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Next steps in telecom liberalisation in Denmark
Telecommunications Policy 24 (2000) 369}376
Policy forum
Next steps in telecom liberalisation in Denmark J+rgen Abild Andersen* National Telecom Agency (NTA), Holsteinsgade 63, 2100 Copenhagen, Denmark
Abstract Since 1995 Denmark has held the political vision that Danish telecommunication customers should be o!ered the world's best and cheapest telecommunication services. The means to reach this goal has been the establishment of comprehensive liberalisation of the sector; and the main challenge has been to establish free access to, and real competition among the operators in the market. 2000 Elsevier Science Ltd. All rights reserved. Keywords: Denmark; Liberalisation; Network society
1. Results achieved One of the main purposes of the regulation so far has been to break open the market and create competition on basic telecommunications services on the "xed network. Free competition has been ensured through the establishment of a class licence system in the "xed network area, which has made it possible for all operators to establish themselves as providers of telecommunications network and services in Denmark without having to obtain individual licences or to be registered with the National Telecom Agency (NTA). Real competition has been promoted through the extended scope of interconnection regulation in Denmark in order to strengthen the possibilities for competition on various telecommunications services. The interconnection regulation in Denmark comprises both switched interconnection, lease of all types of infrastructure (leased lines, raw copper, raw "bre and coaxial cables), and all forms of service provision agreements. 2. Implementation of competition Competition for the "xed network market so far has primarily been based on access services such as carrier selection and carrier pre-selection. With the unbundling of the local loop and the * Corresponding author. Tel.: #45-35-45-00-00; fax: #45-35-45-00-10. 0308-5961/00/$ - see front matter 2000 Elsevier Science Ltd. All rights reserved. PII: S 0 3 0 8 - 5 9 6 1 ( 0 0 ) 0 0 0 2 7 - 6
370
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
possibility for service provision agreements, competition has now emerged on subscription services. So far the provision of subscriptions has primarily been based on service provider agreements (resale). As illustrated in Table 1, there has been signi"cant growth in the number of interconnection agreements. At the beginning of 2000, 47 providers of telecommunications networks and services had concluded an interconnection agreement with the incumbent operator Tele Denmark. 3. Consequences for customers As competition has developed, the price per minute on the market for "xed network telephony has dropped considerably during the last few years, especially for international calls. As shown in Table 2, prices for national calls have decreased by 22 percent since 1990 and prices for international calls have decreased by 45 percent. Mobile market competition has also increased as the number of licensed network operators has grown. At present there are four licensed mobile network operators and two service providers o!ering mobile telecommunication services in Denmark. Due to competition among these operators and service providers consumers have experienced considerable decreases for mobile call prices. Since 1995 mobile prices have been reduced by up to 80 percent. In 1995 the price for a mobile call at peak-hour was approximately 0.32 Euro per minute; now the price is about 0.07 Euro per minute.
4. Investments in the telecommunications sector As liberalisation and competition have developed some concern has been expressed, in particular from the incumbent, Tele Danmark, regarding the risk of stagnation in the level of investments in Table 1 Interconnection agreements (number of providers) 1995
1996
1997
1998
1999
2000
2
7
15
23
45
47
Source: Status '98 and Status '99, National Telecom Agency. Excl. service provider agreements. At the beginning of the year.
Table 2 National and international tari!s (adjusted with respect to in#ation) Index
1990
1995
1999
National International
100 100
87 84
78 55
Source: Tele Yearbook 1998, National Telecom Agency Denmark.
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
371
the telecommunications sector. It has been claimed that a tough regulatory regime removes the incentive to invest. Fortunately these concerns have not been demonstrated in the market. As illustrated in Table 3, the yearly investments in the sector in Denmark have more than tripled since 1995, and there is every indication this will continue. The growth of investments is primarily the result of new operators' investments in telecommunication infrastructure, but it is worth noting that also Tele Danmark's investments in telecommunications since 1995 have increased signi"cantly (by approximately 50}60 percent). Before liberalisation the level of investment in the sector did tend to show some stagnation. The increase of investment may be considered an indication of the market's con"dence in the liberalisation process in Denmark and of the objectivity and reliability of the regulatory regime.
5. The role of the National Telecom Agency (NTA) So far the main challenge for the NTA has been to promote and ensure fair competition in the market, especially on basic telecommunications services. Further the NTA has been assigned responsibility for ensuring the necessary protection of consumers and optimal utilisation of limited resources (spectrum and numbering management), and for providing professional advice to the Minister of Research and Information Technology. Although competition in the telecommunication sector has increased, continued regulatory attention to these challenges and tasks is essential for the continued development of telecommunication markets. Tele Danmark still holds a dominant position in the market for "xed-network services, and due to its control of bottleneck resources it is imperative that the market continue to be regulated on the basis of sector speci"c legislation in order to ensure real competition.
6. New policy initiatives: 99The Danes admission ticket to the network society:: As technology changes have taken place with increasing rapidity and new demands for convergent services and bandwidth have increased, a need to adjust the role of regulation has emerged. In September 1999, a new political framework agreement on telecommunications policy aims was reached between the Minister of Research and Information Technology and a majority of the political parties in Denmark. Under the heading, `The Danes admission ticket to the network society'' innovation and development of telecommunications infrastructure and services were
Table 3 Investments in the telecommunications sector 1994}1998 (DKK million) 1991
1992
1993
1994
1995
1996
1997
1998
2512
2694
2281
2535
2704
4100
5872
8770
Source: Status '99, National Telecom Agency Denmark.
372
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
identi"ed as constituting the basic foundation for Denmark's participation in the Network Society. Accordingly, it is recognised that the development of the telecommunication sector forms the basic condition for Denmark's bene"ting from, and participating in the growing Network Economy. In the light of technological developments and the growth of the Network Society, the agreement outlines a number of new goals, including: E that all Danes should be ensured access to modern communication technologies, E that the market should meet the ever-increasing demand for larger bandwidth, E that competition in the telecommunication market should lead to innovation and growth. The political vision of `the best and cheapesta is not only maintained, it is expanded. In order to meet this challenge, it is agreed that the present asymmetric regulation * which implies access for the competitors of the incumbent to a wide number of interconnection products * is retained for the time being. In this connection the asymmetric regulation of interconnection prices is to be further strengthened. The political agreement is presently being followed up by a comprehensive review of the telecommunication legislation, which is expected to pass the Parliament before the summer 2000.
7. New spectrum policy initiatives In October 1999 a special political agreement on new frequency policy initiatives was concluded. One of the main focus points of this agreement was to enable the establishment of alternative infrastructures in the access network by public tendering of frequency resources in order to strengthen competition to the bene"t of end-users. This should make it possible to establish wireless access networks capable of handling services that require large bandwidth. In December 1999 the overall framework and guidelines for the various tender processes were determined by the Parliament (Act no. 1996 of 29 December 1999 amending the Act on Radiocommunications and Assignment of Radio Frequencies and the Act on Public Mobile Communications). In order to increase competition on broadband services for local access, frequencies are to be licensed for "xed wireless access (FWA) technologies, and subsequently frequencies are to be made available for third generation mobile networks. Additional frequencies are to be allocated for second generation mobile networks in order to increase competition in the mobile market. Finally frequencies are licensed for emergency purposes and other forms of speci"c communications requirements (such as digital trunked land mobile networks). The public tenders for frequencies for these technologies are managed by the NTA.
8. New challenges for the regulator Political agreements and initiatives as well as the review and amendments to telecommunication legislation create new challenges for the NTA. With the described political initiatives, including the strengthening of interconnection legislation and legislation on frequency tenders, a basis has been created to stimulate the development of competition for broadband access services.
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
373
9. Strengthening interconnection regulation So far the provision of ADSL services based on access to raw copper has not yet fully exploited the potential of rapid introduction of high-speed and broadband access o!ered by this technology. In order to promote competition in the short-term in this area the overall cost related to the use of the copper wires must be reduced. This implies that the entry prices and the prices for collocation should be reduced. In order to determine pricing for lease of physical infrastructure in the access network and for collocation, the new legislation is expected to require the NTA to develop a Danish LRAIC costcalculation model. It is expected that the work on drawing up the price regulation will be completed in time for speci"c interconnect prices to be set by the NTA before the end of 2002. The LRAIC model will also be used for determining pricing for switched interconnection, in order to sustain competition on basic telecommunication services. During the transitional period, regulation based on a combination of cost-calculated prices and prices based on best practice will be applied. In light of experience gained in developing the LRAIC models referred to above, and an evaluation of competition development, it will * at the political level * be decided whether it is desirable to develop an LRAIC cost-calculation model for lease of higher-level network elements as well. The LRAIC cost-calculation models will be developed under tripartite co-operation between the NTA, the companies obliged to provide interconnection at regulated prices, and the companies that wish to use such interconnection products.
10. Broadband access: 99several pipes to the home:: * stimulating competition As the development of the Network Society create increasing demand for broadband access, it is essential to promote telecommunication markets that can meet consumer requirements. In the short-term, the intended reduction of overall costs for leasing copper wires is expected to stimulate competition on ADSL-services. Large parts of the population will be able to access su$cient bandwidth using access technologies such as ADSL, but in the longer-term, competition based on ADSL and local loop unbundling alone will not be su$cient to create real competition and innovation. Competition between several providers of di!erent access facilities with varying transmission speeds at di!erent prices is essential to promote a wide range of high-speed and broadband access options. For that reason, the NTA has a primary task in order to stimulate the establishment of alternative infrastructure in the access network so that each individual household will have several access routes to the Network Society, i.e., `several pipes to the homea. Box 1. `Several pipes to the homea Local loop unbundling * raw copper (ADSL) Fixed wireless access (FWA) Second generation mobile networks Third generation mobile networks Cable-TV networks
374
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
Satellite access Optical "bre HIPERACCESS High-altitude platform stations (HAPS) Power line access As illustrated in Box 1, several di!erent access technologies and infrastructures have been developed in the telecommunications sector. Some of these technologies and infrastructures such as HIPERACCESS, HAPS and power line access are still at an experimental level, and have not yet been launched commercially on the Danish market. However, in the longer-term these technologies and infrastructures can be seen as potential alternatives to existing possibilities for broadband and high-speed access. Other access technologies and infrastructures such as cable-TV networks, satellite access technologies, and optical "bres are possible alternatives for broadband and high-speed access already developed and launched commercially in Denmark. At the present time the number of customers using cable-TV modems is still very limited, and so far the downstream capacity is quite low compared to services such as ADSL. Satellite access is available too, but still this service has not been launched commercially in a wider scale. The price for satellite access is rather high compared to ADSL. With regards to optical "bres it is possible to establish access with very high transmission capacity. However, optical "bres are still not a realistic alternative for private customers, as the establishment of optical "bres requires large investments. For large companies, organisations, or groups of users with a particular need for high bandwidth, investments in establishing optical "bres might be a suitable and economically reasonable solution.
11. Public tender of spectrum In the shorter-term the development of FWA and third-generation mobile networks constitutes the most interesting alternative to existing infrastructure and technologies as a basis for increasing competition on broadband and high-speed Internet access. As per spectrum policy initiatives, frequencies are to be licensed for these technologies through public tenders. With the allocation of frequencies for FWA purposes a number of new wireless access networks will be established on the market. The establishment of FWA networks is expected to promote the development of a competition-driven market for access networks, which are capable of handling the consumers' demands regarding broadband access. Furthermore, the FWA networks will ensure end-users a higher degree of choice between several providers of access routes to the network, and hence to the Network Society. The public tender for frequencies for FWA purposes is carried out by the NTA from February 2000 until December 2000. The tendering procedure is based on a `beauty contesta. It has been decided politically not to use auctions. The `beauty contesta is chosen in order to ensure the best and cheapest services, and the requirements and evaluation criteria in this contest refers * among other things * to the geographical coverage, the o!ering and prices of interconnection products, and the services and prices o!ered to the end users.
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
375
The public tenders also will cover frequencies for second-generation mobile networks (GSM900 and DCS1800). This particular tender will not directly have any e!ect on the market for broadband access. The public tender for frequencies for second-generation mobile networks is primarily carried out in order to stimulate competition on the mobile market, both in terms of price and quality. The public tender of frequencies for second generation mobile networks will be carried out from April 2000 until March 2001. The public tender of frequencies for emergency purposes and other forms of speci"c communications requirements (digital trunked land mobile networks } e.g. TETRA) will be carried out from July 2000 until June 2001. The development of third-generation mobile networks will make high-speed Internet access possible. It is anticipated that the introduction of the third-generation mobile networks will enable data transfer at speeds up to 2 Mbit/s. This will make it possible for the providers to supplement traditional mobile telecommunication services with new and advanced telecommunications and multimedia products. In contrast to second-generation mobile systems, the third generation systems o!er the capability of a clear technical and operational separation of the players that are operating the networks and the players that are solely providing services. In the long-term this separation constitutes the basis for service providers to develop their own services and products, and thus further increases competition to the bene"t of customers. The public tender for frequencies for third generation mobile networks will be carried out by the NTA from October 2000 until October 2001. In Table 4 the time schedules for the various frequency assignments are re#ected.
12. Conclusion The liberalisation of the telecommunication sector in Denmark has been successful in many ways. Many new providers of networks and services have entered the market, and prices for services have decreased considerably. As the use of Internet services has grown and technology changes have taken place with increasing rapidity, a need to adjust the role of the political aims and regulation has emerged. Accordingly, the major challenge for the NTA is to further stimulate in particular the development of competition on broadband and high-speed access services. This has caused a shift in strategy, and the focus on service-based competition is now combined with an objective to stimulate infrastructure-based competition * `several pipes to the homea. Table 4 Time schedules for frequency assignments Public tender
Tender starting
Licences issued
Fixed wireless access Second generation mobile networks (GSM900/DCS1800) Digital trunked land mobile networks Third generation mobile networks
February 2000 April 2000
December 2000 March 2001
July 2000 October 2000
June 2001 October 2001
376
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
With the political initiatives described, including the strengthening of interconnection legislation and legislation on frequency tenders, a basis has been established in order to meet this challenge, and ensure `the Danes admission ticket to the network societya for the future.
For market statistics, interconnection legislation, and information on the public tenders on spectrum please refer to www.tst.dk.
Policy forum
Next steps in telecom liberalisation in Denmark J+rgen Abild Andersen* National Telecom Agency (NTA), Holsteinsgade 63, 2100 Copenhagen, Denmark
Abstract Since 1995 Denmark has held the political vision that Danish telecommunication customers should be o!ered the world's best and cheapest telecommunication services. The means to reach this goal has been the establishment of comprehensive liberalisation of the sector; and the main challenge has been to establish free access to, and real competition among the operators in the market. 2000 Elsevier Science Ltd. All rights reserved. Keywords: Denmark; Liberalisation; Network society
1. Results achieved One of the main purposes of the regulation so far has been to break open the market and create competition on basic telecommunications services on the "xed network. Free competition has been ensured through the establishment of a class licence system in the "xed network area, which has made it possible for all operators to establish themselves as providers of telecommunications network and services in Denmark without having to obtain individual licences or to be registered with the National Telecom Agency (NTA). Real competition has been promoted through the extended scope of interconnection regulation in Denmark in order to strengthen the possibilities for competition on various telecommunications services. The interconnection regulation in Denmark comprises both switched interconnection, lease of all types of infrastructure (leased lines, raw copper, raw "bre and coaxial cables), and all forms of service provision agreements. 2. Implementation of competition Competition for the "xed network market so far has primarily been based on access services such as carrier selection and carrier pre-selection. With the unbundling of the local loop and the * Corresponding author. Tel.: #45-35-45-00-00; fax: #45-35-45-00-10. 0308-5961/00/$ - see front matter 2000 Elsevier Science Ltd. All rights reserved. PII: S 0 3 0 8 - 5 9 6 1 ( 0 0 ) 0 0 0 2 7 - 6
370
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
possibility for service provision agreements, competition has now emerged on subscription services. So far the provision of subscriptions has primarily been based on service provider agreements (resale). As illustrated in Table 1, there has been signi"cant growth in the number of interconnection agreements. At the beginning of 2000, 47 providers of telecommunications networks and services had concluded an interconnection agreement with the incumbent operator Tele Denmark. 3. Consequences for customers As competition has developed, the price per minute on the market for "xed network telephony has dropped considerably during the last few years, especially for international calls. As shown in Table 2, prices for national calls have decreased by 22 percent since 1990 and prices for international calls have decreased by 45 percent. Mobile market competition has also increased as the number of licensed network operators has grown. At present there are four licensed mobile network operators and two service providers o!ering mobile telecommunication services in Denmark. Due to competition among these operators and service providers consumers have experienced considerable decreases for mobile call prices. Since 1995 mobile prices have been reduced by up to 80 percent. In 1995 the price for a mobile call at peak-hour was approximately 0.32 Euro per minute; now the price is about 0.07 Euro per minute.
4. Investments in the telecommunications sector As liberalisation and competition have developed some concern has been expressed, in particular from the incumbent, Tele Danmark, regarding the risk of stagnation in the level of investments in Table 1 Interconnection agreements (number of providers) 1995
1996
1997
1998
1999
2000
2
7
15
23
45
47
Source: Status '98 and Status '99, National Telecom Agency. Excl. service provider agreements. At the beginning of the year.
Table 2 National and international tari!s (adjusted with respect to in#ation) Index
1990
1995
1999
National International
100 100
87 84
78 55
Source: Tele Yearbook 1998, National Telecom Agency Denmark.
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
371
the telecommunications sector. It has been claimed that a tough regulatory regime removes the incentive to invest. Fortunately these concerns have not been demonstrated in the market. As illustrated in Table 3, the yearly investments in the sector in Denmark have more than tripled since 1995, and there is every indication this will continue. The growth of investments is primarily the result of new operators' investments in telecommunication infrastructure, but it is worth noting that also Tele Danmark's investments in telecommunications since 1995 have increased signi"cantly (by approximately 50}60 percent). Before liberalisation the level of investment in the sector did tend to show some stagnation. The increase of investment may be considered an indication of the market's con"dence in the liberalisation process in Denmark and of the objectivity and reliability of the regulatory regime.
5. The role of the National Telecom Agency (NTA) So far the main challenge for the NTA has been to promote and ensure fair competition in the market, especially on basic telecommunications services. Further the NTA has been assigned responsibility for ensuring the necessary protection of consumers and optimal utilisation of limited resources (spectrum and numbering management), and for providing professional advice to the Minister of Research and Information Technology. Although competition in the telecommunication sector has increased, continued regulatory attention to these challenges and tasks is essential for the continued development of telecommunication markets. Tele Danmark still holds a dominant position in the market for "xed-network services, and due to its control of bottleneck resources it is imperative that the market continue to be regulated on the basis of sector speci"c legislation in order to ensure real competition.
6. New policy initiatives: 99The Danes admission ticket to the network society:: As technology changes have taken place with increasing rapidity and new demands for convergent services and bandwidth have increased, a need to adjust the role of regulation has emerged. In September 1999, a new political framework agreement on telecommunications policy aims was reached between the Minister of Research and Information Technology and a majority of the political parties in Denmark. Under the heading, `The Danes admission ticket to the network society'' innovation and development of telecommunications infrastructure and services were
Table 3 Investments in the telecommunications sector 1994}1998 (DKK million) 1991
1992
1993
1994
1995
1996
1997
1998
2512
2694
2281
2535
2704
4100
5872
8770
Source: Status '99, National Telecom Agency Denmark.
372
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
identi"ed as constituting the basic foundation for Denmark's participation in the Network Society. Accordingly, it is recognised that the development of the telecommunication sector forms the basic condition for Denmark's bene"ting from, and participating in the growing Network Economy. In the light of technological developments and the growth of the Network Society, the agreement outlines a number of new goals, including: E that all Danes should be ensured access to modern communication technologies, E that the market should meet the ever-increasing demand for larger bandwidth, E that competition in the telecommunication market should lead to innovation and growth. The political vision of `the best and cheapesta is not only maintained, it is expanded. In order to meet this challenge, it is agreed that the present asymmetric regulation * which implies access for the competitors of the incumbent to a wide number of interconnection products * is retained for the time being. In this connection the asymmetric regulation of interconnection prices is to be further strengthened. The political agreement is presently being followed up by a comprehensive review of the telecommunication legislation, which is expected to pass the Parliament before the summer 2000.
7. New spectrum policy initiatives In October 1999 a special political agreement on new frequency policy initiatives was concluded. One of the main focus points of this agreement was to enable the establishment of alternative infrastructures in the access network by public tendering of frequency resources in order to strengthen competition to the bene"t of end-users. This should make it possible to establish wireless access networks capable of handling services that require large bandwidth. In December 1999 the overall framework and guidelines for the various tender processes were determined by the Parliament (Act no. 1996 of 29 December 1999 amending the Act on Radiocommunications and Assignment of Radio Frequencies and the Act on Public Mobile Communications). In order to increase competition on broadband services for local access, frequencies are to be licensed for "xed wireless access (FWA) technologies, and subsequently frequencies are to be made available for third generation mobile networks. Additional frequencies are to be allocated for second generation mobile networks in order to increase competition in the mobile market. Finally frequencies are licensed for emergency purposes and other forms of speci"c communications requirements (such as digital trunked land mobile networks). The public tenders for frequencies for these technologies are managed by the NTA.
8. New challenges for the regulator Political agreements and initiatives as well as the review and amendments to telecommunication legislation create new challenges for the NTA. With the described political initiatives, including the strengthening of interconnection legislation and legislation on frequency tenders, a basis has been created to stimulate the development of competition for broadband access services.
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
373
9. Strengthening interconnection regulation So far the provision of ADSL services based on access to raw copper has not yet fully exploited the potential of rapid introduction of high-speed and broadband access o!ered by this technology. In order to promote competition in the short-term in this area the overall cost related to the use of the copper wires must be reduced. This implies that the entry prices and the prices for collocation should be reduced. In order to determine pricing for lease of physical infrastructure in the access network and for collocation, the new legislation is expected to require the NTA to develop a Danish LRAIC costcalculation model. It is expected that the work on drawing up the price regulation will be completed in time for speci"c interconnect prices to be set by the NTA before the end of 2002. The LRAIC model will also be used for determining pricing for switched interconnection, in order to sustain competition on basic telecommunication services. During the transitional period, regulation based on a combination of cost-calculated prices and prices based on best practice will be applied. In light of experience gained in developing the LRAIC models referred to above, and an evaluation of competition development, it will * at the political level * be decided whether it is desirable to develop an LRAIC cost-calculation model for lease of higher-level network elements as well. The LRAIC cost-calculation models will be developed under tripartite co-operation between the NTA, the companies obliged to provide interconnection at regulated prices, and the companies that wish to use such interconnection products.
10. Broadband access: 99several pipes to the home:: * stimulating competition As the development of the Network Society create increasing demand for broadband access, it is essential to promote telecommunication markets that can meet consumer requirements. In the short-term, the intended reduction of overall costs for leasing copper wires is expected to stimulate competition on ADSL-services. Large parts of the population will be able to access su$cient bandwidth using access technologies such as ADSL, but in the longer-term, competition based on ADSL and local loop unbundling alone will not be su$cient to create real competition and innovation. Competition between several providers of di!erent access facilities with varying transmission speeds at di!erent prices is essential to promote a wide range of high-speed and broadband access options. For that reason, the NTA has a primary task in order to stimulate the establishment of alternative infrastructure in the access network so that each individual household will have several access routes to the Network Society, i.e., `several pipes to the homea. Box 1. `Several pipes to the homea Local loop unbundling * raw copper (ADSL) Fixed wireless access (FWA) Second generation mobile networks Third generation mobile networks Cable-TV networks
374
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
Satellite access Optical "bre HIPERACCESS High-altitude platform stations (HAPS) Power line access As illustrated in Box 1, several di!erent access technologies and infrastructures have been developed in the telecommunications sector. Some of these technologies and infrastructures such as HIPERACCESS, HAPS and power line access are still at an experimental level, and have not yet been launched commercially on the Danish market. However, in the longer-term these technologies and infrastructures can be seen as potential alternatives to existing possibilities for broadband and high-speed access. Other access technologies and infrastructures such as cable-TV networks, satellite access technologies, and optical "bres are possible alternatives for broadband and high-speed access already developed and launched commercially in Denmark. At the present time the number of customers using cable-TV modems is still very limited, and so far the downstream capacity is quite low compared to services such as ADSL. Satellite access is available too, but still this service has not been launched commercially in a wider scale. The price for satellite access is rather high compared to ADSL. With regards to optical "bres it is possible to establish access with very high transmission capacity. However, optical "bres are still not a realistic alternative for private customers, as the establishment of optical "bres requires large investments. For large companies, organisations, or groups of users with a particular need for high bandwidth, investments in establishing optical "bres might be a suitable and economically reasonable solution.
11. Public tender of spectrum In the shorter-term the development of FWA and third-generation mobile networks constitutes the most interesting alternative to existing infrastructure and technologies as a basis for increasing competition on broadband and high-speed Internet access. As per spectrum policy initiatives, frequencies are to be licensed for these technologies through public tenders. With the allocation of frequencies for FWA purposes a number of new wireless access networks will be established on the market. The establishment of FWA networks is expected to promote the development of a competition-driven market for access networks, which are capable of handling the consumers' demands regarding broadband access. Furthermore, the FWA networks will ensure end-users a higher degree of choice between several providers of access routes to the network, and hence to the Network Society. The public tender for frequencies for FWA purposes is carried out by the NTA from February 2000 until December 2000. The tendering procedure is based on a `beauty contesta. It has been decided politically not to use auctions. The `beauty contesta is chosen in order to ensure the best and cheapest services, and the requirements and evaluation criteria in this contest refers * among other things * to the geographical coverage, the o!ering and prices of interconnection products, and the services and prices o!ered to the end users.
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
375
The public tenders also will cover frequencies for second-generation mobile networks (GSM900 and DCS1800). This particular tender will not directly have any e!ect on the market for broadband access. The public tender for frequencies for second-generation mobile networks is primarily carried out in order to stimulate competition on the mobile market, both in terms of price and quality. The public tender of frequencies for second generation mobile networks will be carried out from April 2000 until March 2001. The public tender of frequencies for emergency purposes and other forms of speci"c communications requirements (digital trunked land mobile networks } e.g. TETRA) will be carried out from July 2000 until June 2001. The development of third-generation mobile networks will make high-speed Internet access possible. It is anticipated that the introduction of the third-generation mobile networks will enable data transfer at speeds up to 2 Mbit/s. This will make it possible for the providers to supplement traditional mobile telecommunication services with new and advanced telecommunications and multimedia products. In contrast to second-generation mobile systems, the third generation systems o!er the capability of a clear technical and operational separation of the players that are operating the networks and the players that are solely providing services. In the long-term this separation constitutes the basis for service providers to develop their own services and products, and thus further increases competition to the bene"t of customers. The public tender for frequencies for third generation mobile networks will be carried out by the NTA from October 2000 until October 2001. In Table 4 the time schedules for the various frequency assignments are re#ected.
12. Conclusion The liberalisation of the telecommunication sector in Denmark has been successful in many ways. Many new providers of networks and services have entered the market, and prices for services have decreased considerably. As the use of Internet services has grown and technology changes have taken place with increasing rapidity, a need to adjust the role of the political aims and regulation has emerged. Accordingly, the major challenge for the NTA is to further stimulate in particular the development of competition on broadband and high-speed access services. This has caused a shift in strategy, and the focus on service-based competition is now combined with an objective to stimulate infrastructure-based competition * `several pipes to the homea. Table 4 Time schedules for frequency assignments Public tender
Tender starting
Licences issued
Fixed wireless access Second generation mobile networks (GSM900/DCS1800) Digital trunked land mobile networks Third generation mobile networks
February 2000 April 2000
December 2000 March 2001
July 2000 October 2000
June 2001 October 2001
376
J. A. Andersen / Telecommunications Policy 24 (2000) 369}376
With the political initiatives described, including the strengthening of interconnection legislation and legislation on frequency tenders, a basis has been established in order to meet this challenge, and ensure `the Danes admission ticket to the network societya for the future.
For market statistics, interconnection legislation, and information on the public tenders on spectrum please refer to www.tst.dk.