Transcript Key Issues for BG

Telecoms Business and the EU – An
Operators Perspective
John Munnery
Our Experience
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14 years in South East Europe
16 years in Mobile; plus substantial fixed experience
Where – Bulgaria, Macedonia, Serbia, Croatia, Georgia
For who: BT, C&W, Deutsche Telecom/Matav, Soros,
BTC and others
• Boutique consultancy, forming teams as necessary, or
cooperating with other lead consultancies
EU Practice – a pragmatic view
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Breaking of monopolies and cartels
Best deal for customers - consultation
Sector Development
Effective regulation through an empowered Civil Service
New entrants encouraged, but trend is towards
consolidation either in national groupings, or
international product service lines
The Telecoms Market in Bulgaria
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Total value around 1.3 billion Euro
500 million BTC
700 million Mobile
100 million rest (ISPs, Cable, calling card)
Issue is more about redistribution of incomes than fighting for the
limited growth in the market (driven primarily by GDP growth)
• Is anyone not for sale?
• New entrants open the market, but trends are towards consolidation,
either along international product service lines, or local groupings
(possibly only way in BG to get critical mass)
Monopoly and Cartel Issues in BG
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Two operators with SMP – one in Mobile, other in fixed
Third substantial player in mobile close behind
All three account for +/- 90% of BG telecoms revenues
Sector growth is limited to GDP + a bit
Fight is for revenue redistribution/protection which is determining the
strategy of the big players
Impact of fixed rebalancing
Informal cartels in Mobile – no one wants to reduce prices
There is enough Mobile and fixed backbone capacity in place for
many, many years – new infrastructure/opportunities needed only for
the last mile
Impact of new technologies – Wimax, PMP in particular; exclusion of
operators with SMP
The Achilles Heels
• Poor fixed network in BG has resulted in mobile substitution; may be
beyond recovery; EU former incumbents are running fast to stand
still
• Fight for 100% on-net traffic – artificially high cross-operator
charges; key regulatory/competition issue
• BTC making positive steps – but may be too little too late; limited
reach of services such as DSL; party line problems
• Privatisation is taking some time to turn BTC round; unlike
elsewhere not protected by monopoly
• Existing mobile businesses have vulnerabilities – relatively high
tariffs and little revenue growth. Will seek to extend market to retain
revenues
• Short term business objectives
Key Issues
• Local loop unbundling – but don’t forget the Mobile local loop!
• Domestic access – BTC, Gas, Electricity, CATV; who can afford the
investment and who can offer quality?
• Breaking of the Mobile Cartel – business pressures on GSM1, 2 and
3 unlikely to drive down prices; and 3G process did not bring in a
new entrant; answer may be mandatory service provision/MVNO
operations
• There is sufficient transmission infrastructure in BG for all possible
demands for the next 10 years – the access technology (outside
mobile) is the issue – how do entrepreneurial operators get into this?
Areas for Growth
• Data explosion in customer numbers and data transmission needs –
BG is hungry; but penetration of PCs is low, so there are limits
• “Internet is Free” attitude; but corporate sector is becoming
demanding in price and quality
• Schools programme will drive expectations
• But majority of market is hungry for cheap voices and SMS (and
SMS is a data service)
• BTC rebalancing offers opportunities
Key Issues for BG
• Revenue redistribution is a greater driver that growth alone; and the
near monopolies have little growth potential
• Competition fed by consolidation – present situation is “divide and
rule”
• Long-term business view would help
• The giants have vulnerabilities
• New licences should be awarded to companies with no SMP
• Continued regulatory pressure needed to open up networks and
allow successful models to be imported from other European
countries
• How are the customers’ view heard – need for lobby – Telecoms
Users’ Association