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A rather remarkable Decision was published yesterday on the website of OPTA, the Dutch regulatory authority. The Decision has important implications with regard to the wholesale market for Access and Call Origination on Public Mobile Telephone Networks (Market 15).


The Decision was made in the context of an appeal by KPN Mobile and Yarosa against a previous decision by OPTA (Decision Opta/Ibt/2004/201323), regarding a dispute between KPN Mobile and Yarosa relating to special access for SMS services. Yarosa is a player on the mobile entertainment market in the Netherlands; it mainly provides SMS games and ready for deployment SMS-TV formats.


The matter of the original dispute is highly interesting in and by itself, but this is overshadowed by the implications of OPTA's Decision published yesterday.


In essence, OPTA declares in its Decision that, although the relevant market analyses have not yet been completed, there are strong indications that:



  1. No separate SMS wholesale market should be defined.
  2. Neither KPN Mobile nor any other mobile operator in The Netherlands has a dominant position in the applicable market (Market 15).

OPTA states that “The outcome of the market research gives sufficient grounds to assume that the college [of OPTA] shall proceed to the withdrawal of the existing SMP designation of KPN Mobile and that the obligation of KPN mobile, under Article 6.9 of the old Telecommunications Act, to give access, will expire.” [T-REGS translation - words in square brackets inserted by us]


In view of this observation, OPTA finds it unreasonable, given the prospect that KPN Mobile will no longer have SMP in the future, to oblige KPN Mobile to invest in the form of access requested by Yarosa and which OPTA had imposed on KPN Mobile in its previous decision (an access that KPN Mobile was obliged to provide under the old Act, but which it did not effectively provide).


OPTA adds that the definitive decision with regard to the (non) SMP designation of KPN Mobile will probably occur in June 2005 and that there is a real possibility that KPN Mobile would not be able to implement the requested access by that time.



This decision is remarkable on several accounts. It is highly unusual for a National Regulatory Authority to take a decision based on projected market analysis results (which have not been notified to the European Commission and to other NRAs, as the analysis has not as of yet been fully completed). It also appears to be at odds with the European Commission Report of 25 November 2004 on the Transitional Measures Pursuant to Article 27 of Directive 2002/21/EC.


This Report, presented to the European Regulators Group (ERG Document ERG(04)58), states the following:


"The purpose of this document is to clarify under what circumstances regulatory action taken by national regulatory authorities (“NRAs”) after the date of application of the new regulatory framework (“NRF”), i.e. 25 July 2003 (or alternatively 1 May 2004 for the ten new Member States) may fall within the scope of the transitional provisions contained in Article 27 of the Framework Directive.


[...]


The question arises as to how these transitional provisions should apply in cases where an NRA has not yet completed market reviews under Article 16 of the Framework Directive, but where, either at its own initiative or through a dispute settlement procedure, it needs to update those pre-existing regulatory requirements. This may be required for different reasons, including in particular ensuring legal certainty, proportionality and non-discrimination or the continuity of existing agreements.


The Commission services recall that all existing obligations imposed in accordance with the provisions referred to Article 27 of the Framework Directive, must remain in force until a determination is made in respect of those obligations in accordance with the procedures provided by the NRF [New Regulatory Framework].


Pending completion of market reviews, the updating of pre-existing regulatory requirements (imposed under the provisions of the ONP framework referred to in Article 27 of the Framework Directive) would in principle fall within the scope of the transitional measures. In doing so, NRAs should take utmost account of the general principles and policy objectives enshrined in the NRF, and especially those referred to in Article 8 of the Framework Directive. However, the Commission services are of the view that a conclusion as to the compatibility of any measure with the transitional arrangements is dependent on a proper case-by-case analysis being carried out. It should also be recalled that the Commission retains its powers under Article 226 of the EC Treaty, when an NRA applies an obligation under the ONP legislation that is not, in a particular case, proportionate and/or justified under Article 27 of the Framework Directive."


This section of the Report, especially the part that refers to the "updating" of regulations prior to the conclusion of a market analysis has been explained several times by Commission officials and regulators alike as meaning that the details (such as the adaptation of specific tariffs) of existing regulations may be changed ad interim, but the essence of the regulation should remain in place until the market analysis is completed.


This does not however seem to be the case in this particular OPTA Decision, where an obligation existing under the existing framework (resulting from a dispute resolution decision) is phased out rather drastically, with a view to a market analysis conclusion/decision, which is not expected to be taken for more than 6 months (OPTA's decision was taken at the end of Nov 2004, but published yesterday).


This OPTA Decision also gives us a sneak preview as to the intentions of the Dutch regulatory authority, not to declare any mobile operator as having SMP on Market 15.


OPTA’s Decision (in Dutch) in the KPN Mobile / Yarosa case can be accessed by clicking here.


For more detailed information on this OPTA Decision, and for a discussion of the market analysis process in The Netherlands, please contact Alexa Veller.