FOSTERING INFRASTRUCTURE SHARING IN THE WESTERN BALKANS: B lk ns Di it l Hi hw Pr -f sibilit Studi s S U M M A RY Report No: AUS0000775 Western Balkans Balkans Digital Highway Summary May 2019 DDT Document of the World Bank © 2017 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guaran- tee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. This report has been prepared for the purposes of providing information to the governments and electricity trans- mission operators of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia to fa- cilitate infrastructure sharing nationally and regionally. This report is for information purposes only and has no binding force. The analyses and recommendations in this report are based on desk research and information and opinions collected from interviews undertaken and materials provided by the governments, electricity transmis- sion operators, and other local stakeholders during the course of preparation of this report; and such analyses and recommendations are subject to approval by management of the World Bank. All information contained in this report may be updated, modified or amended at any time. Additionally, the authors of the report are not qualified to practice law in Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia. Accordingly, nothing in this report constitutes legal advice and no inference should be drawn as to the completeness, adequacy, accuracy or suitability of any of the analyses or recommendations. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowl- edge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “World Bank. 2019. Western Balkans Digital Highway: Summary. © World Bank.” All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@ worldbank.org. ACKNOWLEDGMENTS This summary was prepared by a team led by Mrs. Na- events and in the press. The team would also like to ac- talija Gelvanovska-Garcia, Senior Digital Development knowledge significant efforts by Ms. Boutheina Guer- Specialist of the World Bank’s Digital Development mazi, Senior Director, and Ms. Jane Treadwell, Practice Global Practice and Task Team Leader of the “Balkans Manager, from the Digital Development Global Practice Digital Highway” initiative, under the auspices of which to drive internal visibility to this important work. this document was published. Mrs. Vaiva Maciule was the lead author contributing to the report. Ms. Daria Last but not least, the Program team would like to Lavrentieva, Senior Portfolio Coordinator for Western thank the stakeholders from the participating coun- Balkans Regional Unit, Mr. Rhedon Begolli, Senior Ener- tries for their cooperation under the technical assis- gy Specialist and co-Task Team Leader of the “Balkans tance and support for the Balkans Digital Highway Digital Highway,” Ms. Zhenia Viatchaninova Dalphond, initiative: (from Albania) Mr. Skerdi Drenova, Chief Digital Development Consultant, and Ms. Patricia Car- Executive Officer (CEO), OST sh.a.; Mr. Idajet Projko, ley, Consultant, contributed their time during the docu- Chief of Telecommunications Sector, OST sh.a.; Mr. Al- ment review. The analyses for the report were conduct- ban Ibrahimi, Director of Operation Department, OST ed by consultants Mr. Ludvik Uhan, Mr. Matej Trobis, sh.a.; Mr. Bledi Kasa, Head of SCADA Sector, OST sh.a.; and Mr. Andrej Mihevc, the main authors of pre-feasi- Mr. Daniel Marango, Specialist of Telecommunications bility studies. Sector, OST sh.a.; Ms. Dorina Cinari, Deputy Minister, Ministry of Infrastructure and Energy; Ms. Irena Malolli, The Balkans Digital Highway team wish to extend their Director of Policies and Strategy Development of Tele- gratitude to the World Bank colleagues who were in- communications and Post, Ministry of Infrastructure strumental in helping to achieve the project’s objec- and Energy; Mr. Agim Bregasi, Director of the Director- tives, including: Ms. Odeta Bulo, Senior Executive As- ate of Policies and Electric Power Department, Ministry sistant; Mr. Gazmend Daci, Senior Energy Specialist; of Infrastructure and Energy; Mr. Petrit Ahmeti, Chair- Ms. Ana Gjokutaj, Senior Communications Officer; Ms. man, Energy Regulatory Authority; Mr. Altin Rrapaj, Elda Hafizi, Program Assistant; Ms. Enkelejda Karaj, Director of Economic Regulation and Statistics, Elec- Program Assistant, from Albania Country Office; Ms. tronic & Postal Communications Authority (AKEP); Mr. Samra Bajramovic, Program Assistant; Mr. Zoran Had- Shefqet Meda, Director of the Scarce Resources, Autho- ziahmetovic, IT Officer; Ms. Jasmina Hadzic, Communi- rization and Facilities Administration Directory, AKEP; cations Officer; and Ms. Sanja Tanic, Program Assistant, Mr. Donald Shtrepi, Director of the Information Tech- from Bosnia and Herzegovina (BiH) Country Office; nology and Broadband Development Directory, AKEP; Mr. Lundrim Aliu, Communications Officer; Ms. Ivana and Ms. Enkeleda Pojani, Head of Unit for the market Bojic, Program Assistant; Ms. Linda Gorcaj Llalloshi, analysis and regulatory measures, AKEP; (from BiH) Senior Executive Assistant, from Kosovo Country Of- Mr. Mato-Matan Zaric, General Manager, JP Elektropri- fice; Ms. Boba Vukoslavovic, Team Assistant; Mr. Denis jenos – Eletktroprenos; Mr. Cvjetko Zepinic, Executive Mesihovic, Operations Officer from Montenegro Coun- Director for System Operation and Maintenance, JP try Office; Mr. Luan Aliu, Program Assistant; Ms. Anita Elektroprijenos – Eletktroprenos; Mr. Sinisa Lukic, Head Bozinovska, Communication Assistant; and Mr. Artan of ICT Department; Mr. Nermin Isovic, Head of Telecom- Saliu, IT Analyst, from North Macedonia Country Of- munications Department; Ms. Lejla Mujkanovic-Krka, fice; Ms. Zana Ivanovic, Executive Assistant; Mr. Miro- Head of Cabinet, Ministry of Communications and slav Nesic, Program Assistant; Ms. Svetlana Vukanovic, Transport BiH; Mr. Vlatko Drmic, Assistant Minister, Senior Transport Specialist, from Serbia Country Of- Ministry of Communications and Transport BiH; Mr. fice; Ms. Marga O. de Loayza, Program Assistant; and Suad Zeljkovic, Chairman, State Electricity Regulato- Ms. Marisol Ruelas, Program Assistant, from the Digital ry Commission; Mr. Sasa Scekic, Board Member, State Development Global Practice. Country Managers Mr. Electricity Regulatory Commission; Ms. Meliha Kova- Marco Mantovanelli (for Kosovo and North Macedonia), cevic, Head of Telecommunications Licensing Sector, Mr. Stephen Ndegwa (for Serbia), Mr. Emanuel Salinas Communications Regulatory Agency BiH; Mr. Admir (for BiH and Montenegro), and Ms. Maryam Salim (for Softic, Assistant Minister, BiH Ministry of Foreign Trade Albania), under the leadership of Ms. Linda Van Gelder, and Economic Relations; Ms. Branka Knezevic, Head of Country Director for Western Balkans Regional Unit, Department for Primary Energy and Policy, BiH Minis- were instrumental in supporting this work and rally- try of Foreign Trade and Economic Relations; Mr. Milan ing support for the program at high-level meetings and Jankovic, Head of Electricity Department, RS Ministry of Industry, Energy and Mining; (from Kosovo) Mr. Ilir M. Energy; Ms. Jelena Simovic, Assistant Minister, Minis- Shala, CEO, KOSTT J.S.C; Ms. Resmije Ahma, Director of try of Mining and Energy; Ms. Natalija Lukovic, Head of Support Services Department, KOSTT J.S.C.; Mr. Besim the Group for programing projects funded by EU and Gerxhaliu, Director of Transmission Operation Depart- international assistance, Ministry of Mining and En- ment, KOSTT J.S.C.; Mr. Nagip Syla, Telecom Manager, ergy; Ms. Olivera Gudzulic, Head of the Electric Power KOSTT J.S.C.; Mr. Agim Kukaj, Director of Telecommu- Inspection, Ministry of Mining and Energy; Ms. Neda nications, Post and ICT Department, Ministry of Eco- Mijatovic, Head of Department, Ministry of Mining and nomic Development; Mr. Arsim Janova, Acting Head of Energy; Ms. Irini Reljin, Assistant Minister for Electronic the Board, Energy Regulatory Office; and Mr. Kreshnik Communications, Ministry of Trade, Tourism, and Tele- Gashi, Chairman of the Board, Regulatory Authority of communications; Mr. Milan Dobrijevic, Head of Digital Electronic and Postal Communications (ARKEP); (from Agenda Development Group, Ministry of Trade, Tour- Montenegro) Mr. Dragan Kujovic, Executive Director, ism, and Telecommunications; Dr. Gordan Tanic, Head CGES A.D.; Ms. Slavka Markovic, Chief of Telecommuni- of Economics and Finance Division, Energy Agency; and cation Service, CGES A.D.; Mr. Zarko Mujovic, Chief En- Ms. Nemanja Vukotic, Chief of Staff, Regulatory Agency gineer for Transmission Systems, CGES A.D.; Mr. Bosko for Electronic Communications and Postal Services. Damjanovic, Engineer for Development of new TC Tech- nologies, Investment and Commercialization, CGES This document was prepared as part of the Balkans A.D.; Mr. Milan Srzentic, State Secretary, Ministry of Digital Highway technical assistance of the World Bank, Economy; Ms. Ratka Seka-Strugar, Deputy Minister funded under the Public-Private Infrastructure Adviso- and General Director of Directorate of Electronic Com- ry Facility (PPIAF). PPIAF is a multi-donor technical as- munications, Postal Service and Radio Spectrum, Mi- sistance facility that is financed by 11 multilateral and nistry of Economy; Ms. Tanja Maras, Senior Adviser of bilateral donors. Established in 1999 as a joint initiative the Directorate of Electronic Communication, Postal of the governments of Japan and the United Kingdom Service and Radio Spectrum; Mr. Anton Ljucovic, Ad- and working closely with and housed at the World Bank visor, Department of Energy, Ministry of Economy; Mr. Group, PPIAF is a catalyst for increasing private sector Novak Medenica, Director, Energy Regulatory Agency; participation in emerging markets. Its mission is to help Mr. Igor Malidzan, Engineer Analyst, Energy Regulatory eliminate poverty and increase shared prosperity in de- Agency; Mr. Nikola Novakovic, Lawyer, Energy Regula- veloping countries by facilitating private sector involve- tory Agency; Mr. Darko Grgurovic, Director, Agency for ment in infrastructure. Electronic Communications and Postal Services; and Mr. Vitomir Dragas, Manager for interconnection and transmission systems, Agency for Electronic Commu- nications and Postal Services; (from North Macedonia) Mr. Sasho Vasilevski, General Director, MEPSO A.D.; Mr Tomi Bozinovski, Director of IT and Telecommunica- tions, MEPSO A.D.; Ms. Magdalena Cizbanova, Finance Director, MEPSO A.D.; Mr. Marko Bislimoski, President and Member, Energy Regulatory Commission; Mr. Sasho Dimitrijoski, Director, Agency for Electronic Commu- nications; Mr. Dimitar Manchev, ICT Advisor, Ministry of Information Society and Administration; Ms. Elena Mancheva, ICT Advisor of the Minister for Information Society and Administration; Ms. Jovana Gjorgjioska, Junior Associate for coordination and monitoring stra- tegic plans, Ministry of Information Society and Admin- istration; and Ms. Solza Kovachevska, State Advisor for Information Systems and Technologies, Ministry of Information Society and Administration; (from Serbia) Ms. Jelena Matejic, General Manager, EMS; Ms. Mirja- na Filipovic, State Secretary, Ministry of Mining and CONTENTS EXECUTIVE SUMMARY ........................................................................................................................................................... 7 I. INTRODUCTION ..................................................................................................................................................................... 9 1.1. Strategic importance of infrastructure sharing......................................................................................... 10 1.2. What is infrastructure sharing and what are the benefits? .................................................................. 11 1.3. Engagement of utilities .................................................................................................................................. 14 1.4. Main objectives of the “Balkans Digital Highway” pre-feasibility work .............................................. 16 II. PRINCIPAL RESULTS OF THE PRE-FEASIBILITY STUDIES ......................................................................................... 17 2.1. Demand analysis .............................................................................................................................................. 18 2.2. TSO infrastructure ......................................................................................................................................... 25 2.3. Policy and regulation ...................................................................................................................................... 28 III. RECOMMENDATIONS ........................................................................................................................................................ 31 CONCLUSIONS .......................................................................................................................................................................... 35 ANNEX 1. List of Stakeholders .............................................................................................................................................. 37 ANNEX 2. List of Recommendations by Country .............................................................................................................. 39 EXECUTIVE SUMMARY The availability of broadband infrastructure has organizational, and regulatory bottlenecks in each been found to be an important determinant of a country. country’s economic and social development. In recognition of this, the European Union (EU) ad- The engagement of utilities (gas, transport, elec- opted a Digital Agenda for Europe in 2012 that has tricity) in infrastructure-sharing activities is often since been updated by the European 2025 Gigabit driven by external factors, such as government or Society. The deployment of broadband infrastruc- regulatory pressure, and internal considerations, ture has also come to be a major priority for the such as the need to optimize costs and diversify Western Balkans region, which consists of Alba- revenue. Utilities usually already have extensive nia, Bosnia and Herzegovina, Kosovo, Montenegro, infrastructure in place or privileged rights-of-way North Macedonia, and Serbia. Infrastructure shar- for building new structures. However, analysis re- ing, an agreement between two or more operators vealed that in the Western Balkans, utilities, par- (including utilities from other sectors of the econ- ticularly the electricity sector, are facing declin- omy, such as electricity) to share various parts of ing returns as electricity consumption flattens, their infrastructure to provide services, is an effec- making infrastructure sharing an attractive way tive way to lower the costs of deploying broadband to diversify revenue. Similarly, the currently mod- communications networks and obtain better con- erate or stagnating growth of mobile and fixed nectivity; it also helps to protect the environment, broadband penetration and the quality of services reduce resource consumption, and increase energy are limited by the region’s existing telecommuni- efficiency. cations infrastructure. This encourages telecom operators to optimize their operating and capital Given the benefits, the World Bank set up the expenditures by using the shared infrastructure Balkans Digital Highway initiative to explore and and fiber optic network of the TSO. advance infrastructure-sharing opportunities in the Western Balkans region. The initiative carried If the region’s TSOs were to use their fiber assets out a number of pre-feasibility studies to (i) ex- to increase the network supply, it would potential- plore opportunities to use the excess capacity on ly transform the wholesale broadband markets in existing fiber optic ground wire networks located the Western Balkans. Indeed, estimates indicate alongside power grids operated by transmission that only 35 percent of the total capacity of all the system operators (TSOs) in the six Western Bal- TSOs’ fiber optic networks in the region is current- kan countries to generate additional income, (ii) ly being utilized. Infrastructure sharing can thus make a technical assessment of the existing ex- be seen as a “win-win” proposition: the govern- cess optical ground wire (OPGW) capacity on the ment wins by saving public funds and avoiding the TSOs’ networks, (iii) determine what changes are unnecessary duplication of infrastructure, utilities required in the national telecommunications and win by lowering the cost of installing infrastruc- energy frameworks within and between countries ture they will need anyway, and telecom operators to operationalize infrastructure sharing, and (iv) win by optimizing their networks to focus on pro- develop an action plan to advance infrastructure viding access to hard-to-reach areas and boosting sharing in the region that addresses the technical, retail operations. Summary _ 7 A technical inventory of the current excess OPGW wholesale broadband services (defined as “dark fi- capacity on Western Balkan energy utility net- ber” in the pre-feasibility studies) are not regulat- works points to the clear potential for nation- ed ex ante anywhere in the region. Some countries al-level and cross-border infrastructure sharing, have legislation to manage dispute resolution in and those existing networks might be a good infrastructure sharing and others do not, and in all starting point for further development. Currently, but Kosovo, electronic communications services however, engagement in infrastructure sharing in are not subject to official procurement procedures, the region is low because of the absence of stra- offering potential players more market flexibility. tegic political support and the lack of awareness Finally, no limitations on public-private partner- of the importance of TSOs’ OPGW networks to the ships were found in the legislation of any of the development of the electronic communications countries, which is useful when a combination of market. public and private funds is needed. These relatively few legislative obstacles could easily be eliminated The review of the policy and regulatory frameworks to create more uniform conditions for the develop- revealed that all six countries have transposed the ment of infrastructure-sharing services across the relevant EU directives into their energy laws to en- region. able TSOs to engage in infrastructure sharing, and Recommendations: >> Clear and long-term national broadband development strategic goals are a necessity. The absence of strategic guidance creates uncertainties for prospective market players. Given its potential economic impact, broadband policy should be at the top of each government’s agenda. >> Regulatory and legislative alignment with EU legislation should continue. Legislative bottlenecks re- lated to infrastructure sharing need to be removed to create regulatory certainty, ease the TSOs’ entry into the market, and ensure transparent, equal, and non-discriminatory rules for all. >> A review of TSOs’ long-term strategic objectives is needed. The approval of clear strategic objectives by company shareholders would ease communication with regulators, policy makers, and other stake- holders and thereby simplify a company’s decision-making process. >> Choosing a wholesale-only business model is advisable. Forecasts show that this business model has great potential in the future, with business opportunities that could include physical infrastructure sharing, dark fiber leasing, colocation space leasing, and/or capacity leasing. >> The separation of telecom activities from the TSO’s primary functions is advisable. A separate orga- nizational unit ensures more flexibility and transparency and provides a stronger incentive for employ- ees, who are usually remunerated according to their output. >> Start locally – think globally. It is easier to begin infrastructure-sharing activities at a national level, which is a necessary prerequisite in any case to international cooperation. TSOs in the Western Balkan TSOs should consider international cooperation—starting within the region. >> Human capacity is key to success. Even those TSOs that have already begun sharing their free optical infrastructure often do not have enough staff in their communications technology departments to sup- port the infrastructure services marketing and sales tasks and the implementation procedures. 8 _ Summary I. INTRODUCTION 1.1. who signed a Statement of Support at the Western Balkans Summit in Sofia on May 17, 2018. The follow- ing June, the European Commission (EC) adopted a staff Strategic importance working document on measures to support the Digital Agenda for the Western Balkans.5 The broadband ob- of infrastructure jectives of the EU, in which all of the Western Balkan countries aspire to membership, are therefore now di- sharing rectly relevant to the Western Balkans. Research indicates that an increase in broadband pen- etration is not necessarily homogeneously distributed. Significant differences exist not only among countries It is widely recognized that the availability of broad- and between wealthier and poorer regions but also band connectivity is an important determinant of the within countries, especially between their rural and ur- economic and social development of a region or coun- ban areas. The EC is therefore emphasizing efforts to try. Access to this high-speed broadband network can overcome this and other challenges, particularly the help foster economic growth, facilitate social cohesion, need to minimize infrastructure deployment costs. and improve citizen well-being. It is therefore not sur- This is where infrastructure sharing, an integral part of prising that the acceleration of broadband diffusion has the EC’s initiative, plays a vital role. The Western Bal- become one of the key policy aims for many national kan countries share this view, as they have agreed to and international policy bodies. The European Union “d. Establish regional dialogue on commercialization of (EU) is no exception. In fact, the EU has long recognized spare fibre optic assets; identify and address legal and and underlined the importance of widely available and regulatory constraints and implement the agreed com- competitively priced broadband and adopted a Digital mercialization model” as part of the Digital Integration Agenda for Europe in 20121 that was updated in 2016 actions agreed by the region’s leaders in the Multi-An- to mirror the strategic objectives of the European 2025 nual Action Plan on a Regional Economic Area signed in Gigabit Society.2 According to the EU, “very high-ca- Trieste in July 2017.6 pacity Internet connectivity is essential to unleash the next wave of competitiveness and innovation and to al- The Balkans Digital Highway initiative was set up by low Europe’s businesses and citizens to harvest the full the World Bank to (i) explore existing business opportu- benefits of the Digital Single Market.”3 To that end, it nities for regional integration involving the energy and outlined three main strategic objectives for 2025:4 telecommunications sectors through infrastructure sharing and (ii) develop a plan of action to operation- 1. Gigabit connectivity for all of the main socioeco- alize infrastructure sharing in the region’s state-owned nomic drivers electricity transmission utilities. The initiative was de- 2. Uninterrupted 5G coverage for all urban areas and signed to provide analyses, guidance, and critical input major terrestrial transport paths to the participating governments and their electricity 3. Access to connectivity offering at least 100 mbps transmission operators with a view to reaching con- for all European households sensus on a strategy to promote infrastructure sharing within and between utility companies. The deployment of broadband infrastructure has also come to be a major priority for the region of the Western Balkans, which consists of six countries: Albania, Bos- nia and Herzegovina (BiH), Kosovo, Montenegro, North Macedonia, and Serbia. Indeed, the objective has been explicitly endorsed by the six Western Balkan leaders, 1 EC, “A Digital Agenda for Europe” (Brussels: European Commission, 2010), ht- 6 Regional Cooperation Council, “Consolidated Multi-Annual Action Plan for a tps://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0245:FIN:EN:P- Regional Economic Area in the Western Balkans Six” (Sarajevo: Regional Coopera- DF. tion Council, 2017), https://www.rcc.int/docs/383/multi-annual-action-plan-for- 2 EC, “State of the Union 2016: Commission Paves the Way for More and Better a-regional-economic-area-in-the-western-balkans-six. Internet Connectivity for all Citizens and Businesses” (Brussels, European Com- mission, 2016), http://europa.eu/rapid/press-release_IP-16-3008_en.htm. 3 EC, “Connectivity for a Competitive Single Market: Towards a European Gigabit Society” (Brussels: European Commission, 2016), https://eur-lex.europa.eu/ legal-content/en/TXT/?uri=CELEX%3A52016DC0587. 4 For information on the EU’s program, “Broadband Europe,” see https://ec.europa. eu/digital-single-market/en/broadband-europe. 10 _ Summary 1.2. In general, the benefits of infrastructure sharing, whether telecom infrastructure only or across-sectors, can be summarized as follows (see also figure 1 below): What is infrastructure sharing and what are >> Cost savings. One of the most important benefits of infrastructure sharing is that it helps to signifi- cantly cut broadband network expansion costs. It the benefits? is widely agreed that civil engineering works con- stitute the dominant part of overall network de- ployment costs, regardless of the technology used, with estimates as high as 80 percent for certain Infrastructure sharing is commonly understood as an technologies.9 Thus according to the EC,10 with agreement between two or more market players to proper infrastructure-sharing policies in place (for share various parts of their infrastructure for the pro- example, improved access to suitable physical in- vision of services. This has been identified as an effec- frastructure, more cooperation in civil engineering tive way to lower the cost of network deployment and works, streamlined permit procedures for roll- to achieve better connectivity. Infrastructure sharing ing out broadband networks, and more buildings can also play an essential role in protecting the envi- ready for high-speed broadband), is it possible for ronment, reducing resource consumption, increasing an operator (a lessee) to save between 20 and 30 energy efficiency, and achieving sustainable growth.7 percent of network deployment costs. Other stud- Sharing can take place within a particular sector (e.g., ies also record potentially significant cost savings between telecom network providers) or between differ- (see table 1). ent sectors (e.g., between telecoms and other utilities, such as electricity grids, gas, or transport networks). Cost savings for infrastructure owners will large- Depending on the type, infrastructure sharing is usually ly depend on the existing/owned infrastructure. If categorized as either passive or active. Passive refers the infrastructure is already in place, its owners to the sharing of non-electronic infrastructure, such (e.g., telecoms or utilities) could partly cover depre- as sites, towers, poles, ducts, equipment rooms, and so ciation and/or maintenance costs by leasing spare forth, as well as civil engineering components, while ac- infrastructure components. If the infrastructure tive infrastructure sharing means that electronic (i.e., is yet to be built, cooperation in civil engineering active) elements of the core network are shared, such works may bring their initial investments down, as switches, antennas, management systems, or spec- and/or the installation of extra capacities to be trum.8 leased could guarantee additional revenues in the future. It should be noted that infrastructure sharing with- in the telecom sector has already been taking place It is worth mentioning that cost savings do not throughout the world for a number of years. Indeed, the necessarily mean smaller investments or bigger increase in the number of network sharing agreements profits. In an environment with clear strategic ob- has been especially notable since the 3G network’s li- jectives, it instead means better tailored invest- censing and regulatory requirements for network cov- ments, where some (i.e., infrastructure owners) erage were established. The deployment of 5G technol- can focus their resources on core networks and ogy could lead to a second big wave in the number of others (e.g., internet service providers [ISPs]) can sharing agreements. concentrate on access technologies. When gov- ernments learn that a 20-percent increase in in- formation and communications technology (ICT) investment can expand a country’s GDP by 1 per- cent,11 they may consider implementing policies to promote these investments. 7 APEC, “Survey Report on Infrastructure Sharing and Broadband Development 9 EC, “Impact Assessment Accompanying the Document Proposal for a Re- in APEC Region,” APEC Telecommunications and Information Working Group gulation on Measures to Reduce the Cost of Deploying High-Speed Electronic (Singapore: Asia-Pacific Economic Cooperation, 2011), Communications Networks” (Brussels: European Commission, 2013), https:// https://www.apec.org/Publications/2011/09/Survey-Report-on-Infrastructu- ec.europa.eu/digital-single-market/news/impact-assessment-accompanying-do- re-Sharing-and-Broadband-Development-in-APEC-Region. cument-proposal-regulation-european-parliament-and-council. 8 ITU, “ITU Infrastructure Development Portal” (Geneva: International Telecom- 10 Ibid. munication Union), https://www.itu.int/en/ITU-D/Regulatory-Market/Pages/ 11 Annie Turner, “20% Increase in ICT Investment = 1% Growth in GDP,” Inform, July InfrastructurePortal.aspx. 2015, https://inform.tmforum.org/features-and-analysis/2015/07/20-increase- in-ict-investment-1-growth-in-gdp. Summary _ 11 Table 1 Potential Savings from Infrastructure Sharing # Study Savings from Infrastructure Sharing (compared to not sharing), % 1. Analysys Mason, “The Costs of Deploying 16–24% Fibre-Based Next-Generation Broadband This study evaluated the potential cost savings Infrastructure” (2008), from the reuse of infrastructure owned by www.broadbanduk.org/wp-content/up- utilities. Cost savings depend on the areas loads/2012/08/http___www-broadbanduk6.pdf covered (urban vs. national) and technologies chosen (FTTC vs. FTTP). 2. Analysys Mason (2012), 29–58% “PIA versus self-Build Fibre in the Final Third: The study examined the cost savings that may be Digging into the Financials,” (2012) achieved by using passive infrastructure sharing in the UK. It concludes that savings depend on areas covered and additional works to be done: from 29% in relatively densely populated areas using a combination of infrastructure sharing and traditional trenching to 58% in sparsely populated areas using the cheaper slot-cutting trenching approach. 3. OFCOM/CSMG, “Economics of Shared Infrastruc- 57–67% ture Access” (2010), The study constructed a cost model comparing http://stakeholders.ofcom.org.uk/ the costs of sharing infrastructure and establish- binaries/consultations/wla/ ing a new network (in both urban and suburban annexes/csmg.pdf areas). It concluded that reuse of existing ducts where possible could result in up to 57% cost savings in urban and 67% in suburban areas. 4. EC, “Impact Assessment” (2013) 75% http://register.consilium.europa.eu/doc/s- According to this report, the initial cost of rv?l=EN&f=ST%207999%202013%20ADD%204 network deployment in Western Europe using existing ducts ranges from €20–25 per meter compared to an average of €80–100 per meter for deployments that require digging (costs were estimated by the Engage Group, Enhancing Next Generation Access Growth in Europe). 5. BEREC, “Report on Infrastructure Sharing” 16–35% (2018) This document provides an analysis of mobile https://berec.europa.eu/eng/document_regis- network infrastructure-sharing arrangements ter/subject_mat- that are in place in various European markets. ter/berec/reports/8164-berec-report-on-infrastr According to the report, costs savings depend on ucture-sharing the type of sharing: --passive sharing cost savings are between 16 and 35% of capital expenditures (CAPEX) and 16–35% of operating expenditures (OPEX); --active sharing (excluding spectrum) cost savings are 33–35% of CAPEX and 25–33% of OPEX. 12 _ Summary >> Network expansion/better connectivity. Consid- operators may concentrate their saved resources ering the amount of money needed to develop an on the deployment of the access (terminating) part end-to-end fiber network, it is difficult to expect of the network. As communication technologies that any one investor could commit to covering become increasingly complex, larger investments a substantial part of any country without public are needed in order to bring the latest technologies support, be it direct (financial subsidy) or indi- to end users. Infrastructure sharing, whether ac- rect (demand subsidy and regulatory certainty).12 tive or passive, allows operators to upgrade their Sharing the existing infrastructure or the costs of networks more quickly and at lower cost. Sharing building it new may significantly improve the busi- is especially attractive in less profitable regions, ness case for the less-covered rural areas, where since it minimizes the investment needs there.14 demand for internet services is lower and the cost of broadband network deployment is higher. Infra- >> Affordability. Infrastructure deployment and its structure sharing may similarly help to improve in- maintenance costs rest on the shoulders of end ternational connectivity if an interconnection with users. Naturally, the cost of the backbone net- alternative infrastructures (such as electricity, work (construction and maintenance) is only one transport, and so on) exists. component (though significant) in the whole cost structure of the final retail broadband price, which >> Additional revenues. Infrastructure sharing also depends on many factors, such as other cost el- benefits the host infrastructure providers through ements, demand for the service, pricing policies, additional rental revenues. Depending on the busi- and regulatory or competitive pressures. However, ness model and services provided, it can become the possibility of reducing the cost of the backbone an important revenue diversification source. Shar- network already offers some flexibility in adjusting ing only physical infrastructure would guarantee retail prices and providing a potential spin: “lower relatively lower revenues (at lower risk and addi- retail prices -> higher demand -> increased usage tional expenditure) when compared to active in- -> lower costs per customer (meaning additional frastructure sharing or engagement in the provi- resources for network expansion or further price sion of end-user services. Analyses of the Western competition).” Recent examples from New Zealand Balkan region show that the provision of just dark show that almost 90 percent of wholesale price fiber service can provide an additional 3–5 percent reductions have been passed on to residential con- on top of existing revenues for transmission sys- sumers.15 tem operators (TSOs). A similar amount of addi- tional revenue can be attributed to capacity ser- >> Public benefits, environmental impact. Sharing vices; these, however, require Dense Wavelength infrastructure can also reduce public infrastruc- Division Multiplexing (DWDM) equipment that only ture expenditure by avoiding unnecessary network a few Western Balkan TSOs possess. The engage- duplications and multiple civil works. Tradition- ment in retail broadband provision activities may ally, utilities are operating in a strict regulatory offer revenue diversification for utilities of up to environment with regulated prices and rates of 20 percent,13 though at significantly higher invest- return. Therefore, big infrastructure deployment ment and risk. projects usually require not only an approval from a regulator, government, or municipality, but also >> Competition and time-to-market. Infrastructure significant financial support (through different sharing reduces barriers to entry for new market funds, public loans, and so on). Avoiding network players. Upstream markets are often controlled duplications and multiple civil works may help to by incumbent operators, and entering this market save these public funds for other important pub- requires substantial initial investments. Therefore, lic needs (such as health care, education, and so by providing the possibility of accessing or deploy- forth). Infrastructure sharing also has a positive ing more economically viable backbones, infra- environmental impact by reducing the carbon structure sharing offers a more rapid and cost-ef- footprint (through materials, energy, and emission fective way to enter the market. By renting the whole or part of a high-quality backbone network, 12 Andrea Faggiano and others, “Utilities’ Contribution to National Fiber Develo- 14 M. Andrews, M. Bradonjic, and I. Saniee, “Quantifying the Benefits of Infrastruc- pment” (Paris: Arthur D. Little, 2017), http://www.adlittle.com/sites/default/files/ ture Sharing,” Researchgate, June 2017, https://www.researchgate.net/publica- viewpoints/adl_utilities_contribution_to_fiber_deployment.pdf. tion/317673723_Quantifying_the_Benefits_of_Infrastructure_Sharing. 13 Ibid. 15 Glimp, “Cheaper Broadband Prices for Consumers” (Auckland: Glimp, 2017), https://www.glimp.co.nz/blog/cheaper-broadband-prices. Summary _ 13 savings).16 Some analyses17 suggest that up to 36 percent of fiber networks’ annual carbon footprint can be reduced by using existing infrastructure for fiber network deployment. Figure 1 Potential Benefits of Infrastructure Sharing - Increased - Lower barriers coverage A decrease to market - Newer - Increased in OPEX entry technologies broadband and CAPEX - Freed - Decreased take-up assets time-to-market - Lower prices National Increased competitiveness GDP Infrastructure - A smaller environmental impact duplications - Public resource savings avoided Source: Authors. 1.3. faster and may reduce installation costs signifi- Engagement cantly. Furthermore, utilities, especially electric- ity companies, are not newcomers in deploying communication networks, which they need for in- of utilities ternal operations. For example, TSOs use ICTs for process monitoring, grid management, automatic emergency shutdown, maintenance and security systems, internal communications, data transfer The engagement of utilities (gas, transport, electricity) and storage, billing, and corporate information in infrastructure-sharing activities is usually driven by technology (IT) networks. Since fiber optics are a two factors: prevalent cable technology (see box 1), telecom op- erators can reuse the existing infrastructure while External (governmental or regulatory) pressure. optimizing their networks and saving the cost of Countries that have clear strategic objectives for deploying new ones. A number of utilities around broadband development usually realize infrastruc- the world are stepping in to fill the gaps left by ture sharing’s potential in helping them to achieve telecom players (see “Toolkit on Cross-Sector In- their information goals. They do so by formulating frastructure Sharing”18 for detailed case studies appropriate policies that encourage or mandate and examples). infrastructure sharing. Utilities are frequently cov- ered under the scope of such policies, as typically they already have extensive passive infrastruc- ture or privileged rights-of-way (ROW) for building new structures, which makes deployment much 16 Deloitte and APC, “Unlocking Broadband for All: Broadband Infrastructure Sha- 18 Macmillan Keck and Columbia Center on Sustainable Development, “Toolkit on ring Policies and Strategies in Emerging Markets” (New York and Melville, South Cross-Sector Infrastructure Sharing” (New York: Macmillan Keck and Colum- Africa: Deloitte and Association for Progressive Communications, 2015), https:// bia Center on Sustainable Development, 2017), http://pubdocs.worldbank.org/ www.apc.org/sites/default/files/Unlocking%20broadband%20for%20all%20Full%20 en/307251492818674685/Cross-Sector-Infrastructure-Sharing-Toolkit-fi- report.pdf. nal-170228.pdf. 17 A. S. G. Andrae and G. Griffa, “Carbon Efficiency Evaluation of FTTx Deploy- ment,” Huawei Communicate 57 (2010), https://www.huawei.com/mediafiles/ CORPORATE/PDF/Magazine/communicate/57/HW_076453.pdf. 14 _ Summary BOX 1. Fiber Optics in Electrical Networks revenue diversification offered by infrastructure sharing thus becomes an attractive option. In ma- ture markets, a utility could make up to 20 percent of its revenue from infrastructure sharing, depend- Electric utility companies are increasingly apply- ing on the chosen business model.20 The variety of ing fiber optics in their communication systems. services may range from rough dark fiber service Optical ground wire (OPGW) is one of the most provisioning to data traffic transit in the wholesale common cable technologies used by power utili- market or the provision of final broadband services ties (including TSOs in the Western Balkans). Fiber on a retail level. Retail business models are richer networks offer reliability, a major requirement for in revenue contribution but not necessarily in prof- the industry, as being less susceptible to outages its, 21 a possible reason why utilities prefer to be is very important to electricity companies. engaged as wholesale-only providers. For example, Northpower Limited, an electricity company oper- As fiber optic cables are made out of very strong ating in New Zealand, has implemented the active and resistant material, they are not vulnerable wholesale model for its Ultrafast Fiber and now has to extreme weather conditions. Optical fiber is more than 45 service providers on its networks. also quite economical for electric utilities, since Open Fiber in Italy (owned by Enel Group) seems to they already own rights-of-way (ROW) and pow- be following the same approach.22 There are other er poles, making it possible for them to install fi- successful examples around the globe. Moreover, ber optic cables alongside their existing overhead some experts23 think that wholesale-only business power lines (OHLs) and power poles. has great potential, as the availability of dark fiber will become even more critical for mobile operators Utilities could lower the cost of fiber network de- when they upgrade to 5G technologies. The 5G ployment through the reuse of spare infrastruc- system uses higher frequencies with a lower range ture. Furthermore, the infrastructure a utility uses and therefore requires a build-out of additional to offer its core electrical services is generally very base stations over time, especially in densely pop- similar to the fiber network architecture. Electric ulated areas; it is therefore likely to require the utilities are therefore well positioned to play a deployment of fiber to the vast majority of base complementary role in national fiber network de- stations (more than 90 percent) in comparison to velopment. today’s networks.24 Source: Authors. In sum, infrastructure sharing may result in a “win-win” situation, where society/government wins by saving Internal drivers (cost optimization and revenue public funds and avoiding the unnecessary duplication diversification). Oftentimes utilities (such as gas, of infrastructure, utilities win by lowering the cost of in- water, electricity companies) are state- or mu- stalling infrastructure they will need anyway, and tele- nicipality-owned companies, basically providing com operators win by optimizing their networks and regulated services. As they are facing significant concentrating their investments on “last mile” access, pressure to keep costs and service prices low, retail operations, and greater customer satisfaction any investments or additional costs must be well (while limiting their upfront investments in fiber deploy- founded and communicated to regulators. For ex- ment). ample, the role of fiber optics as reliable communi- cation infrastructure for grid management needs Of course, what looks good on paper usually faces chal- to be clearly formulated, understood, and, in some lenges in the real world. Companies (utilities and tele- cases, approved by a regulator.19 The benefits of com operators) have different approaches to network infrastructure sharing and its potential to lower planning, use different vendors, and manage their net- existing costs may simplify the process. works differently. Sharing their infrastructure requires a delicate intervention to ensure that their partnership Furthermore, utilities, particularly the electricity sector, are facing the challenge of declining reve- nue as electricity consumption flattens due to in- 20 Ibid. creasing energy efficiency, more distributed gen- 21 Ibid. 22 Ibid. eration, and less energy-intensive industries. The 23 I. Godlovitch and T. Gantumur, “The Role of Wholesale Only Models in Future Networks and Applications” (Bad Honnef, Germany: WIK Consult, 2018), https:// www.stokab.se/Documents/Nyheter%20bilagor/The%20role%20of%20wholesa- 19 Faggiano and others, “Utilities’ Contribution to National Fiber Development.” le%20only_WIK.pdf. 24 Ibid. Summary _ 15 is sustainable and acceptable to all parties.25 Utilities >> to determine a plan of action on how to realize in- often lack sufficient telecom capabilities in terms of frastructure sharing in the entire Western Balkan human resources and expertise, not only in planning, region based on the technical, organizational, and design, construction, operations, and maintenance but regulatory bottlenecks identified in each country also in commercial activities. Simply put, utilities often lack personnel who understand how to make money out In the pursuit of these objectives, the World Bank has of spare resources, and they also often face their own cooperated with all the Western Balkan TSOs and all specific challenges, such as safety requirements for in- the relevant private, public, and other stakeholders, in- stalling fiber networks with minimum interruptions to cluding regional organizations.27 The list of participants their core business.26 Last but not least, utilities first and stakeholders is provided in Annex 1. have to comply with the requirements and regulations of their sector—for example, the approval of investment This analysis is based on information obtained: plans by the energy regulator in order to ensure that their primary service (electricity, for example) remains i) directly from stakeholders (questionnaires were affordable. These challenges often make utilities reluc- sent to all relevant stakeholders)28 tant to engage in infrastructure-sharing activities. ii) from secondary sources and publicly available in- formation (reports from international institutions, such as the International Telecommunication 1.4. Union [ITU], EC, and World Bank, and from nation- al institutions, such as ministries, regulators, and Main objectives iii) national statistical offices) from national and EU legislation of the “Balkans iv) from discussions with experts, including direct interviews with all incumbent operators in the Digital Highway” Western Balkan region, international carriers, and others pre-feasibility work The data were collected, and secondary sources and available public information analyzed between April 2017 and January 2018. For the purpose of creating a The World Bank’s “Balkans Digital Highway” initiative technical inventory of the TSOs’ existing and planned has pursued its pre-feasibility work, as described below, OPGW in the Western Balkans, a simplified Geographic with the overall objective of determining whether it is Information System (GIS) was used. The analytical tool worthwhile to pursue national and especially regional EleGIS was designed to develop infrastructure maps. infrastructure sharing and thus proceed with actual EleGIS was provided with data received from TSOs and feasibility studies: data (geographical locations of the TSOs’ facilities) found during the course of the research. >> to scope out existing demand and business oppor- tunities in the wholesale markets, both national The pre-feasibility work for the “Balkans Digital High- and cross-border/regional, for using the excess ca- way” initiative was financed by the Public-Private pacity available on the existing fiber optic ground Infrastructure Advisory Facility (PPIAF). PPIAF is a wire networks, installed alongside the power grids multi-donor technical assistance facility financed by and operated by TSOs in the six Western Balkan 17 multilateral and bilateral donors: the Asian Develop- countries, as a way to generate additional income ment Bank, the European Bank for Reconstruction and >> to take detailed stock of existing excess optical Development, the International Finance Corporation, ground wire (OPGW) capacity on the TSOs’ net- the Millennium Challenge Corporation, the World Bank, works, including cross-border networks, from a and the governments of Australia, Austria, Canada, technical standpoint France, Germany, Netherlands, Sweden, Switzerland, >> to determine what changes are required in the the United Kingdom, and the United States. PPIAF pro- national telecommunications and energy frame- vides technical assistance to governments to support works within each country to operationalize infra- the creation of a sound environment enabling the pri- structure sharing vate sector to provide basic infrastructure services. 25 M. Paolini, “The Benefits of Infrastructure Sharing,” FierceWireless, June 29, 2010, https://www.fiercewireless.com/tech/paolini-benefits-infrastructure-sha- 27 These include the Energy Community and the Regional Cooperation Council. ring. 26 Faggiano and others, “Utilities’ Contribution to National Fiber Development.” 28 Over 1,000 e-mails and over 500 phone calls were exchanged. 16 _ Summary II. PRINCIPAL RESULTS OF THE PRE-FEASIBILITY STUDIES 2.1. >> providing an overview of the potential demand (and also competition) from the wholesale level, that is, the main national market players, their Demand analysis independence in terms of infrastructure deploy- ment, and any unserved needs from local, nation- al, or international carriers. The results were used to forecast the potential demand for the infra- One of the initial tasks of the pre-feasibility work was to structure-sharing services of TSOs in the Western evaluate the potential demand for infrastructure-shar- Balkans. ing services. Knowing that this demand comes mainly from two sources—retail demand for ICT services, in ICT market in general. The countries of the Western particular for broadband services, and demand from Balkans are at different stages of ICT development. other market players for network capacities—the work This development can be analyzed based on sever- has focused on: al parameters, such as the penetration of fixed tele- phone subscriptions, mobile cellular subscriptions, fixed >> providing a general market analysis of the broad- (wired) broadband subscriptions, mobile broadband band market in the Western Balkans, including the subscriptions, the relative share of households with a main indicators, the primary market players and computer, and so forth. In order to avoid possible meth- their market shares¸ broadband technology splits, odological differences in statistics, an aggregated index and the intensity of service usage, as well as so- of ICT development—the ICT Development Index (IDI) of cioeconomic indicators influencing the broadband the ITU—was used. This index includes different mea- market and a forecast of broadband dynamics for sures of ICT infrastructure, usage, and skills. The ICT the period 2018–23. Development Index indicates that compared globally, the Western Balkan countries are at a middle level of ICT sector development, with Serbia having made the most progress and Albania the least29 (see table 2). Table 2 Western Balkans: IDI Comparison with Developing and Developed Countries (2016) Republic of North Herzegovina Montenegro Bosnia and Developing Daveloped Macedonia countries countries Albania Kosovo Serbia IDI score: 4,30 5,18 5,43 6,05 5,47 6,79 6,90 8,06 Ideal value weight ICT Readiness 1 0,4 4,96 4,89 5,93 6,75 6,27 7,92 7,82 8,40 Fixed-telephone subscriptions per 100 inhabitants: 60 0,2 8,5 7,8 19,5 17,5 3,4 23,8 39,1 38,1 Mobile-celular subscriptions per 100 inhabitants: 120 0,2 96,3 105,1 89,2 100,7 97,7 167,5 128,5 127,3 International internet bandwidth per internet user (kbit/s): 977 0,2 53 57 99 109 80 203 193 140 Households with computers (%): 100 0,2 34,4 27,7 49,2 69,8 71,5 58,2 65,8 81,5 Households with internet acces (%): 100 0,2 40,4 37,0 57,1 70,4 73,1 69,8 64,7 82,9 ICT Use 1 0,4 3,24 4,43 4,52 5,36 3,67 5,38 5,96 7,48 Individuals using internet (%): 100 0,33 39,0 66,4 69,3 72,2 51,1 69,9 67,1 79,6 Fixed (wired) BB subscriptions per 100 inhabitants: 60 0,33 8,7 8,3 17,4 17,9 11,9 18,5 23,9 30,3 Active mobile BB subscriptions per 100 inhabitants: 100 0,33 43,6 52,6 37,4 59,0 39,2 60,7 71,9 94,4 ICT Capacity 1 0,2 5,08 7,26 6,23 6,03 7,48 7,36 6,96 8,53 Mean years of schooling: 15 0,33 7,4 9,6 9,0 9,4 10,8 11,3 10,8 11,7 Secondary gross enroiment ratio: 100 0,33 74,9 95,8 89,3 78,6 94,3 90,3 88,2 109,8 Tertiary gross enroiment ratio: 100 0,33 28,3 58,1 37,7 39,6 58,1 55,3 48,4 68,2 Source: ITU, “ICT Development Index,”2017, https://www.itu.int/net4/ITU-D/idi/2017/index.html; for Kosovo, the IDI index was supplemented with national data. 29 Serbia is ranked as 51st country out of 175 countries. Albania, on the other hand, is in 91st place. 18 _ Summary Broadband market in the Western Balkans. People can The introduction of this technology will require sig- access the internet through two basic ways: through nificant infrastructure investments in all parts of a fixed broadband connection at home or elsewhere the mobile network. (in the building) and via a wireless connection on a cell phone or tablet. At the initial stages of broadband mar- >> It can be concluded that the private sector–led ket development when demand had not yet escalated, penetration of fixed broadband connections has both fixed and mobile technologies were perceived as been saturated. In most Western Balkan coun- interchangeable. However, over time, fixed technologies tries, fixed broadband penetration is stagnant—its started to play a critical role in providing the guaran- growth is slow or slowing down. Nationally, higher teed high-speed connections to institutions and house- fixed broadband penetration may be observed in holds that mobile networks could not offer. Looking more concentrated areas around the main cities, ahead, mobile broadband technologies are evolving and as geographical factors and socioeconomic indica- with introduction of 5G, high-speed connections can be tors are not conducive to its being evenly spread ensured. Ironically deployment of 5G will rely on fixed throughout an entire country. In rural areas, alter- fiber infrastructure that shall be linking most of the el- native (not fixed broadband) technological solu- ements in the 5G network (incl. antennas). Thus, over tions prevail, indicating that thus far, commercial time, both technologies (and infrastructures) became (that is, without public co-financing) fixed broad- complementary to each other and are considered to be band deployments are not viable. Fiber-to-the-x essential national assets. (FTTx) access growth is driven by infrastructure improvements that are in turn driven by compet- The analysis has revealed that the currently moderate itive pressure, while greenfield FTTx deployments (and in some cases stagnating) growth of mobile and are rare. This implies that the current FTTx infra- fixed penetration and the quality of services are limited structure footprint is not increasing. The number by the existing infrastructure. Moreover, further growth of users of FTTx access is doubling every year, but would require both greenfield deployments and infra- its access technology share ranges from only 0.1 structure upgrades. For instance, fiber connections to percent in BiH to 11 percent of total broadband the towers and antennas in mobile networks are critical connections in Albania. prerequisites to the rollout of 5G services. Similarly, the technical viability of offering high-speed fixed connec- >> End users in the majority of Western Balkan coun- tions to households and institutions will be determined tries are paying relatively high prices (measured by the footprint of the fiber networks. The analysis has in GNI per capita) to get fixed broadband access. also confirmed the differences in the penetration levels It could be assumed that the fixed broadband pen- of both fixed and mobile broadband access among and etration rate would increase as residents’ incomes within Western Balkan countries. Key observations in- increase and/or the price for services decreases. clude: >> The average internet speed varies widely from >> The mobile sector is predominant in all six West- country to country and within countries. At the ern Balkan countries, as mobile penetration is time of this writing, the highest average speed high and has started to reach its saturation was recorded in Serbia (14.4 Mb/s), while the low- point. On average, mobile penetration in the region est was in Albania (3.2 Mb/s). The differences in stood at 114 percent at the end of 2016. The high- the average internet speeds are similarly very high est was registered in Montenegro (167 percent) within the countries of the Western Balkans. The and the lowest in BiH (97 percent). However, the data collected indicate that on a regional level, the gap between mobile and mobile broadband pene- highest average speed was recorded in the North tration is still significant in all the countries stud- Banat District of Serbia (17.8 Mb/s) and the lowest ied, thus showing the potential for future growth. in Berat County in Albania (only 0.2 Mb/s). Provid- The mobile broadband penetration in the Western ers of fixed broadband services offer users high- Balkans was 55 percent on average at the end of speed subscription packages but do not guaran- 2016. The biggest gap can be seen in BiH, where tee speeds. Differences between the advertised only 38 percent of active mobile users are using and actual broadband speeds are among the main the mobile internet, most likely because the de- complaints in most of the countries studied. ployment of new generation mobile networks has been delayed there. The highest mobile broadband penetration is around the capital cities, where cov- erage of 3G and 4G networks is better. No country in the Western Balkans has yet begun the test- ing or commercial exploitation of 5G technology. Summary _ 19 Table 3 Western Balkans: Fixed Broadband30 Internet Penetration (per Household), Forecast, and Growth 2016 2023 HHs Subscribers Penetration Subscribers Penetration CAGR (million) (million) (%) (million) (%) (%) Albania 0,72 0,27 36,9% 0,40 55% 5,9% Bosnia and Herzegovina 1,16 0,66 57,0% 0,69 59% 0,6% Kosovo 0,32 0,24 73,9% 0,31 95% 3,6% Republic of North Macedonia 0,58 0,38 65,6% 0,45 77% 2,4% Montenegro 0,19 0,11 58,9% 0,13 67% 1,8% Serbia 2,47 1,44 58,3% 1,98 80% 4,6% Source: Telecommunications agencies of the Western Balkan countries, 2016. Table 4 Western Balkans: Mobile Broadband31 Internet Penetration, Forecast, and Growth 2016 2023 Population Subscribers Penetration Subscribers Penetration CAGR (million) (million) (%) (million) (%) (%) Albania 2,78 1,57 56% 2,94 106% 9,4% Bosnia and Herzegovina 3,52 1,32 38% 2,88 82% 11,7% Kosovo 1,82 1,24 68% 1,98 109% 7,0% Republic of North Macedonia 2,08 1,19 57% 2,12 102% 8,6% Montenegro 0,62 0,37 60% 0,89 143% 13,3% Serbia 7,06 4,85 69% 8,31 118% 8,0% Source: Telecommunications agencies of the Western Balkan countries, 2016. Note: Methodology of EKIP (Montenegro’s telecommunications agency) differs from other telecommunications agencies, hence ITU data for Montenegro in 2016 were used (marked in blue). Expected growth over the next several years in the Potential demand at the wholesale level stems from Western Balkans will be driven by the higher afford- the main national market players and their networks. ability of services and increased network accessibility. At first glance, it may appear that telecom operators, However, this will require investments in technology with their own infrastructure, do not have any demand to enable the countries, especially BiH and Albania, to for TSOs’ infrastructure-sharing services. This is true, keep up with the rest of Europe. To achieve the policy as long as the former have complete and far-reach- goals while responding to key socio-demographic and ing infrastructure, which is rarely the case, especially economic projections, the Western Balkan countries in rural, unprofitable areas. Furthermore, today, when need to reevaluate the ability of their current networks quality of service is one of the key measures for com- to absorb the projected demand for broadband and to petition, operators often want to have some backup (re)define their action plans. The private sector might capacity. For this reason, telecommunication providers require public support to cover the less profitable areas usually deploy redundant (backup) networks (in rings, in order to address the urban-rural divides within coun- for example) to have various alternatives operating in tries. This is precisely where infrastructure sharing may parallel, which, again, are expensive to own. Telecom play an essential role. operators are thus not only competitors to TSOs in the market of wholesale broadband services but also po- tential customers (at the wholesale level). The second wave of the privatization of the telecom- 30 Fixed broadband refers to fixed access to the public internet at speeds equal munications sector in the Western Balkans allowed to or greater than 256 kbit/s in one or both directions. 31 Mobile broadband refers to mobile access to data communications (e.g., the foreign carriers to enter the national telecommuni- internet) at speeds greater than or equal to 256 kbit/s in one or both directions. cation markets. These commercial companies have 20 _ Summary their own regional (e.g., Telekom Slovenije, Telekom Analysis has confirmed that although competition in Srbije, Telemach), international (e.g., Telenor, Telekom the wholesale broadband market exists, it is not suffi- Austria), or global (e.g., Deutsche Telekom, Vodafone) cient, as in every country there is at least one market footprint. All of these carriers have a strong presence in player that has at least half of the market or more. The the Western Balkans. Some have managed to acquire table below provides the Herfindahl-Hirschman (HHI) or build their own fiber optic networks in the countries estimation based on the length33 of the backbone opti- in which they operate (e.g., Telekom Slovenije, Telekom cal cables of the wholesale broadband providers in each Srbije, Telemach, Deutsche Telekom, Telenor); however, country. The calculated value of the HHI is highest in others (e.g., VIP.mobile in Serbia, Vodafone in Albania) North Macedonia and Serbia, indicating the weakest have chosen to rent fiber optic networks to complete level of competition among the wholesale broadband their networks. In addition, there are roughly 250 local service providers in those countries. The lowest value of ISPs in the region whose activities basically depend on the HHI is in Montenegro, indicating that competition the availability of wholesale broadband services. In the on the wholesale broadband services market is more Western Balkans, local ISPs play a critical role in pro- evenly distributed. viding internet access in rural locations; usually they are the first to move into remote villages. In many in- The potential entry of TSOs into the market (increasing stances, their services are a valuable alternative to the supply by bringing their fiber assets) would have a pos- incumbent operators’ offerings. During the pre-feasibil- itive transformative impact on wholesale broadband ity work, it was determined that local ISPs are partic- markets in the Western Balkans. In terms of the HHI, ularly in demand for alternative wholesale broadband the concentration index would undergo the greatest services.32 adjustment in Serbia and North Macedonia and only a relatively small one in Montenegro. According to estimations, the current size of the West- ern Balkan wholesale broadband market is at least €37 million, which is about 1.2 percent of the total electronic communications market of the EU (see table 5). For the purposes of this evaluation, providers with their own backbone optical network were considered, regardless of whether they offer access to that network on the market or use it exclusively for their own needs. Table 5 Western Balkans: Overview of Wholesale Broadband Market Size Wholesale BB market EC market size share size share [€ million] [%] [€ million] [%] Albania 1.8 4.7% 252 8.1% Bosnia and Herzegovina 6.8 18.1% 716 23.0% Kosovo 1.5 4.0% 168 5.4% Republic of North Macedonia 2.5 6.8% 283 9.1% Montenegro 1.7 4.5% 152 4.9% Serbia 23.3 61.9% 1,544 49.5% Total 37.6 3,116 Source for electronic communications market size: National Regula- tory Authorities (NRAs) of the Western Balkan countries for 2016. Note: Estimation of the wholesale broadband market size is based on data on the total quantity/length and prices of fiber optics (dark fiber) provided and collected during the market research. 32 This is the case for all Western Balkan countries and is especially true in 33 This approach is indicative and accounts for the fiber used by many carriers Albania. for their own purposes. However, it provides good initial understanding of the situation in each country’s market. Summary _ 21 Table 6 Western Balkans: Current Wholesale Broadband Services Concentration (HHI) Index (without and with the potential participation of the TSO) existence of competitor 1 competitor 2 competitor 3 HHI competition market share market share market share index Albania YES 55% 26% 11% 0.39 Bosnia and Herzegovina YES 50% 30% 20% 0.38 Kosovo YES 55% 30% 10% 0.40 Republic of North Macedonia YES 65% 25% 6% 0.49 Montenegro YES 50% 29% 17% 0.36 Serbia YES 67% 16% 11% 0.49 existence of competitor 1 competitor 2 competitor 3 TSO HHI difference competition market share market share market share market share (with TSO) Albania YES 41% 20% 8% 25% 0.19 0.20 Bosnia and Herzegovina YES 38% 23% 15% 25% 0.18 0.20 Kosovo YES 41% 23% 8% 25% 0.19 0.21 Republic of North Macedonia YES 49% 19% 5% 25% 0.22 0.27 Montenegro YES 38% 22% 13% 25% 0.18 0.19 Serbia YES 51% 12% 8% 25% 0.22 0.27 Ideal situation YES 25% 25% 25% 25% 0.17 0.17 Source: Networld Consulting, “Regional Broadband Market Study,” Report for the Balkans Digital Highway, 2018 (Unpublished). Note: The calculation is made based on the estimation of the relative share (i.e., the length of the optical cable leased by a provider divided by the total length of the optical cable leased in a country) of the leased backbone optical cable of the wholesale broadband providers/competi- tors. The data came from wholesale broadband providers/competitors, NRAs, and clients of broadband providers. According to a forecast of the market up to 2023, Table 7 Western Balkans: Forecast of Wholesale Broad- the size of the Western Balkan wholesale broadband band Market Size in 2023 market may potentially decrease to around €29 mil- lion. The biggest share is projected to remain in Serbia, Wholesale BB market EC market where the total share of the market is likely to fall to size share size share €16 million, or roughly 55 percent of the market. The [€ million] [%] [€ million] [%] second biggest wholesale broadband market will like- Albania 1.7 5.7% 227 8.1% ly remain in BiH, with an absolute value of almost €6 Bosnia and Herzegovina 5.7 22.1% 600 23.0% million and a share of around 22 percent. Next is North Kosovo 1.5 4.8% 146 5.4% Macedonia, with an absolute value of more than €2.4 Republic of North Macedonia 2.4 8.1% 246 9.1% Montenegro 1.5 5.0% 132 4.9% million and a share of around 8 percent. The size of the Serbia 16.2 54.2% 1,203 49.5% Albanian, Montenegrin, and Kosovan markets is likely Total 28.9 2,554 to range between €1.5 and €1.7 million (in the relative value of 4.8 to 5.7 percent of the total Western Balkan Note: Estimations are based on Networld Consulting methodology wholesale broadband market). The Western Balkan (2018), wholesale broadband market will likely represent a bit more than 1.1 percent of the total electronic communi- There are several reasons for this, most importantly the cations market of the EU (table 7). decrease in wholesale prices. Due to competitive pres- sure, prices of wholesale broadband access are falling globally, starting with the mature telecommunications markets. This trend is likely to advance into the West- ern Balkan countries. Wholesale broadband (including fiber optics) prices are also likely to fall if a new big mar- ket player were to enter the market in each country— that is, a TSO. 22 _ Summary On the other hand, it is important to emphasize that distribution system operators (DSOs). the demand for dark fiber services is going to increase, primarily because of the more rapid development of To sum up, whereas the majority of Western Balkan mobile broadband than fixed broadband access. Mo- countries (Albania, Kosovo, Montenegro, and North bile broadband access is going to proliferate, and the Macedonia) experienced their peak revenue from tele- steady growth of the average broadband connection communications services several years ago, others (BiH speed will follow. At the same time, broadband penetra- and Serbia) are only now encountering it, and operators tion in the fixed networks will grow moderately, and the are or will soon be facing a fall in revenue from this in- average broadband download speed per user will rap- dustry. This trend inevitably forces operators not only idly increase. External factors will play a role. Plenty of to optimize their operating expenditures (OPEX) but large international internet carriers are still not present also to shrink their capital expenditures (CAPEX). It will in the Western Balkans, though they are operating in also force them to think about the use of the shared several EU countries, including those neighboring the infrastructure and fiber optic network of the TSO as a Western Balkan region. However, their fiber-optic back- potential “win-win” option. bone networks (either owned or leased) are somehow bypassing the Western Balkans. This is likely because, In the course of this study, the following groups of po- among other reasons, telecommunications policies are tential clients were identified that would likely be inter- not sufficiently transparent, the leasing prices of the fi- ested in the fiber optic networks of TSOs: ber optic backbone network are too high, the countries’ fiber optic networks are fragmented and not unified, (1) Initially, demand is likely to come from the follow- and there are insufficient business opportunities. If the ing groups of telecom operators: i) local ISPs who situation were to improve, Western Balkan countries need only a point of presence (PoP), ii) regional could expect the larger international internet carriers operators that may need alternative connectivity to move into their region also. between cities/regions/districts/counties/coun- tries; and iii) alternative operators that are cur- Additional factors affecting the increased traffic and rently leasing dark fiber at unfavorable prices and/ network capacity requirements are the performance or unfavorable conditions, mostly from incumbent of the internet exchange points (IXPs), the number of telecommunications operators that are owners high-quality data centers in a country, and of course, of most of the widespread fiber optic networks in the content delivery networks (CDNs). CDNs and data Western Balkan countries; centers are particularly important sources of demand for high-speed broadband that would need to be sup- (2) Demand might also come from incumbent tele- ported by reliable national and regional backbones. At communications operators looking for the deploy- the moment, these factors are not putting significant ment of redundant (backup) network (segments) pressure on the networks in the region, but this will and alternative physical paths, including interna- change over time. Currently, the performance of IXPs tional paths; in the Western Balkans is weak, and the majority of the data centers are technologically incomplete. The CDNs (3) Demand from international operators is then likely are still relatively inadequately developed in most of the to follow, including those with a commercial inter- countries, with the exception of Montenegro. Based on est in the Western Balkans or those transiting in- the data obtained, as far as the wider Balkan region is ternet provider traffic through the region; concerned, CDNs are indeed sufficiently developed only in Romania. This area is expected to develop relatively (4) Finally, demand might come from the public/pri- quickly, however, especially in countries with their own vate non-telecom sector actors, including but not strong production (video) content, sound international limited to: i) academic and research networks of internet connections, and better knowledge of foreign Western Balkan countries that require connectiv- languages, among other factors. ity for universities, schools (both primary and sec- ondary), and research institutions, ii) governments TSOs may consider some of these activities (IXPs, and state administrations that require connectivi- CDNs, data centers) to be reliable sources of addition- ty for their agencies, iii) banks that are facing strict al revenue in the future. For example, in Lithuania, the regulatory rules about the safety and reliability of company that operates the TSO’s fiber network (Data- their dedicated networks’ connectivity, and iv) big Logistics) is also engaged in the business of data cen- companies that will otherwise need to deploy their ters, building advanced centers and selling their capac- own private networks, connect supercomputers to ities to strategic national and international companies, their research and development centers, or provide such as banks, larger organizations, or even TSOs and access to centralized data centers. Summary _ 23 The pre-feasibility work has determined that there main transport corridors (for example, Podgorica – Ti- is currently considerable demand for infrastructure rana – Elbasan – border with Greece, border with Hun- sharing among TSOs that will continue well into the gary – Subotica – Novi Sad – Belgrade – Skopje, border future. with Croatia – Banja Luka – Sarajevo, and so on). Sev- eral of the Western Balkan countries are located at the The analysis estimated that the highest market po- crossroads of pan-European corridors and this will, if tential for the fiber optic cables of TSOs (see figure 2) there is fair and transparent regulation, very likely pull would be in the network segments near all the capitals in the most prominent international carriers that are of the Western Balkan countries and those along the currently bypassing the Western Balkans. Figure 2 Western Balkans: Market Potential of TSOs’ Fiber Optic Networks Beograd Požega NIŠ OF Market potential: 1 2,3 4,5 6,7 >7 Source: Networld Consulting (2018). 24 _ Summary 2.2. OPGW interconnection and it is used for TSO data exchange for the observability area. TSO infrastructure >> In Montenegro, CGES already provides wholesale services by leasing optical fibers and other infra- structure to the telecom sector. The capacity of its 689 kilometer-long OPGW cable is 48 fibers of two The basic task of TSOs is transmitting electricity and types. CGES interconnects with electricity compa- providing system services for a complete electric pow- nies in Albania, BiH, Kosovo, and Serbia.37 er system. With a professional approach, know-how, and advanced technology, TSOs in the Western Bal- >> In North Macedonia, MEPSO has built 1,385 kilo- kans provide safe, reliable, and uninterrupted electric meters of OPGW cable with interconnections to power transmission both within their countries and Bulgaria, Greece, Kosovo, and Serbia and plans to across borders. Not only are they extending special- develop interconnections with Albania.38 ized subsystems throughout their networks, they are also laying optical networks along their core business >> In Serbia, EMS/EPS has built around 5,000 kilo- networks, high-voltage overhead power lines (OHL), meters of OPGW cable with interconnections to substations, and electric poles. By combining multiple Bulgaria, BiH (Republika Srpska), Croatia, Hunga- service networks on a converged optical fiber platform, ry, North Macedonia, Montenegro, and Romania.39 electric utility companies are improving reliability and Kosovo and Serbia have an operational OPGW in- security while reducing network complexity. terconnection and it is used for TSO data exchange for the observability area.40 A technical inventory of TSOs’ infrastructure estimat- ed that overall, Western Balkan TSOs have a total of >> It is estimated that only 35 percent of the total ca- roughly 25,000 kilometers of high-voltage networks pacity of all the TSOs’ fiber optic networks in the that have integrated OPGW cables at a total length Western Balkans is currently being utilized. of around 15,500 kilometers. This means that, on av- erage, approximately 64.4 percent of the high-voltage electricity grid is equipped with an OPGW network (be- There are many gaps (including international links) in tween 50 percent in Serbia34 and up to 82.8 percent in the high-voltage electricity networks of the regional BiH): TSOs. Understanding the importance of closing these gaps, TSOs have included the construction of relevant >> In Albania, OST has 2,002 kilometers of OPGW high-voltage electricity lines in their short-, medium-, network installed. OST plans to develop intercon- and long-term plans (figure 3). nections with North Macedonia, thus completing OPGW interconnections with all neighboring coun- Similarly, there are many gaps in TSOs’ optical net- tries.35 works—in fact, there are more gaps in these networks than in their high-voltage electricity networks. Even >> In BiH, Elektroprenos/Elektroprijenos has 5,233 ki- though the TSOs are aware of the importance of tele- lometers of OPGW network installed and several communications networks to the functioning of the OPGW interconnections with all neighboring coun- entire high-voltage electricity transmission system, tries.36 the closure of these gaps remains on the back burner. Governments and regulatory bodies clearly have an im- >> In Kosovo, KOSTT launched infrastructure-shar- portant role to play here; by looking at the bigger pic- ing services in 2017. Its fiber optic network con- ture (national or even international), they can formu- sists of 57 segments with a total length of 1,109 late what they expect from TSOs. This would ease and kilometers. Kosovo and Serbia have an operational smooth the consideration of investments and help to close the network gaps. 34 The required data for Serbia were obtained but are not featured in this output 37 According to CGES, the TSO in Montenegro. due to the country’s decision not to do so. This report therefore only features the 38 According to MEPSO, the TSO in North Macedonia. information about Serbian network that was obtained from the public sources. It 39 Source http://www.eps.rs/Eng/Godisnji%20Izvestaji/Godisnjak_ was also agreed that Serbia would not receive with the “Inventory of Optical Fiber EPS_2014_07082015_en.pdf Ground Wire (OPGW) in Electricity Transmission Grids” as part of the technical as- 40 According to KOSTT, the TSO in Kosovo. sistance. This report will be shared with the remaining Western Balkans countries that did not disagree to featuring their data. 35 According to OST, the TSO in Albania. 36 According to ELEKTROPRENOS, the TSO in BiH. Summary _ 25 On average, TSOs invested €7.4 per meter of optical network in the construction of optical networks, and these optical networks are between seven and 11 years old.41 Unleashing OPGW sharing, which would involve hardly any capital investment, allows for the more ef- fective use of TSO resources (fewer resources would be allocated to energy investment) while generating a new stream of income. This additional income could then be used for re-investment, for example, to enhance energy service delivery, which would have a positive impact on end users. When this pre-feasibility work was begun, only two out of six TSOs in the Western Balkans were sharing their infrastructure (CGES and KOSST). However, during the course of the work, MEPSO (North Macedonia) an- nounced the launch of infrastructure sharing in De- cember 201842 and other TSOs have made known their intention to begin infrastructure sharing in the near fu- ture (Albania and Serbia). The current low engagement in infrastructure sharing in the region may be explained by a number of several factors that include, to varying degrees depending on the country: the absence of polit- ical support; the lack of understanding and awareness of the potential strategic importance of TSOs’ OPGW networks to the development of the country’s elec- tronic communications market; regulatory uncertain- ty; TSO management’s failure to focus on the issue; a lack of qualified staff; and the low understanding and awareness of market needs. Although these challenges need to be overcome, a technical inventory of existing excess OPGW capacity on Western Balkan energy util- ity networks points to the clear potential for nation- al-level and cross-border infrastructure sharing, and those networks may be a good starting point for fur- ther development. 41 Except for OST, which was completely modernized in 2017. 42 “Zaev: MEPSO’s Optical Network will Enable the Internet to Meet EU Stan- dards,” Makfax, November 25, 2018, https://makfax.com.mk/ekonomija/ (in Serbian). 26 _ Summary Figure 3 Western Balkans: OPGW Infrastructure of TSOs Sr. Mitrovica Ugljevik Beograd Kragujevac Požega NIŠ Plevlja 2 Riberevina Valač Podujevo Peja 3 Kosovo B Trebinje Berivojcë Podgorica 2 Fierza 2 Szar Skopje 5 Note: This overview is based on the analyses of all six fiber optic networks of the Western Balkan TSOs. Green lines represent the OPGW net- works of the Western Balkan TSOs. Black lines represent the interconnection points of the Western Balkan TSOs. Summary _ 27 2.3. keep separate accounts for each of their transmission or distribution activities.44 The first shows the extent to which it is difficult for a TSO to engage in infrastruc- Policy and regulation ture-sharing activities, the second reflects on how flex- ible a TSO is (or could be) in managing its finances with respect to additional activities, and the third indicates the importance of transparency and the need to avoid Successful cross-sectoral infrastructure sharing re- possible market distortions. quires not only smooth cooperation between market players but also deep collaboration at an institutional The outcome of the review are as follows: level. Taking this into account, the pre-feasibility work included a review of the six countries’ national policy >> All of the Western Balkan countries have made it and regulatory frameworks in order to identify possible legally possible for TSOs to engage in infrastruc- obstacles to infrastructure sharing. Areas of analysis ture-sharing activities. It is worth mentioning that included energy sector regulation, electronic commu- North Macedonia adopted a new Energy Law that nications regulation, dispute resolution, public-private incorporates the necessary EU directives and reg- partnerships (PPPs), and procurement legislation. ulations and focuses on a bottleneck in its regula- tory regime that was identified during the writing Infrastructure sharing is a system in which two sepa- this pre-feasibility study.45 rate sectors, with their own rules, regulations, and dy- >> Decisions on the treatment of “non-regulated” (ad- namics, start to interact. For market players involved ditional) revenues have to be taken in Albania and in this complex environment, it is important to under- Serbia (by electricity sector regulators); in Monte- stand the rules of the game from both sides: energy negro, BiH, and Kosovo, the unregulated revenues and electronic communications. Energy sector regula- have to be fully or partially deducted from the reg- tion prescribes the conditions under which the sector’s ulated ones. market players (TSOs, in this case) may or may not be >> Separate accounting is stipulated in Albania, Mon- involved in offering electronic communication services. tenegro, BiH, Serbia, and Kosovo. Electronic communications sector regulation deter- mines how these services are regulated. Dispute-reso- Electronic communications sector regulation. The fol- lution procedures should be clear on how the disputes lowing aspects of legislation governing the electronic between the market players in the two different sectors communications sector were reviewed: (i) whether ex can be resolved and which authority or agency will be ante regulation for wholesale broadband services ex- imposing these decisions and obligations, if necessary. ists;46 (ii) whether there is separate accounting; and (iii) the types of licenses and authorizations needed to en- PPP and procurement legislation represents other pos- ter the market. These elements again reflect the pres- sible entry or activity barriers. The first describes if ence of market entrance barriers (from the perspective there are any limitations on PPPs (which may be im- of electronic communications regulation), the level of portant in substantial infrastructure development competition in the market, competition problems and projects), and the second determines if electronic com- regulatory instruments that are in use or are required munications activity is included in or excluded from na- for use,47 and the necessary prerequisites for ensuring tional procurement law. Procurement legislation stip- transparency and fair competition in the market. ulates the rules and procedures governing how public bodies purchase work, goods, and services; if electronic communications services are not subject to this law, market players have more flexibility to act. 43 In other words, the question is whether the Law on Energy or the methodology Energy sector regulation. The following aspects of en- stipulate how to treat the non-regulated revenue. There are several options. Some ergy sector legislation were reviewed: (i) whether energy share of the regulated revenue could be deducted, leading to a decrease in the the price for electricity end users, or a portion of the revenue could not be deducted legislation clearly lays out the conditions under which but be directly invested in the development of the electronic communications the responsible authority could decide to allow a TSO to system. 44 As required according to Directive 2009/72/EC of the European Parliament offer electronic communications services to third par- and of the Council, July 13, 2009, concerning Common Rules for the Internal ties; (ii) whether the regulation of additional revenues Market in Electricity. 45 Ivan Kolekjevski, “New Energy Law a Turning Point for Macedonia, Says (not coming not from their primary activities) exists Energy Community,” MIA, October 31, 2018, https://mia.mk/2018/10/new-ener- and whether these additional revenues should be treat- gy-law-a-turning-point-for-macedonia-says-energy-community/?lang=en. 46 This was evaluated based on whether the NRAs in the Western Balkan coun- ed as a part of the regulated energy revenue;43 and (iii) tries define the relevant wholesale market of leased lines and imposes remedies whether in order to prevent cross-subsidizing, discrim- on any identified Significant Market Power (SMP) operator(s) according to the ination, and a distortion of competition, TSOs should EU’s recommendation from 2003. 28 _ Summary The outcomes of the review are as follow: regime applied in the EU. The procedures to notify the intent to engage in the provision of electronic >> Wholesale broadband services (as defined for the communications services is simple and transpar- purpose of the pre-feasibility studies, i.e., dark ent. In Serbia, the authorization regime is generally fiber) are not regulated ex ante in Western Bal- in line with EU requirements; however, the informa- kan countries. Ex ante regulation of the relevant tion required by the regulator about the network services is not yet in place in Albania and BiH. In and services to be provided is more substantial North Macedonia, the trunk segment of leased when compared to what is required for the same lines is defined as a relevant market, but dark fiber purpose in neighbouring countries, except for BiH. is not included in it. In Serbia, the Electronic Com- BiH still applies a license regime that is complex to munications Regulator defines the wholesale rel- comply with and not aligned with the current EU evant market for leased lines, which include both regulatory framework for electronic communica- the trunk and terminating segment. Dark fiber, tions. It is advisable that BiH update its license re- however, is not included in that market. In Kosovo, gime accordingly. the Electronic Communications Regulator defines the relevant market wholesale provisioning trunk Dispute resolution. This part of the analysis reviewed: (i) segments of leased lines, and optical fibers are in- the status of the implementation of Directive 2014/61/ cluded in the market. Nevertheless, the Regulator EU across the Western Balkan countries, and (ii) wheth- has concluded that the market was not developed er any other corresponding regulations are in place to enough, and imposing ex ante obligations would be deal with the issue. premature at the moment. Thus, there are no spe- cial ex ante obligations for leasing optical fibers on Each sector involved in infrastructure sharing tradition- the market in Kosovo. ally has its own dispute-resolution procedures (electric- ity and electronic communications sectors, in this case) >> Accounting separation is in place in all Western that are implemented by the sector-specific regula- Balkan countries. The countries have transposed tors. Usually those procedures are for participants in accounting separation to their respective elec- the same sector and do not apply to cross-sector dis- tronic communications legislation. This requires putes (which are common in the case of infrastructure that electronic communications be independent of sharing). The lack of dispute-resolution procedures for the regulated energy system. Separate account- cross-sector disputes is being addressed through the ing should be imposed in the Electronic Communi- transposition of Directive 2014/61/EU, which requires cations Law covering electronic communications countries to assign a relevant body or bodies to be re- services for the companies that have special or ex- sponsible for the resolution of disputes. clusive rights to the provision of services in other sectors (e.g., electricity, in this case) to keep sep- The outcomes are as follows: arate accounts for the activities associated with the provision of electronic communications net- >> With the exception of BiH, all Western Balkan works or services. countries have completed the transposition or have concrete plans to transpose the relevant >> Authorization regimes differ in Western Balkan provisions of Directive 2014/61/EU. Albania and countries. Authorization regimes vary across North Macedonia have completed the transpo- Western Balkan countries. In Albania, Kosovo, sition process. Kosovo, Montenegro, and Serbia Montenegro, and North Macedonia, they are in line plan to transpose the directive through a number with the provisions of the General Authorization of dedicated legal acts. >> Albania has decided to divide the responsibility for 47 TSOs could offer dark fiber and capacities via the implemented transmission infrastructure-sharing disputes between the ener- technology. If the competition is not effective and an SMP exists, then a TSO, when entering the market, could offer better conditions than the regulated gy and electronic communications regulators. The operator(s) and slowly acquire a market share. It is always better for a TSO if the disputes between a TSO and the carriers are the competition on the trunk segments is not effective and ex ante regulation exists. This means that remedies are imposed on SMP players. In this case, a TSO knows responsibility of an energy regulator, the ERE. In its conditions and could easily acquire new customers. If the relevant market is North Macedonia, the electronic communications not effective, it principally means that fewer carriers are offering their services on the relevant market and a new player could easily acquire a higher market share. sector regulator (AEK) is responsible for dispute Furthermore, it is better for a TSO if dark fiber is included in the market, since it resolution in cases of infrastructure sharing. At is difficult to expect that a TSO will become an SMP player in a reasonable time period and will be regulated. On the other hand, the main competitor is regulated, the time of this writing, in Kosovo, Montenegro, and this signifies some advantages for a TSO. Proper ex ante regulation could be and Serbia, resolution of infrastructure-sharing one of the levers, though other major actions need to be taken to enforce infras- tructure sharing in a country. disputes is the responsibility of the sector regula- Summary _ 29 tors (ARKEP, EKIP, and RATEL). Kosovo, Montene- tioning that, acting on the identified bottleneck in gro, and Serbia are still in the process of prepar- its regulatory regime during the process of writ- ing dedicated laws to establish dispute-resolution ing this study, Kosovo has initiated the relevant procedures and thus the framework for dispute changes to its current legal framework. resolution in infrastructure-sharing disputes has not been finalized. Serbia is currently preparing a >> No PPP limitations were found in the legislation of dedicated law to transpose the directive, though the Western Balkan countries. the current Law on Electronic Communications includes many of its requirements. In BiH, a ded- In brief, there are no major bottlenecks in the legislation icated approach toward dispute resolution for in- of the Western Balkan countries that would prevent in- frastructure-sharing disputes has not yet been frastructure sharing from going forward, but some ob- established. stacles still need to be removed to improve the overall framework for the process. The situation stems primar- The transposition and implementation of the directive ily from the variations in the business environment for is important, as it provides useful instruments that go TSOs in the different countries. The obstacles should be beyond dispute resolution and support smoother and eliminated not only to encourage infrastructure shar- more efficient broadband infrastructure development. ing in each country but also to create more transparent The transposition of those instruments into the nation- and uniform conditions for any operators willing to pro- al legal framework is therefore critical. As stated by the vide infrastructure-sharing services across the region. EC,48 “[a]lignment with the Broadband Cost Reduction Directive is ongoing in the Western Balkans, but imple- mentation is uneven and sometimes the lack of coordi- nation between the national level and local municipal- ities hampers the speed of broadband infrastructure rollout.” PPPs and procurement legislation. This was reviewed to determine: (i) whether procurement legislation ex- cludes electronic communications activity and is in line with EU Directives 2014/23/EU and 2014/25/EU, and (ii) whether there any limitations in the legislation re- garding PPPs. As noted above, procurement legislation that does not include electronic communications activ- ity provides flexibility to market players to more easily fulfill market needs. PPPs are very important when a combination of funds from a TSO and a private investor is needed for the further development of the electronic communications infrastructure. Legislation on PPPS and procurement in the Western Balkan countries is as follows: >> With the exception of Kosovo, electronic commu- nications services are excluded from the applica- ble procurement procedures in all countries of the Western Balkans because of the existing compe- tition in the electronic communications market. In Kosovo, telecommunications activity is required to use official procurement procedures, which is not in line with Directive 2014/25/EU. It is worth men- 48 EC, “Measures in Support of a Digital Agenda for the Western Balkans” (Brussels: European Commission, 2018), https://ec.europa.eu/neighbourhood-en- largement/sites/near/files/swd_measures_in_support_of_a_digital_agenda_for_ the_western_balkans.pdf. 30 _ Summary III. RECOMMENDATIONS Summary _ 31 Clear and long-term national broadband Regulatory and legislative alignment with development strategic goals are a EU legislation should continue. necessity. At the start of the pre-feasibility works, Montenegro, Advancements in policy making and the transposition Albania, Serbia, and Kosovo had developed their Digital of EU frameworks are still a challenge for some West- Agendas. However, many of those plans already need to ern Balkan countries. Legislative uncertainties related be updated, as the time periods they cover will end soon to infrastructure sharing need to be removed in order to and a re-evaluation of the goals is required. The other create regulatory certainty for market players, to ease countries are still in the process of developing nation- the TSO’s entry into the market, and to ensure trans- al broadband strategies.49 The absence of this kind of parent, equal, and non-discriminatory rules for all. This strategic guidance creates uncertainties for (potential) is essential not only for the competitiveness of national market players and complicates their planning process. markets but also for regional cooperation. Clearly, in view of the impact of broadband on a coun- try’s social and economic development, broadband pol- In view of most Western Balkan countries’ ongoing icy should be at the top of each government’s agenda. preparations to become EU members, the alignment of their national legislative and regulatory frameworks The EC adopted the Western Balkans Strategy on Feb- with the EU directives should continue. ruary 6, 2018, and one of the six flagship initiatives is the Digital Agenda for the Western Balkans. That agen- da was launched on June 25, 2018, and it “aims to sup- port the transition of the region into a digital economy A review of companies’ long-term and bring the benefits of the digital transformation, strategic objectives is needed. such as faster economic growth, more jobs, and better services.”50 The EC, together with ministers from the six Western Balkan partners—Albania, BiH, Kosovo, Mon- With national broadband development objectives and tenegro, North Macedonia, and Serbia—among other a clear regulatory environment in place, it is essential actions, committed to improving broadband connectiv- that companies (TSOs, in this case) review their cor- ity by investing and reducing the cost of the infrastruc- porate strategic goals, specifically with regard to how ture required and building competencies in broadband they correspond with national objectives. As TSOs are development. This could be an excellent reference point usually government owned, this alignment becomes for the countries that still lack their own Digital Agen- even more important. The approval of clear strategic das. objectives by company shareholders would ease com- munication with regulators, policy makers, and other A key task for all the governments is not only setting stakeholders who can often make a company’s deci- goals but also reviewing the available instruments sion-making process particularly cumbersome. If, for needed to achieve them. It is particularly critical to example, a TSO formulates a strategic goal of becom- determine ways to foster and simplify infrastructure ing the biggest neutral backbone network provider (in sharing, as has occurred in many developed countries.51 order to facilitate national broadband development, Utilities, especially TSOs, may play an important role, accommodate increasing traffic, and so forth) and goes as in most countries, their OPGW networks are the sec- on to create an underlying action plan, the company ond most important networks after the incumbent’s. should not have to go back and forth for regulatory or There are also areas where the incumbent has no net- policy makers’ support for every related investment. work or where the network of other infrastructure car- Instead, a substantial justification should be prepared riers could be used as a backup route to increase the (that evaluates, for example, the expected benefits, re- quality of broadband services. Fostering cross-sectoral quired investments, associated risks, and so on) for a infrastructure sharing in the region should thus be of strategic blueprint, which then must be followed by im- national importance to the Western Balkan countries. plementation plans. 49 The Digital Agenda for Serbia consists of two documents: the “Strategy for the 51 Infrastructure sharing is one of the crucial elements needed to reach the goal Development of the Information Society in the Republic of Serbia to 2020” and of a Digital Single Market for the EU. the “Strategy for the Development of Electronic Communication in the Republic of Serbia from 2010 to 2020.” In addition, a “Strategy for the Development of Next Generation Networks (NGN) in the Republic of Serbia to 2023” has been drafted. BiH and North Macedonia have not yet adopted their national Digital Agendas. 50 EC, “Commission Launches Digital Agenda for the Western Balkans,” European Commission, June 25, 2018, http://europa.eu/rapid/press-release_IP-18-4242_ en.htm. 32 _ Summary Choosing a wholesale-only business c) Colocation Space. Together with dark fiber, a TSO model is advisable. can also lease its colocation space for telecom- munications operators to install their equipment, for example, amplifiers. Amplification of the signal may be needed in some cases where the length of The range and type of services that may be provided by the leased dark fiber is long. On the other hand, the TSOs depend on their disposable finances, the amount need for colocation space for amplification equip- of risk they can assume, the characteristics of the local ment can be included in the price of the leased telecom market, and their willingness to capture val- ue in that telecom market. However, as good practice d) dark fiber, since it represents only a small part examples demonstrate, the wholesale-only business of the costs for a TSO. Colocation spaces can be model is a good place to start, and forecasts show that offered to all of the above-mentioned customers, this business model will continue to have great poten- and mobile operators would need more colocation tial in the future. With clear strategic goals set, it will be spaces in improving LTE and building the 5G net- much easier for a TSO to take and ground decisions in work, which requires that they are closer to their the business model chosen. end customers. The following business opportunities for energy opera- Capacity leasing. A TSO that has invested in ac- tors in the telecom market exist at the wholesale level: tive telecom equipment may start leasing capaci- ties, which means the leasing of bandwidths in the a) Physical infrastructure sharing. TSOs are obligat- e) network from one point to another. In this case, ed to offer services under Directive 2014/61/EU. An the last mile connections to end users need to be electricity operator (in this case, a TSO) may share provided, which indicates that it is very important its current physical infrastructure with other car- that distribution companies are included in the riers, such as poles, ducts, and anything that can agreement. The capacities can be leased to busi- hold electronic communications infrastructure. ness customers and to domestic and international This strategy requires hardly any investment and operators. is therefore the safest strategy of all. Combination of the business opportunities above. b) Dark fiber leasing. A TSO may charge third par- One common option is to offer dark fiber services ties for the use of its dark fiber. Dark fiber leas- together with colocation services, as was done ing involves no extra investment in any active by the TSO in Kosovo. It should be noted that the telecom equipment. Since the value of dark fiber provision of dark fiber and colocation may be con- is directly proportional to its length, this strategy sidered the fastest strategy for TSOs to start in- is used primarily when a TSO has a widely spread frastructure sharing, as initial investments are electronic communications network. A TSO may relatively low (though organizational issues still develop a special department that deploys fiber have to be solved). However, if not offered from the cables in particular routes that have been previ- start, in the medium or long term, it is reasonable ously requested by carriers. The customers could to consider a capacity leasing model. be national or international carriers, banks, or state institutions, all of which need dark fiber and will deploy their transmission system on it. In this During the course of this work, the various options were case, a TSO may find it useful to collaborate with discussed with the TSOs. The majority clearly stated a DSO, whose distribution network may be import- their intent to offer capacity leasing rather than dark fi- ant to reaching every locality52. Dark fiber could ber services at the start. Although this model of service be leased monthly and on an indefeasible rights provision would require some initial investments, for of use (IRU) basis (which means prepayment and example, active equipment to light the fibers, it indeed some percentage for annual maintenance). offers better conditions for service-level agreements (SLAs)53 that match the high requirements of telecom- munications operators. 52 Especially in Serbia the DSO (EPS) owns considerable OPWG assets and thus 53 LAs are used to define the requirements of service quality, for example, how involvement of the DSO may have greater impact on the market. quickly service has to be restored when it has been interrupted. In telecommuni- cations, SLA requirements are very high. Summary _ 33 The separation of telecom activities from infrastructure sharing at the national level is a neces- the TSO’s primary activity (in terms of sary prerequisite to international cooperation. accountability and/or organization) is advisable from the very beginning of the Pre-feasibility workshop discussions indicated that po- infrastructure-sharing practice. tential cross-border partners, such as TSOs in Romania and Greece, are monitoring the situation in the West- ern Balkans and are interested in collaboration.54 Even Telecommunications activity as a non-electricity activ- more, participating TSOs have agreed to establish an ity should be separated from the TSO’s main activity informal group for infrastructure sharing, to, among (electricity transmission) in the accounting process. others aims, coordinate standards for interconnections It is also advisable to create a separate organization- and share information about the fiber networks. At the al unit for this activity (e.g., in the form of a daughter time of this writing, the working group was actively dis- company or as a separate unit within a TSO). A daugh- cussing concrete next steps in pursuing the implemen- ter company or a separate unit, accountable directly to tation of national infrastructure sharing and regional the head of a TSO, ensures more flexibility in operations collaboration. and provides a stronger incentive for employees, who may be remunerated according to their output. Reac- tions to changes in the market could be faster because of the clearer organization of the management’s deci- Human capacity is key to success. sion-making process. The separation would ease ac- countability and communication with regulators and make it easier to monitor the results. The main weak- All six TSOs have a separate structural unit (usually ness of this kind of separation stems from having less a department)55 dedicated to supporting information control over or impact on the development plans. How- technology and telecommunications. The staff in these ever, there is no “one size fits all” approach, and the ICT departments carry out the work needed to support eventual organizational setup in each country will de- the core activities of the TSOs. Even in cases where pend on country- or company-specific factors. TSOs have already begun sharing their free optical in- frastructure (KOSTT, CGES), the ICT departments do not have enough staff to fully support the infrastruc- ture services marketing and sales tasks and the im- Start locally – think globally. plementation procedures. Capacity building may help to overcome this challenge. As a first step, a two-day workshop in Tirana, organized by the World Bank at the invitation of the Government of Albania and the Alba- Though national strategies for broadband development nian TSO in September 2018, brought the heads of tele- usually address and stress the importance of national com departments together with the senior leadership of markets, TSOs as business entities should not forget several TSOs. The TSOs were introduced to a number of the opportunities outside of these markets. A proper national-level and cross-border infrastructure-sharing example might be the Baltic Digital Highway, in which examples from the EU and Latin America.56 the companies involved receive more than half of their revenues from cross-border contracts. Clearly, reliable Major recommendations for each country are summa- physical international links with neighboring countries rized in table 8 in Annex 2. These recommendations are are necessary for this to happen, though these links ac- not meant to be prescriptive but rather to inform inter- tually pose a double-edged benefit for operators. On the nal decision makers of TSOs and their stakeholders in one hand, they reduce risks by increasing redundancy; the telecom and energy sectors of the actions needed if an international link ever fails, other connections can to successfully proceed with infrastructure sharing. redistribute the traffic through an alternative link. On the other hand, these links can also leverage the avail- ability of different interconnecting points, thus allowing a TSO to have a more solid position when negotiating its peering and transit costs with other operators, ul- 54 KOSTT, “KOSTT Supports Further Scoping of the Balkans Digital Highway timately leading to cost reductions. Thus, it is strongly Infrastructure-Sharing Initiative” (Pristina: KOSTT, 2018), www.kostt.com/ recommended that Western Balkan TSOs consider in- website/index.php/en/press-releases/1326-2-tetor-2018-kostt-supports-fur- ternational cooperation—starting within the region. Of ther-scoping-of-the-balkans-digital-highway-infrastructure-sharing-initiative-. htm. course, the initial infrastructure-sharing activities are 55 Except for EMS, where the optical network is in EPS management. easier to set at a national level, and implementation of 56 KOSTT, “KOSTT Supports Further Scoping of the Balkans Digital Highway Infrastructure-Sharing Initiative.” 34 _ Summary CONCLUSIONS In conclusion, it is worth mentioning that this All the TSOs in the Western Balkans have pre-feasibility work was one of the first attempts confirmed their intention—or are taking to extensively evaluate the infrastructure-sharing the relevant actions—to provide infra- situation in the Western Balkans, including its po- structure-sharing services. tential benefits and implementation constraints. It not only analyzed the current and potential fu- The prime ministers of all six countries com- ture demand for such services, but also provided mitted to a regional infrastructure-sharing a technical inventory of existing TSO infrastruc- initiative as part of the Multi-Annual Ac- ture in the entire region by mapping the available tion Plan on the Regional Economic Area. data (which was not an easy task, as such data had never been collected before and TSOs do not The Western Balkan TSOs have formed a have GIS systems to clearly and promptly provide group to discuss regional infrastructure information on their infrastructure). The regulato- sharing. ry and legal environments were also analyzed in detail to identify the possible obstacles to infra- North Macedonia, Kosovo, and Albania have structure sharing. Additionally, significant inter- started discussions on a potential joint ap- mediary results were achieved, including: plication to the Western Balkans Invest- ment Framework (WBIF) to request funds for feasibility studies on the next phase of North Macedonia amended its Law on En- activities in order to build upon this pre-fea- ergy to permit infrastructure sharing, and sibility work (starting in 2019/2020). its TSO launched infrastructure sharing during the course of writing this study. There is still a substantial amount of work to do Albania’s TSO outlined a plan for the opera- for all stakeholders, including policy makers, regu- tionalization of infrastructure sharing. lators, and TSOs, but the results of the pre-feasi- bility work and the dialogue it generated indicate Kosovo’s TSO intensified its infrastructure that infrastructure sharing is set to accelerate in sharing by commercializing about 10 per- the Western Balkans. The Balkan Digital Highway cent of its fiber optic network. The compa- may soon become another example on the global ny also started to plan the modernization list of successful cases of cross-country electrici- of its telecommunications network to en- ty-telecommunications infrastructure sharing. able regional infrastructure sharing. BiH’s energy regulator agreed to reconsider its previously unfavorable decision regard- ing potential infrastructure sharing when- ever the TSO requests it. Summary _ 35 ANNEXES 36 _ Summary ANNEX 1. List of Stakeholders >> Telecom regulators: • The Electronic and Postal Communications Authority (AKEP) in Albaniaw • Communications Regulatory Agency (CRA, RAK) in BiH • Agency for Electronic Communications (AEC, AEK) in Republic of North Macedonia • Regulatory Authority of Electronic and Postal Communications (RAEPC, ARKEP) in Kosovo • Agency for Electronic Communications and Postal Services (AECP, EKIP) in Montenegro • Republic Agency for Electronic Communications and Postal Services (RATEL) in Serbia >> Line ministries responsible for telecommunications: • Ministry of Energy and Infrastructure (MIE) in Albania • Ministry of Communications and Transport (MKT) in BiH • Ministry of Information Society and Administration (MISA) in Republic of North Macedonia • Ministry of Economic Development (MZHE, MED) in Kosovo • Ministry of Economy (MEK) in Montenegro • Ministry of Trade, Tourism and Telecommunications (MTTT) in Serbia >> Carriers: • ALBtelecom, Vodafone Albania, Telekom Albania, Albanian Telecommunications Union (ATU), in Albania • BH Telecom, HT Eronet, Telekom Srpske (m:tel), and Telemach in BiH • Makedonski Telekom, vip.ONE, and Neotel in Republic of North Macedonia • IPKO, PTK (Vala), Kujtesa, and Artmotion in Kosovo • Crnogorski Telekom, Telenor Crne Gore, and m:tel Crne Gore in Montenegro • Telekom Srbije (MTS), Telenor Serbia, Serbia Broadband (SBB), ORION Telekom, and VIP mobile in Serbia >> International carriers Summary _ 37 >> Energy regulators: • Energy Regulatory Agency (ERE) in Albania • State Electricity Regulatory Commission (SERC, DERK) in BiH • Regulatory Commission for Energy in Federation of Bosnia and Herzegovina (FERK) in BiH • Energy Regulatory Commission (ERC) in Republic of North Macedonia • Energy Regulatory Office (ERO) in Kosovo • Montenegro Energy Regulatory Agency (REGAGEN) in Montenegro • Energy Agency of the Republic of Serbia (AERS) in Serbia >> Ministries responsible for energy: • Ministry of Energy and Industry (MIE) in Albania • Federal Ministry of Energy, Mining, and Industry (FMERI) in BiH • Ministry of Economy (ECONOMY) in Republic of North Macedonia, • Ministry of Economic Development (MZHE, MED) in Kosovo, • Ministry of Economy (MEK) in Montenegro and • Ministry of Mining and Energy (MRE) in Serbia. >> Transmission system operators: • OST in Albania • ELEKTROPRENOS in BiH • MEPSO in Republic of North Macedonia • KOSTT in Kosovo • CGES in Montenegro • EMS in Serbia 38 _ Summary ANNEX 2. List of Recommendations by Country Table 8 List of Recommendations by Country Technical Regulatory Organizational Strategic Pricing strategy Opinion from ERE, Set-up of internal Albania Sales contact (IRU/non-IRU) notification to AKEP processes to support Standard terms and ERE needs to decide how to telecommunication conditions treat the unregulated activities GIS and Asset Management revenues Billing System Separate accounting Close the national OPGW model and process network gaps Approval from SERC Flexible procurement Due to TSO’s Bosnia and OST should implement RAK needs to issue the process ownership Herzegovina IP/MPLS license Project manager- structure, it is OST should close the Transposition of Directive new employee important to international OPGW network 2014/61/EU into the Market research and secure strategic gap with North Macedonia legislation business plan (political) ELEKTROPRENOS/ Permissions, e.g., for an Market activities plan support for ELEKTROPRENOS should international connection New customer infrastructure implement DWDM and via cable, should be implementation sharing upgrade IP/MPLS reconsidered process plan Major update of the Access to the sites regulatory framework for (security process- electronic communications part of general terms is required and conditions) Implementation of ARKEP should repeat an Billing Kosovo IP/MPLS analysis of the relevant Separate accounting model and process Implementation of market for wholesale Project manager- DWDM provisioning of trunk new employee GIS and asset segments of leased lines management system Implementation of Close the national OPGW Directive 2014/61/EU in the network gaps legislation The Law on Procurement must be amended and harmonized with EU Directive 2014/25/EU Pricing strategy Internal processes to North Sales contact (IRU/non- support Macedonia IRU) telecommunication Standard terms and activities conditions Billing Implementation of Separate accounting DWDM and IP/MPLS model and process already in plan Flexible procurement GIS and asset process management system Project manager- Close the national OPGW new employee network gaps and an Market research and international OPGW business plan network gap with Albania Market activities plan Summary _ 39 Technical Regulatory Organizational Strategic CGES should reconsider Adjust secondary legislation New customer Montenegro pricing strategy (IRU model to allow building the optical implementation of leasing may be fibers on 10 KW process plan considered) REGAGEN should redonsider Access to the sites CGES should calculate its its current decision on the (security process- costs for optical fiber treatment of non-regulated part of general terms leasing and consider a revenue and; consider leaving and conditions) capacity leasing option the revenues in full to CGES Close the national OPGW network gaps Serbia Pricing strategy (model, The treatment of Define the owner LRIC calculation) unregulated income needs of the asset (EMS Sales contact (IRU, non- to be prescribed or EPS) IRU) Complete trasposition of Standard terms and Directive 2014/61/EU into conditions the legislation Implementation of IP/MPLS DWDM already in plan GIS and asset management system Close the national OPGW network gaps 40 _ Summary