The Power to Enforce
The Regulator, Legislator and the Judiciary
ITU 8 March, 2005
Sandro BAZZANELLA
Regulatory Affairs Director
European Competitive Telecoms Association (ECTA)
ECTA
§ The European Competitive Telecommunications Association is the
leading pan-European trade association serving the alternative
telecommunications industry.
§ ECTA has some 150 member companies, operators and service
providers as well as national associations of such.
§ ECTA objectives are to:
− Work for a fair regulatory environment which allows all electronic
communications providers to compete on level terms in order to
multiply investment and innovation throughout an effective European
internal market.
− Represent the telecommunications industry to key government and
regulatory bodies
− Maintain a forum for networking and business development
throughout Europe.
1
Competition is Key
§ ECTA believes that effective competition is key to unlocking
the potential of the electronic communications sector
because:
• it drives innovation
• it drives down prices
• it stimulates investment
• it boosts broadband penetration and adoption
§ The single most important way of achieving the benefits of
competition is through effective implementation of the new
regulatory framework (NRF)
The (New) Regulatory Framework (I)
§ The NRF is theoretically elegant:
• Competition law principles for market definition and
finding SMP
• Technology neutral
§ The NRF
•
•
•
•
•
Framework Directive (2002/21/EC)
Access and Interconnection Directive (2002/19/EC)
Authorisation Directive (2002/20/EC)
Universal Service Directive (2002/22/EC)
ePrivacy Directive (2002/58/EC)
• Recommendation on Relevant Markets C(2003)497
• ERG Common Position on the approach to appropriate
remedies in the new regulatory framework (April 2004)
2
The (New) Regulatory Framework (II)
§ Key to its success is full and rapid implementation
§ Transposition of Directives is still not completed in
all Member States (25 July, 2003 deadline!)
§ Moreover, effective implementation still varies
significantly across Member States and is not
compliant with the Directives in some cases
§ This leads to significant discrepancies that do not
benefit end -users and can impact growth
Regulatory Effectiveness
Regulatory effectiveness still varies significantly
across Member States
Regulatory Scorecard Results
United Kingdom
384
318
Ireland
Denmark
309
293
Italy
276
Sweden
The Netherlands
267
257
Spain
253
France
Belgium
215
200
Germany
0
100
200
300
400
3
NRF: main differences
SMP designation
(> 25%)
Predifined markets
Imposition of a set
of remedies
EC Recommendation
Feb 2003
18 relevant markets
Based
Segúnon
EC
Directrices
Guidelines
de
la CE
July
2002
Competition
assessment
Set of remedies
listed in
EC Directives
Designation of SMP
(dominance)
Criteria established
in EC Directives
List of possible
remedies
CONTROL & COORDINATION
Mechanisms (NRAs,EC, ...)
Selection of the
remedie(s)
Justification and
implementation
The liberalisation process is NOT complete
§
Lisbon Strategy Mid-term review: the Kok Report
“…the regulatory framework for electronic communications adopted in
2002 should be fully implemented and strictly enforced, so that
competition is more effective in driving down prices for consumers
and businesses.”
§
OFCOM Strategic Review
•
UK market has 20 years of liberalisation, and NRF more
substantially implemented than in any other member state
•
“The market has made good progress, however, its foundations
are unstable”. Bottlenecks still exist (local loop)
Regulation is still needed and OFCOM plans to reinforce its efforts
to prevent discrimination by the incumbent
Non-discrimination is a key element of the NRF and probably the
best tool to ensure effective competition
•
•
4
OFCOM Strategic Review
Real Equality of Access
§ Altnets should have access to:
• The same or similar set of regulated wholesale products as
incumbents’ own retail activities
• At the same prices as incumbents’ own retail activities
• Using the same or similar transactional processes as
incumbents’ retail activities
§ Incumbents would have to:
• Implement a significant shift at an organisational level in the
product development process
• Change the management structures, incentives and business
processes. The current processes are the result of incumbents’
historical structure as vertically-integrated operators
• Introduce transparency to demonstrate the level of equivalence
within the organisation
Key to fostering competition (I)
1. Securing implementation of the framework
•
In some cases the Directives have not been accurately
transposed, leading to uncertainty and less harmonisation
•
Many countries have yet to complete the market reviews.
• The Directives call for the reviews to be completed by July
2003 or ‘as soon as possible’ thereafter which has given rise
to legal uncertainty
• If necessary this provision should be revisited or clarified to
provide an end-date
•
There remains a lack of clarity about what the Commission
intends to do to pursue individual Member States beyond taking
infringement proceedings for failed transposition in a minority of
countries (Effective Implementation Issues)
5
Keys to fostering competition (II)
2.
Ensuring equivalence of access
•
Non-discrimination is not always understood or effectively
enforced
• Need for clarification and effective enforcement
• Need for development of best practice by the European
Regulators Group (ERG) followed by Commission Guidance
•
Key to relaxing burden of regulation is creating a compliance
culture
• Need to assess and embrace incentives, penalties and
organisational structures which entrench compliance
•
Ensure that competition is maintained and enhanced with the
transition to converged ‘next generation’ networks (legacy
assets will still be fundamental).
Keys to fostering competition (III)
3. Ensure independence of regulatory decision-making:
•
•
Independence from the incumbent and from the government
There is strong evidence to suggest that government ownership
in the incumbent or direct intervention in regulatory issues
hampers the proper workings and effectiveness of regulation
and competition
Establish ‘KPIs’ for regulatory and competitive effectiveness
It may be helpful for the Commission to develop, with input from
NRAs, guidance as to specific measures which may provide
an indication of regulatory and competitive effectiveness
4. Addressing lengthy appeals procedures
•
•
In some countries appeals are lodged as a matter of course and
take up to 5 years rendering the regulatory process ineffectual
Action is needed by Member States to establish deadlines and
ensure effective appeals process.
6
New Member States: another answer?
§ The majority of incumbent operators among the new EU 10
Member States have to varying degrees significant
shareholdings by the incumbents from the original EU-15
§ Know-how transfers between incumbents is quicker than
between regulators (through the ERG)
§ Altnets invest where a return on capital is possible within an
effective regulatory framework (i.e. ladder of investment)
§ A regulatory approach that is adapted specifically for the new
EU-10 would be counterproductive to the single market. The
NRF must be effectively implemented for all 25 Member
States
Conclusion
Incumbent and new entrant investment follows
similar pattern: highest in “best” regulated (most
competitive) markets
Investment as % of
GFCF
Relationship between Regulatory Scorecard and
Investment as Percentage of GFCF
8
UK
6
NL
4
2
DE
0
200
BE
FR ES SE
250
DK
IT
IE
300
350
400
Regulatory Scorecard
Source: JonesDay & SPC Network (Regulatory Scorecard)
7
Sandro BAZZANELLA
sbazzanella@ectaportal.com
+32 (0)2 282 18 36
European Competitive Telecoms Association
8