It is debatable whether allowing increased regulatory intervention in retail market pricing and quality of service is a positive development.
The new proposals for the EU Regulatory Framework were announced on 13 November 2007. The most notable proposed changes to the Framework are as follows:
- the Commission gets substantial new powers, including a veto on remedies and the ability to hold national regulatory authorities (NRAs) to a timetable
- there are substantial changes to the European Regulators Group (ERG), which becomes an EC agency (the European Electronic Communications Market Agency, EECMA) with a substantial staff and the aim of improving the harmonisation of regulation
- the NRAs get a new remedy – functional separation – and their decisions may be more difficult to suspend prior to appeals being heard
- there are fewer relevant markets presumed to require review, which will reduce the cost of regulation
- there are substantial changes which relate to citizens’ rights such as privacy, price transparency, more rapid number portability and access to electronic communications for disabled users
- there are significant proposed changes in the area of spectrum management, which will affect the entire industry
- finally, there is a proposal which affects providers of VoIP services: under the new proposal, if a user can call telephone numbers at all, calls to the emergency services must be possible.
Many of the issues raised by these significant changes were discussed at length in the report Preparing the Next Steps in Regulation of Electronic Communications, written by Analysys (now Analysys Mason) and Hogan and Hartson (downloadable from http://ec.europa.eu/information_society/).
There are also some surprises in the proposals which have not been widely noted in the press. One of these is new powers regarding ‘net neutrality’, under which the NRAs and the Commission will be able to set minimum standards of quality of service. Another surprise is a proposed role for the Commission in constraining retail tariffs for certain call types (e.g. calls to numbers in the range used for pan-European services). These powers do not sit at all easily within the 2002 Framework because they would involve interventions in the retail market which could apply to players without significant market power (SMP). The 2002 Framework sought to minimise impositions on operators other than those with SMP, and to keep regulatory intervention to the wholesale level and rely on competition where possible. It has been largely successful: in the case of net neutrality, for example, there is not as yet an issue in Europe as a whole, because we have vibrant competition in the retail markets for both broadband and mobile access, and customers can always switch supplier if they dislike the way their traffic is handled.
Let us hope, therefore, that the political negotiations about the contentious issues of principle noted above include a discussion of whether allowing increased regulatory intervention in retail market pricing and quality of service is a positive development. Let the horse trading begin…