Minister of Transport and Communications Torild Skogsholm
European Regional Meeting on Fair Competition and Interconnection
Oslo
1 June 2004

Ladies and gentlemen,

A warm welcome to all of you participants in this European regional meeting on fair competition and interconnection, hosted by the Norwegian Post and Telecommunication Authority.

In my opening remarks I will firstly give a brief overview over the liberalisation process in the telecoms market in Norway, secondly identify the main drivers of the market. Thirdly I will highlight our political goals and the main characteristics of our regulation.

The gradual opening up of the telecoms market in Norway started in the middle 1980’s. The basis for public intervention changed as telecommunication, which used to be a scarce commodity, gradually became highly marketable and competitive. The market was opened step-by-step until it – in line with EU-regulation – was fully opened for competition six years ago – January 1st 1998.

Our incumbent operator, Telenor, used to be an ordinary state agency 100% owned by the state, responsible for securing basic telecoms services to the Norwegian population. The company’s status and relations to the state has gradually changed, and Telenor is now a listed company, but the state is still the largest owner. The state ownership was recently reduced to 54%.

The market has changed dramatically, and statistics show that Telenor’s share of the market has fallen to appr 67% in the total end-user market. For mobile, Telenor’s marketshare has been reduced to 56%. Prices have also fallen, and the prices in Norway are fairly low compared to the price level in other countries. Norway is, however, a sparsely populated country with a difficult topography, and investment costs per customer are relatively high.

There are two major network operators in the Norwegian mobile market, Telenor and NetCom. There are many service providers who operate as resellers of traffic and subscriptions for NetCom and Telenor. The service operators do not have their own networks, but they have their own customer/billing systems. Tele 2 and Chess are the service providers with the largest market shares now (appr 9% together). Three operators have an UMTS licence (3 G); Telenor, NetCom and Hi3G.

It is important to identify the main drivers of the market in order to better understand the dynamics of liberalisation:

• The convergence between different technologies (digitalization). Telephony, data and broadcasting can now be transmitted through the same networks.
• The economic development in the telecom industry (after some hard times we now see a more positive trend)
• The industrial development – restructuring of the industry (organisational convergence) – Telenor active in all segments incl TV/digital TV
• Globalisation – for Norway especially the development of an European marketplace (level playing-field)
• The extremely dynamic technological development of the telecommunication/ICT sectors (3 G, EDGE etc)
• Regulatory development, evolving gradually from sector specific to ( in the future) competition law

Before I give a brief description of the Norwegian regulatory framework, I will share with you the political goal for our work in this field in Norway. The most important goals are clearly linked to consumer needs: Norwegian consumers shall have access to:

• a wide range of services and products
• at low prices
• early introduction to new technologies
• innovation

You will probably have noticed that COMPETITION is not mentioned as one of the goals. This is because we see competition as an instrument - a means of acheiving these goals, not as a goal in itself. This is an important distinction, which is also quite controversial.

The Norwegian Parliament passed a new law on electronic communication in 2003. This law is based on the new EU regulatory framework on electronic communication, which has been included in the EEA-agreement. The new law is closer to competition law than the former telecommunication regulation. As the different markets in the ICT/telecoms sectors become more mature, this regulation will gradually give way to ordinary competition regulation.

The main characteristics of the regulation are:

• Technologically neutral. The Electronic Communications Act covers all electronic infrastructure, including broadcasting
• Asymmetric. Market players with significant market power are subject to stricter regulation than other players
• Ex ante. Regulatory means are used to prevent the abuse of market power (as opposed to ex post regulation where sanctions are used after such abuse has been detected) – typically cost-oriented prices
• Open. Access to network and services must not be restricted, except for reasons of general, public interest.
• Objective and transparent. Conditions for access must be based on objective criteria, they must be transparent and published, and they must not discriminate against any actor in the market
• Universal Service Obligations are included in the obligations which Telenor is subject to, according to the law. Telenor has been, and is, obliged to offer such services since it is the only SMP actor in the fixed line market. However, other providers may at a later stage be involved.

When it comes to the issue of interconnection operators of public communications networks has a right and an obligation to negotiate interconnection with each other for the purpose of providing publicly available electronic communications services. However, if the Regulatory Authority finds it necessary for securing “all-to-all” communication, obligations can be imposed on any provider.

You will have presentations and discussions on these subjects during the meeting. Let me assure you that it is my firm belief that the new European regulatory framework on electronic communications – that is implemented in the Norwegian legislation – will be a good basis for the fulfilment of our political goals for the sector.

The Agenda for this three days meeting looks very promising, and I wish all participants a beneficial stay in Oslo.

Thank you.