Inside telecommunications Issue 10

Regulation

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EU presses ahead with single telecoms market reform

Europe currently accounts for less than 1 in 20 LTE connections worldwide, and only 2% of European households have access to super-fast broadband. Market fragmentation is seen as a root cause of Europe’s slower technology cycle in fixed and mobile broadband, compared with other regions.

The European Commission (EC) recognizes that there remain barriers to the kind of scale economies required for growth. At the same time, it has estimated the benefits of a single telecommunications market could amount to €110b per year.

Various initiatives have been proposed to catalyze the move toward a more unified European telecommunications sector, such as the introduction of an EU passport and a clear focus on standardized network access products.

Spectrum release policies have also come under scrutiny, with the EU highlighting that a lack of regional coordination is hampering both operator multi-market investment strategies and handset manufacturer initiatives to provide suitable LTE devices.

The focus on reducing industry fragmentation does not sidestep the needs of the end user. In June, the EC voted to end roaming rates for voice calls, text messages and internet access within Europe. However, a sharp reduction in wholesale rates could lead to a spike in competition, affecting network investment.

EU glide path for maximum roaming charges

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Source: "EU to scrap mobile roaming charges in favour of a single market," Euronews, 14 June 2013.

Net neutrality remains under scrutiny, with the EC underlining the need to provide legislation that guarantees the equal treatment of content by operators.

EU proposals are set to go to the College of European Commissioners in September. The need for more efficient market structures is more pronounced. Yet the proposed changes run the risk of producing new challenges. Ensuring that spectrum plans are not developed in isolation will be difficult to achieve: there remain significant variations in valuations of spectrum and auction formats.

While the European Telecommunications Network Operators’ Association (ETNO) has welcomed the prospect of single market reforms, it has also argued that current plans do not go far enough.

Myanmar awards mobile licenses

In June, Myanmar’s Government selected Norway’s Telenor and Qatar’s Ooredoo for two nationwide mobile licenses, set to run for 15 years. A consortium of France Telecom-Orange and Japanese company Marubeni has been nominated as backup candidate.

Although still to be issued, the licenses will carry coverage commitments designed to ensure that mobile infrastructure reaches the country’s rural population.

Telenor will launch a network using HSPA and LTE-ready technologies in 2014. Ooredoo has underlined the direct and indirect job creation that its investment in the previously closed market will bring.

GDP per capita and mobile penetration in South East Asia, 2012

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Source: ITU, IMF World Economic Outlook.

The Government has set a 50% population penetration target by 2015. However, specific issues need to be addressed. The overall penetration targets may be ambitious, given there is almost no rural coverage in the country at present.

For the new operators, challenges include:

  • Mountainous terrain
  • A dispersed population
  • Poor road infrastructure
  • Site acquisition issues
  • Affordability of mobile services in rural areas

The country’s ICT policy-makers will need to put both short and long-term frameworks into place. The mobile licenses themselves cannot be issued until a new telecoms law has been passed by parliament.