Transcript Slide 1

This talk was given by Richard Harris (an
independent consultant) under contract to Intellect,
the trade association that represents the UK
Technology Industry. More information about
Intellect can be found at their web-
site: http://www.intellectuk.org/
This project is funded by
the European Union
The EU regulatory framework for
electronic communications
One size fits all
Richard Harris
Independent EU telecommunications consultant
ICTtrain workshop
Istanbul, 27 February 2009
The views expressed here do not necessarily represent those of the European Commission
Aim
To summarise the origin,
principles and scope of the EU
regulatory framework for
electronic communications
services
25th February 2009
3
Agenda
1.
2.
3.
4.
5.
6.
7.
3rd November 2008
the basis of policy for this sector
the common approach
the global dimension
the wider EU regulatory space
the present EU legislation
points to watch and summary
epilogue
4
1 The basis of the policy
The convergence of technologies and
industries:
• Telecommunications - monopoly
• Broadcasting – some competition
• Data processing - competition
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5
Convergence is a reality
Service
Network
Terminal
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Voice
telephony
Wireless
Fixed
Mobile
Telephone/
Handset
Data
Satellite Cable
Fixed
PC
Broadcasting
Cable
Telecoms
Satellite
Terrestrial
Television
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2 The common approach
Competition law and policy
– In the USA – anti-trust court
decisions from the 1950s onwards
• Communications Law unchanged from
1934 to 1995
– In the EU – the Treaty of Rome
• “British Telecom” case in 1982/5 showed
that the treaty’s competition rules apply
to telecommunications
• EU obliged to develop a policy for
telecommunications – adopted 1987
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The sequence in Europe
• The UK opened its telecoms market
between 1981 and 1990
• EU decided in 1987 to abolish
telecoms monopolies in stages
• The first stage was in 1988
• The last stage was 1998
• Review in 2000 led to 2002 framework
• Further EU review in progress today
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The competition rules
81
82
83
84
85
86
87-89
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Articles 81-89 of the EU Treaty .
Anti-competitive agreements
Abuse of a dominant position
Making of laws for enforcement of 81-82
Until which time MSs are responsible
Commission to police principles of 81-82
Rules apply also even where there are
special or exclusive rights
No state aid which distorts the market
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Liberalisation
In 1990 an article 86 Commission Directive was
adopted that required member states to abolish
exclusive and special rights for providing
telecommunications services.
At first, certain activities were exempted from this
but the Directive was later amended five times so
that all exemptions were progressively removed.
Directive 2002/77/EC explains all this in the
recitals and then consolidates the remaining
articles.
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Why is it so important?
• EU telecom revenue is 3% of GDP
• The sector is vital to most economic
sectors and social groups
• Mobile penetration very high (112%)
but prices vary too much (6:1)
• Broadband penetration now growing
(EU average 20%) but highest is 5 x
lowest
• The Internet is bringing new risks
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3 The global dimension
• The WTO decided in 1997 to open the
market for telecoms services
• 95 signatories initially, now many more
• The ITU sought a solution for the mainly
smaller 3rd world countries
• The EBRD will finance telecoms only
where modern policy is pursued
• The World Bank adapted its lending policy
for telecoms because of competition
• The OECD reports on this sector as an
important indicator of economic strength
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4 EU regulatory space
•
•
•
•
•
•
The framework spreads beyond the EU
Non-EU Balkan countries have
perspective of EU membership
Treaty relationship
Approximate national laws to the acquis
Principles of EU competition rules apply
Cooperation regarding telecoms
Committee structure
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For EU candidates
The pace intensifies for accession candidates
Accession negotiations ask for action
The EU Council and MSs are involved
Bilateral meetings are more frequent
The Commission monitors the markets more
closely
• Aid funds are focused more on the acquis
• Observer status in groups and committees
•
•
•
•
•
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For EU neighbours
• Membership of the EU internal market is
offered (without membership of the EU)
• This means, treaty relationships
• Adoption of EU telecoms acquis
• Monitoring of the markets
• Consistency arrangements - non EU
candidates not yet covered by these
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EU Neighbourhood policy – 16 countries
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5 EU telecommunications legislation
• Almost entirely in the form of Directives
First one in 1983
Mostly Council and Parliament Directives
Underpinned with Commission Directives
A series of Directives which opened the
market gradually
• 1998 package – complete market opening
•
•
•
•
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2002 regulatory framework
- for all electronic communications
Authorisation Directive
Framework
Directive
(Art. 95)
Access & Interconnection Directive
Liberalisation
Directive
(Art. 86)
Universal service Directive
Privacy Directive
Spectrum
Decision
(Art. 95)
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2002 regulatory framework
Key principles:
• Independent national regulators
• Minimise regulation
• Technological neutrality
• Consistency across the EU market
• Level playing field for new entrants
• Universal service
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2002 regulatory framework - laws
Framework Directive: outlines general principles,
objectives and procedures
Authorisation Directive: replaces individual licences
with general authorisations
Access and interconnection Directive: sets out rules
for a multi-carrier market place, ensuring access to
networks and services, interoperability etc
Universal service Directive: guarantees basic rights
for consumers and minimum levels of availability
and affordability
Privacy Directive: covers protection of privacy and
personal data protection communicated over public
networks
Liberalisation Directive: prohibits special or exclusive
rights in this sector
Radio spectrum Decision: principles and procedures
for developing a EU radio spectrum policy
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Vocabulary 2
– Significant market power: This
phrase is not defined in the
Directive but it is very important
and occurs 5 times in the recitals
and 10 times in the text
– It is always used in relation to
“undertaking” – this term
embraces operators and
companies
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What’s the difference
Between the 2002 rules and the
previous rules?
In essence the previous rules
divided the world into incumbents
and new entrants. A fixed set of
rather heavy ex ante rules were
imposed on incumbents and very
few rules on new entrants. Ex
poste rules apply to everyone
automatically.
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What’s the difference 2
The 2002 rules divide the world
into markets and assess each
operator in respect of each
market. The aim is to decide
where and whether ex ante rules
should be applied and, if so, what
particular rules are needed. These
are called remedies
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Who decides?
National regulatory authorities
Who is this?
See definitions in Article 2.
“national regulatory authority” means
the body or bodies charged by a
Member State with any of the
regulatory tasks assigned in this
Directive and the Specific Directives
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How do they decide?
See recital 28
In determining whether an undertaking has
significant market power in a specific market,
national regulatory authorities should act in
accordance with Community law and take
into the utmost account the Commission
guidelines.
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Access - Vocabulary 1
• Access means the making available of facilities and/or
services, to another undertaking, under defined conditions,
on either an exclusive or non-exclusive basis, for the
purpose of providing electronic communications services. It
covers inter alia: access to network elements and
associated facilities, which may involve the connection of
equipment, by fixed or non-fixed means (in particular this
includes access to the local loop and to facilities and
services necessary to provide services over the local loop),
access to physical infrastructure including buildings, ducts
and masts; access to relevant software systems including
operational support systems, access to number translation
or systems offering equivalent functionality, access to fixed
and mobile networks, in particular for roaming, access to
conditional access systems for digital television services;
access to virtual network services;
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Access - Vocabulary 2
• Interconnection means the physical and
logical linking of public communications
networks used by the same or a different
undertaking in order to allow the users of
one undertaking to communicate with users
of the same or another undertaking, or to
access services provided by another
undertaking. Services may be provided by
the parties involved or other parties who
have access to the network. Interconnection
is a specific type of access implemented
between public network operators;
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Access - Vocabulary 3
• Local loop means the physical circuit
connecting the network termination point at
the subscriber's premises to the main
distribution frame or equivalent facility in
the fixed public telephone network.
• Reference offer is not defined but this vital
phrase is used in article 9.2 and 9.4 to
describe the standard terms and conditions
that SMP operators can be obliged to
publish for its wholesale customers.
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Summary of Access
This Directive strongly encourages
operators to conclude all of their access
agreements by negotiation and, as far as
possible to standardise their terms in
published “reference offers”. The aim is
to minimise the aspects where agreement
cannot be reached and where regulatory
intervention might be needed.
The NRAs are however given strong powers
and operators are reminded about the
competition rules (which have heavy
penalties)
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Universal service 1
– Before liberalisation, most countries
had some kind of obligations as to
universal provision of service but
there was great diversity in results
and in how it was paid for.
– There was concern that liberalisation
might undermine the achievement of
universal access.
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Universal service 2
– The 2002 rules are designed to
ensure that universal service is
maintained
– Any unfair financial burden arising
from supplying it is compensated in a
way that does not distort competition
– If it is compensated, all potential
suppliers must be eligible
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EC’s Implementation tasks
Under the heading of implementation, the
European Commission has several roles
1. Monitoring and publishing
2. Active day to day regulation
3. Chairmanship of the
Communications Committee
4. Review and report to the EP
5. Police the EU Treaty
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Monitoring and publishing
•
•
•
•
A series of implementation reports began in 1997
13th (relating to 2007) covered 27 Member States.
A short formal summary report plus two volumes.
The first volume contains:
– About 70 pages on the regulatory regime as a whole.
– About 250 pages reporting on all 27 Member States
individually.
• The second volume contains:
– About 140 pages of data about the market, including
volumes and prices in relation to all manner of services
and presented in a comparative format.
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Active regulation
Since the 2002 Framework came into effect, the
EC has made over 500 decisions relating to
notifications under Article 7:
3rd November 2008
Year
Decisions
2003
13
2004
63
2005
117
2006
161
2007
119
2008
54
34
The Communications Committee
• 5 or 6 meetings a year since 2003
See: http://circa.europa.eu/Public/irc/infso/cocom1/library
• 41 committee papers so far in 2008
• Not all papers are published.
• Committee business includes some
mandatory items and some items of
regular interest.
• Regulatory developments are discussed
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The Communications Committee 2008
•
•
•
•
•
•
•
•
•
•
•
•
3rd November 2008
Broadband access
Article 7 cases
List of standards
Mobiles on aircraft
112, 116, numbering, addressing
Creation of Working Groups
Termination rates
Next Generation Access
Roaming
Mobile Satellite services
WAPECS
Digital TV
1
3
1
2
7
2
2
2
1
2
1
1
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Review
Each of the Directives contains a review clause.
As three years have elapsed, the initial reviews
have already happened and an important set of
changes has been proposed by the Commission.
This can be found at:
http://ec.europa.eu/information_society/policy/ecomm/
tomorrow/index_en.htm
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Policing role 1
Legal action for infringement against a
Member State is the main weapon the
Commission has to enforce EU law.
– First the EC sends an initial legal assessment
and invites the MS to present its views.
– If not resolved the EC issues a “reasoned
opinion” that an infringement exists giving a
deadline.
– If not resolved EC may then refer the case to
the Court of Justice.
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Policing role 2
By end of 2007, the EC had opened proceedings in
c.100 cases of failure to implement correctly
Belgium
5
France
2
Austria
3
Bulgaria
2
Italy
3
Poland
11
Czech Rep 4
Cyprus
6
Portugal
4
Denmark 1
Latvia
7
Romania
1
Germany
6
Lithuania 4
Slovenia
3
Estonia
4
Luxembg
4
Slovakia
7
Ireland
1
Hungary
2
Finland
5
Greece
2
Malta
5
Sweden
3
Spain
3
Netherlds 3
UK
1
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Policing role 3
•
•
•
•
•
Results
Of the cases started
61 were closed without reaching the ECJ
12 were closed after referral to the ECJ
14 have been referred to the ECJ but are
not yet closed
14 have not yet reached the stage of
referral to the ECJ
****
Each case clarifies the law and leads to
better decisions elsewhere. They can also
lead to improvements in the law.
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2002 regulatory framework
- minimise
• Regulation is limited to situations where
an operators has “significant market
power” - SMP
• SMP status is determined by NRAs on the
basis of market analysis
• These decisions are based on competition
law principles
• Status under 1998 framework is
unchanged until analysis has been done
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2002 regulatory framework
- consistency
Communications Committee: regulatory and advisory
functions on implementation of the Directives
European Regulators Group: helps consistent application of
the regime throughout the EU
Radio Spectrum Policy Group: high level platform where
member states and the Commission coordinate use of the
spectrum
Radio Spectrum Committee: deals with technical issues
around harmonisation of frequency allocation across
Europe and develops an external EU policy
Notification procedures: “Article 7” procedure
Independent EU Advisory Body on Data Protection and
Privacy (Article 29 working party)
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6 Points to watch
• Investors draw confidence from knowing that
regulation is fair and reasonable
• The NRAs should have powerful tools and not be
open to pressure from operators or investors
• GSM operators beyond the EU15 have greater
market power
• EU universal service model not such a good fit
beyond the EU15
• Convergence with broadcasting is unfinished
business - who regulates four-play?
6 February 2009
43
From Virgin Media
Great value bundles
The more services you get with us, the better the deal!
TRIPLE DEAL = £14 a month
Broadband +
Up to 10Mb
fibre optic
6 February 2009
TV
Over 45 digital
channels
+
Phone
Unlimited weekend
calls to UK landlines
44
From uSwitch web site
For my address in London, Uswitch identifies:
• 49 bundled offers from 11 different suppliers.
Cheapest
Dearest
£104 in the first year
£573 in the first year
• 35 broadband only offers all 8 Mega bits or faster
from 10 different suppliers.
Cheapest
Dearest
See:
6 February 2009
£88 in the first year
£650 in the first year
http://www.uswitch.com/
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Summary
• Regulation is needed only where policy aims
cannot be achieved without it
• Competition is intended to stimulate incumbents
• Industry should take the lead in finding solutions
• Ministers regard this sector as an aspect of the IS
• They discuss cartels, abusive practices, spam,
IPRs, the digital divide, universal service,
eGovernment, promoting broadband and security
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7 Epilogue
USA in 1985 - direct cost of regulation was very
high, perhaps 15,000 people employed in total
• Rate of return regulation of profits
• Separation of state and federal powers
• Separation of anti-trust and regulators
• Appeals and rules of evidence
Allowing competition was called “deregulation”
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In Europe at that time?
Only the UK had a regulator by 1985
UK in 1985 - direct cost of regulation was very
low, perhaps 150 people employed in total
• Price cap regulation
• EU (ie federal) powers prevail over national
• Competition authorities and sector regulators
obliged to cooperate
• Little recourse to the courts
Allowing competition was called “liberalisation”.
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How is the EU doing today?
• Regime is intended to be minimalist and this
has started to happen
• Convergence with broadcasting makes
comparison more difficult
• Some disturbing signs
• Some national regulators are very large
• Increasing recourse to the courts
• No study done yet – waiting for a PhD
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Thank you for your attention
For more information:
See - Europa web-site, especially:
http://ec.europa.eu/information_society/policy/ecomm/index_en.htm
3rd November 2008
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