This is an analysis of the impact of mobile telephony regulation with regard to setting MTRs and their asymmetry on the development of the Polish telecommunications market.
The analysis was based on detailed market data for 2003-2009 and forecasts for 2010. The results indicate that:
- Gradual reduction of MTRs had a positive influence on the increase of competition in the market. It has lead to the drop in retail prices, including F2M calls, it has reduced barriers for mobile telephony development, it had a positive effect on service innovation and has improved allocation of resources. Contrary to some expectations, MTR reduction has not affected consumers negatively: "the water bed effect" has not been observed (that is the spread of negative effects over retail prices) and has not resulted in the drop in investment. MVNOs' activity has risen, on the other hand, which stimulated additional growth of mobile penetration. MTRs reductions have also eliminated adverse economic practices such as traffic termination in mobile networks through FCT gates and subsidizing mobile services by subscribers of fixed networks.
- Implementation of MTR asymmetry lead to successive positive effects. Competition has grown further while the degree of provider concentration in the mobile telephony sector has gone down. These developments resulted from the fact that new infrastructural operators entered the market, especially P4, which within its first 3 years of operation has gained a 10% market share. Proactive efforts meant to boost competitiveness contributed to a further drop in retail prices, emergence of new innovative voice services and non-voice solutions. Price discrimination for calls in the networks of new operators was the only negative effect of MTR asymmetry observed.
The results of MTR regulation are reflected by the following figures for 2006-2010 (2010 figures were forecasted based on data from the first two quarters of 2010):
- Call prices in mobile networks have dropped in the period analysed collectively by 65,4% (averaged annually they were 33,8% lower than in the "no MTR regulation" scenario);
- Prices of calls from fixed to mobile networks (F2M) have dropped collectively by 50,4% (averaged annually they were 30,2% lower than in the "no MTR regulation" scenario);
- Voice traffic in mobile telephony, averaged annually was 26,9% higher;
- The penetration of mobile services has gone up to 118% (1,8% more than in the "no MTR regulation" scenario which is approx. 800 k SIM cards);
- Social prosperity balance reached the level of 12,6 bln PLN.
The way chosen to implement MTR reductions (a glidepath towards cost-oriented prices) and MTR asymmetry (MTR reduction for incumbent MNOs) complies with the recommendations of the European Commission and regulatory practices of other EU countries.
Given the benefits of a direct reduction of negative influence of network effects and a reduction in price advantage of incumbent operators, it is recommended that the President of UKE should continue the policy of MTR reductions and asymmetry for new MNOs at least till the end of 2012. Current estimates of incremental costs of call termination in MNO networks leave considerable room for regulation - both for further reduction of MTRs as well as for asymmetry application.
The full text of the analysis is available in Polish.