[eccr] Commission puts in place final piece of new framework for electronic communications

Title: Commission puts in place final piece of new framework for electronic communications

Commission puts in place final piece of new framework for electronic communications

Today, the European Commission identified 18 markets in the electronic communications sector that national regulators will have to investigate in order to decide whether these markets continue to justify sector specific regulation. The list of the markets is a key element of the new regulatory framework for electronic communications in Europe. By listing the markets where the Commission considers that regulation may be justified, the recommendation(1) seeks to roll back regulation where it is no longer required and provides greater legal certainty for suppliers of communications networks and services.

European Commissioners Liikanen and Monti said, "This Recommendation is a key building block of a stable and forward-looking technology-neutral regulatory framework based on competition law concepts. Our joint initiative will promote consumer benefits and provide a clear perspective of decreasing regulation."

European Enterprise and Information Society Commissioner Erkki Liikanen added, "The message that we want to send to the market today is our desire to promote and secure investment in networks and technologies. This will amongst others stimulate the roll-out of broadband in Europe as called for by the eEurope 2005 Action Plan "

European Competition Commissioner Mario Monti added, "Sector specific regulation should be the exception, antitrust rules should be the norm . For an operator, being subject to ex ante regulation is a heavy burden because it limits commercial freedom without any evidence of an abuse having occurred."

National regulators will take the markets listed in the Recommendation as the starting point for their own market analyses. Intervention in markets other than those identified in the Recommendation is possible, but only if the Commission agrees that the following three criteria are met: (a) the existence of high barriers to entry into the market concerned, (b) the absence of dynamic competition in spite of these barriers and (c) the fact that competition rules are not sufficient to address the perceived market failures. These three criteria are discussed in detail in the Explanatory Memorandum which accompanies the Recommendation.

When assessing these markets, national regulators will for the first time apply concepts that were developed in the Commission's competition practice such as, e.g., the concept of dominant position (Article 82 of the Treaty). This raises the threshold for regulatory intervention.

As a result, sector-specific obligations will, in principle, only be imposed on undertakings, which are designated by national regulatory authorities as having significant market power (a position equivalent to dominance). This implies that the relevant product markets will need to be analysed according to the principles that the Commission itself applies in its own antitrust practice, in accordance with existing case-law. Therefore, the Recommendation, as a building block of the new framework:
*    provides a flexible approach for national regulators to adapt regulation to deal with technological and market changes;
*    rolls back regulation where it is no longer required because markets have become competitive.

The new powers of national regulators should also help harmonise the current divergent national approaches. National regulators will consult each other on their draft measures and discuss their practices in the European Regulators Group. In addition, the new framework requires national regulators to co-operate with national competition authorities. Finally, the Commission has certain powers (in the framework under the so-called notification procedure laid down in Article 7 of the Framework Directive) to require regulators to amend two types of draft measures. Firstly, measures designating an operator as having significant market power. Secondly, measures that seek to regulate a market not identified in the Commission Recommendation.

Erkki Liikanen said therefore, "the new legal framework will stimulate new investment in communications networks and services, by both new entrants and existing operators. The technology-neutral approach is central to the new framework and this Recommendation encourages competition between networks. In the medium- to long-term such facilities-based competition is the best way to lower prices and increased choice of services for users. It also stimulates innovation and creates resilience in the communications infrastructure."

Mario Monti said, "Competition rules and sector-specific regulation complement each other. At this stage sector-specific intervention is indispensable, in particular for the development of broadband access via the local loop which is dominated by the historic incumbents. At the same time, the fact that undertakings are regulated does not make the anti-trust, merger or State aid rules redundant with respect to electronic communications".

The new regulatory framework aims at ensuring regulatory harmonisation across the EU and guaranteeing legal certainty and a Single Market in Europe in this sector. Today's recommendation plays an important role in achieving both of these objectives. It seeks to ensure that the same product and services markets will be subject to a market analysis in all Member States and that market players will be aware in advance of the markets to be analysed. The Recommendation for example includes a wholesale broadband access market, which covers bitstream access and other wholesale access provided over other infrastructures, if and when they offer facilities equivalent to bitstream access.

Background

The former European telecom regulatory framework of 1997 brought about the full liberalisation of the European telecommunications market initiated first in 1990 with the adoption by the Commission of the first "Liberalisation Directive". It led to higher quality services and lower prices for the consumers. However, technology and markets have evolved. In a sector increasingly based on convergence between various technologies, the former legal framework has demonstrated some deficiencies. First, it runs the risk of over-regulation as competition develops as it is linked to an automatic 25% market share trigger for intervention. Second, it can lead to inappropriate regulation, as it is technology specific. Finally, it is unable to respond to dynamic change and encourage innovation. To deal with these deficiencies, a new, technology neutral and convergence-based legislation will take effect in the European Union from July this year.

The new regulatory framework for electronic communications, adopted by Parliament and Council on the basis of a proposal from the Commission represents a comprehensive reform of the existing legislation and is aimed at providing the best conditions for a dynamic and competitive industry in Europe.

For more information, see press releases IP/02/783, IP/02/259, IP/01/1801, IP/01/456 and IP/99/825.

(1) Available at : HYPERLINK http://europa.eu.int/information_society/topics/telecoms/regulatory/new_rf/index_en.htm http://europa.eu.int/information_society/topics/telecoms/regulatory/new_rf/index_en.htm