Have regulators lost their way? Overview
By Danny Preiskel
16 July 2001
Telecoms markets in most industrialized countries have been liberalized, but few operators would venture to voice satisfaction with the state of competition. Policy and regulation are now more important than ever. Have legislators stepped up to the task? Danny Preiskel gives an overview of the pending European Commission proposal to redefine its regulatory role and what effect this may have on the telecoms market.
There is a new regulatory framework afoot at the European level.
With a nod to the increased convergence of the digital age, the European Commission is consolidating the multitude of telecoms directives as well as those related to Internet, wireless and broadcasting.
The proposal includes requirements on national regulatory authorities (NRAs) to publish procedures and generally to improve co-ordination of the various in-country regulators that to date separately regulate spectrum, fixed telecoms, competition and broadcasting.
The Commission's intention is to enable the speeding up and harmonization of the telecoms industry. But the regulatory boards have so far been reluctant to embrace these proposals and have been successful in defeating initial proposals that would have required consolidation of the different regulatory authorities within a member state.
The new telecoms laws are expected to get final European Union approval by the end of 2001. The Competition Commission has published guidelines to assess market dominance of companies in the telecoms sector. The goal is to ensure a streamlined approach of competition law across the 15-nation bloc for all electronic services and networks.
The European Commission hopes for a smooth transition towards fully liberalized electronic communications markets, with only one set of competition rules.
Currently, the Commission is focused on a legislative role in the telecoms regulatory process, while interpretation and implementation of existing legislation is the remit of national regulators.
National regulators are at present solely responsible for imposing obligations, such as access or price capping, on operators they consider to be dominant in a non-competitive market, and the Commission has published a set of guidelines that should help the regulators assess what constitutes dominance.
Under the Commission proposal, the EU executive would get - for the first time - the power to have the last say on such obligations.
However, the Commission has resisted the temptation of creating a single pan-European regulatory authority, which some operators have called for to ease the burden of having to deal with so many NRAs across the EU.
At present, the Commission can only suggest recommendations to rectify a situation where it believes a telecoms operator is behaving in an anti-competitive manner in a dominant market position.
It has emerged that the resolution of certain issues has become a crucial aspect of the regulatory debate both in the United Kingdom and abroad.
In the area of leased lines, U.K. regulator Oftel published a direction earlier this year to force BT to provide certain leased-line product to rival operators on a "wholesale" basis. The incumbent was given a two-month time frame to agree prices and conditions with 10 operators; after that, the incumbent was given a month and a half to deliver the product.
Oftel is currently reviewing comments relating to its directive on price controls on calls to mobiles and effective competition in the mobile sector.
Mobile operators are clearly pressing for abolition of regulation of second-generation services in order to help fund the payment of third-generation licenses and roll-out. Most likely, this 2G liberalization would be detrimental to fixed operators and consumers.
Finally, despite current EU regulations, local loop unbundling is a continuing saga with extremely slow progress.
This predicament raises immediate questions both for operators and the industry as a whole: for example, what does the future hold for Internet service providers in the United Kingdom?
To address these and other issues, a roundtable discussion, in conjunction with CWI, was held on 28 June at the offices of Steptoe & Johnson, Rakisons.
In total, there were 17 participants, all of them representatives from the industry, including operators and regulatory boards as well as our own law firm.
Dialogue at the roundtable centered on five main themes:
Is the European Commission justified in recommending the consolidation of the national telecom regulatory boards?
Although this consolidation might serve to protect the consumer, is there a fundamental difficulty with the fact that it may cause further delay as the regulatory boards consolidate?
What are the reasons for the telecom regulators to oppose the system and recommendations for the Commission to have ultimate say?
How much influence will the Commission have over the pace of deregulation with these proposed measures?
Finally, how would operators like to see Europe harmonized? Would they prefer to have the national regulators co-ordinate amongst themselves, or would it be more desirable for the European Commission to have a stronger role, including veto powers?
Danny Preiskel is head of telecoms at law firm Steptoe & Johnson, Rakisons in London. |
