The new regulatory framework for electronic communications is based on the principle that regulatory action should be based on clear objectives and proportionate to identified market failures. National regulatory authorities (NRAs) have more margin of manoeuvre when deciding what regulatory remedies are appropriate than within the previous regulatory framework. Where, as a result of market analysis, NRAs find that an operator has significant market power on a specific market, they now have a range of regulatory tools available. There is the possibility for an NRA to go beyond the range of remedies available and devise alternative remedies. This very flexibility, which is the strength of the new regulatory framework, could potentially result in a range of regulatory solutions to deal with the same problems in different jurisdictions. Article 8 of the Framework directive requires NRAs to cooperate with each other and with the Commission in a transparent manner to ensure the development of consistent regulatory practice and the consistent application of the new regulatory framework. This call for input has been elaborated by the ERG and Commission who have committed to work towards a jointly endorsed approach on remedies.
The Significant Market Power (SMP) process of the new regulatory framework is conducted in three steps:
This call for input relates to the third step. The specific regulatory obligations to be imposed on SMP undertakings can apply either to wholesale or retail markets depending on the market identified for analysis. The remedies related to wholesale markets are set out in Articles 9 to 13 of the Access Directive. The obligations related to retail markets are set out in Articles 17 to 19 of the Universal Service Directive.
When imposing a specific obligation on an undertaking with significant market power, the NRA will need to demonstrate that the obligation in question is commensurate with the problem identified, proportionate and justified in the light of the NRA’s basic objectives as set out in the Framework Directive (Art. 8). These basic objectives require NRAs to:
The obligations which apply to wholesale markets set out in the Access Directive are: transparency (Article 9); non-discrimination (Article 10); accounting separation (Article 11), obligations for access to and use of specific network facilities (Article 12), and price control and cost accounting obligations (Article 13). Within each of these options there are numerous variations on the remedies to be imposed, for instance price control could be calculated implemented in a number of ways. In addition, Article 8 of the Access Directive provides that NRAs may impose obligations outside this list. In order to do so, they must seek the prior agreement of the Commission for the remedy proposed. The Commission in turn will take a decision after seeking the advice of the Communications Committee, as to whether the NRA concerned is permitted to impose such obligations.
Obligations which apply to retail markets set out in the Universal Service Directive are: regulatory controls on retail services (Article 17), availability of the minimum set of leased lines (Article 18 and Annex VII) and carrier selection and pre-selection (Article 19). In addition there are provisions set out in Article 6 of the Access Directive which allow an NRA to impose obligations regarding Conditional Access Systems.
In addition, regulatory controls on retail services should only be imposed where national regulatory authorities consider that relevant wholesale measures or measures regarding carrier selection or pre-selection would fail to achieve the objective of ensuring effective competition and public interest.
=> Scope of the call for input
The ERG work program states that, as the new framework provides for a higher degree of flexibility when applying ex ante rules, it would be in the benefit of the EU internal market, that the ERG focuses on a thorough analysis and ideally a common position on how to approach regulation.
The common approach to be developed on the basis of this call for input should, on the one hand, be sufficiently specific to offer practical guidance and, on the other hand, avoid unnecessary rigidity and leave room for differentiation of regulation according to circumstances and markets. The ERG welcomes views on the balance between these conflicting goals.
Input can be given on a more general as well as on a more specific level. On a more general level, views are welcomed on what principles and guidelines to take into account when designing appropriate and proportionate remedies for market failures.
If you wish to give a more detailed input please have reference to the following issues:
=> Procedure for the call for input
Comments will be made available to the ERG members and the Commission and unless marked as confidential, will be published on the ERG website.
Comments should be sent in English or any other official language of the EU.
=> For more information please contact with: International Department of the URTiP, ph. (+48 22) 53 49 229.