Jeronimo gonzalez brussels 2010

FUTURE OF COMPETITION POLICY International Institute of Communications TELECOMMUNICATIONS AND MEDIA FORUM Brussels, 29 April 2010

How we see competition… Beyond connectivity: global, convergent, customer-centric & innovative 01 Source: ATKearney. Internet Value Chain – March 2010

What capital markets are telling us about our prospective growth Uneven distribution ,[object Object],Notes to Diagram: (1) Average for Disney, NewsCorp, Time Warner ,Warner Music Group, Vivendi & Electronic Arts; (2) Average for Amazon, Google, Yahoo, eBay, Baidu, Expedia & PartyGaming; (3) Average for Akamai, CyberAgent, Google, ValueClick, Verisign & WPP; (4) Average for AT&T, Vodafone, NTT, British Telecom, Deutsche Telecom & France Telecom; (5) Average for Microsoft, Apple, Dell, Acer, Nokia & McAfee 02 x 5 x 0,9 x 3

Increasing pressures over margins Strong traffic increase vs revenue stabilisation Increasing investment need in network capacity Why? The model supporting this success story is now close to exhaustion with uneven consequences for each parties… 03 ARPU Network cost per user $ / Users / Month 0 10 20 30 40 2006 2008 2010 2012 2007 2009 2011 Source: Bell Labs Modeling and Network Planning Time Revenues Voice dominates Data dominates Traffic Decoupling

As current pricing models based mainly on flat rates paid by final customers incentivizes “uncontrolled” traffic growth with no efficiency incentives ADSL ADSL 2 ADSL 2+ VDSL Fiber Current model is not sustainable in the long term 03 How to continue ? Flat rates Traffic Growth Capacity problem

Some ways forward to deal with the problems… 04 Access Regulation Public investments Competition Access Regulation Net Neutrality CHALLENGES FOR MARKET PLAYERS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Change Revenue models ,[object Object],[object Object],[object Object],Expand Network Capacity Manage Traffic Growth Constraints

What about [Competition & Regulatory] Policy ? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],05 Revenues Generated by the Internet Industry (2008) Source: ATKearney. Internet Value Chain – March 2010 Both challenges are yet unmet !

NGA regulatory framework is a key milestone upon which building a new regulatory culture in Europe – Let’s start with the basic things 05 FOCUS ON CUSTOMER CHOICE & SERVICES NOT THE INCUMBENT ACCESS PLATFORM WHEN IT COMES TO INTERNET ACCESS FOCUS ON GENERIC BROADBAND NOT ON FIBRE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Smart (De) Regulation In Practice ,[object Object],[object Object],[object Object],[object Object],Regulatory structures need to be prepared to capture all these transformations: focus in the medium term to change relevant market definitions and analysis with focus on the consumer experience of access to services and use both regarding products/services (no platform distinctions) and geographic scope

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And a final thought: Does fragmentation of European telecom industry say anything to us about how proper our regulation is? Population (Millions) Operators (Number) Note: includes mobile + fixed operators, excluding MVNOs and B2B operators US: 4 major mobile players accounting for 95% of the market, 3 major fixed and 8 major cable operators included A sustainable middle ground is possible 05 ~ 17 17 > 170 ,[object Object],[object Object],[object Object]

No grand idea was ever born in a conference, but a lot of foolish ideas have died there ” F. Scott Fitzgerald Q&A

Many Thanks for your attention ! Jerónimo González E: [email_address] M: + 34 669856098

Jeronimo gonzalez brussels 2010

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