1. Liberalization and Market Regulation in the EU Andrejs Dombrovskis Deputy Director Electronic Communications and Post Department Workshop on EU telecommunications regulation Belgrade, 12 – 13 J UNE 2012

2. topics of the presentation ∆EU Regulatory Framework ∆1998 ONP framework ∆2002 NRF framework ∆2009 NNRF framework ∆Role of the European Commission and of the BEREC in market regulation ∆Transposition into national legislation ∆Implementation of national legislation by the NRA ∆Recent developments in markets and experience in Latvia as a country that started the implementation later

3. DEVELOPMENT OF THE COMPETITIVE FRAMEWORK 1984 198719972002 2006 Break-up of AT&T GREEN BOOK LIBERALIZAT. Optim. ? 1994 UMBRELLA AGREEMENT LV EU 2003 ONP Liberalization …….. 2001 2004 ONP 2005 NRFW NRFW ….. 1998 GREEN BOOK CONVERGEN. Full liberalization …………… Step-by-step liberalization SPRK Exclusive rights of Lattelecom 2010 2009 State owned monopoly BEREC

5. ONP REGULATORY FRAMEWORK EMPHASIS ON REGULATION OF INTERCONNECTIONS, ACCESS, LEASED LINES AND UNIVERSAL TELECOMMUNICATIONS SERVICE Individual licensing & general authorisations regimes To promote competition it was envisaged: - to implement carrier selection, carrier pre-selection - to implement number portability - to implement comprehensive directory services - supervision of QoS, tariffs and costs of voice telephony services - SMP (Significant Market Power) analysis in 4 – fixeed and mobile voice telephony, interconnection and leased lines service markets Creation of ONP Committee at EC for co-ordinated implementation of regulation Requirement to establish independent regulatory authority (NRA) Regulatory requirements presscribed in ~ 30 directives, recomendations and decisions In 1987 created unformal community of NRAs – Independent Regulatory Group (IRG) Also in 1987 market player ’ s lobby group ECTA was formed (ETNO created in 1992)

6. SUMMARY: IMPLEMENTATION OF TELECOMMUNICATIONS REGULATORY REGIMES IN LATVIA 2002 LV E U 2003. gads 30.11. 2001. 01.05. 2004. NRFW 1998 OPEN NETWORK PROVISION (ONP) REGIME SPRK 2009 NEW REGULATORY FRAMEWORK (NRFW) 2011 OPTIMIZED REGULATORY FRAMEWORK ONP 29 01.07.2001

7. 2002 REGULATORY FRAMEWORK (Streamlined regulation, easier market entry) EMPHASIS ON MARKET ANALYSIS IN 18 (7) SERVICE MARKETS – assymetric regulation Extended regulation scope (broadcasting, CaTV and Internet), concept of electronic communications networks and electronic communications services Simplified market entry (individual licences replaced by general authorisations) Applying the principle of technological neutrality Simplified processes for granting usage rights for scarce resources Concept of secondary trading of radio frequencies Ensuring more transparency in NRA work Ensure that national legal systems allow for appeals on decisions of NRAs Applying competition law in definition and analysis of service markets and applying ex-ante regulation to dominant market players Providing for strong and independent NRAs Simplification of whole regulatory package (5 basic Directives) To achieve greater harmonisation of regulation Communication Committee (COCOM) Radio Spectrum Committee (RSCOM), Radio Spectrum Policy Group (RSPG) and European Regulators Group (ERG) were created

8. “ FULL ” SET OF 2002 REGULATORY PACKAGE DIRECTIVES Framework Directive (2002/21/EC), establishing also COCOM Access Directive (2002/19/EC) Authorisation Directive (2002/20/EC) Universal Service Directive (2002/22/EC) Privacy Directive (2002/58/EC) Competition Directive (2002/77/EC) REGULATIONS, DECISIONS, RECOMENDATIONS AND GUIDELINES Regulation No 2887/2000/EC on unbundled access to the local loop Radio Spectrum Decision (676/2002/EC), establishing also RSCOM Decision (2002/622/EC) establishing Radio Spectrum Policy Group RSPG Decision (2002/627/EC) establishing European Regulators Group ERG Recommendation (2003/311/EC) on relavent product and service markets Giudelines (2002/C165/03) on market analysis and assessment of SMP Uncanged previous regulatory documents (Terminal Directive, GSM Directive, etc.)

9. PROGRESS OF EC PROPOSALS FOR CHANGES IN REGULATORY FRAMEWORK OF 2002 Agreed proposals approved by European Parliament on 25 November 2009 EC proposals for changing of regulatory framework on 29 June 2006 submitted for public consultation untill 27 October 2006 EC summarised proposals published on 13 November 2007 (included proposal of creation of ECMA - European Electronic Communications Market Authority)

10. CHANGES OF 2002 FRAMEWORK IN 2009 Framework Directive 2002/21/EC Authorization Directive 2002/20/EC Access Directive 2002/19/EC US Directive 2002/22/EC Privacy Directive 2002/58/EC Directive 2009/136/EC amends Directives 2002/22/EC, 2002/58/EC and Regulation 2006/2004 on co-operation of consumer protection bodies Regulation 1211/2009 sets BEREC Directive 2009/140/EC amends Directives 2002/19/EC, 2002/20/EC and 2002/21/EC Competition Directive 2002/77/EC AMENDMENTS WERE REQUIRED TO BE IMPLEMENTED BY 25 MAY 2011

11. PROPOSALS OF 2009 FOR REVIEW OF REGULATION Number portability in one working day Maximal term for customer contracts – 24 months (preferably 12) Detailed information in contracts (QoS, compensation for un-qualitative services, advertising rules, etc.) Respect to customer privacy when using Internet Network neutrality conditions by informing customers about traffic management if applied Obligation to inform customers on security breaches or attempts to do it Access to 112 services and caller location, information on other emergency numbers Functional separation as possible explicit remedy or by operator’s initiative Requirement for more independency of NRA Involvement of BEREC to facilitate regulatory consistency Indirect “veto” of the EC on decisions on remedies of NRA

12. OTHER EU REGULATIONS DURING 2007-2011 Rec-n on markets New version in 2007 2007, 2009 Ieteikums par tirgiem Roaming Regulation Rec-n on interconnection tariffs 2009 Recomendation on NGA 2010 2008 Rec-n on market analysis procedures

13. CHANGING REGULATORY FRAMEWORKS 2002 Time 1998 OPEN NETWORK PROVISION (ONP) REGIME Institutions: ONP COMMITTEE LICENSING IRG COMMITTEE, NRAs, IRG 2009 NEW REGULATORY FRAMEWORK (NRFW) Institutions: COCOM IRG, ERG NRAs, IRG, ERG, RSC, RSPG REVISED REGULATORY FRAMEWORK Institutions: COCOM IRG, BEREC NRAs, IRG, BEREC, RSC, RSPG

14. Results that matter, on topics that matter In the medium term BEREC’s main focus will continue to be its contribution to the realisation of the internal market. It will do so in particular by: a. Adopting common regulatory approaches and best practices in areas where differences impede the internal market, and monitoring conformity with those approaches thereafter. b. Issuing robust and respected opinions on Article 7 cases. c. Advising the EU institutions, upon request and on its own initiative, on draft legislation and regulation. BEREC: Body of European Regulators for Electronic Communications

15. IRG/BEREC EXSPERT WORKING GROUPS 2012 Framework Implementation (3 projects) Convergence and Economic Analysis (5 projects) International Roaming (2 projects) Next Generation Networks (3 projects) Net neutrality (3 projects) End –User (2 projects) BEREC-RSPG Cooperation (1 project) Remedies (3 projects) Benchmarking (3 projects) Termination Rates (1 project) Regulatory Accounting (2 projects)

16. SPRK 01.07.2001. TPD 17.09.2001. ECPD ACTIONS FOR PROVISION OF REGULATION 2001 2002200420052006 20092011 November 2001 Law On Telecommunications ONP ECPD FUNCTIONS: authorization, interconnections, resourses, market analysis, obligations, tariffs, costs, universal service, QoS, complaints, technical regulation, etc. Liberalization 2003 May 2004 Electronic Communications Law (ECL) Telcos Law of 1993 NRFW and optimised RFW ECPD FW Review TTC TQCC June 2011 ECL amended

17. Nov 2001 Jan 2003 May 2004 Dec 2004 Dec 2005 Telcos Law Jul 2003 Start Liberalization 1st RIOs approved ECL accepted by CoM ECL accepted by Parliament ESSENTIAL BENCHMARKS OF LATVIAN ELCOS SECTOR: ECL: bylaws drafted NP introduced ONP Regime Implemented ? NFW Transposed ? PUC created in July 2001 June 2005 ECL am. Nov 2002 1st SMP desig. Apr 2004 SP - 2008 2006 MA

18. CABINET REGULATIONS ACCORDING TO PUC, ELCOS AND NETWORK SECURITY LAWS On regulated public services National Numbering Plan On supporting numbering DB by SSC ElComs On annual fee for numbering use On supporting caller location National Radio Frequency Plan On frequency bands with limited use On radio frequency assignment use permits On internal procedures for data protection On data to be provided to national CERT institution

19. CABINET REGULATIONS ACCORDING TO ELECTRONIC COMMUNICATIONS LAW II On holder of country top level domain.lv and ENUM On telecommunications terminal equipment On use of Amateur Radio Equipment On use of special radio facilities On use of equipment for lawful interception On procedures for requesting the data to be retained

20. SPRK REGULATIONS ACCORDING TO ELECTRONIC COMMUNICATIONS LAW I On registration & list of services On requirements of GA On information provided for SPRK On violation of requirements of GA On numbering usage rights On frequency usage rights On number portability On carrier selection and CPS On descriptions of public services On access to facilities On access to unbundled loops On minimal set of leased lines

21. SPRK REGULATIONS ACCORDING TO ELECTRONIC COMMUNICATIONS LAW II On dispute resolution On information for market analysis On application of remedies On consultations with market On universal service On comprehensive directories On detalization of service bills On publication of QoS surveys On control of payments On connection of private networks

22. INFRINGEMENT PROCEDURES NrYearCase 12005Non-conformity with e-Privacy Directive (spam) 2Number portability (fixed and mobile) 3Directory Services 42005/2006Failure to carry out market review 52006Non-availability of caller location information for 112 6Incomplete transformation of notification mechanism 72008/2010Independence of NRA 82009/2011Administrative charges

23. Digital Agenda: Commission asks Court of Justice to fine five Member States for missing telecom rules implementation deadline Member State Daily penalty Belgium €70 353,36 The Netherlands €105 688,8 Poland €112 190,4 Portugal €22 014,72 Slovenia €13 063,68 What is proposed - a daily penalty payment on each Member State (see table below) which would be paid as from the date of the Court's ruling until full transposition of the rules into national law is notified.