New European telecoms rules: deregulation hand in hand with stricter supervision?
A. On Tuesday 13 November, the European Commission adopted legislative proposals for a revision of key principles in the Directives governing the telecommunications sector in the European Union.
1 MAJOR ISSUES
BELTUG summarizes the following main proposals:
More independence for National Regulatory Authorities (NRAs, in Belgium BIPT/IBPT)
The possibility to introduce ‘functional separation’ of dominant operators (in Belgium this would be Belgacom) as a new remedy for the NRA
Set-up of a pan-European regulator, i.e. national regulators such as the BIPT/IBPT in Belgium would be superseded by a European regulator
New legislative proposals on the protection of consumers: easier tariff comparison, better protection against cyber criminality, faster number portability procedure
2 BELTUG COMMENTS AND POSITIONS FOR BELGIUM:
2.1 More independence for National Regulatory Authorities (NRAs, in Belgium BIPT/IBPT)
BELTUG feels a stronger and even more independent BIPT is effectively needed. A strong BIPT is one of our major items in our Memorandum to the new government.
2.2 The potential to introduce ‘functional separation’ for Belgacom
In the UK, the regulator compelled incumbent BT to split off the entity in charge of network management functionally from the other activities of the operator. The purpose of this decision was to bring the commercial departments of BT on a similar level with competitors.
BELTUG prefers to withhold any comment on this matter, particularly because this recent example in the UK is unique and it is still too early for a truly objective assessment.
Functional separation is a double-edged issue: equal access is necessary, but innovation may not be hampered. National circumstances can also make that this last-resort remedy is less suitable, when alternatives are readily available.
2.3 Set-up of a pan-European regulator
BELTUG welcomes the fact that more harmonisation is sought after on a European level. Neither technology nor the economic interests of telecoms operators or consumers are confined by national borders. Recently, the mobile roaming example has shown that only action at EU level is effective (lower roaming tariffs from this summer on). BELTUG welcomes the fact that the pan-European regulator will also strengthen the independence of the national regulators that come under undue pressure from their national governments.
Harmonisation however does not signify that a ‘one size fits all’ strategy can be taken: national differences should be taken into account - for the future as well.
2.4 New legislative proposals on the protection of consumers
2.4.1 A tariff comparison simulator is being implemented at the BIPT in Belgium (retail consumer fixed market is foreseen for March 2008)
BELTUG favours all initiatives aimed at protecting consumers. However, the Belgian telecoms law features several stipulations with unclear advantages for consumers, albeit quite aggravating to the BIPT.
BELTUG argues for a cost/benefit analysis at a macroeconomic level before defining any new measures. BELTUG considers it essential to have a powerful BIPT. It is essential that the BIPT concentrate as much as possible on core tasks in order to create and improve a highly competitive market - benefiting all consumers. Any additional tasks assigned to the BIPT – whose ultimate benefits are unclear – will hamper its mission.
2.4.2 Strategy on fighting against cyber criminality
BELTUG feels the fighting against cyber criminality could be more streamlined in Belgium.
2.4.3 Number portability is already working relatively well in Belgium.
3 TIMING – NEXT STEPS
1. The proposals of the EU Commission still have a long way to go via the European Parliament and the Council of Ministers before their adoption. Expectations are that they will not be adopted before 2009 – and no predictions can be made about any amendments.
2. Next member countries shall have to translate the Directives into national law. Remember that the previous regulatory package was translated into Belgian law with a 2-year delay.
3. National Regulatory Authorities (i.e. BIPT) have to develop measures to enforce the law.
BELTUG will follow up, analyse, comment on and exert its influence on this process to the benefit of its members - both on an international level (via INTUG) and in Belgium.
B. Decisions with direct effect: relieve the burden of the regulators (BIPT)
The European Commission took decisions that will have a direct effect. Most striking is the reduction from 18 markets to only 7.
The objective is to significantly relieve the workload of the regulator. In the present situation, each county has to monitor competition in 18 different markets, i.e. an almost permanent follow-up of the various competitors – a time-consuming task. Not all markets in Belgium have been screened, and they are now even abolished. That will at least require amendment to the present telecoms law.
The 7 markets remaining are:
From today, the Commission and national regulators will be refocusing their efforts on those markets where competition is not yet effective and where consumer benefits are still largely lacking:
Access to the fixed telephone network (formerly Markets 1 and 2)
Call origination on the fixed telephone network (formerly Market 8)
Call termination on individual fixed telephone networks (formerly Market 9)
Wholesale access to the local loop (formerly Market 11)
Wholesale broadband access (formerly Market 12)
Wholesale terminating segments of leased lines (formerly Market 13)
Voice call termination on individual mobile networks (formerly Market 16)
For the removed markets, the Commission no longer sees an a priori case for sector-specific ex ante regulation by national telecoms regulators; competition authorities using ex post instruments should now primarily deal with these markets.
BELTUG understands the focusing on real bottlenecks, but has some doubts about omitting several markets.
BELTUG comments that for the retail leased lines market this removal is early, although pressure from substitution to SDSL broadband lines makes this more acceptable.
However, BELTUG questions who will follow up on competition guarantees in e.g. the mobile market (labelled as liberalised), on quality issues, price transparency, etc. in the omitted markets?
BELTUG supports the Commission in its intention to come to a workable regulatory framework without hampering of innovation and applauses the deregulating efforts. BELTUG welcomes the combination of deregulation with a more effective supervision, via a pan-European regulator and strong national regulators. This is effectively needed.
The markets now removed from the Recommendation cover:
× National/ local residential telephone services from a landline (Market 3)
× International residential telephone services from a landline (Market 4)
× National/ local business telephone services from a landline (Market 5)
× International business telephone services from a landline (Market 6)
× The minimum set of leased lines (Market 7)
× Transit services in the fixed telephone network (Market 10)
× Wholesale trunk segments of leased lines (Market 14)
× Access and call origination on mobile networks (Market 15)
× International roaming on mobile networks (Market 17)
× Broadcasting transmission (Market 18)
In sum, the wholesale markets relating to fixed broadband access are omitted.