Regulatory modernization and competition promotion

Ernesto P. Orozco O.

National Television Board

Subscription TV in Colombia

3

Assurance of universal service in

new digital economy

Sustainability of traditional industry vs new forms of

business

Diffuse marketslimit informationand regulatory

intervention

Rigid and obsoleteregulatory

frameworks

The regulation canencourage

innovation and new business

Regulation challenges

Recommendable practices

The industry has faced changes in its cost structure and to the competition of new agents that merit a different look. At the international levelregulators are opting to flex the regulatory burden of operators, and createregulatory environments that favor investments, and the update of networks.

International organizations recommend “light touch” measures. OECD, UIT y CE, recommend collaboration schemes with industry and betweenregulators, co-regulation and self-regulation through codes of conduct, to facilitate the performance of the industry, the understanding, the promotionof new technologies, and the user-provider interaction.

Recommendable practices

There are related aspects with the user and the new digital ecosystem that deserve a different regulatory approach from the one applied untiltoday. Among these, protection of intellectual property rights, cybersecurity, protection of personal data, electronic commerce.

The degree of intervention should be reduced as it intensifiesthe rivalry and the competition. Market forces are capable of improving the welfare of consumers.

Guiding principles

PRO Competition

Accessibility

AffordabilityPRO

Inversion

Guidingprinciples

7

Efficientregulation

Governance RIAExpostReview

Simplification Compliance

Methodology

Regimen intervened

Obsolete legal framework (23

years)

Regulatoryframework (12

years)

Barriers to market entry

and exit(Selectionprocess/

Concessioncontract)

Asymmetries in regulatory

chargesdepending onthe concession

date

Asymmetry in service levels(National –

Zonal – Local –Multilocal)

Withouttechnological

neutrality(Asymmetry

between cable – IPTV – DTH)

Against highand non-

proportionalbenefits

General objectives

Promotion of competition

Reduction of requirements and regulatory burdens

Update of considerations

Enabling nationwide

Technological neutrality

Workplan

Technical tables of public television policy

ANTV tables and forumswith subscription

television operators

Mechanisms forconsultation and open socialization with the

industry

Industry diagnostics byvarious authorities and

agents

Promotion of a discussion framework with authorities and different agents of the industry that allowed understanding realities, by analyzing various intervention

options and their impacts

1813 resolution of 2017"Considerations for subscription TV service"

026 resolution of 2018"Regulation of subscription TV service"

New regulatory framework

NATIONAL TOTAL

1.122

49.291.925

37.816.924 11.475.001

77% 23%

13.766.267

10.929.396 2.836.870

79% 21%

5.556.593

4.050.521 1.506.072

73% 27%

50,8% 40,4%

MPIOS > 100K

64

8.613.998

8.113.653 500.345

94% 6%

4.529.647

81,5%

3.517.319 1.012.328

87% 67%

78% 22%

55,8% 52,6%

MPIOS < 100K

1.058

5.152.269

2.815.743 2.336.525

55% 45%

1.026.946

18,5%

533.202 493.744

13% 33%

52% 48%

36,5% 19,9%

40 Companies

All

390.724

75%

47 Companies

407 municipalities

132.944

25%

Market characterization

NACIONAL TOTAL

1.122

49.291.925

37.816.924 11.475.001

77% 23%

13.766.267

10.929.396 2.836.870

79% 21%

5.556.593

4.050.521 1.506.072

73% 27%

50,8% 40,4%

MPIOS > 100K

64

8.613.998

8.113.653 500.345

94% 6%

4.529.647

81,5%

3.517.319 1.012.328

87% 67%

78% 22%

55,8% 52,6%

MPIOS < 100K

1.057

5.152.269

2.815.743 2.336.525

55% 45%

1.026.946

18,5%

533.202 493.744

13% 33%

52% 48%

36,5% 19,9%

MPIOS < 100K

898

4.742.928

2.686.044 2.056.884

57% 43%

1.005.304

18,1%

533.202 472.102

13% 31%

53% 47%

37,4% 21,2%

MPIOS < 100K

145

376.663

121.254 255.409

32% 68%

21.642

0,5%

0 21.642

0% 1%

0% 100%

17,8% 5,7%

MPIOS < 100K

15

32.677

8.445 24.232

26% 74%

0

0,0%

0 0

0% 0%

0% 0%

0,0% 0,0%

Market characterization

$ 6

58

.29

$ 6

49

.19

$ 6

43

.34

$ 6

68

.27

$ 7

30

.55

$ 1

,87

4.3

4

$ 1

,85

0.5

3

$ 1

,82

8.9

8

$ 1

,90

6.1

3

$ 2

,14

1.1

2

$ 2,532.63 $ 2,499.72 $ 2,472.32$ 2,574.40

$ 2,871.67

$ 0.00

$ 500.00

$ 1,000.00

$ 1,500.00

$ 2,000.00

$ 2,500.00

$ 3,000.00

$ 3,500.00

2012 2013 2014 2015 2016

Co

ntr

apre

stac

ión

Concesiones Cable

$ 6

58

.29

$ 6

74

.35

$ 7

11

.94

$ 7

64

.00

$ 8

34

.23

$ 1

,87

4.3

4

$ 1

,85

0.5

3

$ 1

,82

8.9

8

$ 1

,90

6.1

3

$ 2

,14

1.1

2

$ 2,532.63 $ 2,524.88 $ 2,540.92$ 2,670.13

$ 2,975.35

$ 0.00

$ 500.00

$ 1,000.00

$ 1,500.00

$ 2,000.00

$ 2,500.00

$ 3,000.00

$ 3,500.00

2012 2013 2014 2015 2016C

on

trap

rest

ació

n

Concesiones DTH

Compensations 2016

CONCEPTMUNICIPALITIES > 100 K HBS

UNTIL 2018 SINCE 2019

CONCESSION 1,00% $ 340,00 0,80% $ 272,00

COMPENSATION 4,90% $ 1.666,00 4,30% $ 1.462,00

TOTAL 5,90% $ 2.006,00 5,10% $ 1.734,00

ADJUSTMENT 20,27% 30,15% 31% 40%

CONCEPTMUNICIPALITIES ≤ 100 K HBS

UNTIL 2018 SINCE 2019

CONCESSION 0,40% $ 88,00 0,30% $ 66,00

COMPENSATION 1,00% $ 220,00 0,50% $ 110,00

TOTAL 1,40% $ 308,00 0,80% $ 176,00

ADJUSTMENT 81,08% 89,27% 89% 94%

Considerations 2017

In order to promote competition, reduce requirements and regulatory burdens and allow to all service concessionaires, current and future, to provide the service with total technological neutrality, the ANTV

modified the subscription television service regime, depending on:

Enabling for the provision of theservice at national level without prior approval of an expansion or businessplan.

General enabling for the provision of the service in conditions of total technological neutrality.

Enabling with technologicalneutrality for current suppliers of DTH.

Review and adjustment of therights and obligations frameworkof the operators.

New regulatory framework

CONCEPT OF COMPETITION ADVOCACY

"Aims to correct market failures associated withregulatory asymmetries and user sublocations"

"Favorable conditions for the extension of servicecoverage"

"Market entry barriers are reduced"

"Benefits for the market, qualitatively superior"

Advocacy of the competition

EX-POST Revision

Cifras

439

357

232 231

303

123

3,872

4,310 4,668

4,899 5,131

5,434 5,557

-

100

200

300

400

500

600

700

-

1,000

2,000

3,000

4,000

5,000

6,000

1 2 3 4 5 6 7

THO

USA

ND

S

Customers Evolution2011 - 2017

Anual Total

5% 5% 6%2%

TCT=44%

TCAC=6%

8%11%

Cifras

TELMEX1,814

TELMEX1,955

TELMEX2,041

TELMEX2,136

TELMEX2,174

TELMEX2,312

TELMEX2,381

UNE EPM1,035

UNE EPM1,049

UNE EPM1,060

UNE EPM1,040

UNE EPM1,052

UNE EPM1,096

UNE EPM1,145

DIRECTV435

DIRECTV683

DIRECTV869

DIRECTV986

DIRECTV1,041

DIRECTV1,013

DIRECTV952

MOVISTAR249

MOVISTAR274

MOVISTAR336

MOVISTAR389

MOVISTAR455

MOVISTAR494

MOVISTAR554

RESTO338

RESTO349

RESTO362

RESTO348

RESTO408

RESTO519

RESTO524

TOTAL3,872

TOTAL4,310

TOTAL4,668

TOTAL4,899

TOTAL5,131

TOTAL5,434

TOTAL5,557

-

1,000

2,000

3,000

4,000

5,000

6,000

2011 2012 2013 2014 2015 2016 2017

THO

USA

ND

S

TELMEX 31%

UNE EPM 11%

DIRECTV 119%

MOVISTAR 122%

RESTO 55%

TOTAL 44%

TELMEX 5%

UNE EPM 2%

DIRECTV 14%

MOVISTAR 14%

RESTO 8%

TOTAL 6%

337,855 349,318

362,477 346,196

408,416

519,312 523,668

-

100,000

200,000

300,000

400,000

500,000

600,000

2011 2012 2013 2014 2015 2016 2017

Mid-Size Operators

3,4% 3,8% -4,5%

18%

27% 0,8%TCT55%

TCAC8%

Cifras

439

357

232 231

303

123

3,872

4,310 4,668

4,899 5,131

5,434 5,557

-

100

200

300

400

500

600

700

-

1,000

2,000

3,000

4,000

5,000

6,000

1 2 3 4 5 6 7

THO

USA

ND

S

Customers Evolution2011 - 2017

Anual Total

TI-2018: 411.784 (7%)

5% 5% 6%2%

TCT=44%

TCAC=6%

8%11%

Ernesto P. Orozco O.

Junta Nacional de Televisión

¡Thanks for your attention!