1. 1 A New Regulatory Paradigm for European Electronic Communications Alexandre de Streel ITS-Regional Conference, Sept. 2004

2. 2 “One of our concerns with current regulatory reforms is that, beyond the liberalization and free-market rhetoric, one may be creating an environment that will lead to heavy-handed regulatory intervention” Laffont and Tirole (2000, p. 141)

3. 3 Outline 1. Change in Paradigm 2. New Substantive Test 3. New Institutional Design 4. Emerging Markets 5. Appraisal of the New Regime 6. Proposal for the Next Recommendation on relevant markets

4. 4 1. Change in Regulatory Paradigm

5. 5 2. New Substantive Test Relative efficiency of sector specific remedies compared to antitrust remedies 1. High, non-transitory, non-strategic entry barriers Economic or legal 2. No market characteristics such that market tends toward effective competition Innovation driven market 3. Relative efficiency of antitrust remedies alone to address identified market failures Extensive compliance requirement, need of frequent and/or timely intervention, need of legal certainty

6. 6 3. New Institutional Design Regulated markets are selected by: European Commission (DG Information Society and DG Competition), NRAs, in co-operation with NCAs, Under the control of the National Courts (and ultimately European Courts)

7. 7 4. Emerging Markets

8. 8 5. Appraisal of the New Regime Selection criteria: Hard-core market power: natural monopoly, externalities Risks of the new paradigm Legal uncertainty Law of the majority Regulatory creep

9. 9 6. Proposal for the next Recommendation on relevant markets Candidates for removal All retail markets (markets 1 to 6) Wholesale fixed transit (market 10) Wholesale leased lines trunk segment (market 14) Wholesale mobile access and call origination (market 15) Wholesale mobile international roaming (market 17) Candidates for re-definition Wholesale broadcasting transmission services (market 18) Candidates for addition Wholesale premium rate telephony Wholesale SMS termination on individual mobile network

10. 10 Conclusion Need to apply the new paradigm cautiously NRA: In case of doubt, forbear! Commission, NCA, Court: Strict control Otherwise the 2003 Framework may end up like being the 1996 US Telecom Act Pervasive (and perverse) regulation with multiple legal challenges