Comparative Telecommunications Law Spring, 2007 Prof. Karl Manheim 4: Regulation in the EU Copyright © 2007

Spring 2007CTL2 Regulatory Framework Framework Directive (2002/21/EC) Preference for ex post regulation  See also EC Treaty Art (Rules on Competition) Ex ante regulation principally to promote competition  See also EC Treaty Art. 86 (phase out of monopolies)

Spring 2007CTL3 Regulatory Framework Framework Directive (2002/21/EC) Article 8 - Policy Objectives [page S12]  8(2): NRAs shall promote competition in the provision of telecom networks, services & facilities  8(3): NRAs shall promote internal markets by Removing remaining (regulatory) obstacles Encouraging trans-European networks and services Ensuring non-discrimination  8(4): Specific objectives (universal service, privacy)

Spring 2007CTL4 Ex ante Regulation by EC & NRAs Article 15 - Market Definition by EC (1) - Comm’n’s Recommendation on Relevant Markets, suitable for ex ante telecom regulation  Purpose is to promote competition Article 16 - Market Analysis by NRAs (1) - Analyze markets defined in 15 (2) - Determine market competitiveness  (3) - No ex ante regulation if competitive  (4) - Reg’n if firms have “significant market power” (5) - Joint analysis/reg’n of transnat’l markets

Spring 2007CTL5 Market Reviews Stages Definition of relevant market (Art. 15) Assessment of competitiveness & SMP (Art. 16) Assessment of appropriate reg’ns  Consultation (Art. 6)  Notification to Commission & other NRAs (Art. 7)

Spring 2007CTL6 Market Failures requiring ex ante Types of market (competitive) failures Excessive (monopoly) pricing Denied access to network or market  Market segregation/segmentation Discriminatory treatment (pricing) cf. market dominance in compe- tition law The regulatory measure should respond to the type of market failure found Types of ex ante regulatory measures Required transparency $ separation (vert. integrated) Non-discrimination Access obligations Price controls

Spring 2007CTL7 Ex ante Regulation - Art. 6 Transparency for proposed regulations Publication Consultation with industry Compare FCC procedure Notice of Proposed Rulemaking (NPRM) Publication in Federal Register (FR)  Notice and Comment period Report and Order  Publication in Code of Federal Regulations (CFR)  Further Notice of Proposed Rulemaking (FNPRM)

Spring 2007CTL8 Ex ante Regulation - Art. 7 Art. 7(2) - Transparency & Cooperation Art. 7(3) - Notification to EC / other NRAs If reg’n affects “trade between member states” Com’n approves or “comments” (+ other NRAs) Phase 1 Phase 2  Implementation is delayed  EC may require NRA to withdraw the draft reg’n Art. 7(4) - Rejection by EC If EC finds the reg’n would “create a barrier to single market” or if it has “serious doubts” as to compatibility with Community law

Spring 2007CTL9 Article 7 Process Phase 1 - Notification & Comment Filed with ad hoc team (DGs ISM / Competition) Approves or comments on draft reg’n (1 month) NRA obliged to take comments seriously Phase 2 - “Serious Doubts” If draft reg’n is contrary to EC’s Art. 15 market definition or its Art. 16 SMP analysis Commission opens a hearing procedure  Implementation delayed for additional 2 months  Withdraws serious doubts or vetoes the draft reg’n

Spring 2007CTL10 Phase I Notification - Ofcom (2006) Art. 16 Market Analysis link Mobile call termination market  Recommendation on Relevant Market by EC (Art. 15) “Undertakings” with SMP  3, Inquam, O2, Orange, T-Mobile, Vodaphone Proposed regulations  Mandatory network access  Non-discr. in network connections  File and wait pricing  Reduced termination charges National consultation per Art. 6

Spring 2007CTL11 Phase I Approval - AGCOM (2006) Notification - Leased Lines Market Low bandwith leased lines (“T1”) was defined by EC as a Relevant Market  AGCOM finds non-competitive market & SMP  Proposes to impose price controls AGCOM also defines mid- and high bandwidth leased lines, not defined by EC  AGCOM finds competitive markets; no reg’n Commission has “No Comment” AGCOM may enact proposed T1 regulation

Spring 2007CTL12 Phase II Investigation - UKE (2006) Notification - Fixed call termination Commission expresses “serious doubts” Lack of evidence of non-competitive market Investigation commenced  Polish UKE provides satisfactory explanation  SD withdrawn, replaced by comments Comments Price control mechanism lacks transparency and certainty UKE to clarify pricing/verification procedures

Spring 2007CTL13 Phase II Investigation - RegTP (2005) Notification - Fixed call termination NRA concludes non-competitive market / SMP But fails to specify proposed remedies Additional information (Phase I) Proposed regulation of Fixed operators, but not Alternative Network Operators  despite having 100% market share Finding of no SMP raises Serious Doubts