Relevant markets - The Times
They are a-Changin’
Brian Williamson
ETNO MLex Regulatory Summit, Brussels
25 April 2013
Plum Consulting, London, T +44 (0)20 7047 1919, www.plumconsulting.co.uk
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Market changes to 2015 & beyond
“When the facts change I change my mind, what do you do Sir?” John Maynard Keynes
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Focus on broadband
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Intensifying platform competition
Bandwidth Mbps
Supply side
Demand side
Smartphone penetration in the EU5
100
80%
Fibre/cable
2011
2012
70%
60%
Vectoring
50%
40%
Copper (VDSL)
30%
10
20%
LTE
Advanced
1
0%
Copper
(ADSL)
LTE
3G
10%
LTE
Advanced
Spain
UK
France
Italy
Germany
EU5
Source: Plum Consulting, Comscore
Growing at 10 percentage points pa
100
10
Capacity GB/month/household
LTE & smartphones near ubiquitous by 2015, implementation of July 12 statement
accelerates fibre (including VDSL)
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Intensifying over-the-top
competition
WhatsApp first launched 2009
OTT messaging to overtake global SMS in 2013
Gigaom, January 2013
The impact of OTT is real - applications are competitive
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Regulation should change too
• Risk of circularity leading to
over-regulation
• Separate consideration of nondiscrimination from price control
• Don’t price regulate multiple
products/points in value chain
Focus on
wholesale
“market”
Over regulation
• Consistency with July 12
statement
Only one
supplier
Need clear focus on retail competition & all suppliers as starting point for analysis
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Steps for NRA to follow under
revised recommendation
Step 1:
• Start with retail market
• Focus on access, direct
constraints & sub-markets
Step 2: Is retail market
competitive absent
regulation?
Yes
Withdraw
regulation
No
List of relevant wholesale
markets
Step 3: Define notional
wholesale market and test
three criteria
Step 4: Proportionate
remedy on operator with
SMP
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Guidance on remedies
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Retail markets as starting point for
analysis
• Focus
• Access not services
• Broadband not narrowband
• All available technologies
• Bottlenecks may arise in following markets
• Dedicated high capacity broadband access in corporate services market
• Broadband access at a fixed location for mass-market customers
• Mobile broadband
• Is competitive
• Should be considered in assessing competition in broadband access at a
fixed location for mass-market
• Scope for inclusion in retail broadband market depends on national
circumstances and future usage
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Proposals for list of markets
Market
Proposal
Reasoning
1
Remove
Anachronistic in broadband world
Access-based and platform-based competition
2
Remove
OTT competition
Mobile voice competition
3&7
Remove (with
safeguards)
OTT competition & low price (due to regulation)
Symmetric obligations
Threat of price control if prices rise
4&5
New
approach
Platform competition & changing technology
Trade-offs to consider in relation to preferred approach
Keep
Corporate market for dedicated capacity sufficiently distinct
from mass market
6
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Calls - access, origination &
termination
• Consistent with focus on broadband access propose that existing
Markets 1 & 2 be removed from the list of relevant markets
• Mobile & fixed voice competition
• Over the top competition for communications services
• Broadband access will remain regulated where justified
• Call termination Markets 3 & 7
• Over the top competition & alternative means of reaching people other than
phone number (Facebook identity, device identity in iOS etc.)
• Termination rates already low due to regulation
• Costly in time and money to continue current approach
• Move to alternative approach to provide assurance of good outcomes
– Interconnection and symmetry requirement (Article 5)
– Backstop – re-regulate if termination prices rise?
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List of wholesale markets
• In relation to corporate services
• Wholesale terminating segments of leased lines
• In relation to broadband at a fixed location
• Wholesale market for passive remedies; and/or
• Wholesale market for active remedies
• Appropriate wholesale market for regulation depends on
national/local circumstances
• Access obligation should apply at only one level - active or passive - in a
network
• Passive remedy may not be technically/economically feasible/attractive e.g.
with VDSL/vectoring
• Passive remedy may be preferred with co-investment
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