RELEVANT MARKETS

AND

MARKET ANALYSIS

Relevant Acquis (I)

• Commission Recommendation 2007/879/EC of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services

• Commission Recommendation 2008/850/EC of 15 October 2008 on notifications, time limits and consultations provided for in Article 7 of Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services

• Commission guidelines (2002/C 165/03) on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications networks and services

Relevant Acquis (II)

• Commission Recommendation 2009/396/EC of 7 May 2009 on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EU

• Commission Recommendation of 2010/572/EU of 20.9.2010 on regulated access to Next Generation Access Network (NGA) C(2010) 6223 final

• Commission Recommendation 2013/466/EU of 11 September 2013 on consistent non-discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment (2013/466/EU)

• Commission Recommendation 2005/698/EC of 19 September 2005 on accounting separation and cost accounting systems under the regulatory framework for electronic communications

National Legislation

• Law on Electronic Communications (“Official Gazette of the Republic of Serbia” no.44/10 and 60/13-CC Decision)

• Decision on relevant markets susceptible to ex-ante regulation (“Official Gazette of the Republic of Serbia” no. 59/11)

• Rulebook on the application of the cost-accounting principle, separate accounts and reporting by an operator with significant market power in the electronic communications sector (“Official Gazette of the Republic of Serbia” no. 52/11)

• Rulebook on minimum content, level of detail and manner of publishing reference offers (“Official Gazette of the Republic of Serbia” no. 70/11)

• Rulebook on the scope and content of the minimum set of leased lines (“Official Gazette of the Republic of Serbia” no. 70/11)

EU Regulations Fully Transposed

into National Legislation

• Commission Recommendation 2007/879/EC of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services

• Commission guidelines (2002/C 165/03) on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications networks and services

• Commission Recommendation 2005/698/EC of 19 September 2005 on accounting separation and cost accounting systems under the regulatory framework for electronic communications

EU Regulations Not Transposed into

National Legislation

• Commission Recommendation 2008/850/EC of 15 October 2008 on notifications, time limits and consultations provided for in Article 7 of Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services

• Commission Recommendation 2009/396/EC of 7 May 2009 on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EU

• Commission Recommendation of 2010/572/EU of 20.9.2010 on regulated access to Next Generation Access Network (NGA) C(2010) 6223 final

• Commission Recommendation 2013/466/EU of 11 September 2013 on consistent non-discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment (2013/466/EU)

Analysis of Relevant Markets (I)

• Pursuant to the Law on Electronic Communications (the Law), RATEL carried out the first round of market analysis, applying the Commission Recommendation 2007/879/EC (2007 Recommendation) and BEREC (ERG) Guidelines

• The first round of the Market Analysis started in September 2010 and ended in November 2011

• The collected and analyzed data cover the 2007-2010 period

• Furthermore, in October 2012 RATEL finished the second round of the market analysis for Market 5 - Wholesale broadband access and Market 8 - Retail media contents distribution, with the same conclusions as in the first round

Analysis of Relevant Markets (II)

• Data collection

- Questionnaires for collecting the 2007-2010 data were sent to all major operators in electronic communications markets

• Market definition - relevant markets were defined based on the 2007 Recommendation, plus 2 additional retail markets

- For product dimension definitions, on both retail and wholesale level, the characteristics of the products or services provided are taken into account. In particular:

• whether there is a demand-side substitution

• whether there is a supply-side substitution

• whether there is potential competition.

- Geographic dimension for all markets is the territory of the Republic of Serbia, since the regulatory and legal conditions are uniform and all major operators provide services with national coverage

Analysis of Relevant Markets (III)

• Market analysis was carried out: a set of criteria, laid down in the

Commission Guidelines (2002/C 165/03) and the Law, were applied to

determine the level of competition and to identify SMP operator(s) and

potential barriers to efficient competition

The three-criteria test was performed for the markets not listed in the

Law and the 2007 Recommendation

• SMP operators were identified for each market

• Remedies were imposed on SMP operators (non-discrimination,

transparency, accounting separation, access obligation, price control

and cost accounting)

• Reference Offers were published in the period January – May 2012,

defining minimum terms and conditions for provision of services on

wholesale markets, including the minimum set of leased lines.

Results of Market Analysis

6 Wholesale Markets

• Wholesale call origination on the public telephone network at a fixed location

• Wholesale call termination on the public telephone network

• Wholesale (physical) access to network elements and associated facilities (including shared and full unbundled access to the local loop)

• Wholesale broadband access

• Wholesale leased lines

• Wholesale call termination on the mobile network

3 Retail Markets

• Retail access to the public telephone network at a fixed location

• Retail media contents distribution

• Retail publicly available telephone service at a fixed location

Price Control

• 2009-2013 the top-down FCA Historical Cost Model was applied as the cost model for price regulation

• Since 2013 the top-down FCA Current Cost Model has been used, based on the Rulebook on the application of the cost-accounting principle, separate accounts and reporting by an operator with significant market power in the electronic communications sector

Termination rates (I)

• According to RATEL’s decision from August

2013 a glide path of MTR has been set for all

three mobile operator

01.01.2014 -

31.12.2014

From

01.01.2015

MTS

RSD 3.95 per

minute

RSD 3.43 per

minute Telenor

VIP

1 Euro = 114,0325 Serbian dinars, average exchange rate in Aug. 2013 3.4

3.5

3.6

3.7

3.8

3.9

4

01/01/2014 01/01/2015 01/01/2016

MTR

Termination rates (II)

• In the first half of 2014 RATEL adopted a

decision designating the call termination

charges on the fixed network for Telekom

Srbija and Orion telekom

- local termination: RSD 0.63 per minute

- single transit: RSD 0.89 per minute

- double transit: RSD 1.11 per minute

1 Euro = 115,5407 Serbian dinars, average exchange rate in April 2014

Number Portability

EU Regulation

• Universal Service Directive (2002/22/EC), Article 30

amended by Directive 2009/136/EC

National Legislation

• Law on Electronic Communications, Art. 79

• Rulebook on Number Portability on Public Mobile

Telecommunications Networks (Official Gazette of RS, no.

5/10)

• Rulebook on Number Portability on Public Telephone

Networks at a Fixed Location (Official Gazette of RS, no.

52/11)

Number Portability

Implementation (I) • An operator of publicly available telephone services

(donor operator) shall enable subscribers of its services, upon their own request, to switch to the services of other operator (recipient operator), to retain their assigned numbers at a specific location, in the case of geographic codes, or at any location in the case of non-geographic codes.

• RATEL manages the information system for number porting and keeps the database of ported numbers, taking into account the protection of personal data, and prescribes the conditions for and the manner of the number porting procedure, as well as the fees for the number portability service.

Number Portability

Implementation (II) • Number porting fee to be paid by the subscriber to the

recipient operator amounts to RSD 165 excl. VAT (ca. EUR 1.4) for FNP, and up to RSD 200 incl. VAT (ca. EUR 1.73) for MNP – mobile operators agreed to renounce the fee. The donor operator may not request any reimbursement of fees from the subscriber. Upon completed NP procedure, the recipient operator shall pay the fee to the donor operator in the amount of RSD1000 excl. VAT (ca. EUR 8.66)

• Upon receiving the request for mobile NP, the donor operator is given two working days at most to verify whether all the necessary conditions for the number porting procedure are met. Once the donor operator accepts to port the number, the number must be ported within two working days at most.

Number Portability

Implementation (III) • Upon receiving the request for fixed NP, the donor operator is given three

working days at most, starting from the first working day following the day the request for number porting is received, to verify whether all necessary conditions are met and to submit the notification thereof. Once the donor operator accepts to port the number, the number must be ported within three working days at most.

• In performing the procedure of number porting, the donor and recipient operators shall enter into mutual cooperation and cooperation with RATEL so as to ensure that the loss of service during the process of porting shall not exceed one working day, and thus needlessly hinder the provision of services to subscribers, and shall refrain from actions aimed at obstructing or preventing the number porting.

• Subscriber (user) who has ported the number may not request to port the same number again sooner than three months for MNP and six months for FNP, following the day the number has been ported.

Number Portability

Implementation (IV) The NRA and operators signed the protocols on the implementation of the rulebooks on

number portability, so as to enable mutual coordination of the procedures related to the

administrative issues which may arise during the number portability implementation

process.

MNP

• Available since 1 July 2011

• 3 operators

• Ported numbers as on 1 July 2014: 219,021

• Rulebook on Number Portability for Services Provided via Public Mobile

Communications Networks pending adoption

FNP

• Available since 1 April 2014

• 11 operators

• Ported numbers as on 1 July 2014: 8,120

Future Steps

• Continual monitoring of SMPs’ activities

• Further liberalization of the electronic communications market

• Further regulation of bundled services and consistent application of the Margin Squeeze test

• In 2014-2015 RATEL will carry out the next round of the market analysis for all markets, focusing on the possible deregulation of retail markets

Detailed Information (I)

LEGISLATION

• Law on Electronic Communications http://www.ratel.rs/upload/documents/Zakon/Electronic%20Communications%20Law.pdf

• Decision identifying relevant markets susceptible to ex-ante regulation http://www.ratel.rs/upload/documents/Regulativa/Analize_trzista/Odluka%20o%20trzistima%20podloznim%20prethodnoj%20regulaciji.pdf

• Rulebook on the application of the cost-accounting principle, separate accounts and reporting by an operator with significant market power in the electronic communications sector http://www.ratel.rs/upload/documents/Regulativa/Pravilnici/Telekomunikacije/Rulebook%20on%20the%20application%20of%20the%20cost-accounting%20principle.pdf

• Rulebook on minimum content, level of detail and manner of publishing reference offers http://www.ratel.rs/upload/documents/Regulativa/Pravilnici/Telekomunikacije/Rulebook%20on%20minimum%20content%20level%20of%20detail%20and%20manner%20of%20publishing%20reference%20offers.pdf

• Rulebook on the scope and content of the minimum set of leased lines http://www.ratel.rs/upload/documents/Regulativa/Pravilnici/Telekomunikacije/Rulebook%20on%20the%20scope%20and%20content%20of%20the%20minimum%20set%20of%20leased%20lines.pdf

Detailed Information (II)

MARKET ANALYSIS

• Market 1 Retail access to the public telephone network at a fixed location http://www.ratel.rs/upload/Trziste%201%20-%20Izvestaj%20o%20analizi.pdf

• Market 2 Wholesale call origination on the public telephone network at a fixed location http://www.ratel.rs/upload/Trziste%202%20-%20Izvestaj%20o%20analizi.pdf

• Market 3 Wholesale call termination on the public telephone network http://www.ratel.rs/upload/Trziste%203%20-%20Izvestaj%20o%20analizi.pdf

• Market 4 Wholesale (physical) access to network elements and associated facilities (including shared and full unbundled access to the local loop) http://www.ratel.rs/upload/Trziste%204%20-%20Izvestaj%20o%20analizi.pdf

• Market 5 Wholesale broadband access http://www.ratel.rs/upload/documents/Regulativa/Analize_trzista/Trziste_5-Izvestaj_o_analizi_oktobar_2012.pdf

• Market 6 Wholesale leased lines http://www.ratel.rs/upload/Trziste%206%20-%20Izvestaj%20o%20analizi.pdf

• Market 7 Wholesale call termination on the mobile network http://www.ratel.rs/upload/Trziste%207%20-%20Izvestaj%20o%20analizi.pdf

• Market 8 Retail media contents distribution http://www.ratel.rs/upload/documents/Regulativa/Analize_trzista/Trziste_8-Izvestaj_o_analizi_oktobar_2012.pdf

• Market 9 Retail publicly available telephone service at a fixed location http://www.ratel.rs/upload/documents/Regulativa/Analize_trzista/Trziste%209%20-%20Pozivi%20sa%20fiksne%20lokacije.pdf

Detailed Information (III)

REFERENCE OFFERS • Reference offer for interconnection with public fixed network Telekom Srbija

http://www.ratel.rs/upload/documents/Telekom%20Srbija%20-%20medjupovezivanje%20sa%20fiksnom%20mrezom%20decambar%202013.pdf

• Reference offer for interconnection with public fixed network Orion Telekom http://www.ratel.rs/u pload/documents/Standardne_ponude/Orion%20telekom%20-%20interkonekcija%20februar%202013.pdf

• Reference offer for unbundled access to the local loop Telekom Srbija http://www.ratel.rs/upload/documents/Standardne_ponude/Telekom%20Srbija%20-%20usluga%20rasclanjenog%20pristupa.pdf

• Reference offer for wholesale broadband access Telekom Srbija http://www.ratel.rs/upload/documents/Standardne_ponude/standardna%20ponuda%20za%20usluge%20sirokopojasnog%20pristupa%20%20%20%20%20%20mart2014.pdf

• Reference offer for wholesale leased lines Telekom Srbija http://www.ratel.rs/upload/documents/Standardne_ponude/Telekom%20Srbija%20-%20usluga%20iznajmljivanja%20linija%20u%20veleprodaji.pdf

• Reference offer for call termination on the mobile network Telekom Srbija http://www.ratel.rs/upload/documents/Standardne_ponude/Telekom%20Srbija%20-%20terminacija%20poziva%20u%20mobilnoj%20mrezi%20decembar%202013.pdf

• Reference offer for call termination on the mobile network VIP mobile http://www.ratel.rs/upload/documents/Standardne_ponude/Vip%20%20mobile%20-%20terminacija%20poziva%20u%20mobilnoj%20mrezi.pdf

• Reference offer for call termination on the mobile network Telenor http://www.ratel.rs/upload/documents/Standardne_ponude/Telenor_terminacija_poziva_u_mobilnoj_mrezi_decembar_2013.pdf

Thank you for your attention Brussels, 10-11 July 2014