Swedish Post and Telecom Authority

Regulatory challenges Regulatory challenges for tomorrow – for tomorrow –

in the light of speedin the light of speedGöran Marby

Director-General Swedish Post and Telecom Authority

BEREC Chair 2014

An inclusive societyAn inclusive society

Exclusion AccesAccesss

Pay

Vote Watch

Book

Study

Work

AccessibiliAccessibilityty

Ongoing technological and Ongoing technological and market developmentsmarket developments

• We are moving from specific networks for specific services to ip-based networks for all services

• The provider of the network infrastructure does not have a monopoly of providing services anymore!

One IP- network

can transpo

rt all services

One IP- network

can transpo

rt all services

PSTN/GSM-networks for voice

PSTN/GSM-networks for voice

Television networks for TVTelevision networks for TV

Computer networks for data

Computer networks for data

Terrestrial audio broadcasting networks

Terrestrial audio broadcasting networks

Consumers demand … Speed

Access everywhere on every deviceMobility

Quality/capacity

… to get All content available through the

Internet

The consumer can be expected to be:

less sensitive to the price of a high quality access,

and more sensitive to the price of

the content.

Market impacts and Market impacts and developmentsdevelopments

• Pressure on business models of traditional operator

• Push towards increased horizontal specialization

• New ways to make revenues in a disintegrated value chain

Pressure on traditional revenuePressure on traditional revenue

Voice seems to have reached its Voice seems to have reached its peak while mobile data is peak while mobile data is

boomingbooming

Number of voice minutes Data in mobile networks

Sou

rce:

Sw

ed

ish

tele

com

mu

nic

ati

on

s m

ark

et,

firs

t

half-y

ear

20

13

Price development mobile calls in Price development mobile calls in SwedenSweden

Sourc

e:

Str

ate

gy A

naly

tics

, Telig

en a

nd P

TS

Same price for 100, 300 and 900 calls/month in 2013 – more common with flat rate subscriptions

calls calls calls calls

Value chain – with different risk at Value chain – with different risk at each level each level

Content providersContent providersContent providersContent providers

Service providersService providersService providersService providers

Infrastructure Infrastructure ownersowners

Infrastructure Infrastructure ownersowners

Mobile

Mobile

Mobile

Mobile

Different business models and Different business models and profits?profits?

Content providersContent providers14,0 %14,0 %

Content providersContent providers14,0 %14,0 %

Service providersService providers9,9 %9,9 %

Service providersService providers9,9 %9,9 %

Infrastructure Infrastructure ownersowners6,1 %6,1 %

Infrastructure Infrastructure ownersowners6,1 %6,1 %

Mobile

Mobile

Mobile

Mobile

Own calculations of representative sample of companies. Net operating profit in

relation to total invested capital. Data source: Bloomberg

8,0 8,0 %%

Competitive and regulatory Competitive and regulatory challenges challenges

• Vertical disintegration and horizontal specialization implies new competitive bottlenecks on the different levels

• Future recommendations on relevant markets need to identify and incorporate a shift in competitive bottlenecks

Examples of competitive Examples of competitive bottlenecksbottlenecks

• Blockage through property rights

• Accessing enough and suitable spectrum

• Investment capital adjusted to risk levels

• Accessing the end users (last mile)

Maximise benefit for society Maximise benefit for society by spectrum managementby spectrum management

• Calculate and maximise societial benefit to meet the needs for society and citizens

• Use spectrum more efficiently

• Give the market better prequisites to fulfill the increasing demand for wireless services

Coverage requirement in the Coverage requirement in the 800 MHz award in Sweden800 MHz award in Sweden

• Six national licenses, one with coverage requirement

• License holder Net4Mobility shall use up to 300 MSEK to cover specific households and businesses who lack basic broadband access

• PTS assembles an annual list of addresses to be covered

• Service and technology neutral licence conditions

To concludeTo conclude

We are in the middle of big changes in consumer demand, technology and business models

We must have a creative approach when taking the next steps towards future regulation!

Thank You!Thank You!

Investments in fixed networks Investments in fixed networks by operators and customersby operators and customers

Consumer investments Investments in fixed networks

Mobile investments by Mobile investments by operators and customersoperators and customers