Competition and regulation in the Nordic mobile markets - PTS-ER-2006:40


For the last twenty years, mobile telephony, along with the Internet, has been the technology that has most dramatically transformed the telecommunications sector. Mobile communications started as a premium service offering voice transmission with mobility. As the service became more widely available, mobile telephony challenged the notion of a natural monopoly within the sector, prompting a wave of regulatory changes that has profoundly altered the market structure of the entire telecommunications industry. The key variable for the development of the industry is radio spectrum, a scarce resource that could be used for other purposes.
Technological innovation, such as the introduction of cellular technology and subsequent switch from analogue to digital transmission, has helped to make
the spectrum constraint less severe. Moreover, technological innovation also helped to extend cellular mobile telecommunications into higher frequency bands of the radio spectrum, bands that previously had not been feasible for carrying mobile telecommunications services. On the supply side, relaxing the spectrum constraint permitted an increase in the number of operators in the market, with beneficial effects on service quality and prices for users.

The EU’s new regulatory framework for electronic communication was adopted in 2002. The framework is meant to lay the groundwork for harmonising regulation in the EU/EEA, reduce entry barriers and facilitate sustainable competition for the good of users. The Commission has issued a list of the product markets it deems relevant in the markets for electronic communication. In this report we have focused on two of these markets:

  • Market 15: Access and call origination (MO) on mobile networks. This market includes voice and SMS1 on 2G and 3G networks.
  • Market 16: Voice call termination (MT) on an individual mobile network. The market comprises voice call termination on a mobile network and interconnection products and services necessary for the handling of incoming traffic.

A mobile operator can offer mobile services to end users either by producing the service on its own mobile network or by purchasing all or part of the service from a mobile network operator (MNO). In the case of national roaming (NR) an MNO purchases access to mobile networks in areas where the MNO itself does not have geographical coverage. Access to NR is typically important in the establishment phase of a new MNO. A mobile virtual network operator (MVNO) purchases radio access from an MNO and produces the rest of the mobile service itself. A service provider (SP) purchases basic mobile services from an MNO and resells the service in its own brand.

In this report, we shall try to compare the development of competition in the Nordic mobile markets by comparing the changes in, and level of, retail prices and market concentration. Although this may provide an indication of the differences between the Nordic countries, it does not provide an exact measurement of the development of competition.