A Telecommunication and Telephone Operator
Belgacom (Belgium)

Context

European Directives on the establishment and exploitation of public telecommunication networks and on the delivery of fixed and mobile telephone services have been negotiated and have to be transposed into national laws. When they are negotiated between the telecommunication and telephone operator and the European Commissioner, a proactive approach can be followed. The second step, the secondary legislation in each country, is at least as important. In addition, in most countries, a periodic management contract is negotiated with the government and other stakeholders such as the regulatory authority.

Customer Demand & Needs

• When negotiating the transposition of a Directive , use benchmarking from other telecommunication and telephone operators in the European Union on the basis of objective analysis and quantitative arguments

• Convince the stakeholders - the minister in charge of the telecommunication and telephone operator, the trade unions, the General Assembly, the CEO and the directors of the operator - about appropriate competitive rules for the industry.

• Construct quantitative scenarios of the impact of technological progress on the competition in the telecommunication and telephone industry and its impacts on the quantitative objectives of many stakeholders in individual countries.

Benefits for the Telecom Industry

• Generate arguments for the negotiation of the transposition of the European Directives and for feasible compromises between the universal service and the profitability requirement for the telecommunication and telephone operators

• Understand the costs and the benefits of a change in each separate regulatory lever for the telecommunication and telephone operators, its impact on NPV, market shares, employment... to improve negotiations

• Balance the benefits for the customer from the universal service obligation of the telecommunication and telephone operators with its costs

• Compute the sensitivity of the business plan under alternative regulatory setups

• Forecast next year's demand using conjoint analysis of customer behaviour.

Work agenda

• Quantified regulatory levers such as those published in the 2002 European Directives : "Access", "Authorisation", "Framework", "Universal Service", "Privacy and Electronic Communication" and "Competition". Levers such as areas to be retained, licensing conditions, price caps, price homogeneity, network access, access pricing conditions (geographic coverage, minimum quality requirement, obligations for competitor, points of access, cost rules for access pricing.)

• Developed and ran the model: customer/product/geography items produced, cost profiles per activity segment of incumbent and competitors, customer behaviour (loyalty and elasticities, sensitivity to quality.), market structure and profit maximization process

• Identified scenarios and solved the model to provide impacts on quantified stakeholder stakes.

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