Today, the European Regulators Group (ERG), a body which brings together the National Regulatory Authorities (NRAs) from the 25 EU Member States and the European Commission, held a hearing, at which interested parties were invited to express their views on the draft ERG Work Programme for the year 2006.
The hearing was chaired by the current ERG chairman, Jørgen Abild Andersen of the Danish ITST, whilst Kip Meek of the UK Ofcom, who will become ERG Chairman on 1 Jan 2006, delivered a presentation (which contained added value compared to the draft Work Programme) and answered questions and comments from the floor.
About 25 stakeholders attended the hearing. The questions raised, and the answers given, were highly relevant for current regulatory practice and for the future development of European Union telecommunications regulation.
Kip Meek emphasised from the outset that:
'The ERG is no more and no less deregulatory than the currently applicable regulatory framework'. and that 'the IRG (Independent Regulators Group) remains important, and should be seen as no more no less than a forum for heads of NRAs to meet independently, without the European Commission'.
The forthcoming European Commission review of the EU regulatory framework was identified as 'categorically the first priority' for the ERG in 2006. Kip Meek stressed that the regulatory framework needs to be stable and clear, and needs to remain effective. He presented the review as a real opportunity to improve processes and policies, taking into account the NRAs' experience of its application, and changing market and technological conditions. He also indicated that the ERG has set up a working group to discuss the 2006 review, which is chaired by the Irish regulatory authority ComReg.
Key points to be examined by this working group are the following:
Functioning of the Article 7 FD process (notification of market definition, SMP assessment and proposed regulatory obligations to other NRAs and European Commission, and veto power of European Commission over market definition and SMP assessment) and other inter-institutional issues.
The appropriate depth of harmonization. The ERG considers that there is good progress on harmonization of methodologies but that differences in appeals procedures result in large differences in practice.
Scope for a more deregulatory approach; (the framework sets out circumstances in which deregulation can occur; should they be amended)?
How much competition is “enough”; what is the threshold for intervention (dominant position, persistent bottlenecks, ...)?
List of recommended markets for ex-ante assessment – is it too prescriptive?
Consistency of appeals procedures.
Obligations under Articles 5 and 6 of the Access Directive.
Universal service issues.
Breach of regulatory obligations
In his presentation, Kip Meek also referred to the need for the ERG to 'think about the Commissioner's proposals for regulatory forbearance'.
T-REGS note: this is a reference to speeches given by Commissioner Reding in Sep 2005, in which she mentioned the possibility of a regulatory moratorium relating to the roll-out of Next Generation Networks.
The Question and Answers part of the hearing was dominated by the main industry associations (GSM Europe, ETNO, ECTA) and by the association of corporate end-users, INTUG. Comments and questions were also raised by BT, COLT, mmO2, Deutsche Telekom and Telecom Italia.
Key questions from these stakeholders, and the ERG's answers were the following:
GSM Europe (association of leading mobile operators)
GSME agreed with the ERG's proposed priorities, and welcomed the ERG's commitment to increased transparency. GSME raised questions about 'joint dominance / joint SMP', which is included as an item for study in the draft work programme. GSME stated that it understands joint dominance to be a competition law concept, and that the way it should apply is set out by the European Court of Justice. GSME questioned how the ERG could interpret this concept (differently), emphasised the need for consistency, and expressed concerns about there being two tests and two interpretations.
Kip Meek answered that the ERG has no interest in creating conflicting ex-ante and ex-post regimes, and will be careful to ensure that any proposals do not add to regulatory complexity. He stated that 'the hurdle associated with joint dominance occasionally does raise problems for regulators', and that 'it would be peculiar if we didn't at least look at the issues that arise', but would not commit to any particular outcome of the study: 'we may end up doing nothing, but should study the issue; we are not making any suggestions about the type of solutions available'.
ETNO (association of leading fixed operators)
ETNO welcomed the improvement in openness of ERG to engage in dialogue with market players, and emphasised that all ERG documents should be open to some kind of consultation (ETNO gave the example of the ERG broadband market competition report, which, according to ETNO, contains not only facts and statistics, but also relevant policy conclusions which were not consulted on). ETNO also welcomed the ERG decision to identify deregulation as a priority for work in 2006, and called for 'guidance to and from NRAs to reduce regulation where competition is expected to develop in the near future' (with Next Generation Networks given as an example).
ETNO also directly asked Kip Meek whether and how the ERG is pre-positioning itself for the 2006 Review of the regulatory framework, and specifically asked: 'the Commission does not seem intent on making major changes, while some NRAs are calling for a more profound review; will this be a minor or more profound review?'
Kip Meek answered that the ERG is not sure at this stage about the scope of the review, but stated that, 'from the UK perspective, the framework has been one we can work with in general' and 'it's not for me or for the ERG to decide; it's the Commission's review, but the ERG has to look at experience of other regulators; and stakeholders, and will take an evidence based and proportionate approach'. He also indicated that if stakeholders raise fundamental worries about the framework, the ERG will consider these, and said that: 'gut feeling is that certain things need to be addressed but one should not expect a fundamental overhaul'.
ECTA (association of competitive operators)
ECTA expressed its support for the overall direction proposed by the ERG, and agreed with the ERG's priorities, although it included the review of the Recommendation on Relevant Markets as a high priority item.
ECTA also stated that 'when moving out of monopoly, we should not have any kind of a priori. We don't want more or less regulation; we want effective competition, which is the measurement as to whether regulation is necessary or not'.
On Next Generation Networks, ECTA highlighted that it sees risks of foreclosure of competition, but also opportunities to create competitive conditions, and that timing is key. ECTA also called for more consideration of economic regulation of VoIP, cost-modelling for IP interconnection, attention to mobile markets, and demanded that 'the concept of the 'ladder of investment' should not be lost'.
Kip Meek answered that the revision of the ERG Remedies Paper, which is scheduled to be finalised in Feb 2006, will address the ladder of investment, and that the ERG is there to facilitate the application of the framework: 'The framework suggests the application of regulatory obligations when there are problems of competition, and the removal of regulation when there are no problems of competition'. He acknowledged that Next Generation Networks could potentially be damaging to the prospects for competition, but also stressed that: 'We always need to look for opportunities to deregulate, not gayly without reference to market conditions, but precisely taking into account market conditions'.
The deadline for presenting written comments to the ERG is 21 October 2005.
For further information, including information about questions and answers relating to individual companies' points raised at this hearing, please contact Yves Blondeel.