Review of the EU
regulatory framework for
electronic communications
Stephen Banable
European Commission
DG Information Society and
Media
••• 1
ITU Conference January 2006
The Future of Voice
‘Refining the enabling environment’
Contents
1. Brief overview of the EU
telecoms market
2. Review of the regulatory
framework
••• 2
The ICT Market in Europe
••• 3
Fixed voice decline
Sector Size (EUR billion)
160
140
120
EUR billion
100
89
88
86
83
80
60
40
20
0
2005
2004
2003
Year
Fixed Voice
••• 4
Mobile
Fixed Data
Cable
Linear (Fixed Voice)
2006
Revenue breakdown
cable
fixed
fixed data
fixed
mobile
fixed data
cable
mobile
••• 5
Incumbents market share in voice
telephony
••• 6
Pricing
••• 7
Broadband penetration –
international comparison
(provisional)
••• 8
Broadband platforms and competition
Incumbents' vs. new entrants's retail market share by technology,
October 2006
Total lines: 72 600 067
100%
80%
Other
Satellite
60%
WLL
Fiber to the home
40%
Cable modem
DSL
20%
0%
••• 9
INCUMBENTS 48%
NEW ENTRANTS 52%
Mobile penetration
••• 10
Bundled packages
•
•
EU Household Penetration of Bundled Offers
Penetration
•
15%
•
10%
•
5%
•
0%
•
•
Internet+Fixed
•
TV+Fixed
•
Internet+TV+Fixed
•
Internet+TV+Fixed+Mobile
••• 11
•
•
2P
•
Internet+TV
Internet+Fixed+Mobile
3P
•
Other
•
4P
Review of the framework
• Existing framework basically
sound
– Evolution not revolution
• Objectives remain valid
– Promoting competition
– Consolidating the single market
– Promoting the interests of the
citizen
••• 12
Public consultation
Authorisation Directive
Framework
Directive
Access & Interconnection
Directive
Users’ Rights Directive
ePrivacy Directive
Recommendation on
relevant markets
••• 13
Revision
Regulatory approach
• Regulation focused on markets
where competition is not effective,
and on market players with
‘significant market power’
• Regulation is removed once
competition is effective
• Market-based approach facilitates
convergence
••• 14
Proposals for change
Spectrum management
Streamlining market reviews
Consolidating the internal market
Strengthening consumer
protection and user rights
• Improving security
• Removing outdated provisions
•
•
•
•
••• 15
Specific issues
•
•
•
•
•
•
•
••• 16
Emerging markets
Structural / functional separation
Art 7 procedures
Appeals mechanism
List of markets
Pricing and consumer protection
Regulatory models
Treatment of emerging markets
Is the market
stable enough
to apply the 3
criteria test ?
••• 17
The 3 criteria test
- used to identify markets which
may justify ex-ante regulation



••• 18
the presence of high and nontransitory
barriers to entry;
no tendency towards effective
competition
(in the absence of regulation);
the insufficiency of competition law
to address the market failure
- applied cumulatively
Treatment of emerging markets
Remedies
Transparency
Non-discrimination
Accounting separation
Access obligations
Price control
••• 19
“Taking account of
the initial investment
by the facility owner,
bearing in mind the
risks involved in
making the
investment” Art 12 AID
Structural separation
varieties of form
• Divestiture
• Creation of separate legal entities,
without divestiture of assets
• Functional separation, with
separate management structures
• Accounting separation
••• 20
Structural and functional separation
responses
• ECTA – ‘explicit NRA powers to apply
functional separation’
• ERG ‘calls for the strengthening of nondiscrimination obligations by … allowing NRAs
to oblige functional separation where
necessary
• ETNO – ’Any forced … separation of networks
and services … risks discouraging investment
… and damaging harmonisation and
innovation in the single market’
••• 21
Market review procedures (Article 7)
responses
• Many recognise the achievements
of the Art 7 process
• Some support Commission approval
of remedies
• Some support a stronger role for
ERG
• Some call for abolition of Art 7
• Some support creation of a
European regulator
••• 22
Appeals
responses
• ERG - supports the aim of the
Commission proposal relating to the
suspension procedure
• ECTA - welcomes clear conditions
on appeals
• ETNO – an effective appeals
process is essential
••• 23
List of relevant markets
responses
• Some oppose removal of retail
markets
• Some want more markets removed
• Different views on possible
withdrawal of:
- market 15
••• 24
(mobile access and call origination)
Pricing and consumer protection
In general:
• Consumers seek more protection,
especially in the area of pricing
• Operators and service providers
resist
••• 25
Pricing and consumer protection
some options
• Framework to have more specific
provisions, eg on price transparency
– where is the right balance between
general principles and detailed provisions
(‘better regulation’)
• Framework to give more powers to
NRAs
– risk of fragmentation across EU (VoIP)
• No change to framework, more
guidelines
••• 26
– guidelines not legally binding
Key issues
•
•
•
•
•
••• 27
NGN’s
VoIP
Interconnection
Bundling
Roaming regulation
Timeline for implementation
Call for input on
Directives and
Recommendation
on relevant
markets
Adoption by
Commission
of proposed
legislative
measures
Transposition of
Directives in
Member States
Negotiation in EP and Council
2005
2006
Commission Communication
launching public consultation
Draft revised
Recommendation on
relevant markets
••• 28
2007
2008
Adoption by Commission
of revised
Recommendation on
relevant markets
Application of Recommendation
2009
2010
long term goal
• ‘An open and competitive internal
market, offering affordable and secure
high bandwidth communications, with
rich and diverse content and digital
services’
(i2010 Communication, 2005)
• ‘A world class communications
infrastructure’
(Lisbon, 2000)
• Choice, quality, value for money
for users’
(Green Paper 1987)
••• 29