1 Review of the EU regulatory framework for electronic communications Stephen Banable European Commission DG Information Society and Media ITU Conference January 2006 The Future of Voice ‘Refining the enabling environment’

2 Contents 1.Brief overview of the EU telecoms market 2.Review of the regulatory framework

3 The ICT Market in Europe

4 Fixed voice decline

5 Revenue breakdown

6 Incumbents market share in voice telephony

7 Pricing

8 Broadband penetration – international comparison (provisional)

9 Broadband platforms and competition

10 Mobile penetration

11 Bundled packages 0% 5% 10% 15% Penetration 2P 3P 4P EU Household Penetration of Bundled Offers Internet+Fixed TV+Fixed Internet+TV Other Internet+TV+Fixed+Mobile Internet+TV+Fixed Internet+Fixed+Mobile

12 Review of the framework Existing framework basically sound –Evolution not revolution Objectives remain valid –Promoting competition –Consolidating the single market –Promoting the interests of the citizen

13 ePrivacy Directive Public consultation Framework Directive Authorisation Directive Access & Interconnection Directive Users’ Rights Directive Recommendation on relevant markets Revision

14 Regulatory approach Regulation focused on markets where competition is not effective, and on market players with ‘significant market power’ Regulation is removed once competition is effective Market-based approach facilitates convergence

15 Proposals for change Spectrum management Streamlining market reviews Consolidating the internal market Strengthening consumer protection and user rights Improving security Removing outdated provisions

16 Specific issues Emerging markets Structural / functional separation Art 7 procedures Appeals mechanism List of markets Pricing and consumer protection Regulatory models

17 Treatment of emerging markets Is the market stable enough to apply the 3 criteria test ?

18 The 3 criteria test -used to identify markets which may justify ex-ante regulation  the presence of high and non- transitory barriers to entry;  no tendency towards effective competition (in the absence of regulation);  the insufficiency of competition law to address the market failure -applied cumulatively

19 Treatment of emerging markets Remedies Transparency Non-discrimination Accounting separation Access obligations Price control “Taking account of the initial investment by the facility owner, bearing in mind the risks involved in making the investment” Art 12 AID

20 Structural separation varieties of form Divestiture Creation of separate legal entities, without divestiture of assets Functional separation, with separate management structures Accounting separation

21 Structural and functional separation responses ECTA – ‘explicit NRA powers to apply functional separation’ ERG ‘calls for the strengthening of non- discrimination obligations by … allowing NRAs to oblige functional separation where necessary ETNO – ’Any forced … separation of networks and services … risks discouraging investment … and damaging harmonisation and innovation in the single market’

22 Market review procedures (Article 7) responses Many recognise the achievements of the Art 7 process Some support Commission approval of remedies Some support a stronger role for ERG Some call for abolition of Art 7 Some support creation of a European regulator

23 Appeals responses ERG - supports the aim of the Commission proposal relating to the suspension procedure ECTA - welcomes clear conditions on appeals ETNO – an effective appeals process is essential

24 List of relevant markets responses Some oppose removal of retail markets Some want more markets removed Different views on possible withdrawal of: - market 15 (mobile access and call origination)

25 Pricing and consumer protection In general: Consumers seek more protection, especially in the area of pricing Operators and service providers resist

26 Pricing and consumer protection some options Framework to have more specific provisions, eg on price transparency –where is the right balance between general principles and detailed provisions (‘better regulation’) Framework to give more powers to NRAs –risk of fragmentation across EU (VoIP) No change to framework, more guidelines –guidelines not legally binding

27 Key issues NGN’s VoIP Interconnection Bundling Roaming regulation

Commission Communication launching public consultation Draft revised Recommendation on relevant markets Adoption by Commission of proposed legislative measures Transposition of Directives in Member States Call for input on Directives and Recommendation on relevant markets Adoption by Commission of revised Recommendation on relevant markets Negotiation in EP and Council 2010 Timeline for implementation Application of Recommendation

29 long term goal ‘An open and competitive internal market, offering affordable and secure high bandwidth communications, with rich and diverse content and digital services’ (i2010 Communication, 2005) ‘A world class communications infrastructure’ (Lisbon, 2000) Choice, quality, value for money for users’ (Green Paper 1987)