implementation of the universal service obligation (uso) regime in albania: initial analysis and...
TRANSCRIPT
Implementation of the universal service obligation (USO) regime in Albania:
Initial Analysis and Results
ITU Regional Forum for Europe
Tirana, AlbaniaSeptember 7, 2012
Edgardo SepulvedaWorld Bank Consultant
2
Overview• “Snap-shot” of work to date in Phase I of implementation of
the universal service obligation (USO) regime in Albania– Phase I supported by World Bank Project to assist AKEP and MIICT
– Comprehensive analysis and preparation of USO Consultation Document to get the process going and to seek Stakeholder views, including with respect to the inclusion voice & broadband in USO, among other matters
• No conclusions yet - analysis, identify issues/options; series of open questions; subsequent documents shall include specific recommendations
– Goal: establish a framework multi-year plan with the objective that Albania make significant progress in becoming compliant in the implementation of the EU’s regulatory framework in relation to USO matters, while ensuring that it is done in manner that benefits Albania
– Work is on-going; analysis so far only a “snap-shot” and not final results• Presentation is sole responsibility of World Bank Consultant
– Outline• Legal & Policy Framework Universal Service (USD) in Practice
• Sector Development & StatusDiscussion & Issues
3
Legal & Policy Framework• WTO Framework
– Albania became a member of the WTO in September 2000
– With respect to universal service, the Reference Paper states:• …USOs will not be regarded as anti-competitive per se, provided they are
administered in a transparent, non-discriminatory and competitively neutral manner and are not more burdensome than necessary for the kind of universal service defined by the Member
• EU Framework– In context of Albania’s National Strategy for Development
and Integration (NSDI) and specifically the objective of integration with EU, review legal and implementation compliance of EU regulatory framework
• Universal Service Directive (USD)
• National Framework
4
USD - I• Scope and Principles
– Member-States (“MS”) should first rely on market results to achieve universal service objectives, and impose USOs only if market not meeting needs
• Availability of Universal Service– All MS shall ensure that all designated services are made available to all
end-users in their territory, independently of geographical location, and, given national conditions, at an affordable price
• Availability may be achieved by market, and supplemented by USO, if market not meeting objectives
• MS to determine approach, while respecting objectivity, transparency, non-discrimination and proportionality and minimise market distortions.
• USO Element: access and service at a fixed location• Ensure that requests for connection at fixed location met by at least one undertaking
• Support voice, facsimile and data at rates that are sufficient to permit functional Internet access, taking into account prevailing technologies used by the majority of subscribers and technological feasibility
5
USD - II• Other USO elements
– Directory enquiry services (“DES”) & comprehensive directories (“CDir”); Public payphones; Equivalency measures for disabled end-users
• Other Matters– Designation of undertaking to implement USO – universal service provider (USP)
– USO Social Tariffs – tariff packages which depart from normal commercial conditions – for low-income and other social groups
– Financial matters: Costing of USO, Request for compensation; Financing of USO
• Review of scope of universal service– Extensive debate on inclusion of broadband as designated service
• USO financing – if broadband included in USO, MS may use sector contributions to finance broadband ; if not MS, can still subsidize broadband, but only from State funds
– Current situation reflects “middle road” where MS have the flexibility, but not obligation to include broadband within USO scope, subject to the 50/80 Rule as guideline: EC considers that inclusion of broadband may only be appropriate where the data rate in question is used at the national level
– by at least 50% of all households and;
– by at least 80% of all households with a broadband connection
• To date, no MS has formally adopted broadband in their USO
6
National Framework• Main Policy Documents
• National Strategy for Development and Integration (NSDI)
• Cross-Cutting Strategy on Information Society
• Policy for Electronic Communications
• Draft National Broadband Plan
• Legal and Regulatory Framework– Law 9918 dated May 19, 2008 was intended to transpose the 2002 EU
regulatory framework– GoA intends to modify Law 9918 to reflect 2009 EU amendments
– Chapter V (Articles 25 to 30) of Law 9918 develops universal service concepts and transposes the main provisions of the 2002 USD
– No universal service provider has been designated to provide any specific USO element pursuant to Law 9918
• Nor has Albania determined that the market is meeting the needs of end-users for the USO elements
– Hence, certain provisions in Chapter V remain to be implemented
70%
10%
20%
30%
40%
50%
60%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
De
ns
ity (%
)
Fixed Density - 2000 to 2011
Albania
EU-12
EU-15
CPC-5
Sector developments from regional perspective by focussing on:• EU-15 countries that were MS prior to EU expansion in 2004• EU-12 countries that acceded to EU in 2004 and afterwards• CPC-5 are the five SEE candidate and potential candidate countries (CPC) Montenegro, FYROM, Bosnia and Herzegovina, Kosovo and Serbia
Fixed density in the EU-15 and EU-12 has declined. Fixed density in the CPC-5 countries has been stable, with about 28% for 2010. Albania has had a steady increase/recent stabilization in fixed density, at just over 10% in 2010 and 2011.
80%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
De
ns
ity (%
)
Mobile Density - 2000 to 2011
Albania
CPC-5EU-15
EU-12
There has been very significant mobile density growth increasing across all groups and resulted in a relatively converged mobile density of about 130% in 2010. Albania surpassed regional averages in 2008 and reached a mobile density of 183% in 2011
970%
75%
80%
85%
90%
95%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Co
ve
rag
e (%
)
Mobile Population Coverage - 2000 to 2010
Albania
EU-12
EU-15
CPC-5
Average mobile population coverage has converged to almost complete population coverage by 2010, including in Albania.
100%
5%
10%
15%
20%
25%
30%
35%
2004 2005 2006 2007 2008 2009 2010 2011
De
ns
ity (%
)
Fixed Broadband Density - 2000 to 2011
CPC-5
EU-12
EU-15
Albania
Average fixed broadband density has increased from 2004 to 2011 and reflects significant fixed broadband density growth over the period.
11€0
€2
€4
€6
€8
€10
€12
€14
€16
€18
€20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
€/m
on
th
Fixed Residential Monthly Fee (€) - 2000 to 2012
CPC-5
Albania
EU-12
EU-15
In context of rebalancing, the price of fixed residential fee has increased in EU-15 to about €16 in 2010. EU-12 countries increased to about €10 in 2010. Have also increased in CPC-5 and Albania, to about €7 and €4 in 2012 – both are still below EU-15 and EU-12 averages.
12
USD in Practice: Designation of USPs• EU-27
– Majority of MS have designated undertakings (operators) to carry out some or all USO elements
– Minority of MS have not designated any undertaking for any USO element
• NRA have determined that elements provided under market conditions and therefore not necessary to designated any undertaking
• CPC-9– CPC-9 group is the full group of CPC countries and is made up of the
CPC-5 group plus Croatia, Iceland, Turkey and Albania
– Four of CPC-9 group have carried out USP designations in line with USD:• Croatia, Iceland, Montenegro and FYROM
– In remaining five countries (Kosovo, Albania, Serbia, Turkey, Bosnia & Herzegovina) no USP designations have been undertaken in line with USD
13
USD in Practice: Designation of Services• EU-27
– No USO element designated where no USP designated
– Some MS designated all USO elements, while others fewer
– Access at a fixed location most-commonly designated element• EU-15 countries have generally designated incumbent fixed operator• Given differential development of mobile and fixed networks, Czech Republic
and Romania have determined that certain fixed-location services provided by mobile networks also meet the criteria for the service at a fixed location
– Other Elements– About half a dozen MS have not designated Public payphones (because
declining use) or DES/CDir (because commercially available)
• CPC-9• Most common is that all four USO elements have been designated
• Access at a fixed location also dealt with depending on national conditions; sometime fixed incumbent, sometimes, as in Montenegro, where NRA determined services provided by mobile networks meet USO criteria and has designated a mobile operator as the USP
14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Geographic averaging 105 105 154 77 57 3 1 0 3 1
Payphones 14 15 21 24 19 14 14 12 14 14
Social Tariffs 9 22 35 36 39 37 36 30 37 36
Directory 0 0 0 0 0 0 0 0 0 0
Intangible Benefits 0 0 -95 -84 -82 -23 -22 -21 -23 -22
TOTAL 129 142 124 53 33 31 30 27 30 29
USD In Practice - Table shows the absolute and relative manner in which the different USO elements have evolved over the relevant period for France (in € millions)
In the early part of the period (2000-2002, for instance), the largest USO element was related to geographic averaging. These were geographic areas where the underlying cost are higher than the national average price and hence, in order to maintain affordability the USP was compensated. However, this component has effectively been eliminated by the end of the period (2007-2009) as a result of the general rebalancing and specifically the increase of national monthly rentals. Therefore, the largest current component is now Social Tariffs
15
Discussion & Issues: Principles
• Main principles being considered for the implementation of USO Regime in Albania– First, Market Solutions. Ensure markets are working well so that these
may provide the services to end-users. Impose USO only when markets not working well.
– Any intervention must be proportionate with national conditions. Any proposal be simple in implementation and consider sequenced approaches
– USD should be implemented in a manner reflective of national sector status. Includes considering which services are being provided and what kind of networks are best placed to implement USO
– Legal Certainty and Procedural Correctness. Implementation of USOs often subject of administrative delays/judicial appeals and hence legal certainty and procedural correctness is paramount
– Prospective analysis and planning. Objective is for future compliance – therefore, analysis and planning should be prospective
• For brevity, only cover one USO element in what follows
16
Access & Service at Fixed Location - I• Five main aspects to consider
– #1: Other similar countries determined that (certain) services provided by mobile networks also meet criteria
– #2: Coordination/sequencing with further/full rebalancing of incumbent fixed tariffs and possible access deficit
– #3: Social Tariffs – important to distinguish different types:• USO Social Tariff. Tariff option/package departs from normal
commercial conditions only available to designated groups provided by designated USP based on USO; USP eligible for USF compensation
• Other Social Tariff. A tariff option/package that departs from normal commercial conditions that is only available to designated social groups and provided by an undertaking based on a requirement, obligation or other arrangement that is not a USO, for which the undertaking may or may not be eligible for compensation from a source other than a USF
• Low-Usage Tariff Package. A tariff option/package that is provided under normal commercial conditions and is available to the general public and provided by an undertaking voluntarily, for which there is no USF or other external compensation
17
#4 – Affordability. Evolution of low user mobile package based on OECD methodology (30 outbound calls): CPC-5 countries first declined and remained around €5.50-6.00. In contrast, mobile prices in Albania were very high, but have decreased so that in 2012 they are at the same level as the CPC-5 average.
€0
€2
€4
€6
€8
€10
€12
€14
€16
€18
€20
€22
€24
2007 2008 2009 2010 2011 2012
€/m
on
th
OECD Low-user mobile basket (€) - 2007 to 2012
CPC-5
Albania
18
CPC-5 low-usage/Social Tariff package of €3.05 is 44% of the standard average of €6.94. Albania’s standard residential package of €3.79 is relatively low. In Albania, the Low-Usage Residential Package (€2,06) have correspondingly lower monthly fees than the standard package of €3.79
With respect to one metric of affordability, price-to-income (monthly per person GDP), shows that for Albania, the Low-Usage/Other Social Tariff at €2.06 requires only 0.9% of monthly GDP to purchase while the standard package requires 1.6%. This is lower than CPC-5 of 2.6% and 1.1%, respectively.
For mobile, OECD low-user package is now comparable in price to fixed, with mobile package of €5.50 requiring about 2.3% of income.
Price/GDP comparisons for selected fixed and mobile services/packages (€) (March, 2012)
Standard Residential Fixed Monthly Fee
Low Usage / Social Tariff Residential
Fixed Monthly Fee
OECD Low-User Mobile Package
Monthly Fee(€)
% of GDP/pop
Monthly Fee(€)
% of GDP/pop
Fee(€) % of
GDP/pop
CPC-5 Average 6.94 2.6% 3.05 1.1% 5.68 2.0%
Albania 3.79 1.6% 2.06 0.9% 5.50 2.3%
19
Access & Service at Fixed Location - V• #5: Access to Broadband
– Broadband currently not included as a mandatory USO element in the USD or in Law 9918
• EC set national flexibility for inclusion of Broadband– To ensure consistency and proportionality, established guidelines of
50/80 Rule for inclusion of Broadband
• Albania`s fixed broadband penetration does not currently meet the 50/80 Rule – perhaps in 3-4 years?– Would probably require ≈ 13-15% broadband density to meet 50%
of households component of Rule
• Article 32 of USD allows financing of broadband initiatives outside USO arrangements– Any net cost of broadband initiatives to be financed by State funds
• GoA has pursued a number of such initiatives, including PPP, in Draft National Broadband Plan
20
Access & Service at Fixed Location - VI• Issues/open questions related to designation of this USO
element on which Consultation Document seeks input:– Is market meeting needs now or in medium term?
• Designation not necessary if market is meeting needs• If not, what measures to encourage market to meet needs?• If not, whether USO intervention now or later is appropriate
– Whether any USO regime should be started before further or full rebalancing is achieved?
– Scope Components• Traditional fixed wired technology or a technology-neutral approach to
designation that also allows some services provided by mobile networks to meet USO criteria?
• Whether the geographic coverage of the obligations will focus on currently-served areas and/or on unserved areas?
• Whether or not to include USO Social Tariffs in the USO?• Whether or not to mandate access to Broadband in the USO?
21
Conclusion - Next Project Steps• Snap-shot” of work to date only - not final results
• Next week discuss current work:– Meet with AKEP/MIICT
– Meet with private sector Stakeholders
• Based on feedback, finalize USO Consultation Document over next weeks
• In near-mid term, AKEP issues final version of the USO Consultation Document
– Allow Stakeholders opportunity to comment in writing
• Review Stakeholder comments
• Prepare Consultation Report and set out next phases of process
