Vodafone 2002 Annual Report Download - page 26

Vodafone Group Plc Annual Report & Accounts and Form 20-F Information on the Company24
Central Europe Region
Germany
Current German telecoms regulation requires all network operators to allow
interconnection of their public telecommunications networks with those of other
carriers. Cost orientation of interconnection prices applies only to dominant
operators on the relevant market. The Regulator of Telecommunications,
(“Reg TP”), has not declared any of the four German GSM mobile network
operators as market dominant in the interconnection market. In November 2001,
following pressure from the European Commission, the Reg TP published a
commitment in its Official Journal stating that it would use the current EU SMP
test (with a 25% market trigger) for investigating market dominance. Previously,
the Reg TP used a 33% market trigger as prescribed under German Competition
Law. At the date of this report the Reg TP has not begun any market dominance
investigation in the mobile market since this change.
Other countries
Poland and Hungary, as possible EU accession countries, are required to
implement EU legislation into national law. To meet accession criteria, these
countries are in the process of implementing the current EU regulatory
framework. The European Commission has advised EU accession countries that
they will also be required to implement the new EU regulations. The Polish NRA
has postponed the required obligation to launch commercial 3G services by
licenced operators by a year (i.e. not until January 2005). Hungary has made no
announcements regarding the award of 3G licences.
Switzerland, although not part of the EU, is considering implementing parts of
the new EU regulatory framework for the purposes of “European compatibility”.
The Swiss Competition Commission is expected to investigate mobile termination
charges during the course of 2002.
Southern Europe Region
Italy
Telecom Italia Mobile (“TIM”), Omnitel Vodafone, Wind Telecommunications
(“WIND”), ISPE and Andala were awarded 3G licences in February 2001.
The Italian Government has, since the award of the 3G licences, extended the
licence duration term from fifteen to twenty years, with licences now expiring on
31 December 2021. GSM network operators are obliged, under the terms of
their 3G licences, to offer GSM national roaming to the new entrant 3G operators
(ISPE and Andala). Only TIM and Omnitel Vodafone, the designated SMP
operators, are required to offer GSM-3G national roaming at cost-oriented
pricing.
TIM and Omnitel Vodafone have been designated as operators with SMP in
both the mobile and interconnection markets since 1999. Following this
determination, the Autorita per la Garanzie nelle Communicazioni (“AGCOM”),
established a maximum value for the mobile termination rates for TIM and
Omnitel Vodafone, based on a European benchmark. Since this decision, Omnitel
Vodafone and TIM have voluntarily reduced their mobile termination charges.
On 20 December 2001, AGCOM directed the mobile operators to prepare a cost
accounting model based on fully allocated costs for the years 1999 and 2000 as
an intermediate step for the adoption of a long run incremental cost model.
The results of the cost model are expected to be used as a reference by AGCOM
in its review of SMP operators’ charges. Separately, on 20 December 2001,
AGCOM launched a consultation on a possible price cap mechanism for mobile
termination charges of SMP operators.
Other countries
Mobile termination charges are subject to regulatory attention in other countries
in the Southern Europe region. In January 2002, the Portuguese NRA issued a
decision which will reduce fixed to mobile termination charges to be applied by
mobile operators, and in Spain, the NRA is working on a cost-accounting model
with a final decision on adjusted mobile termination charges expected in
September 2002. The Greek NRA is currently carrying out an investigation on
mobile termination charges with a decision expected before the end of 2002.
Both Spain and Portugal have postponed the date that 3G licensed operators are
required to provide commercial 3G services until 1 June 2002 and 31 December
2002, respectively. The Romanian Government intends to award three 3G
licences in June 2002.
Romania and Malta, as possible EU accession countries, are currently
implementing EU legislation into national law.
Americas Region
United States
US mobile, paging and PCS licences are issued and regulated by the FCC.
In addition, US mobile operations are subject to regulation in the states in which
service is provided and to local regulations. States are preempted from regulating
mobile, PCS and paging rates and market entry but may regulate certain other
terms and conditions of service. The location and construction of mobile service
facilities are also subject to state local zoning, land use and other local regulation
and fees, although federal law does limit local discretion in this area.
A discussion on Verizon Wireless’ application for 1.9 GHz licences can be found
under “Business Activities – Mobile Telecommunications – Geographic operations
– Americas”above.
Asia Pacific Region
Japan
The Japanese market has been liberalised in stages over the last 15 years.
Nippon Telegraph and Telephone Corporation (“NTT”), which was privatised in
1985, still has a leading market position within Japan. It partially demerged its
mobile subsidiary, NTT DoCoMo, in 1992, and DoCoMo continues to enjoy a
leading position in the mobile telecommunications service market. In 2001, the
Japanese government embarked on a two-year programme of economic reform,
underpinned by review obligations contained in the Telecommunications Business
Law. There are a variety of regulatory and policy issues under consideration,
including fixed-line interconnection charges on NTT’s networks, regulation of the
mobile sector, competition guidelines, administrative arrangements and universal
service. However, since the main round of consultations will not conclude until
the second half of 2002, it is not yet clear how far the consultations will result in
substantive changes to the regulatory environment.
Information on the Company continued