Comparative Telecommunications Law Spring, 2007 Prof. Karl Manheim 3: Competition Copyright © 2007

Spring 2007CTL2 Evolution of Telecom Reg’n State ownership State reg’n (licensing) of private monopolies State reg’n of competition Market/technological regulation of unlicensed uses

Spring 2007CTL3 Evolution of Telecom Reg’n EU State ownership State reg’n (licensing) Reg’n of competition Market/tech reg’n of unlicensed uses BBC, BT NRAs (Post/Tel) ONP, Comp’n Dir Frmwork Directive, Regulatory Comp’n Decentralization through “directive” approach; competition among NRAs

Spring 2007CTL4 Evolution of Telecom Reg’n US State ownership State reg’n (licensing) Reg’n of competition Market/tech reg’n of unlicensed uses Military (NTIA) ‘34 Act, AT&T ‘96 TCA Internet, Dereg- ulated spectrum But, no major revision yet to regulatory mission, except more centralization

Spring 2007CTL5 Sector Approach by the FCC Overview of Communications Act of 1934 Title I - The FCC Title II - Common Carriers (Telephony) Title III - Broadcast & Radio Transmission  Excluded: DBS, Gov’t spectrum Title IV - Enforcement Title V - Penal Provisions Title VI - Cable  Excluded/preempted: Rate regulation, open access Ex: How/where does FCC regulate broadband?

Spring 2007CTL6 Layer Approach by EU Communication Layers Transmission & Network Interconnection  EU Directives (e.g., Framework, Authorisation) End-user and Network Equipment Content  EU Directives (e.g., TVWF); Member State (culture) Information Services (e.g., Internet) Separation Layer Regulation Operations (deregulation)

Spring 2007CTL7 Albacom v. Italy (ECJ 2003) Procedural History Reference by Consiglio di Stato  Judicial Chambers of Council of State Facts Revenue (franchise) fee on telco networks  Formerly royalty on monopoly telco services  Amended when Auth. Dir.transposed into IT law Claims Fees violate Authorisation Dir. (97/13/EC)97/13/EC  Similar provisions as in Mobistar case

Spring 2007CTL8 Albacom v. Italy (ECJ 2003) Analysis Italy imposes charge to fund “liberalization of telecom sector” & to develop innovative uses Is this justified on theory of “ensuring optimal use of scarce resources”?  Fees impede liberalisation (obstruct market entry); how can they be levied to promote liberalisation?  What if revenues were used to subsidize market entry by small competitor telcos? Could be a form of Universal Service, but not justified by Italy on that ground.

Spring 2007CTL9 Convergence Principles in EU Technologic Neutrality Standards-based, cross-platform, interoperative  Industry-based development Radio spectrum flexibility & harmonization Facility sharing (colocation) Numbering Resources Harmonization Market allocation? Ex ante regulation Only to ensure competitive market

Spring 2007CTL10 Convergence and Competition EU migrates from ex ante to ex post unbundling/interconnect for firms > 25% share New standard “significant market power”  Market defined functionally, not service/technology  I.e., ability to charge monopoly rents w/o causing customer defection to substitute goods/services US service (silo) approach dates to 1934 Radio, wireline, wireless, cable, satellite, energy Where does broadband fit it? Ex: sole cable provider offers broadband at $55/mo; sole wireline provider offers DSL at $40/mo; competitive DSL provider offers it at $20/mo

Spring 2007CTL11 Competition in Telecom Basic Principles No exclusive markets (public utility monopolies) No exclusive licenses (except w/ scarce resources) Open access & Interconnection (ex ante reg’n)  Unbundling, Transparency  Standards, Harmonization, Interoperability Ex post regulation  Antitrust principles  Market pricing Decentralization