Study: Customers suffer where regulators are weak

nahdoic

Study: Customers suffer where regulators are weak

IDG News Service 12/2/05

Nancy Gohring, IDG News Service, Dublin Bureau

Customers pay more and are offered fewer telecommunications services in European countries where regulators have done a poor job of weakening former monopolies, according to a report commissioned by the European Competitive Telecommunications Association and released on Friday.

The report, conducted by Jones Day and Strategy and Policy Consultants Network Ltd., showed that investment in telecommunications, which leads to better services for end users, is lower in countries where there is little competition. For example, in the U.K., where the study found that the regulator is independent and has created effective regulations, telecommunications companies invest US$184 per capita. By contrast, in Germany, which tied with Greece as having the least effective regulatory environment, operators spend just $68 per capita. The incumbent has maintained a strong grip on the German market.

The report, which examined 16 countries, found that most regulators appear to be independent of the incumbent and the government. However, it concludes that state ownership in the incumbent, which occurs in Belgium, Germany, Greece, France and Portugal, presents a potential conflict of interest. Germany was singled out as a country where political interference in the regulatory environment is a concern.

Some regulators might do a better job if they could increase the fines they can hand out to operators that may break regulations, the report noted. The lack of effective fines is particularly problematic in Ireland, Hungary and Italy, the report found.

The report includes a scorecard that ranks countries by the effectiveness of their regulator. It was developed through a questionnaire that considered factors such as independence of the regulator, speed of the appeals process, speed of dispute settlement and existence of rules relating to price control and access. The U.K. received the best score, followed by Denmark, France and Austria. Germany and Greece tied for last place, with Poland and the Czech Republic scoring slightly better.

watty

Yet Germans get much, much better telecomms than us.

1) ISDN nearly standard for all users.

2) aDSL over ISDN rather than convert back to analog as per Eircom

3) One ISDN channel as a 64k "slow broadband always on" if they can't install aDSL.

4) Lower line rental.

Here apart from Eircom, in past Chorus & NTL ran rough shod over regulator knowing that the only real penalty of losing license would never be applied to TV because of political consequences. Chorus did lose Wireless phone license. Which hurt Chorus Wireless phone customers more than Chorus.

The "losing licence" early penalty should be dropped in favour of BIG BIG fines.

Appeals system weighted to much in favour of operator rather than regulator as if it is the Consumer.

Fergus

The actual report is available here:

http://www.spcnetwork.co.uk/uploads/Scorecard.pdf

In fact, Ireland comes 2nd overall:



However, they also point out:

"Ireland has an investment level [as a percentage of GFCF] significantly below the trend line, i.e., investment is significantly lower than would be expected given its performance in the Scorecard Report."

lucernarian

P. 35 is not suprising. We fared the worst in the regulation of LLU.

Fergus wrote:

However, they also point out:

"Ireland has an investment level [as a percentage of GFCF] significantly below the trend line, i.e., investment is significantly lower than would be expected given its performance in the Scorecard Report."

They later go on to indirectly explain this. They blame inflation for the discrepancies and basically claim that the accuracy of the investment vs. regulation graph is improved when inflation is taken into account.

I know we have a higher rate of inflation but that would not explain the large difference between Ireland and the UK in investment per capita.

Solair

ComReg should have held Chorus and NTL to their licence agreement and auctioned their licences for failure to comply. The excuses were ridiculous.

They were the alternative networks that would have driven competition and that did drive competition for DSL services in other countries (UK, Scandinavia, France and the US etc)

At least Chorus/NTL will now face serious consequences due to market forces if they don't roll out broadband this time. They sat on their backsides relying on BBC/ITV/C4 availability to differenciate them from sky digital. BBC and ITV are now available on sky, C4 will probabally follow suit. Also, major technological advantages on sky such as Sky+, better sound, HDTV in a few months etc etc will drive more people to satellite.

If cable's to survive as an industry here it will have to move beyond analogue and pathetic digital packages.

Ireland's a small market, so ComReg's role is even more fundemental than Offcom's. It's much easier for monopoly type situations and market problems to occur in a small market.

Fingers crossed things will improve!

eircom needs real competition!!

Sponge Bob

Solair wrote:

ComReg should have held Chorus and NTL to their licence agreement and auctioned their licences for failure to comply. The excuses were ridiculous.

The excuses that were ACCEPTED by Comreg were ridiculous. At the end of the day it is the regulators job to regulate and not regurgitate lies fed to them by operators.....be they incumbent or otherwise. I remember Doyle spouting crap about the Chorus fibre rollout at a conference as late as 2001 . She decribed Chorus fibre corridors that did not exist save in her addled mind and in Chorus PR bumf. She felt it was here job to spin the public the industries lies on behalf of the industry . This is still going on of course .

Then Comreg decided that the best solution for NTL and Chorus was to completely unregulate them so that Comreg could not be responsible for anything at all to do with either company, this happened in 2003 .

Tom Young

Fergus wrote:

The actual report is available here:

http://www.spcnetwork.co.uk/uploads/Scorecard.pdf

In fact, Ireland comes 2nd overall:



However, they also point out:

"Ireland has an investment level [as a percentage of GFCF] significantly below the trend line, i.e., investment is significantly lower than would be expected given its performance in the Scorecard Report."

Humm I think this data is stale:

The study of the EU telecom sector reveals that stricter (de?)regulation leads to greater investment, whereas monopolies limit economic performance.

The ranking according to the International Herald Tribune out of a possible 520 (based on various measures of the market) is:

Britain (430)
Denmark (386)
France (337)
Austria (334)
Ireland (313)
Sweden (302)
Italy (299)
Portugal (297)
Netherlands (289)
Hungary (276)
Spain (274)
Belgium (271)
Czech. rep. (234)
Poland (225)
Greece (213)
Germany (213)

The surprise here is that the German Telecom market, Europe's largest, is the least open to competition.


I believe this may be based on the Jones Day information.

Re: Above posters comment on Germany. While it will be no surprise to Urban and Peter, the steering committee of the BNetzA or RegTP (Like ComReg) is actaully a set of political appointees from the various bundeslande or states. From an engineering point of view your statement is correct, German's are generally better at electronic engineering and networks that Irish people or many other nations. Problem is that with a even more toothless regulator and an extremely unionised incumbent e.g. DTAG, the government is powerless to act. There is little independence in my view.

Recently DTAG threatened to sack or jeopardise 5K jobs if the government moved forward to regulate WBA and WUA markets over there. Funnily enough France Telecom did something similar.

Sometimes politics pays. Depending on where interest luy/lie

Tom.

WBA - Wholesale Broadband Market (Bitstream)
WUA - Wholesale Unbundled Access (LLU/ULL)

Relevant markets: 11 - WUA and 12 -WBA.;)