Too much monopoly

According to a report presented in Brussels by Tele2, Member States have been too slow in implementing the European Union’s new electronic communications rules. In the report entitled “Tele2 – The Monopoly Challenger” (“Tele2 – The Monopoly Challenger”), the company presents its views on fixed line subscription (subscriptions), carrier pre-selection, MVNOs and ADSL, as well as proposing a method to break the dominance of former national operators.

In March 2002, the European Union adopted a package of new electronic communications regulations while setting a July 25, 2003 deadline for implementation by member countries. Only a handful of member countries have implemented the rules so far.

– Many EU recommendations are still not implemented in the Member States, mainly due to insufficient capacity of the national regulators or, in some cases, due to fading interest, says Jan Tjernell, Director of Regulatory Affairs at Tele2.

The report, which compares the legal situation in the European Union and the accession countries, stresses the importance of rapid and uniform (universal) implementation of the European Union regulatory package.

– Although Tele2, being a leading pan-European telecommunications company, has the potential to positively influence market competition in many areas, in many countries there is still a monopoly in such key areas as fixed line subscription (subscription), carrier selection, mobile access and ADSL, says Tjernell.

In its report, Tele2 describes how Denmark has addressed the issue of call subscription in fixed telephony. Denmark is so far the only EU Member State that has allowed alternative operators to provide a subscription service at a fixed location. In addition, it has set a maximum price level, which has had a positive effect on consumers’ overall costs for calls made at a fixed location. Recently, Sweden has also become a country open to discussing the subscription issue. Other countries could also follow the Danish example if they were given the right information.

– The fixed line subscription is the most important issue that needs to be resolved in order to lower the cost of service for consumers. We must end the former national operators’ practice of balancing (offsetting) lower call prices with higher subscription rates. This can only be achieved if alternative operators are also allowed to offer fixed line subscriptions,” says Jan Tjernell.

Another important area related to fixed telephony is carrier pre-selection (this service allows the subscriber to choose an alternative operator without having to dial a prefix). According to the European Commission, operator pre-selection has proven to be a very effective way of opening the market to competition.

– In order to implement carrier pre-selection, the regulatory environment must be continuously improved. Here, Sweden can serve as an example. The procedure for ordering services from new customers has been greatly simplified there. Customers now only have to place orders verbally instead of sending written confirmations,” explains Jan Tjernell.

Competition in the mobile telephony sector has long been considered to be more effective than in the fixed line sector. However, the positive effects of both competition and the macroeconomic factor would be even greater if the concept of “Mobile Virtual Network Operator” (MVNO) would be widely accepted in Europe. The MVNO concept opens the market to additional operators and radio frequencies can be used more widely. In Sweden, Tele2 owns the network and allows other operators to use it, while in other countries Tele2 itself acts as an MVNO.

– Since the MVNO concept solves the issues of limited spectrum and therefore increases competition, it results in a more efficient use of the national radio infrastructure. This creates an advantageous situation for all parties involved. Network owners receive a better return on investment, while MVNOs can offer a complete range of services. However, the biggest benefit is for consumers, as the MVNO concept facilitates price reductions and increases the number of available services, Tjernell explains.

In addition, according to Tele2, NRAs should pay more attention to strengthening the competitive environment around ADSL. Internet services can be provided in many ways, but ADSL is the only truly mass-market broadband product.

– If European Union member states are serious about improving Internet services, they should take stronger action regarding ADSL. Currently, alternative operators are feeling unjustified pressure on the margin that is the difference between the wholesale price and the price paid by the end user. Former national operators are still not granting ADSL access to alternative operators on cost-oriented terms, argues Jan Tjernell.

In the autumn of this year, Tele2 intensified its contacts with Europe’s national regulators to discuss fixed line subscriptions, carrier pre-selection, MVNOs and ADSL.

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