Sweden

Sweden is today heading towards a situation where various organisations with different backgrounds offer or will offer access to their proprietary networks. One might be inclined to believe that these organisations that are climbing into the infrastructure business, in competition with state owned Telia AB, would primarily be private companies. This is not the case. Indeed, a majority of these organisations are in themselves public utilities or publicly owned companies. Network capacities are presently being offered by:

• The National Rail Administration - Banverket
• The Swedish National Grid - Svenska Kraftnät
• The publicly owned broadcasting company - Teracom AB
• The publicly owned satellite company - NSAB (Nordisk Satellit AB)
• Local governments
• Local government owned electrical power supplying companies
• Privately owned electrical power supplying companies
• Mobile telephone operators
• Alternative telephone operators
• CTV operators

There are no more any formal monopolies that remain in Sweden for access networks and backbone networks and there are practically nothing that ties a certain form of transmission, may it be text, voice or video, to a specific form of network. What still constitute restrains are the limitations in bandwidth and the lack of an interactive mode for some forms of networks.

2. Infrastructure Deregulation: Consequences on the Competitive Edge

The revised Telecommunication Act entered into force on 1 July, 1997. The Reasons to the revision were: providing a Telecommunication Act more in line with the current situation on the Swedish telecom market as well as an adjustment to the EC Interconnection Directive and the EC Licensing Directive. The former Telecommunications Act was implemented in 1993.

The main elements of the revised Act are:

• Licensing: The licensing regime is changed into a system based on obligations to notify telecommunications activities, combined with requirements for individual licences when necessary.

• Tariffs: Some geographic differences in tariffs will be allowed if considered reasonable. Lower tariffs in on region may not, however, be compensated by a corresponding increase in another region.

• Interconnection: Being subject to notify telecommunications activities do as well indicate that the operator has the obligation to enter interconnection agreements. The revised Telecommunication Act also stipulate, in a lead to improve transparency regarding costs and hence enable cost-based interconnection tariffs, that operators with interconnection agreements are under obligation to render separate account of costs and incomes deriving from interconnection agreements. Telia will however not be separated in to two parts, i.e. a network provider and a service provider. The requirement that interconnection tariffs should be cost-based will apply not only to providers of telephony service delivered to a fixed termination point, but also to providers of mobile telephony and leased lines.

• Supervision authority: PTS is being given a more effective role as mediator in disputes over interconnection agreements and is as well given authority to intervene in such disputes.

• Telia/State agreement: Telia cease to be tied to the separate agreement with the Government regarding special obligations, but is instead subject to the Telecommunication Act as other operators.

The deregulation of the Swedish telecom market has had a profound impact on the telecom scene. Today Sweden benefits from one of the most liberalised telecom markets in the world, with many of the large international PTOs active through, many times, alliances. Global One and Telenordia are both examples of this. But new Swedish operators, with Tele2 as the predominant example, are active as well on the Swedish telecom market. Due to this competitive situation, Sweden enjoys improved quality at lower costs for many telecom services to a greater extent than do most other countries.

Even though competition has developed within international traffic, long distance traffic and mobile telephony, it has not done so for short distance telephony. The imbalance between end-user tariffs and interconnection fees are so far too great to bridge and hence makes it impossible to other operators competing within this area.

What finally can be said about the Swedish deregulation of the telecom market is that it still remains on of the most regulated sectors of all in Sweden, although with the contrariety that monopoly not anymore is the guiding star - instead competition is.

3. Approach of "Historical" Operator Towards the Potential of Alternative Network Providers

In Sweden it is difficult finding more explicit utterances from the "historical" operator that would mirror a negative attitude against the new situation with competition. What needs to be remembered here though is that Telia is a 100% state owned company. As a consequence, Telia would formally have the same attitude on the subject as has its owner the Swedish government. Nevertheless, even though there are not much explicit being said, it is still possible to judge the PTO by its actions. As any company being on a competitive market, Telia has as a goal to become as successful as possible. Hence, Telia is using every possibility offered by the Swedish Telecom Act to strengthen its position. If the actions taken by Telia are disliked, well, then it is for the government, as owner and as legislator, to interfere. And so has been done lately through the updating of the Telecom Act.

Nevertheless, there are allegations against Telia for having used delaying tactics when interconnection agreements have been negotiated with other operators. It is undeniable that Telia has a special and strong position on the Swedish telecom market, with the only nation-wide fixed access network available. As a consequence, other operator are in depending positions when it comes to the use of access networks. Even though every network owner is obliged to offer access to its network trough interconnection agreement, it would still be of economical value to Telia to use delaying tactics trough its dominating position.

4. New Opportunities Brought by Alternative Solutions

An interesting, since 1993 ongoing, development in Sweden is the building of city networks. A considerable part of the Swedish towns are currently building or are planning to build their own optofibre networks, i.e. MANs.

The objective behind this development has been that local authorities experience needs for high quality broadband network services and for interconnections between the various local authority administrations, the schools and the local government owned companies. At the same time the competitiveness prevailing in the matter of attracting and retaining a local industry has sharpened considerably in the 1990:s, especially so now when in Sweden large groups are unemployed. Hence, to offer a developed surrounding and a favourable climate for investments and enterprising in the community has become crucial. Building a MAN, or having it built, is thus, an important component in this strive. The local authorities are of course most suited in promoting and facilitating the construction of these networks. It would only with difficulties be possible for a private company to do so if it was not supported by the local authorities.

By having their local electrical supplier companies building the networks, the local authorities have in many cases been able to achieve, at reasonable cost, more favourable conditions in which they are not only in control over the infrastructure itself and the services offered by it, but are even, at the same time, able to open up to alternative operators that under more neutral conditions strengthen the competition considerably in the towns to the advantage for the local industry.

Basically, there are two predominant schools for how the local authorities provide proprietary commercial optofibre city networks. Either they offer black fibre only or they provide bandwidth. The situation unfolding, however, is clearly that the local authorities increasingly see it as favourable providing bandwidth, and hence become more of network operators through their own electricity power supplier companies.

5. Latest development on alternative networks

5.1 Stjärn TV invests in Internet telephony

Stjärn TV invests over MSEK 200 in new technique with the purpose to increase the availability and choice of freedom for its subscribers. This effort is a step in Stjärn TVs strategy of extending its operations to provide IT-services within the digital TV area, Internet access and Internet telephony.

5.2 Sunet and Stokab gives students faster Internet access

All students that are attending a university or a college in the County of Stockholm are going to get much faster Internet access before the year of 1998 ends. Sunet and Stokab has signed a contract, where Sunet invests MSEK 5 and Stokab puts dark fibre cables into the ground. The students will get a connection speed of 155M/bit upto 2,5G/bit.

5.3 High bandwith network for Internet - covering the whole of Sweden

The Internet operator Utfors located in Uppsala is currently building a new high bandwidth network for Internet. The aim is to cover the whole of Sweden within two years. The first step is a cable between Stockholm and Uppsala in order to be able to provide companies wih high net-traffic a connection with the capacity of upto 1G/bit. Utfors is mainly focused on companies but together with a company called Bredbandsbolaget they are also focused on private homes.

5.4 Surf the WWW via the electric wire

The electricity company Stockhom Energi has been successful in its attempt to try to access Internet via their electric wires. Stockholm Energi is developing this communication together with NOR.WEB, which is a joint venture between Nortel and United Utilities. Stockholm Energi has started a new pilot project with 200 customers that will access Internet via the electric wires. Stockholm Energi conducted such a pilot project this summer, which was very successful. Next step for Stockholm Energi will be to try Internet telephony via the electric wires.

5.5 Satellite

The company NSAB launched its third satellite, Sirius 3 from the base in Kourou, French Guiana at 19.51 local time Monday 5 October. NSAB already operates two satellites, Sirius 1 and Sirius 2, both located at 5 degrees East. By launching yet another satellite, NSAB can offer its clients more satellite capacity that will last at least until the year 2010. Sirius 3 will be used for transmission of analogue as well as digital broadcasting of TV and for multimedia services. Sirius 3 has 15 transponders and within a year it will replace Sirius 1 with its 5 transponders. In the meantime Sirius will be leased by Société Européenne des Satellites (SES), the operator of the Astra Satellite system.

5.6 Electricity Network

Vattenfall, one of the largest electronic supplier in Sweden, is initiating a long-term technical co-operation with Electrolux, the world’s largerst manufacturer of domestic appliances. The aim of the co-operation is to develop simple and efficient household machinery that can communicate via the Internet.