Fostering Broadband Access through ex-ante Regulations

Chisinau, 20-22 May 2014

National Regulatory Agency for Electronic Communications and Information Technology, Republic of Moldova

Vladimir VOZIAN

ANRCETI. 2014 2

Overview

• Electronic communications market overview • Wired and wireless Broadband access • About ANRCETI • Legal and regulatory framework • Market analysis cycle • Regulatory framework. Market analysis • Regulatory framework. Markets 4&5 • Why regulating infrastructure access ex-ante? Asymmetric vs

symmetric • Regulation of Markets 4 and 5. Ex-ante remedies • Ex-ante provisions related to infrastructure access

ANRCETI. 2014 3

Electronic communications market of Moldova

Penetration (%)

Revenue (mil.EUR)

ARPU (EUR)

Other

Mobile telephony 124,5 188,7 3,7 200 (MoU)

Fixed telephony 34,3 60,2 4,1 301 (MoU)

Fixed broadband 13,2 47,5 8,1 -

Pay TV 8,1 18,8 2,6 -

Mobile broadband 7,3 14,0 5,3 7,9 GB (AUPU)

TOTAL 330

3 - mobile operators, 2 of them operate LTE network; 28 – fixed telephony operators; 58 – fixed broadband operators; 130 – cable TV, IPTV (2 of them) and broadcasting operators.

ANRCETI. 2014 4

Wired and Wireless Broadband access

13,4% 12,3%

44,2% 39,5%

14,7% 18,6%

27,3% 27,7%

0,4% 2,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

100,0%

2012 2013

< 2 Mbps 2 - 10 Mbps 10 - 30 Mpbs 30 - 100 Mbps > 100 Mbps

The share of broadband subscribers by Internet access contracted speed

ANRCETI. 2014 5

Wired and Wireless Broadband access

Technologies share in fixed broadband access

24,1% 35,4% 39,7% 45,4% 49,0%

71,2% 61,2% 55,4% 48,7% 44,5%

4,35% 2,80% 4,58% 5,63% 6,05%

0,37% 0,63% 0,35% 0,32% 0,49%

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013

FTTx xDSL coax other technologies

ANRCETI. 2014 6

Wired and Wireless Broadband access

Market shares of the biggest fixed broadband operators by subscribers

Other operators

ANRCETI. 2014 7

Wired and Wireless Broadband access

Subscribers of the mobile broadband datacard subscriptions

49

42

0

71

74

8

79

21

4

86

58

1

11

6 5

25

24

23

0

40

78

8

21

81

8

57

02

1

82

88

4

6 1

45

9 0

63

23

78

1

34

85

7

60

20

4

79 795

121 599 124 813

178 459

259 613

0

50000

100000

150000

200000

250000

300000

0

20000

40000

60000

80000

100000

120000

140000

2009 2010 2011 2012 2013

Orange Moldova Moldcell Moldtelecom Total

ANRCETI. 2014 8

About ANRCETI

ANRCETI – National Regulatory Agency for Electronic Communications and Information Technology in The Republic of Moldova Key regulatory issues:

1. Market analysis and ex-ante remedies: a. Access to essential facilities and interconnection

b. Cost modeling and tariff setting(MTR/FTR)

c. Accounting separation & Regulatory audit

d. Public reference offers

2. Universal service provision

3. Broadband, NGA/NGN development

4. Frequency licensing for mobile networks

5. Digital switchover process

6. Customer protection & Quality of Service

ANRCETI. 2014 9

Legal and regulatory framework

The Law nr.241 of 2007 on electronic communications creates the legal framework of regulating the electronic communications sector

The Law and the subsequent regulations adopted by ANRCETI transpose into the national legislation the EU common framework:

• Directive 21/2002/EC (Framework Directive)

• Directive 19/2002/EC (Access Directive)

• Directive 20/2002/EC (Authorization Directive)

• Directive 22/2002/EC (Universal Service Directive)

• Commission guidelines on market analysis 2002/C165/03

• Recommendation 2003/311/EC (relevant products and services)

• Recommendation 2007/879/EC (relevant products and services)

ANRCETI and MTIC consider revision of the law to adapt it to the 2009 EU framework (Directive 140/2009/EC “Better regulation directive”, Directive 136/2009/EC “Citizens rights directive”)

ANRCETI. 2014 10

Regulatory framework. Market analysis

Market analysis

D

A

E B

C

Market

Identification

In-depth Market

Analysis

SMP

designation

Market

Review

Obligations

imposition

Since 2010, ANRCETI has undergone 2 cycles of markets analysis.

ANRCETI. 2014 11

Regulatory framework. Markets 4&5

Market 4 – Wholesale access to network infrastructure at a

fixed location

Market 5 – Wholesale access to broadband

communications

Physical infrastructure access

Access to local loop (copper/fiber)

Bitstream access

Broadband retail downstream

upstream

ANRCETI. 2014 12

Why regulating IA ex-ante? Asymmetric vs symmetric

Legend:

(S) Cross-sectors infrastracture acces

regulation

(S) Telecoms infrastracture access

regulation

(A) Ex-ante remedies on SMP operator

ANRCETI. 2014 13

Why regulating IA ex-ante? Asymmetric vs symmetric

Ex-ante mandated access to physical infrastructure

Symmetric access to telecoms infrastructure

Cross-sectorial infrastructure access

Suitable infrastructure

Perfect Potentially perfect Depending on type of

infrastructure

Strength of the measure

Strong Slighter The slightest

Timeliness Fast Longer time for

negotiations Longer time for

negotiations

Legal aspect Needs only

regulatory powers for ex-ante

Needs certain legal provisions. Implies telecom regulator

Needs cross-sectorial legal provisions. Might

imply several regulators

Changes Relatively easy to

implement Often might need

legislation changes Needs legislation

changes

Most frequent costing method

LRIC+, LRAIC, FAC Negotiated or own operator’s method

Negotiated

Enforcement Strong if enough

powers and strong Usually slight Weak

ANRCETI. 2014 14

Regulation of Markets 4 and 5. Ex-ante remedies

On the both markets 4 and 5 the incumbent operator Moldtelecom was designated with SMP and ex-ante remedies were imposed.

The following obligations have been imposed:

• Access to, and use of, specific network facilities. It implies not only provision of access to local copper/fiber loops or bitstream services, but also physical infrastructure access (ducts, poles)

• Transparency. Reference offers should be published

• Non-discrimination. The SMP operator has to provide access in the same terms to competitors as it provides to its own services

• Price control and costing accounting. Costing method to be used – LRIC+

• Accounting separation

ANRCETI. 2014 15

Ex-ante provisions related to infrastructure access

Shared access to infrastructure was mandated based on SMP on M4

SMP operator shall provide access to ducts, poles and other relevant infrastructure all across its network infrastructure, irrespective of the intended use

The SMP operator has to open up its plans when building new segments of infrastructure; has to envisage the requests of the operators for sufficient capacities

A reference offer for access to ducts and poles is required

The access services provision should be based on equal input principle; this means access services should be provided externally by the same means, people, in the same terms, by using the same IT systems and procedures as those used for internal provision

The tariffs must be oriented to LRIC+ cost levels

ANRCETI. 2014 16

Thank you!

Vladimir Vozian Regulations Development Department Deputy-chief E-mail: vladimir.vozian@anrceti.md Tel: +373 22 25 13 37 Mob: +373 79 60 66 55

www.anrceti.md