Annual Report 2007 - Company Description Market and Customers: Market Regulation
Regulation is part of the market environment in which we operate and we need to adapt to any changes. As a strong player in many markets, TeliaSonera is significantly impacted by alterations in regulation, since these can change our business conditions. Our standpoint is that in markets where more than one player can, or ought to be able to, invest, regulation is not needed.
The telecom market remains a regulated market. The latest and most important development in regulation is the proposals for a "Revised regulatory framework for electronic communications" published by the EU Commission in November 2007. Following decisions by the Council of Ministers and the European Parliament the revised framework is expected to be implemented in Member States by 2010, and is including following topics:
Frequency allocation
The proposals include a new market-based strategy for the allocation of frequencies with increased flexibility in the use and trade of frequencies.
Functional separation
The Commission also has proposed to provide regulatory authorities with the additional remedy of functional separation. It implies that authorities would have the power to require market dominant operators to separate their access network activities without divestiture of assets, as an exceptional obligation subject to Commission oversight. The Swedish government has stated its intention to propose Swedish legislation on functional separation already in 2008. For TeliaSonera, it is of utmost importance that such legislation makes it possible for us to retain operational and financial control of all our activities in Sweden.
EU regulator
Another proposal is the establishment of a regulatory authority for electronic communications at the EU level, primarily with an advisory role towards the Commission. The present national regulatory authorities will remain unchanged.
Recommendation on relevant markets
The Commission also has published a revised recommendation concerning markets that may be subject to sector-specific ex ante regulation. The revised recommendation entails fewer markets for the national regulatory authorities to analyze than the previous recommendation from 2003. TeliaSonera's opinion is that sector-specific regulations, particularly on the developed Nordic markets, should gradually be withdrawn in order to stimulate investments and innovation, and that the telecom sector should eventually only be regulated by general competition legislation.
Network neutrality
In the US there is a debate on network neutrality concerning the "openness" of the Internet. The debate relates essentially to the question of whether a network should be "neutral" to the content flowing through it, or whether a network provider could offer different levels of quality-of-service for this content.
In Europe, the Commission has concluded that the sector-specific regulatory issues raised in the net neutrality debate concern essentially barriers for competition that can be effectively addressed by the national regulatory authorities, NRAs, under the regulatory framework where appropriate. The competitive markets together with the current provisions on access and interconnection, should therefore be sufficient to protect "net freedoms" and to offer a suitably open environment for both European consumers and service providers. However, the Commission has proposed that the NRAs should be given the power to intervene if the quality of IP networks was to be degraded below acceptable levels.
"We operate in one of the world's most rapidly changing industries."
Lars Nyberg, President and CEO, TeliaSonera
We are living in an all-communicating society. We spend more time communicating with friends, colleagues and customers at the same time as new technologies are gaining ground as means of carrying our communications.
The demand for being "always-on", and expectations on others, friends as well as companies, stores and government offices, to always be available is growing simultaneously. Demand for capacity is virtually unlimited now and in the future.
TeliaSonera believes that fixed lines will be the most efficient technology for many years to service fixed locations, i.e. homes and offices, in regions where fixed networks already exist. Complementary wireless technologies are being explored to support areas where economies are not supporting fixed network presence. In this context, an operator such as TeliaSonera is faced with both numerous opportunities and challenges.
The market is growing as more customers use a wider range of services, such as mobile Internet, TV over broadband, music downloading and online socializing. The increased usage generates a growing amount of data in the form of images, sound and data, to be transferred at higher and higher speeds. In parallel, customers are growing less content with being able to access the Internet just from the office or from home, but rather want to connect anytime, anywhere.