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CANTO 21st Annual Conference

Session 1 Regulatory and Policy

OECD EXPERIENCES WITH TELECOMMUNICATION LIBERALISATION

Dimitri YpsilantiOECD

dimitri.ypsilanti@oecd.orgwww.oecd.org/sti/telecom

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What is the OECD? A forum in which governments work together to address

the economic, social and environmental challenges of interdependence and globalisation– Committees and Working Parties (about 200)– Some 40 000 senior officials from national

administrations come to OECD meetings each year– Working Party on Telecommunications and Information

Services Policies: www.oecd.org/sti/telecom A provider of comparative data, analysis and forecasts to

underpin multilateral co-operation Today the OECD has 30 member countries (+BIAC,TUAC) More than 70 developing and transition economies are

engaged in working relationships with the OECD

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A global outreach

OECD Member CountriesCountries/Economies Engaged in Working Relationships with the OECD

4

Progressive Liberalisation: Competition in Mobile Markets

0

5

10

15

20

25

30

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Number of country

Four or moreoperators

Three operators

Duopoly

Monopoly

5

OECD: Telecommunication Investment1994 -2003

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

USD millions

spectrum revenues

investment

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Growth in Network Coverage and Access Increase in access to networks Discernable shift between platforms Decrease in fixed lines in 2002 and 2003 from peak in 2001 Cellular Mobile substitution (741 million mobile subscribers at end 2003) Broadband substitution (less demand for ISDN and second residential lines)

– Overall increase in access: 1.4 billion access paths (fixed + mobile + broadband) in 2003 which is double 1997

0

200

400

600

800

1000

1200

1400

1600

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Millions of subscribers

Cable Modem Subscribers

DSL Subscribers

Cellular mobile subscribers

Fixed netw ork channels

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Increasing Importance of Communication Services

Communications remains the fastest-growing consumption sector in the OECD

60.00

80.00

100.00

120.00

140.00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Communications

Health

Education

Clothing & footwear

Food & non alcoholic

Furnishings

Housing

Year 1990 = 100

8

Public Telecommunication Revenue per capita, 1993 , 2003

0

200

400

600

800

1000

1200

1400

1600

1800

Switz

erla

nd

Uni

ted

King

dom

Uni

ted

Stat

es

Icel

and

Japa

n

Luxe

mbo

urg

Swed

en

Net

herla

nds

Irela

nd

Den

mar

k

Finl

and

Nor

way

Aust

ria

Ger

man

y

OEC

D

New

Zea

land

Belg

ium

Portu

gal

Can

ada

Aust

ralia

Spai

n

Italy

Fran

ce

Gre

ece

Hun

gary

Kore

a

Cze

ch R

epub

lic

Slov

ak R

epub

lic

Pola

nd

Mex

ico

USD

1993 2003

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Broadband take-up over first 10 years is faster than previous services across the OECD

0

20

40

60

80

100

120

140

160

180

200

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Million

Cellular Subscribers (1985-1995)

Broadband Subscribers (1997-2003)

Narrow-band Internet subscribers(fixed network) (1992-2001)

ISDN Subscribers (1989-1999)

*2003 broadband data based on June 2003 adjusted for full year

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Broadband penetration rates, 2004

0

5

10

15

20

25

30

DSL Cable Other

Broadband subscribers per 100 inhabitants, by technology, December 2004

OECD average

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Unbundling & Local Competition Development of local competition slow: (UK 18% of subscriber lines,

Denmark 16%, US 14%) Argument that unbundling can slow down investment in upgrading local

loops (leads to service and not facilities competition) Arguments that direct access has negative implications on investment

ignore the fact that without adequate levels of competition the pace of investment in upgrading local loop will likely be much slower.

Direct access provides an incentive to both the incumbent and new entrant to upgrade local loops and invest in new infrastructure.

The slow rate in the provision of ISDN, and high ISDN prices, has borne this latter argument out.

It is It is unlikely that a new entrant will be deterred from making new investment because it has access to an unbundled loop. On the contrary access to that loop increases its customer base, and provides immediate revenue facilitating new investment.

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Competition and Prices: Residential and Business Charges

0

20

40

60

80

100

120

140

160Index 1990=100

Fixed

Usage

Total

0

20

40

60

80

100

120

140

160Index 1990=100

Fixed

Usage

Total

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OECD Composite Residential basket, February 2005USD PPP, VAT included

0

200

400

600

800

1000

1200

Pola

nd

Mex

ico

Hun

gary

Slov

ak R

ep.

Turk

ey

Cze

ch R

ep.

Portu

gal

Aust

ralia

New

Zea

land U

SA

OEC

D A

vera

ge

Gre

ece

Belg

ium

Spai

n

Italy

Kore

a

Finl

and

Fran

ce

Japa

n

Ger

man

y

Net

herla

nds

Can

ada

Irela

nd

Luxe

mbo

urg U

K

Aust

ria

Nor

way

Switz

erla

nd

Den

mar

k

Swed

en

Icel

and

USD PPP

Fixed Usage

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Quality of Service: Faults per line

0

10

20

30

40

50

60

70

1990 2003

Faults per 100 lines per year, 1990 and 2003

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Substitution and Universal Service

109.4

154.0

220.4

320.4451.5

4.2 4.5 4.6 4.6 4.3 4.1 3.6 3.2

535.2 585.9 642.2

1.0

10.0

100.0

1000.0

1996 1997 1998 1999 2000 2001 2002 2003

Mobile subscribers per 1 000 inhabitants Payphones per 1 000 inhabitants

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Towards the NGN: Competition and complementarity among different

technologiesHigher cones represent better performance in a given category.

Mobility

Speed

Bits per $

3GWiMAX

Wi-FiDSL/Cable

Fibre