Competition in South East Europe

1
Competition in South East Europe

• Benefits are the same for all countries
• Challenges might differ from country to country

2
Why a reform?

• WTO commitments
• EU membership
• The welfare of the citizens

3
WTO obligations

• Depends on commitments made by the country
• As a EU Member, the country must adhere to
  commitments made by the EU

4
Obligations to the EU

• Accession countries are committed to implement
  all EU legislation.
• EU does not accept any special or exclusive
  rights within electronic communication

5
The welfare of the citizens

• The reform must be implement for the sake of the
  country, not primarily because of international
  commitments.
• Citizens welfare is the objective behind the EU
  policy

6
Citizens welfare

• Economical reasons
• For the private economy
• For private business
• Economic growth
• Social reasons
• Private contacts
• Access to information

7
The objective of the reform

• The reform must be based on the determination to
  improve the situation in the country, rather than
  fulfilling international obligations.
• Only a well defined objective can safeguard a
  successful implementation.
• It is the implementation that counts.

8
Challenges

• Regulatory
• All the BUTs
• These are often by far more difficult to deal
  with than the regulatory challenges

9
Some regulatory challenges (1)

• Any country planning to become a member of EU
• must focus on the EU legislation.
• Problems for accession countries with the new EU
  package
• EU has spent 10 years of gradual evolution
• But note,
• New package is an evolution of previous
  legislation, not a replacement as such.

10
Some regulatory challenges (2)

• Definition of relevant markets
• (art 15 Framework Dir)
• The Directive prescribes cooperation with Member
  states and the Commission, a cooperation that is
  not formally open to non-Members.

11
Some regulatory challenges (3)

• USO
• EU Directive puts obligations on Member States
• but
• Includes also restrictions on how to deliver.

12
USO, continuation

• How to put the needs of the individual country
  into the context of the EU legislation
• Remember
• A universal service scheme by itself does not
  drive economic development. It prioritises the
  available funds for network development to
  achieve social goals rather than economic goals.
  This policy can be in conflict with the objective
  of economic growth.

13
Other Potential Challenges, the BUTs

• Economical interest
• Political interests
• Lack of understanding
• Fear of unemployment
• Bureaucracy at national level
• Bureaucracy at local level
• Corruption.
• Lack of experience
• What is competition? Never heard of that
• Will not work.
• Network will collapse
• New entrants are not interested in good
  services
• Lack of capital
• No risk capital
• Might loose my job
• Might loose my influence
• An unlimited list of relevant and irrelevant
  arguments, often never publicly expressed

14

• Important to realise that
• Incumbents in South East Europe normally have a
  different position and role compared to former
  incumbents in US or some EU Member states.

15
In addition weak economies

• Economical interests in existing structure
• Political problems with rebalancing of tariffs
• Overstaffing within incumbent can result in
  unemployment
• The employment gains through new investments are
  not taken into account

16
In addition

• Bureaucracy in all levels of society
• Misguided trust in regulating technical issues
• Corruption is still a deterrent to investments

17
Potential conflict of interest

• Economical growth is a relatively long term
  perspective
• Versus
• Incumbent providing source of income to the
  State, today
• But has the present situation created welfare for
  the citizens?

18
Conclusion

• Introducing competition is
• Difficult But Necessary, not primarily to please
  EU, but necessary for any country that wants to
  develop and improve the situation for its
  citizens
• Implementation counts, not the policy as such