Review of Legislative Framework for Electronic Communications A Mobile Perspective Rob Borthwick 4 February 2000

M-Commerce - Europe as Leader Governmental recognition of M-Commerce leadership Two options to reach e-objectives: – “Omniscient” regulatory intervention – Flexible market forces delivery Success of market forces in the mobile arena

M-Commerce – Leadership at Threat 99 Review directionally correct Implementation is contradicting policy Withdrawal statements not matched by action 99 Review / current regulatory trends are ONP- based

The failure of regulation to meet real market needs Competition -v- Regulation – Competition delivers consumer benefits through a process – Regulation based on a market situation snapshot Regulation inherently utilitarian but mobile product is personal Utilitarian regulatory implementation fails to deliver Revolutions

The failure of Regulation to meet real market needs (2) Examples include: – MNP – hugely expensive ‘one size fits all’ – CPS instead of commercially negotiated wholesale products

The solution Radical change for the electronic revolution Regulatory withdrawal is the correct approach: – Dynamic mobile markets – Market based solutions to regulatory concerns constantly emerging Minimise intervention – statutory duty to forbear – “forbear unless” as opposed to FCC “do not forbear when”

The solution (2) Separate current conflicting roles of SSR – SSR monitoring role – SSR deal with historical institutional incumbencies – SSR administrator of politically defined social objectives Building in monitoring, cost/benefit and sunset conditions

A regulatory framework for the mobile future Simultaneously: 1. Promote competition 2. Promote consumer interests 3. Deliver political objectives Current regulation Exogenous factors Endogenous factors Political objectives Historical incumbencies Market process Market grasp filterPotential issues Timing and/or economic viability Monopolistic control of essential facilities Abuse of dominance Regulatory Treatment ADMINISTER with ex-ante definition INTERVENE with ex-ante tools FORBEAR or intervene ex-post with competition rules Examples of areas requiring specific regulation Cost/benefits Cost/benefit Fixed PTT interconnection Spectrum allocation Numbering management Abusive pricing Anti-competitive behaviour Monitoring processLimit of SSR role USO Data protection, privacy Health & safety … Simultaneously: 1. Promote competition 2. Promote consumer interests 3. Deliver political objectives Current regulation Exogenous factors Endogenous factors Political objectives Historical incumbencies Market process Market grasp filterPotential issues Timing and/or economic viability Monopolistic control of essential facilities Abuse of dominance Regulatory Treatment ADMINISTER with ex-ante definition INTERVENE with ex-ante tools FORBEAR or intervene ex-post with competition rules Examples of areas requiring specific regulation Cost/benefits Cost/benefit Fixed PTT interconnection Spectrum allocation Numbering management Abusive pricing Anti-competitive behaviour Monitoring processLimit of SSR role USO Data protection, privacy Health & safety …

A regulatory framework for the mobile future (2) Simultaneously: 1. Promote competition 2. Promote consumer interests 3. Deliver political objectives Exogenous factors Political objectives Historical incumbencies Timing and/or economic viability Monopolistic control of essential facilities ADMINISTER with ex-ante definition INTERVENE with ex-ante tools Cost/benefits Fixed PTT interconnection Spectrum allocation Numbering management Monitoring processLimit of SSR role USO Data protection, privacy Health & safety … Simultaneously: 1. Promote competition 2. Promote consumer interests 3. Deliver political objectives Current regulation Exogenous factors Political objectives Historical incumbencies Market grasp filter Potential issues Timing and/or economic viability Monopolistic control of essential facilities Regulatory Examples of areas requiring specific regulation Treatment ADMINISTER with ex-ante definition INTERVENE with ex-ante tools Cost/benefits Cost/benefit Fixed PTT interconnection Spectrum allocation Numbering management Monitoring processLimit of SSR role USO Data protection, privacy Health & safety …

A regulatory framework for the mobile future (3) Simultaneously: 1. Promote competition 2. Promote consumer interests 3. Deliver political objectives Current regulation Endogenous factors Market process Abuse of dominance FORBEAR or intervene ex-post with competition rules Abusive pricing Anti-competitive behaviour Monitoring processLimit of SSR role Simultaneously: 1. Promote competition 2. Promote consumer interests 3. Deliver political objectives Current regulation Endogenous factors Market process Abuse of dominance FORBEAR or intervene ex-post with competition rules Abusive pricing Anti-competitive behaviour Monitoring processLimit of SSR role

Forbearance leads to general authorisations Exception: institutional (often technical) incumbencies – spectrum – numbering Implications for 99 Review - Licensing

Implications for 99 Review – Access and Interconnection Important to consider concept of prospective competitiveness or transient market failure Evidence of commercially negotiated wholesale product Forbearance principles – enable competitive forces to flow

Sector specific oversight while technical issues exist Spectrum is finite rather than “scarce” Transient – new technologies – wholesale (either through secondary trading or unbranded airtime products) – re-farming “Scarcity” - not lever to regulate mobile Implications for 99 Review – Spectrum

Legitimate role of policy maker to set scope of USO Not at expense of delivering innovation, choice and quality Enduring role for market neutral sector specific administration of consumer issues Implications for 99 Review – USO

Conclusion Our New Model – achievable framework for the Commission’s objectives Europe’s future leadership role in m-commerce requires bold and forward looking steps by Commission