Policy for termination regulation of mobile networks - PTS-ER-2006:27

10/07/2006

PTS strives to ensure that consumers have access to affordable electronic communications services with a large supply and good function. Ensuring that competition prevails between providers of services and networks is one way of satisfying this goal. The long-term objective of PTS’s regulatory efforts to promote competition is to achieve sustainable competition. Where sustainable competition prevails, the market may be expected to achieve economic efficiency on its own with, among other things, prices that reflect competition and a broad supply of goods and services.

Taking into consideration that mentioned above, the authority has formulated a number of overall policies to help guide its regulatory efforts to promote competition in all markets.

1. PTS is working to promote the development of sustainable competition by formulating regulations that eliminate barriers for market entry and gradually promote own establishment of replicable1 network elements and network parts. The goal of sustainable competition can often be achieved through a combination of own infrastructure and efficient co-use of existing infrastructure2, rather than through replication of infrastructure.
2. PTS is only introducing regulation to promote competition to markets that have such characteristic features that ex ante regulation is justified, i.e. where competition problems prevail that the market typically cannot resolve itself.
3. PTS’s regulation aims to promote innovation and development. Entry rules regarding the co-use of infrastructure, which can often be socioeconomically efficient, should not be formulated so that they may risk impeding technical development and the upgrading of networks. A party that leases networks to others should have the opportunity to make commercial investments in these. PTS’s regulation should also be designed to prevent keeping market stakeholders restricted to old structures and services and should be technology-neutral to the greatest possible extent.
4. PTS is working towards the increased harmonisation of the system of rules for electronic communications. A new inner market for electronic communications services can be achieved through harmonised regulation of networks and services in Europe. For this reason, PTS is participating actively in European harmonisation work. PTS is also participating actively in other harmonisation and standardisation work.
5. The regulations for access to networks and services should be clear and foreseeable for those operating in the market. They should satisfy the needs of the market and resolve any competition problems that the market stakeholders experience. PTS should consult the market stakeholders on its proposals for action and conduct an active dialogue with every party dependent on or affected by the regulation.
6. Rules for access to networks and services should establish the best possible preconditions for compliance. PTS should work actively with supervision that follows up inadequate compliance and ensures that the rules are observed. It should also be possible to establish rights and obligations through PTS’s dispute resolution activity.

The following policies have been formulated regarding regulation to promote competition in relation to the market for termination on mobile networks:

1. An obligation to provide call termination on mobile networks shall be imposed on undertakings that are dominant in a market where effective competition does not prevail.3
2. When regulating prices for the service ‘call termination on mobile networks’, the price shall correspond to the price that would have arisen if competition prevailed in the market, i.e. the price that would have arisen in the market if the consumer had the possibility of choosing between several competing termination alternatives.
3. Through the regulation described above being formulated in a wellbalanced way, better conditions are established to over time reduce the scope of ex ante regulation in the area.
4. In order to achieve a well-balanced reduction in the scope of regulation, it is important that the stakeholders in the market are given signals about the conditions that must be satisfied for such a reduction.
5. In conjunction with the regular market reviews that the authority is required to conduct according to EkomL4, PTS intends to evaluate the market situation with the aim of determining the need for regulatory measures on the basis of several criteria. Changed conditions in the market may have consequences for one or more of the components included in the regulatory authority’s work on market analysis and the imposition of obligations.
6. PTS applies technology-neutral regulation. Technology-neutral termination regulation should continue, even if the dominant undertaking changes the technology with which the services are provided, subject to the precondition that the control of termination continues.

1  ‘Replicable’ is the term generally used within regulatory theory to describe network elements that are possible and desirable to replicate, i.e. establish in parallel. All networks and network elements are possible to replicate in parallel from a purely technical perspective, but from a business or socio-economic perspective, it may be more or less desirable to replicate infrastructure.

2  Fully owned infrastructure, i.e. parallel networks, of course reduce the dominant network owner’s bottleneck resources and could therefore be more sustainable than strong service competition, where dependence on the network owner’s networks and services is substantial. In the area of mobile communications, there is, to a large extent, parallel infrastructure in Sweden. In other markets, it is not always profitable for an operator to establish its own parallel network, nor socioeconomically justifiable.

3  Such regulation is necessary set against the background of the absence of alternatives to call termination on mobile networks where a subscriber in a network wishes to reach a subscriber in another network. It is only when there is an alternative for a significant number of consumers that the lifting of the regulation may come into question.

4  However, this does not mean that all criteria must necessarily be evaluated at one and the same point in time; certain criteria can, for example, be monitored continuously and at regular intervals. Instead, the issue involves the criteria needing evaluation before a decision is made to change the regulation.