Please cite this paper as: OECD (2014-11-06), “Wireless Market Structures and Network Sharing”, OECD Digital Economy Papers, No. 243, OECD Publishing, Paris. http://dx.doi.org/10.1787/5jxt46dzl9r2-en OECD Digital Economy Papers No. 243 Wireless Market Structures and Network Sharing OECD FOREWORD This report was presented to the Working Party on Communication, Infrastructures and Services Policy (CISP) in June 2014 and the CISP agreed to recommend it for declassification to the Committee on Digital Economy Policy (CDEP). The CDEP Committee approved the report in October 2014. The document was prepared by Rudolf van der Berg, Hajime Oiso, Sukham Sung, Sam Paltridge and Agustin Diaz-Pines of the OECD’s Directorate for Science, Technology and Innovation. The section on the regulatory treatment of network sharing agreements was drafted by Brian Potterill of the United Kingdom Office of Communications. The section on the experiences of the United States was contributed by Walt Strack of the United States Federal Communications Commission, as were sections by Bengt G Mölleryd, Post and Telecom Authority, Sweden. Note to Delegations: This document is also available on OLIS under reference code DSTI/ICCP/CISP(2014)2/FINAL. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. © OECD 2014 Applications for permission to reproduce or translate all or part of this material should be made to: OECD Publications, 2 rue André-Pascal, 75775 Paris, Cedex 16, France; e-mail: [email protected] WIRELESS MARKET STRUCTURES AND NETWORK SHARING TABLE OF CONTENTS FOREWORD ................................................................................................................................................... 2 TABLE OF CONTENTS ................................................................................................................................ 3 MAIN POINTS ............................................................................................................................................... 5 INTRODUCTION ........................................................................................................................................... 7 COMPETITION BETWEEN MOBILE NETWORKS IN THE OECD ....................................................... 11 Designing mobile markets ......................................................................................................................... 11 Regulators reaction to reduction in number of operators ........................................................................... 13 IMPLICATIONS OF AN INCREASE OR DECREASE IN THE NUMBER OF MARKET PLAYERS ... 17 Benefits to consumers ................................................................................................................................ 17 Simplification of offers .......................................................................................................................... 17 Lower prices ........................................................................................................................................... 18 Roaming ................................................................................................................................................. 20 Implications for mobile network operators ................................................................................................ 21 Revenue levels and market structure ...................................................................................................... 22 Recent experience in OECD countries with mobile market participation ................................................. 25 Australia ................................................................................................................................................. 25 Austria .................................................................................................................................................... 29 Brazil ...................................................................................................................................................... 32 Canada .................................................................................................................................................... 33 Colombia ................................................................................................................................................ 34 France ..................................................................................................................................................... 34 Israel ....................................................................................................................................................... 40 Luxembourg ........................................................................................................................................... 43 Sweden ................................................................................................................................................... 45 United Kingdom ..................................................................................................................................... 48 United States .......................................................................................................................................... 53 MOBILE NETWORK SHARING ................................................................................................................ 58 Sharing of passive network elements ......................................................................................................... 58 Sharing of active network .......................................................................................................................... 60 Core network sharing ................................................................................................................................. 61 Roaming ..................................................................................................................................................... 62 Regulatory treatment of network sharing agreements ............................................................................... 64 Network sharing in the United Kingdom ................................................................................................... 66 Drivers for network sharing ....................................................................................................................... 65 Regulatory considerations .......................................................................................................................... 67 MOBILE VIRTUAL NETWORK OPERATORS AND NETWORK SHARING ....................................... 71 OECD DIGITAL ECONOMY PAPERS 3 WIRELESS MARKET STRUCTURES AND NETWORK SHARING ANNEX 1. NUMBER OF OPERATORS PER COUNTRY AND DATE OF LAST CHANGE ................ 75 ANNEX 2. MOBILE MERGERS IN OECD COUNTRIES......................................................................... 78 NOTES AND REFERENCES ...................................................................................................................... 79 Tables Table 1. Expected examination by public authorities on merger or acquisition of MNO, selected OECD countries ......................................................................................................................................... 14 Table 2. Challenger brands influence in international mobile roaming............................................... 21 Table 3. ACCC price monitoring......................................................................................................... 27 Table 4. Mobile market share in Brazil (%), June 2014 ...................................................................... 32 Table 4. Developments in the telecom market in France .................................................................... 37 Table 5. Competition, spectrum and network development in Sweden .............................................. 46 Figures Figure 1. Average monthly mobile expenditure, France ....................................................................... 19 Figure 2. Price index, Austrian mobile prices ....................................................................................... 31 Figure 3. Index of French mobile telecom prices ................................................................................. 36 Figure 4. Percentage of customers using a subscription without commitment period .......................... 39 Figure 5. Typical mobile prices and residential spending on mobile services ...................................... 51 Figure 6. United Kingdom mobile spectrum holdings .......................................................................... 52 Figure 7. Shared facility operated by JMCIA in the subway ................................................................ 61 Figure 8. Types of MVNOs .................................................................................................................. 71 Boxes Box 1. The Netherlands experience with mergers and co-ordination ........................................................ 15 Box 2. The role of a new entrant in driving competition