EUROPEAN COMMISSION
The New Regulatory Framework
for Electronic Communications
Legal and economic implications
Vilnius 5 October 2004
George Papapavlou
Head of unit ‘Implementation of the Regulatory
Framework (II)’
DG Information Society
1
OUTLINE
• Liberalisation process
• Why the need for change?
• The new framework
2
Liberalisation in the EU
1987 Green Paper
1988 Terminal equipment
1990 Value added services
1993 Switched data services
1994 Satellite communications
1995 Cable television networks
1996 Mobile communications
1998 Voice and infrastructure
3
Liberalisation: A Success story
Evolution of growth, prices and quality
4
Size of EU electronic communications
market (€ bn
bn))
EU electronic communications market value (€ billion)
260
251
250
242
240
231
230
220
211
210
200
2000
2001
2002
2003
5
Growth in mobile penetration
EU mobile subscribers and average penetration, 1998-2003
350
90%
250
70,4%
60%
200
100
30,6%
50
283
20%
115
18,3%
40%
30%
194
265
150
306
50%
51,6%
69
Million of subscribers
70%
74,9%
EU average penetration rate
80,9% 80%
300
10%
0
0%
1998
1999
2000
Subscribers
2001
2002
2003
Penetration rate
6
Significant increase in the number of
broadband lines...
EU broadband lines, July 2002 - October 2003
22 000 000
19 456 924
20 000 000
17 497 140
18 000 000
5,338,635
16 000 000
5,036,276
12 898 260
14 000 000
10 906 357
12 000 000
3,810,967
9 052 497
10 000 000
3,383,821
8 000 000
2 934 172
14 118 289
12 460 864
6 000 000
9 087 293
4 000 000
7 522 536
6 118 325
2 000 000
July 02
DSL lines
October 02
January 03
July 03
October 03
Other technologies (cable, satellite, wireless local loop)
7
…and in broadband penetration
Broadband penetration rate in the EU, Oct. 2003 (% of population)
12%
11.08% 11.22%
10.10%
10%
9.04%
8%
7.40%
6.64%
6%
4.90%
5.00%
5.06%
5.18%
4.72%
E
F
EU
D
UK
4.16%
4%
3.19%
2.82%
2%
0.56%
0.05%
0%
EL
IRL
L
I
P
FIN
A
S
NL
B
DK
Data for the US: EC estimates
8
Local and national call charges
(10 min)
Local and national call charge, 10 min
EU 15 weighted average
€-cents, VAT included
250
200
214.0
166.8
150
131.9
112.9
102.0
100
100.4
50
39.8
39.7
39.4
39.5
38.8
38.9
1998
1999
2000
2001
2002
2003
0
Local call charge, 10 min
National call charge, 10 min
9
Clear benefits to consumers
Estimated average cost of an international call
2.0
1.8
1.68
1.6
1.4
1.43
1.03
1.2
€
1.31
1.22
1.08
1.03
1.0
0.98
0.93
0.8
0.70
0.73
0.6
0.4
0.67
Residential, Incl. VAT
Business, Excl. VAT
0.2
0.0
1998
1999
2000
2001
2002
2003
10
Clear benefits to consumers
Estimated average monthly expenditure of a standard EU user
90
80
78.5
70.3
64.0
€ per month
70
62.7
61.0
60.7
29.5
29.4
2002
2003
60
50
40
34.0
31.5
29.8
30.0
30
20
Residential, Incl. VAT
Business, Excl. VAT
10
0
1998
1999
2000
2001
11
Clear benefits to consumers
% of subscribers using an alternative provider
50%
40%
32,66%
29,23%
30%
24,50%
20%
10%
17,53%
5,64%
4,87%
0%
2002
Local calls
2003
Long-dist./ Internat. Calls
Direct access
12
Why the need for change?
• 1998 Framework had achieved most of its
objectives
• More competition, lower prices, better
quality
• However, competition not yet fully
achieved
• Need to address competitive situation in
more diversified markets
13
Why the need for change?
Convergence removes
sector boundaries
.
Service
Type of
network
Voice
telephony
Data
Internet
Fixed
Wireless
Mobile
Fixed
Satellite Cable
Broadcasting
Cable
Satellite
Telecoms
Terrestrial
Terminal
14
Lisbon European Council
March 2000
A “competitive and dynamic knowledgebased economy”
demands
“an inexpensive, world-class
communications infrastructure”
which in turn demands
“a efficient regulatory framework”
15
The New Regulatory Framework
Authorisation Directive
Framework
Directive
(Art. 95)
Access Directive
Universal Service Directive
e-Privacy Directive
Data Protection
Guidelines on
SMP
Recommendation on
relevant markets
Liberalisation
Directive
(Art. 86)
Spectrum
Decision
(Art. 95)
Recommendation
on Article 7
16
Main features of the NRF
•
Legal
certainty/specificity
Ø Ex ante regulation
only in markets that
are not competitive
•
SMP definition aligned
with concept of
dominance under
competition law
Ø Flexibility for NRAs
•
Technological neutrality
Ø Same rules for all
•
Promoting competition
while encouraging
investment and
promoting innovation
and Regulation to be
linked to degree of
competition
infrastructure
platforms
Ø Market analysis-
variety of remedies
available to NRAs
17
Key objectives
•
Regulatory objectives
– Promote competition
– Develop the Internal Market
– Promote the interest of the citizens
18
Article 7 transparency process
• Notification by NRA of market
analysis and intended remedies
• Commission comments letter within 1
month
• ‘Serious doubts’ letter – 2 months
follow up
• Veto decision or withdrawal of
‘serious doubts’
19
Market definition and SMP assessment
Commission
Recommendation
product / service
markets
NRA analysis
- geographical aspects of
the market
- is competition effective?
-are competition law tools
sufficient?
NRA input
Commission Guidelines
NRA removes existing
obligations;
does not impose new
obligations
NRA designates SMP
operator(s) maintains or modifies
existing obligations, or
imposes new obligations
20
NRA Consultation Procedure
• NRAs must consult nationally
• NRAs must consult other NRAs and
EC on issues with impact on the
single market
• Right of appeal on NRA decisions, at
national level, on merits of case
21
Imposing remedies
• Remedies for market power related
issues
• For non-competitive markets at least one remedy shall
be imposed
• Remedies should be based on the problem identified,
justified and proportionate
• Wholesale level intervention should be analyzed first
• NRA can impose other remedies than listed in respective
Directives subject to the necessary procedure
22
Status of art. 7 procedures
(17/09/04)
• 100 notifications/cases (UK 37, Finland 20,
Austria 17, Portugal 11, Sweden 7, Ireland
5, Netherlands 1, Greece 1, Hungary 1)
• 9 cases pending
• 54 Commission actions (48
‘comments’
letters, 3 ‘serious doubts’ letters, 1 veto
decision, 2 ‘incomplete’ notifications)
23
Art. 7 experiences so far
• In general, no NRA deviations from
recommended markets (however tendency
to include cable in broadband access
market)
• SMP designation has followed Commission
guidelines; in most cases SMP market
shares exceed 70%; from 50% downwards
assessment becomes more challenging
• Tendency to impose asymmetric remedies
in fixed and mobile regulation markets; OK
if properly justified
24
Status of transposition
•
Five Member States have not yet
transposed the NRF:
•
•
•
•
•
•
Belgium
Greece
Luxembourg
Czech Republic
Estonia
Infringement proceedings (EU 15):
• 6 October 2003: Launch of Infringement Proceedings
• 19 December 2003: Reasoned opinions
• 20 April 2004: Application to the European Court of Justice
25
Main challenges regarding transposition
•
Independence, powers, resources of NRAs
• Independence from operators and governments/incumbent
shareholders
• Late liberalisation legacy in new Member States Ministry
Guidelines/Ordinances in some Member Sates
• Exclusion of certain markets
•
•
•
•
•
Efficiency of art. 7 procedure
Fast, effective appeal mechanisms
Rights of way
Testing of ‘new’ factors: Broadcasting, Broadband, VoiP, etc
Review in 2006
26
Thank you!
For more information:
DG Information Society
http://europa.eu.int/information_society/
topics/telecoms/index_en.htm
George Papapavlou
E-mail: George.Papapavlou@cec.eu.int
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