A contribution to the telecoms regulatory framework review
The EU is currently preparing the review of the 2009 telecoms regulatory framework - defined by a set of Directives: Framework, Access, Authorization, and Universal Service.
This review is all the more crucial that market evolutions have been questioning the merits of rules that currently apply. This regulation that was designed to develop service competition achieved this objective. Yet, telecommunications infrastructures now need important investment around FTTH and 5G network deployments. These deployments are key to meet the ambitious European objectives of very high broadband deployment to contribute to the Community competitiveness.
In this context, consultations and roundtables are currently being carried out with public and private organisations, on various aspect of the current regulatory framework – from efficiency, relevance, to future-proof dimensions. Access to networks, communication services, consumer protection, spectrum management, governance are all addressed notably with the view of fostering investment.
Opinions expressed cover a wide range of requests, from total deregulation to extension of the framework to new players like OTT; with calls for more reliance on ex post regulation and for the use of common law, notably for consumer protection. ETNO - the Association representing Europe’s main telecom operators - is a key stakeholder. On network access, ETNO highlighted a report by Plum Consulting, “Fostering investment and competition in the broadband access markets of Europe”.
Starting from the European lag in infrastructure investments, this Plum report highlights the impact of current regulatory rules and proposes changes for the EU Telecoms Regulatory Framework to promote investments in fixed access infrastructure. In this line, Plum proposes a set of principles built around the notion of maximizing general welfare: in particular, the main opportunity for economic gains now lies in gains in productive and dynamic efficiency, achieved by investments in new network technologies because they offer major functionality improvements and unit cost reductions; this is why measures should be focused on maximizing investment and infrastructure-based competition, for the long term interest of end-users.
- Implementation of regulation must preserve the principle of technology neutrality: highlighting a specific technology would divert investment, to the benefit of other industries or world regions with less or no regulation.
- Regarding infrastructure-based competition, the growing influence of cable operators must be considered as they have an impact on the geographic scope of retail markets for broadband access
- The primary focus of NRAs should be the definition and assessment of competition in retail markets, before developing wholesale remedies for clearly identified issues.
- Where retail markets are not effectively competitive, NRAs should develop wholesale remedies which:
- Are as simple as possible. The revised regulatory framework should require an NRA to impose a single wholesale remedy to deal with the competition problem identified,
- Move away from cost orientated price regulation to give access providers greater pricing freedom at the wholesale level, and hence strengthen the case for infrastructure investment,
- Are justified by a cost benefit test.
Policies should recognize and favor the use of voluntary commercial agreements in place of ex-ante regulation. These mechanisms offer greater investment certainty and stronger investment incentives than ex-ante regulation.
Operators who wish to do so should be also allowed the freedom to switch-off of legacy networks.