The European Telecommunications Law Blog

Consultation on Cloud computing

2011-05-16T16:52:00.002+02:00

The EU Commission has published an online survey on 'cloud computing'.
The online public consultation will run until the August 31st. Responses will feed into the preparation of a European cloud computing strategy that the Commission will present in 2012.
The survey seeks feedback on the following issues:

- data protection and liability questions, in particular in cross-border situations;
- other legal and technical barriers that can slow down the development of cloud computing in Europe;
- standardisation and interoperability solutions;
- uptake of cloud services, in particular by SMEs;
- ways to promote research and innovation in cloud computing.

The results of the consultation will feed into a European cloud computing strategy that the Commission will present in 2012. This strategy will aim to "clarify the legal conditions for the take-up of cloud computing in Europe, stimulate the development of a competitive European cloud industry and market, and facilitate the roll-out of innovative cloud computing services for citizens and businesses."

Microsoft buys Skype

2011-05-10T21:07:00.004+02:00

Largely commented in press is today's announcement that Microsoft is intending (subject to antitrust approval - which seems unlikely to be a big issue at first glance) to buy Skype. Skype is an EU based company; actually one of the rare significant internet player located in Europe (in one of its smallest countries, namely Luxembourg).

Although Skype is located in Europe, VoIP regulation is still very much in limbo here, as the EU framework is not really tailored to such service (e.g., on authorization - Skype is not registered anywhere to my knowledge) .

Interesting info on how Skype sees itself falling outside the telecom regulation is available in its recent sec filing.

If you are interested in the VoIP topic, an study on VoIP was made in 2008 by WIK.

OPTA's decisions on M4 and 5 annulled

2011-05-06T15:47:00.005+02:00

The Dutch appeal court (College van Beroep voor het bedrijfsleven) has annulled OPTA's M4 and 5 decisions based on incorrect market definition (fiber LLU for corporate users should be a separate market) and lack of rationale for bitstream when LLU regulation has been withdrawn.

The 2 decisions are available here and here.

ECJ: incumbent operators can become a one-stop shop for rival directory-service providers...but not on a cost-oriented basis

2011-05-05T13:57:00.006+02:00

This is the practical result of the decision rendered today ... combined with a previous decision from February.

In its DT decision (case C‑543/09) rendered today, the Court of Justice ruled that the EU telecom framework is not precluding national legislation from requiring telecoms firms to provide data not only from their own subscribers but also data held on third-party subscribers, to directory-services operators.

This ruling echoes another ruling of the Court of last February (in Case C-16/10 The Number Conduit) that considered that imposing a cost-oriented obligation for providing access to such assembled third party data would exceed the power conferred by the EU framework directive.

The conclusion of the Court in both cases are reproduced below:

I. Case C-543/09

1. Article 25(2) of Directive 2002/22/EC of the European Universal Service Directive)must be interpreted as not precluding national legislation under which undertakings assigning telephone numbers to end users must make available to undertakings whose activity consists in providing publicly available directory enquiry services and directories not only data relating to their own subscribers but also data in their possession relating to subscribers of third-party undertakings.

2. Article 12 of Directive 2002/58/EC of the Directive on privacy and electronic communications must be interpreted as not precluding national legislation under which an undertaking publishing public directories must pass personal data in its possession relating to subscribers of other telephone service providers to a third-party undertaking whose activity consists in publishing a printed or electronic public directory or making such directories obtainable through directory enquiry services, and under which the passing on of those data is not conditional on renewed consent from the subscribers, provided, however, that those subscribers have been informed, before the first inclusion of their data in a public directory, of the purpose of that directory and of the fact that those data could be communicated to another telephone service provider and that it is guaranteed that those data will not, once passed on, be used for purposes other than those for which they were collected with a view to their first publication.

II. C-16/10:

Article 8(1) of Directive 2002/22/EC of the Universal Service Directive permits Member States, where they decide to designate one or more undertakings under that provision to guarantee the provision of universal service, or different elements of universal service, as identified in Articles 4 to 7 and 9(2) of that same directive, to impose on such undertakings only the specific obligations, provided for in the directive, which are associated with the provision of that service, or elements thereof, to end‑users by the designated undertakings themselves.

NCA cannot adopt negative antitrust decisions

2011-05-03T09:56:00.003+02:00

Again, the telecom sector gave rise to an interesting preliminary ruling on EU competition law. In the Tele2 Polska decision rendered today, the Court of Justice held that national competition authorities are not allowed to declare that there is no breach of EU competition law and acquit companies under such rules. Only the Commission can do so.

As a matter of practice, NCA must thus simply drop their enquiries but not declare that this is because there has been no breach of EU competition law (although it could actually be the case).

EP Report on spectrum policy program

2011-05-02T18:41:00.002+02:00

The European Parliament has published the report on a coordinated European approach to radio spectrum policy management (in french).

M4 and 5 in France notified to the Commission

2011-04-28T16:30:00.002+02:00

ARCEP notified yesterday its M4 and M5 regulation to the EC. Draft decisions are available here.

Art 7.: M7 in Poland

2011-04-27T16:16:00.002+02:00

At the beginning of this month, the Commission published its comments on the draft M7 polish decision.

Those are as follows:

Need for regulating termination rates reflecting efficient costs

The Commission notes that UKE’s proposal will lead to mobile termination rates in Poland that seem to get closer to the cost of an efficient operator but that they are still based on individual operators' costs. The Commission appreciates, however, that UKE proposes to adopt from 1 January 2013 a bottom up Long Run Incremental Cost model (BU-LRIC) in line with the Termination Rates Recommendation.
However, it appears that UKE plans to adopt the currently consulted draft measures only in case the on-going negotiations with mobile operators concerning infrastructure investments fail. The Commission notes in this respectUKE's assurance that any other draft measure replacing the currently proposed MTRs will be consulted at EU level. Without prejudice to any position the Commission may take with regard to such future notification, the Commissionwould like to point out, already at this stage, that the Termination Rates Recommendation does not allow for granting of higher MTRs to a select number of mobile network operators in return for any sort of commitments by the latter, in particular if this leads to asymmetries of rates in favour of such operators. In particular, it seems difficult to justify higher than the currently proposed rates with objective cost differences outside the control of the operators concerned, which would be, however, one of the requirements of the Termination RatesRecommendation for higher rates. It would appear that a commitment to invest in rural areas is within the control of the operator concerned. The Commission would therefore like to invite UKE to take utmost account of the Termination Rates Recommendation when setting MTRs other than proposed under the current consultation.In any event, the Commission would like to reiterate as well that UKE should consider setting at glide-path for MTRs until the end of 2012 in order to ensure transparency and legal certainty for market players.

Now a question: why does a higher access tariff justified by investments in mobile networks constitute a problem while it does not for invetsments in fixed NGA network?

NEREC papers

2011-04-26T10:06:00.005+02:00

Since last year, NEREC, a Spanish institute, publishes an annual contribution monitoring EU telecom policy. It includes papers from M. Cave and others. It focuses pretty much on NGA regulation. The 2009 edition is available here and the 2010 is available here. The presentations of the last conference are also available here.

Independence of regulators in AVMS Directive

2011-04-22T10:16:00.002+02:00

Last January, the preliminary study on the criteria for independence of regulators in the AVMS directive has been published. Although, this relates to media and not purely telecoms, the criteria could arguably also be applicable for telecoms regulators. The final study is expected for later this year.

In this regards, I believe that some works could be done to harmonize the wording applicable to the notion of independence of regulators across the various regulated sectors (the legal provisions differ not only in the AVMS directive and the Framework directive but also in the directives applicable to the energy sector or to data protection). Some guidelines for such exercise could be found in Case C-518/07, Commission and EDPS v. Germany (re. data protection).

ART 7. COCOM Summary

2011-04-21T11:43:00.003+02:00

COCOM published it summary of the art.7 notifications for the last 3 months.

Commission actions since July 2003:

􀂾 711 cases closed with (481) “comments” letters
􀂾 401 cases closed with (305) “no comments” letters
􀂾 6 veto decisions
􀂾 9 cases closed with (6) “withdrawal of serious doubts” letters
􀂾 2 notifications declared “incomplete”
􀂃 17 cases pending
􀂃 49 withdrawals by NRAs

Consultation on broadband state aid guidelines

2011-04-20T10:38:00.002+02:00

The European Commission published a consultation on the revision of EU rules on the public financing of broadband infrastructure, with a view to presenting new guidelines for state aid to broadband schemes in September 2012.

The Commission has published a detailed questionnaire to highlight the most important aspects where comments would be particularly welcome. These include, for instance, the technological and market development of very high speed broadband infrastructures, the best design of access conditions on subsidized next generation networks, enhancement of transparency of state aid broadband measures or the role of the national regulatory authorities in such projects. In light of the replies, the Commission will then evaluate whether and to what extent changes are necessary. If appropriate, the Commission will come forward with new draft Guidelines in early 2012. Member States and stakeholders will again have the opportunity to express their views on this revised proposal.

"Wait and see" communication on net neutrality

2011-04-19T11:39:00.004+02:00

The Commission published today a communication on The open internet and net neutrality in Europe.

The Commission has asked the BEREC to analyse issues re. ensuring an open and neutral internet, including barriers to changing operators, blocking or throttling internet traffic (e.g. voice over internet services), transparency and quality of service. The Commission will publish, by the end of the year, evidence from BEREC's investigation, including any instances of blocking or throttling certain types of traffic. If BEREC's findings and other feedback indicate outstanding problems, the Commission says it will assess the need for more stringent measures.

The net neutrality communication follows a Commission commitment to net neutrality in the EU telecom reform package, a public consultation in the last summer year and and a summit organised with the European Parliament in autumn last year (all reported in previous posts).

LTE/WImax in 900 /1800

2011-04-18T18:05:00.003+02:00

Today, the Commission adopted a Decision amending Decision2009/776 on the harmonisation of the 900 MHz and 1800 MHz frequency bands for terrestrial systems capable of providing pan-European electronic communications services in the Community.

The Commission Decision must be implemented by Member States by the end of 2011.

The press release is available here.

Digital agenda assembly.

2011-04-18T11:54:00.002+02:00

In addition to the IBA conference, I would like to mention the first digital agenda assembly organised by the Commission on 16-17 June 2011. Further information is available here.

IBA annual telecom conference

2011-04-15T12:26:00.005+02:00

The 22nd Annual Communications and Competition Law Conference will take place on 16 - 17 May 2011 in Vienna, Austria. Topics include:

• Future Challenges of Regulation of Electronic Communications

• Scope and limits of judicial review in the regulatory process

• 3G license renewal, 4G licensing and the Digital Dividend

• Fixed network net neutrality and NGA regulation

As every year, the winners of the young lawyer writing competition and the in-house counsel outstanding achievement will be published.

Further information is available here.

Moving away from Bill and Keep?

2011-04-14T16:58:00.004+02:00

The Commission published a report prepared by TERA on the future interconnection charging method. After much discussion about Bill and Keep (BAK) (see BEREC consultation on this point), the report might suggest that we will finally come back to Calling party pays (CPP)..

The study investigates whether there is a case to move beyond the improved interconnection charging regime for the termination of a phone call on a fixed or mobile network, so called "calling party network pays", or "CPNP", to a "Bill and Keep" regime when taking into account technological change and market developments. The study compares the merits and drawbacks of Bill and Keep v CPNP based on economic literature and case studies. It assesses the regulatory requirements associated with overseeing any (voluntary or mandated) move to BAK system. The study concludes that there is only a weak case to mandate BAK instead of improved CPNP in Europe given the expected impact of the Recommendation of 7 May 2009 on the regulatory treatment of fixed and mobile termination rates in the EU with the incremental cost of voice call termination approaching zero.

"Compulsory filtering is against fundamental rights" says AG

2011-04-14T12:03:00.005+02:00

The AG rendered its opinion on the Scarlet case (Case C-70/10) which involved compulsory filtering to prevent illegal downloads.

According to Advocate General Cruz Villalón, a measure ordering an internet service provider to install a system for filtering and blocking electronic communications in order to protect intellectual property rights in principle infringes fundamental rights

In order to be permissible, such a measure must comply with the conditions laid down in the Charter of Fundamental Rights to govern restrictions on the exercise of rights. It must therefore be adopted, inter alia, on a legal basis that meets the requirements concerning ‘the quality of the law’ at issue

Implementing the E-Privacy Directive.

2011-04-13T12:04:00.003+02:00

The art. 29 data protection working party recently published a report on the implementation of the E-privacy Directive.

After a summary of the main elements of the personal data breach provisions in the ePrivacy Directive (Section II), the working document summarizes the personal data breach legislation in Member States (Section III). The summary is based on information provided by the national data protection authorities ("DPAs") but not reproduced here given the evolving character of the transposition. Section IV puts forward various actions to be carried out by competent authorities and by the Article 29 Working Party towards developing internal processes and setting forth cooperation procedures. Section V and VI focus on the new policy developments by recalling the overall scope and procedures for the expected policy actions regarding personal data breach and providing policy recommendations.

As explained in the report, the core elements set out in the ePrivacy Directive are:

a. The definition of data breach ex Art. 2 (i) which establishes that a
personal data breach "means a breach of security leading to the accidental
or unlawful destruction, loss, alteration, unauthorized disclosure of, or
access to, personal data transmitted, stored or otherwise processed in
connection with the provision of a publicly available electronic
communications service in the Community". Thus, for the personal data
breach to occur, it must include "personal data", as defined under Art. 2(a)
of the Data Protection Directive6. A personal data breach encompasses
cases of unauthorized disclosure or unauthorized access to personal data
but also cases of simple accidental destruction or alteration which is not
followed (or very unlikely to be followed) by unauthorized access.

b. The applicable legal thresholds to notify individuals and authorities (Art.
4(3), subparagraphs 1-2). The thresholds define when an entity suffering a
breach is obliged to notify the breach to authorities and affected
individuals. The ePrivacy Directive requires notification to individuals
“When the personal data breach is likely to adversely affect the personal
data or privacy of a subscriber or individual...". All data breaches shall be
reported to the authorities.

c. The content and time of the notification. The time of notification to
individuals, according to Art. 4(3) subparagraphs 1-2: is "...without undue
delay...". As for content of the notification, it should include the nature of
the personal data breach, contact information and recommend measures to
mitigate possible adverse effects. The notification to the competent
national authority must also describe steps taken by the provider to address
the breach.

d. The possible exceptions relating to technological protection measures and
law enforcement (Art 4(3) subparagraph 3).

WIK report on cooper access pricing

2011-04-12T16:00:00.003+02:00

A study prepared by WIK and commissionned by ECTA has been published today. This study examines the business case for fibre investment and assesses the effect of regulated wholesale charges on investment decisions, retail prices, competition and consumer welfare. The report concludes that, to stimulate rapid fibre deployment and take-up, regulators should signal significant reductions in copper wholesale charges whilst permitting the copper network to be rapidly switched off if open fibre is installed.

Noteworthy, another study prepared by Plum and commissionned by ETNO released a week ago concludes more or less the opposite ;-).

art.7: NGA in Hungary

2011-04-11T10:38:00.003+02:00

Last week the Commission published its comments on the Hungarian NGA regulation. Interestingly, the Commission notes that ducts and fiber unbundling does not come as alternatives... It also points out that 6 months notice should be given for retail service launch..

Comments are reproduced below:

Conditionality of duct access

The Commission takes note of the fact that NMHH proposes to mandate duct access only in those cases where unbundling is not technically feasible and to mandate access to dark fibre only where duct access is unrealizable for objective technical reasons. In this respect the Commission points out that in the Commission's NGA Recommendation27 no such conditionality has been established between unbundled access to the fibre loop and access to civil engineering infrastructure of the SMP operator. On the contrary, the NGA Recommendation clearly sets out that in Market 4 an NRA should, in principle, mandate both access to civil engineering infrastructure and unbundled access to the fibre loop. Access to civil engineering infrastructure is crucial for the deployment of parallel fibre networks. In the light of this, the Commission requests NMHH to re-consider the extent of the proposed access obligations and to require the SMP operator to offer duct access alongside unbundled access to the fibre loop.

Imposition of ancillary backhaul services in an area outside the relevant market

NMHH proposes to impose on the SMP operators the obligation to offer ancillary services, which facilitate the backhauling of traffic to the access seeker's first point of network presence. The obligation covers, inter alia, network segments, which go beyond the access network and thus covers services, which are not part of the relevant market. NMHH maintains that one of the possible reasons for the low demand for LLU services in Hungary has been the lack of regulated backhaul services. In fact, smaller alternative operators, with less extended networks, can find it very difficult to reach the local exchanges. NMHH sustains that in order to address this issue and to foster infrastructure-based competition, an ancillary obligation extended beyond the access network is needed. The Commission points out that NRAs may impose obligations in an area outside but closely related to the relevant market under review only if such imposition constitutes (i) the most appropriate, proportionate and efficient means of remedying the lack of effective competition found on the relevant market, and (ii) an essential element without which the obligation(s) imposed on the relevant market would be ineffective. In light of the above, the Commission urges NMHH to demonstrate and to further justify, in its final measures, why such a remedy is an essential element without which the proposed primary access obligations on the relevant markets would be ineffective and why it considers that the proposed backhaul access obligation is the most appropriate, proportionate and efficient means of remedying the lack of effective competition found on the relevant markets.

Lead time of wholesale NGA offer before retail services based on fibre are launched

The Commission notes the fact that NMHH proposes to require the SMP operators to make available new wholesale access products before the corresponding retail product is launched. However, in the context of wholesale broadband access over NGA, the time period of 30 days proposed by NMHH appears insufficient to ensure effective protection from non-discrimination. In order to avoid timing advantages for the retail arms of the SMP operator a reasonable period should be given to access seekers between the updating of the wholesale Bitstream offer and the launch of the corresponding retail product. As set out in Recommend 32 of the NGA Recommendation, the Commission considers that a six months period would be reasonable in such cases to make the necessary adjustments. In view of this, the Commission asks NMHH to reconsider the scope of its non-discrimination obligation and to introduce a lead time of at least six months with regard to NGA based broadband access.

art 7: Estonia M18

2011-04-01T12:31:00.002+02:00

The Commission also recently published its comments on the Estonian old M18. Interesting in view of some countries' announ-ced intention to regulate cable networks (e.g., Belgium).

Need to regularly verify the ineffectiveness of competition

The market for broadcasting transmission services is no longer recommended by the Commission for ex ante regulation, as greater platform competition and fewer capacity constraints, mainly due to the transition from analogue to digital transmission platforms, should render it effectively competitive. Despite the possible existence of market entry barriers, the market dynamics in this market are generally such that the second criterion of the three criteria test is not met.

In the Estonian case at hand, the Commission recognises however that the specificities of the relevant market as delineated by ECA are such that market dynamics have not yet materialised as could be expected. At retail level, there appears to be at this stage no substitutability between broadcasting transmission signals provided over different transmission platforms (e.g. via cable, DSL or terrestrial networks), except in some highly populated urban areas.

In the relevant digital terrestrial wholesale broadcasting transmission services market, competitive dynamics will most likely not occur until Starman - the operator that has recently been granted the remaining free multiplex licences - starts operations. However, the Commission notes that Starman has committed to start nationwide broadcasting in a few months time, intending to use the network of one mobile operator and potentially the masts of the SMP operator Levira, which are subject to (price) regulation. In case Starman comes to an agreement with the mobile operator concerned, this could in principle also entail investments by the latter in the upgrading of its mobile network so that it allows for offering broadcasting transmission services. As soon as the mobile network would be upgraded so that it allows either nationwide or large area broadcasting transmission coverage17, Starman, potentially by complementing the network with other low masts/buildings, could exert countervailing buyer power vis-à-vis Levira and, as a result, increase its market share as well as potentially expand its network coverage. In such a case it can not be excluded that competitive conditions evolve to such an extent that ECA may have to revise its conclusions on the need for regulatory intervention on the relevant market.

The Commission therefore invites ECA to regularly verify over the review period the ineffectiveness of competition between transmission platforms in the relevant market, and in particular whether the alternative operator Starman is still impeded to compete on the terrestrial platform. In case such verification was no longer possible, regulation might need to be withdrawn.

Art. 7: Geographic segmentation in Poland

2011-03-31T16:23:00.008+02:00

The Commission published its comments on the M5 analysis in Poland. This is interesting for geographic segmentation of market and remedies. In particular, it makes clear that LLU is necessary (in addition to end-to-end cable) to withdraw bitstream access. The Commission's comments are copied below: "Exclusion of allegedly competitive communes from the national geographic market Exclusion of allegedly competitive communes from the national geographic market The Commission notes that UKE excludes from the notified national geographic market 20 communes that (i) are, according to UKE, characterised by strong infrastructure competition, and (ii) exhibit a high degree of competition at retail level. UKE confirms in its reply to the request for information that it will adopt a separate decision concerning those 20 communes which are not covered by the present notification and notify the Commission and the national regulatory authorities in other Member States of a full market analysis covering market definition, SMP assessment and the resulting outcome concerning regulatory obligations. The Commission asks UKE to notify its draft measure concerning the 20 remaining communes without unjustified delay. The Commission further requests UKE to base this forthcoming market definition and analysis on a thorough analysis of all relevant structural (in particular market shares and its evolution over time and entry barriers) as well as behavioural factors (in particular differences in prices, product/service functionalities and marketing strategies). The forthcoming notification should take utmost account of the results of the currently pending national consultation and, in case the 20 communes in question are considered to form one single (subnational) geographic market, show that (i) competition conditions across these communes are sufficiently homogenous and (ii) the differences in demand and supply conditions compared to the presently notified major part of the Polishterritory are stable and significant enough to justify such definition of a separate market37. The Commission's assessment of the present notification is without prejudice to any future position of the Commission with regard to either UKE's forthcoming market analysis for the remaining 20 communes or other measures taken at EU level relating to broadband services in Poland. This includes the question whether it is justified that these communes constitute a separate market from the rest of the Polish territory and whether the exact delineation of the currently notified market should be reassessed in the light of the market analysis to be carried out for the forthcoming notification. Furthermore, the Commission recalls that in the meantime the currently applicable SMP obligations in the 20 communes will remain in force until the relevant measure is consulted at national and EU levels and subsequently adopted Geographic variation of remedies within the notified geographic market UKE defines one relevant geographic market, but distinguishes between three different groups of communes and proposes to vary remedies between these groups. The Commission notes that the regulatory framework does not preclude the imposition of different remedies in the same relevant market, in cases where differences in competitive conditions are observed but the evidence may not be such as to justify the definition of sub-national markets.38 In this regard, the Commission acknowledges that UKE does not find variations of competition between the three groups of communes strong and stable enough to justify the definition of sub-national markets; in particular, TP still applies the same pricing policy across the three groups of communes identified and both the level of customer shares at retail level and the regionally diverging existence of infrastructure competitors seem to indicate that some communes exhibit competitive features such as to deserve different, less intense regulatory remedies to redress the competition problem observed. UKE's finding of a, in principle, national geographic market and the imposition of differentiated remedies is, therefore, not challenged by the Commission. However, the Commission would like to draw UKE's attention to the fact that it is questionable whether the mere assessment of the number of operators present in an administrative unit (i.e. the commune) and their market shares at retail level is a sufficiently elaborated criterion to distinguish between areas with more intense remedies and areas with less intense remedies. While the Commission takes note of UKE's view that competition on the retail broadband market is in Poland rather driven by the rollout of parallel end-to-end networks, and in particular by the presence of cable-TV networks and LAN operators, it points out that, in some areas, it cannot be discarded that competition may as well be driven by the presence of LLU operators which are still relying on TP's copper loop, in a context where DSL still accounts for around 50 % of the retail broadband connections in Poland. Therefore, in addition to the number of end-to-end network infrastructures present in a given commune and their respective customer shares, the Commission invites UKE to undertake a more granular analysis when grouping together those local exchanges, which display sufficiently homogenous conditions of competition. In this respect, while the Commission is not challenging UKE's approach to differentiate remedies within the notified market, additional factors such as the presence of LLU operators in the footprint of the exchanges belonging to a commune and the development of LLU coverage in a given commune would be appropriate to assess the level of entry barriers and differentiate between areas with the need for either more or less intense regulation. Furthermore, in order to appropriately assess the replication of TP's network in a given area and consequently the intensity of competition, the Commission invites UKE to provide more precise information in its final measure regarding the network upgrade and investment strategies of the end-to-end infrastructure operators, including TP's migration plans towards NGA. Also, the Commission would like to stress that any relaxation of remedies should be supported not only by the presence of infrastructure competition but also by evidence that the successful imposition of physical access remedies were to render additional bitstream remedies redundant. In this respect the Commission regrets that UKE – in its adopted measure concerning market 4 – decided to impose only conditional access to unbundled fibre loops/sub-loops. The Commission therefore reiterates its previously expressed position that UKE should withdraw the "conditionality clause" associated with the fibre unbundling access obligation. Otherwise alternative operators in Poland, in particular those who provide their services in group 2 and 3 communes, may be unnecessarily hindered to migrate their customers from partially liberalised bitstream market to the next step of the ladder of investment i.e. local loop. Lack of price regulation and monitoring of market developments The Commission notes that UKE proposes to withdraw the price control remedy for group 2 given TP's limited share of retail customers and the potential of infrastructure competition in the majority of the communes concerned. However, the Commission also notes that in some group 2 communes TP's share of retail customers remains in excess of 30 %. The Commission would, therefore, invite UKE to consider maintaining a price control obligation for these communes. With regard to group 3 communes, which are understood by the Commission to be mainly located in rural areas, the demand for broadband services is currently mainly met by small-scale local operators. However, TP is already providing voice services in those areas and already acquired a customer base. Should consumer demand change and TP start providing retail broadband services, a new analysis of the new competitive conditions and a re-assessment of the need to impose additional remedies might be required. In any event, the Commission invites UKE to regularly re-assess the appropriateness of remedies proposed for group 2 and group 3 communes and consider modifications if justified and appropriate. In this context, the Commission takes note of UKE's clarification provided in its response to the request for information that even in those areas where no price control is mandated (i.e. groups 2 and 3), UKE will be in a position to apply a margin squeeze test. In order to have the necessary tools available to carry out such test, the Commission invites UKE to maintain the accounting separation obligation in all three groups of communes. The Commission would also like to ask UKE to adapt its currently used margin squeeze test, which only relates to copper-based access products, with the relevant cost data for fibre-based products. This would ensure that the proposed relaxation of price regulation is not detrimental to competition based on fibre-based WBA"

Book on Belgian competition law

2011-03-29T11:52:00.003+02:00

The Book resulting from the series of conferences held for the CUP (see post below) has been published. It is available here. Given the limited number of books available on this topic and the quality of the authors involved ;-), this is certainly a must have....

Article 7: KPI's in Ireland (IE/2011/1185)

2011-03-28T10:24:00.003+02:00

The Commission published its comments on the imposition of KPIs in Ireland. The Commission made clear that KPIs are an important for assessing compliance with the non discrimination obligation:

"The Commission would like to stress the importance of ensuring that effective measures are in place to monitor and enforce compliance with nondiscrimination obligations if such obligations are to achieve positive results in the competitive landscape. The introduction of accurate and comparable indicators measuring service quality throughout all stages of provision of services to both the incumbent’s own downstream business and its competitors is, indeed, an appropriate tool to monitor such compliance. Without this transparency it would be more difficult for the national regulator to ensure equal treatment in relation to the key features of the wholesale product and the processes for providing it, which include functionality, quality and reliability along with processes for testing ordering, provisioning and fault repair"

See also ECTA scorecard (question 67) for an european comparison of KPIs.

The EU under (cyber) attack

2011-03-24T10:07:00.006+01:00

The press reported that the Commission has been subject to serious cyber attacks yesterday and had to take preventive measures. As defense against cyber attacks and network security is an integral part of the digital agenda, this might be a good opportunity for moving forward with ENISA reform and the cyber-crime directive announced last september.... The proposal is available here.

Must carry Rulings

2011-03-23T11:20:00.004+01:00

In the last few months, there have been several interesting court's judgements on the must carry obligation, i.e., the obligation for certain network operators (essentially cable and DSL operators) to carry radio and television broadcasts that are considered of general interest.

In Cases T-385/07, T-55/08 and T-68/08, FIFA and UEFA v Commission of 17 February 2011, the Court held that a Member State may, in certain circumstances, prohibit the exclusive broadcast of all World Cup and EURO football matches on pay television, in order to allow the general public to follow those events on free television.

In Case C‑134/10, Commission v. Belgium of 3 March 2011, the court held that the way the must-carry obligations are applied must be subject to a transparent procedure based on objective non-discriminatory criteria known in advance. For more information on this latter case, see the alert that Jones Day published recently.

Article 7: SMS in DK (DK/2011/1181)

2011-03-22T14:45:00.006+01:00

At the end of last week, the Commission commented on the danish wholesale SMS regulation. Comments are reproduced below and pertain to distinguishing national and international MTRs:

The Commission notes that NITA's proposed price regulation benefits only those operators which compete with Danish mobile operators at retail level. Operators established in other EU countries may thus not be offered SMS termination in Denmark at the same regulated rates as Danish mobile operators since they are unlikely to compete on the Danish retail market. NITA argues that interconnection agreements between Danish and other EU operators are concluded in a more competitive manner than national interconnection agreements.
The Commission questions NITA’s conclusion that operators of other EU countries are offered better rates by Danish mobile operators and that there is a more dynamic pricing policy towards operators with whom there is no retail competition. The market data collected by NITA does not support this conclusion either. On the opposite, pricing data collected by NITA shows that, absent regulation, the price for terminating a foreign SMS is up to twice as high as terminating a national SMS, and that the termination bottleneck affects the termination of foreign SMS probably in an even stronger manner. The Commission points out that remedies imposed under Article 16 of the Framework Directive in conjunction with Article 8 of the Access Directive should be based on the nature of the problem identified, proportionate, and justified in the light of the objectives laid down in Article 8 of the Framework Directive. The Commission therefore calls upon NITA to thoroughly assess whether the proposed partial price regulation would not adversely affect end users given that, in the absence of a comprehensive price-regulation, Danish MNOs may have an interest to raise their termination rates vis-à-vis foreign operators. Such price increase could ultimately be detrimental to end users located in Denmark as well as in other EU countries since they may have to pay a higher retail price for cross-border SMS.

Furthermore, NITA should assess more thoroughly whether the proposed regulation will not distort competition at the expense of the other EU competitors if those operators are subject to different conditions, thereby hampering the development of the internal market for SMS services. Indeed, the proposed partial price regulation may lead to discrimination and may have the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State.10 Against this background the Commission asks NITA to reconsider its proposed price regulation and refrain from introducing requirements in their regulatory measures which may incentivise excessive pricing for terminating cross-border SMS traffic.

Mobile on the rise: 4G auctions populate

2011-03-22T14:16:00.005+01:00

With the first spectrum policy programme being discussed at the European Parliament, the refarming in the 900 and 1800 MHz under way and the digital dividend being released, 2011 is likely to be the spectrum year.

As an example, Ofcom announced today that it is launching a consultation re. an auction of the 800MHz digital dividend band and 2.6MHz band.

Highlights are:

Timing. Ofcom wants to start the auction in the first quarter of 2012.

Duration. Unlike other countries, licences are of undefinite terms.

Spectrum Floor. Ofcom proposes one of the following five combinations:
2×5 MHz of sub 1 GHz spectrum and 2×20 MHz or more of 2.6 GHz; or
2×5 MHz of sub 1 GHz spectrum and 2×15 MHz or more of 1800 MHz; or
2×10 MHz of sub 1 GHz spectrum and 2×15 MHz or more of 2.6 GHz; or
2×10 MHz of sub 1 GHz spectrum plus 2×10 MHz or more of 1800 MHz; or
2×15 MHz or more of sub 1 GHz spectrum.

Spectrum caps. Two caps are proposed:
- A sub 1GHz safeguard cap of 2×27.5 MHz, which will mean that no one competitor can obtain more than this amount of sub 1 GHz spectrum.
- An overall spectrum holdings cap of 2×105 MHz, which will mean that no one competitor can obtain more than this amount of spectrum overall.

Coverage obligations. Ofcom proposes to include a coverage obligation in one licence for the 800 MHz spectrum. The obligation would require the licensee to provide a mobile broadband service covering 95% of the UK population bu 2017.

This follows previous moves on the Digital Dividend from other regulators in countries such as Portugal, Ireland, Germany and Sweden. In those two last countries, 800 MHz spectrum has already been awarded.

and now a bit of energy...

2011-03-16T10:09:00.003+01:00

Although not related to telecom as such, the opinion of AG Jaaskinen gave yesterday could be of some interest for interpreting non-discrimination obligations in all types of network access.

The case relates to a contract whereby a Swiss company had been granted priority access to an electricity transmission line in return for investment in the construction costs. The AG concludes that such priority access amounts to discrimination contrary to Directive 2003/54.

However, since the contract was governed by an international agreement between Switzerland and Slovakia signed before Slovakia's accession to the EU, it cannot deprive the Swiss company of the priority access.

Article 7: M3 & M5 in Denmark (DK/2011/1180)

2011-03-15T12:01:00.003+01:00

The Commission published today its comments on the LRAIC model in Denmark. Comments are limited to multicasting access and technological neutrality. They are reproduced below:

Access to the multicast functionality

According to NITA's response to the request for information, the take-up of bundled offers including IP-TV is low21. Furthermore (i) the self-supply of the multicast functionality would require an alternative operator to invest only at the level of the core network and (ii) it is both compatible with the bitstream access services delivered through the copper and fibre networks but not with cable
bitstream access services. In fact, TDC is not currently obliged to provide access to the multicast functionality over its cable-TV network due to technical limitations.

In view of the limited demand for bundled offers including IP-TV, the Commission notes that competition on the retail broadband market does not seem to critically depend on access to the multicast functionality. Moreover, it is not clear whether a bitstream-based alternative operator could profitably self-supply the multicast functionality by investing in the core network. Finally the obligation to provide access to the multicast functionality may not be in line with the principle of technological neutrality as the access network technologies would
be subject to different access obligations. In this regard, this asymmetry in remedies could artificially incentivise access to copper and fibre networks to the detriment of the cable network, especially if IP-TV becomes a more important driver for the demand for broadband connections.

Against this background, the Commission would like to ask NITA to carefully substantiate in the final measure in how far the multicast obligation is proportionate and justified.

Challenges ahead for national telecom taxes

2011-03-14T17:01:00.005+01:00

The Commission today decided to refer France and Spain to the EU's Court of Justice because they impose specific charges on telecoms operators. These taxes were introduced to counter-balance the end of paid advertising on public television.

This arguably violates Article 12 of the Authorization Directive and the Albacom line of case-law (see also cases such as telecom Italia). It is indeed arguable that the new autorization Directive has established an exhastive harmonization of the fees that could be asked from telcos.

The press release is available here.

On the same day, the Commission decided to a request for information to Hungary over its new tax imposed on retail commerce, electronic communications and energy.

BEREC documents on functional separation, NGA implementation, roaming business services,

2011-03-11T17:06:00.004+01:00

BEREC has published several documents on topical issues:

BoR (11) 07 BEREC-RSPG report on transitional issues
BoR (11) 08 BEREC report on alternative roaming tariffs
BoR (11) 09 BEREC response to public consultation on roaming
BoR (10) 46 Rev 1 BEREC report on market definition for business services
BoR (10) 44 Rev 1 BEREC Report on guidance on functional separation & Annex
BoR (10) 47 Rev 1 BEREC report on ensuring equivalence for disabled users
BoR (10) 62 Rev 1 BEREC report on cross-border issues
Bor (11) 04 Decision of the Board of Regulators on the establishment of BEREC working groups
Bor (11) 05 BEREC report on open access
Bor (11) 06 Next Generation Access – Collection of factual information and new issues of NGA roll-out -

All documents are available here.

The NGA documents will certainly be usefull in the light of Commissionner Kroes recent statement that the Commission may act as of May 2011 (date to implement the new framework) to avoid discrepancies across member States in implementing the NGA recommandation.

Recent case law developments: there is no technological neutrality for licence fees?

2011-03-10T15:06:00.007+01:00

There has been several interesting Court jugements in the last few months. The last of those is the case C-85/10 Telefónica Móviles España SA. of today.

In this preliminary ruling the CJEU held that:

The requirements laid down in Article 11(2) of Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 on a common framework for general authorisations and individual licences in the field of telecommunications – under which a charge imposed on operators of telecommunications services for the use of scarce resources must seek to ensure optimal use of those resources and must take into account the need to foster the development of innovative services and competition – must be interpreted as not precluding national legislation which provides for a fee to be levied on operators of telecommunications services holding individual licences for the use of radio frequencies, but does not allocate a specific use to the income derived from that fee, and which significantly increases the fee for a particular technology but leaves it unchanged for another.

The Court held that a licence fee might not be too low or too high.

According to the ECourt, "An excessive charge is likely to discourage the use of the scarce resources at issue and thereby result in under-utilisation of those resources. Similarly, too low a charge risks undermining the efficiency of the use of those resources". This seems somehow contradictory with the Commission statement in the state aid UMTS Czech case that"At no point the applicable EU regulatory framework imposes that Member States should require market prices for the licences they award. ”. (Case n° NN 76/2006 – Czech Republic, Award of the third UMTS licence).

Of particular interest are also §§ 34 to 36 of the court's decision which suggest that the fee can/must be technology specific. They are reproduced below:

"Furthermore, the requirements that a charge imposed on operators of telecommunications services for the use of scarce resources must ensure an optimal use of those resources and must take account of the need to foster the development of innovative services and competition cannot, in light of the foregoing, preclude Member States from establishing, for the purposes of determining the amount of that charge, a distinction – even a significant one – between, on the one hand, the digital or analogue technology used and, on the other, within each technology, the different uses which are made of it, so that equality of opportunity is secured as between the various economic operators.
35 In addition, those requirements cannot, in principle, prevent Member States from increasing, even significantly, the charge payable for a particular technology in response to both technical and economic developments on the market for telecommunications services, but leaving unchanged the charge for another technology, provided that the different amounts imposed reflect the respective economic values of the uses made of the scarce resource at issue.
36 Lastly, the sole fact that such an increase in the amount of the charge is substantial – which, in the present case, is common ground between the parties which submitted written observations to the Court – does not in itself mean that this is incompatible with the purpose that a charge for the use of scarce resources must have under Article 11(2) of Directive 97/13, in so far as the requirements arising from that purpose are respected, that is to say, provided that the charge is neither excessive nor too low.

Conference CUP on the application of Belgian competition law

2011-01-26T16:09:00.006+01:00

There will be a very interesting serie of conferences on the application of the 2006 Belgian competition law that will take place in the various palaces of justice of Liège (February, 11), Charleroi (February, 18) and Brussels (February, 25). A book made of all contribution will also be distributed amongst participants. It should also be possible to follow the conferences online (see here).

I will participate on the topic of its application to liberalized indutries. Here is the full program (in french):

Le nouveau droit belge de la concurrence : bilan et perspectives après trois années d'application

Nicolas PETIT, professeur à l'U.Lg.

Table des matières

1. Le droit belge des ententes et de l’abus de position dominante,
par Damien Gérard, doctorant à l'U.C.L.

2. Le droit belge des concentrations,
par Marc Abenhaïm, avocat

3. Le droit processuel de la concurrence,
par Xavier Taton, assistant à l'U.L.B., avocat et Joachim Marchandise, avocat

4. L’application du droit belge de la concurrence dans les secteurs libéralisés,
par Laurent De Muyter, collaborateur scientifique à l'U.Lg., avocat

5. Le point de vue de l’autorité de contrôle,
par Laura Parret, senior lecturer à l'Université de Tilburg, présidente de chambre au Conseil de la concurrence

Market Sharing between Telefonica and Portugal telecom?

2011-01-24T10:57:00.002+01:00

The Commission has opened an investigation as to whether the Spanish and Portuguese telecoms incumbents Telefónica and Portugal Telecom have breached Artilce 101 TFUE through reciprocal non-compete agreement re. their respective home markets. Such obligation has arisen from Telefónica's acquisition of sole control of the Brazilian JV Vivo.

Article 7: MTR in Poland et WBA in Slovenia

2011-01-13T10:50:00.005+01:00

The Commission published its first article 7 decisions of 2011. Of interest are:

1. Case PL/2010/1152: "UKE further states that it intends to choose between various methods to scrutinise prices proposed by TP (margin squeeze, benchmarking, retail minus, and other not specified methods). The Commission takes the view that such wide choice of verification methods is not conducive to a stable and predictable regulatory environment. Neither TP nor alternative operators will be able to anticipate whether UKE will approve of these charges
because it is unclear which method will be used"

2. case PL/2010/1162: "The Commission acknowledges that the implementation of a regulatory cost model for smaller-sized operators might be considered unduly burdensome. Therefore, alternative methodologies to determine the costs of those operators might be used, such as for example the approach considered by UKE in its 'position' (which is only available on UKE's website), where MTRs of the four new entrants are based on the cost data of another new entrant (P4)." et "As stated in the Termination Rates Recommendation MTRs of new entrants may be subject to higher unit cost for a transitional period before having reached the minimum efficient scale. NRAs may allow new entrant operators, after having demonstrated that there are impediments to market entry and expansion on the retail market, to recoup their higher incremental costs for a period of up to four years. After this transitional period MTRs of all operators should be symmetric and oriented towards the costs of an efficient operator in line with the Termination Rates Recommendation"

3. Case SI/2010/1158: "Given the demand for ubiquitous WBA products in Slovenia, the Commission recognises that the actual coverage of T-2's network may limit its ability to substitute for WBA products provided over the copper network of the incumbent operator at
this stage. Moreover, the regulatory outcome does not appear to be affected by the
exclusion of T-2's network from the relevant market. As a result, the Commission,
while not endorsing APEK's market definition, does not challenge APEK’s finding at
this stage." et "The Commission notes that APEK proposes to implement a retail minus methodologyfor WBA due to retail pricing constraints on the SMP operator stemming from cableoperators, local loop unbundlers and T-2's fibre optical connections. The Commission also notes that, according to APEK, cable offers as well as the alternative operators' LLU and fibre-based offers are only regional or local in scope, which indicates that they exercise only a limited constraint on the SMP operator. The Commission recalls that where ex ante price regulation is applied, WBA access prices should, in principal, be cost-oriented. NRAs may use other price control methodologies where there are sufficient competitive constraints on the downstream retail arm of the SMP operator. In addition, in the absence of cost-orientation, NRAs should monitor the SMP operator's pricing behaviour by applying a properly specified
margin-squeeze test.

Article on the interaction of ex post and ex ante regulations

2011-01-13T10:33:00.006+01:00

First of all, Happy New year! My apologies for the irregularity of the blogging towards 2010. Work commitments make it sometimes difficult to keep up with the regular posting. Nevetheless, I will do my best to try increasing the number of posts this year.

As a starter, I forgot to mention that I have published last october an article on the interaction between ex ante and ex post regulations in Intermedia, the newspaper of the International Institute of Communications. It argues that there is an increasing cross fertilization in substance but a divergence in process between both sets of regulations. It should hopefully be available here soon. A draft version is available here in the section "working papers".

Some running consultations by RSGP

2010-12-20T12:03:00.004+01:00

The radio spectrum pilicuy group has some consultation running until January/February 2010:

- One on its Work program 2011 (until 15 January 2011)

- One on the draft RSPG opinion on Cognitive Technologies (until 15 January 2011)

- One on the draft RSPG Report on spectrum aspects related to "The future of radio broadcasting in Europe: Identified needs, opportunities and possible ways forward" (until 21 January 2011) and

- One on the draft RSPG Opinion on Common EU Policy Objective for WRC-12. (until 15 January 2011)

Some work for the Christmas period?

BEREC 2011 work program

2010-12-15T18:21:00.003+01:00

The BEREC has published its work program for 2011. It is available here. It is interesting to note that it will focus on non-discrimination experience. The Commission has indeed suggested that it might provide guidance on this topic.

Consultation on Roaming

2010-12-08T11:49:00.002+01:00

The Commission is launching a new consultation on the review of the roaming regulation. response should be provided by February 11. The Commission must complete its review and report on the functioning of the Roaming Regulation by 30 June 2011. Among the key questions raised in this consultation are whether regulatory intervention will be necessary for roaming charges post June 2012 and, if so, what is the most appropriate approach to such regulation.

The consultation comes after the communication of June 2010 where the Commission considered regulation as ineffective (see post below). It should also still publish the result of the study commissionned earlier this year.

the Consultation is available here.

Access pricing in Italy

2010-10-21T16:49:00.004+02:00

The Commission published a press release on the Article 7 letter to AGCOM re. the calculation of wholesale access prices fo LLU, WBA and WLR access. AGCOM's proposal is to increase the access price by around 20-30%.

The Commission agrees with the REO BULRIC model but asks that the maintenance and commercial costs be recalculated to reflect efficiency.

The letter will be available on 27 October.

Deutsche Telekom confirmed.

2010-10-15T11:03:00.004+02:00

As expected, the CJEU has confirmed the General court decision in Deutsche Telekom. The case is available here.

The Court confirms inter alia that (i) the as efficient operator test coule be applied (in my opnion, this does not means that a reasonable efficient operator could not apply - see AG 's opinion), and (ii) the principle of equality of opportunities does justify leaving call revenues at bay.

Additionnal case law on universal services

2010-10-12T10:17:00.004+02:00

In addition to the recent BASE & others and Commission v. Belgium cases mentioned below, the Court of Justice also rendered its judgment in Commission v. portugal on the transposition of the Universal Service Directive.

The Court considers that a national system whereby the incumbent (Portugal Telecom) remains automatically the universal service provider until such time as a procedure is launched for the designation of the universal service provider does not provide enough judidicial certainty and thus fails to comply with the obligations in the Universal Service Directive.

The judgment is only available in French and Portuguese.

Picture is Portuguese custard pastel de natas. I could recommend a great shop in Brussels if needed.

Council of Europe declaration on Net neutrality

2010-10-08T16:22:00.004+02:00

On net neutrality see below the Council of Europe declaration of end September:

1. The member states of the Council of Europe have repeatedly expressed their commitment to the protection and promotion of human rights on the Internet. This applies in particular to the fundamental rights to freedom of expression and information regardless of frontiers, the right to respect for private life and correspondence, the right to freedom of thought and religion, the right to freedom of association, the right to education and the right to the protection of property, as well as to related procedural rights guaranteed by the European Convention on Human Rights (ETS No. 5).

2. Recommendation CM/Rec(2007)16 of the Committee of Ministers to member states on measures to promote the public service value of the Internet underlines people’s significant reliance on the Internet as an essential tool for their everyday activities (communication, information, knowledge, commercial transactions) and the resulting legitimate expectation that Internet services be accessible and affordable, secure, reliable and ongoing.

3. Electronic communication networks have become basic tools for the free exchange of ideas and information. They help to ensure freedom of expression and access to information, pluralism and diversity and contribute to the enjoyment of a range of fundamental rights. A competitive and dynamic environment may encourage innovation, increasing network availability and performance and lowering costs, and can promote the free circulation of a wide range of content and services on the Internet. However, users’ right to access and distribute information online and the development of new tools and services might be adversely affected by non-transparent traffic management, content and services’ discrimination or impeding connectivity of devices.

4. Users should have the greatest possible access to Internet-based content, applications and services of their choice, whether or not they are offered free of charge, using suitable devices of their choice. Such a general principle, commonly referred to as network neutrality, should apply irrespective of the infrastructure or the network used for Internet connectivity. Access to infrastructure is a prerequisite for the realisation of this objective.

5. There is an exponential increase in Internet traffic due to the growing number of users and new applications, content and services that take up more bandwidth than ever before. The connectivity of existing types of devices is broadened as regards networks and infrastructure, and new types of devices are connected. In this context, operators of electronic communication networks may have to manage Internet traffic. This management may relate to quality of service, the development of new services, network stability and resilience or combating cybercrime.

6. In so far as it is necessary in the context described above, traffic management should not be seen as a departure from the principle of network neutrality. However, exceptions to this principle should be considered with great circumspection and need to be justified by overriding public interests. In this context, member states should pay due attention to the provisions of Article 10 of the European Convention on Human Rights and the related case law of the European Court of Human Rights. Member states may also find it useful to refer to the guidelines of Recommendation CM/Rec(2008)6 of the Committee of Ministers to member states on measures to promote the respect for freedom of expression and information with regard to Internet filters.

7. Reference might also be made in this context to the European Union regulatory framework on electronic communications whereby national regulatory authorities are tasked with promoting users' ability to access and distribute information and to run applications and services of their choice.

8. Users and service, application or content providers should be able to gauge the impact of network management measures on the enjoyment of fundamental rights and freedoms, in particular the rights to freedom of expression and to impart or receive information regardless of frontiers, as well as the right to respect for private life. Those measures should be proportionate, appropriate and avoid unjustified discrimination; they should be subject to periodic review and not be maintained longer than strictly necessary. Users and service providers should be adequately informed about any network management measures that affect in a significant way access to content, applications or services. As regards procedural safeguards, there should be adequate avenues, respectful of rule of law requirements, to challenge network management decisions and, where appropriate, there should be adequate avenues to seek redress.

9. The Committee of Ministers declares its commitment to the principle of network neutrality and underlines that any exceptions to this principle should comply with the requirements set out above. This subject should be explored further within a Council of Europe framework with a view to providing guidance to member states and/or to facilitating the elaboration of guidelines with and for private sector actors in order to define more precisely acceptable management measures and minimum quality-of-service requirements.

BEREC publish some documents on NP, net neutrality and functional separation

2010-10-08T11:34:00.004+02:00

BEREC has recently published several interesting documents notably on MNP, net neutrality and functional separation:

1. BEREC procedures for public consultations held by BEREC

2. BEREC Report on the consultation draft BEREC procedures for public consultations

3. BEREC report on best practices to facilitate consumer switching

4. BEREC report of the consultation on thebest practices to facilitate switching

5. BEREC Response to the European Commission‟s consultation on the open Internet and net neutrality in Europe

6. Draft BEREC Guidance on functional separation under Articles 13a and 13b of the revised Access Directive and national experiences

7. Draft guidance on functional separation - Annex I - Functional separation in practice: EU experiences

8. MTR Benchmark snapshot (as of July 2010)

9. Draft BEREC report on relevant market definition for business services

10. Electronic communications services: Ensuring equivalence inaccess and choice for disabled end-users

11. BEREC Report Regulatory Accounting in Practice 2010

All documents area available here.

CAT ruling on GSM Refarming EU Directive

2010-10-07T18:26:00.006+02:00

The CAT has ruled today that the EU Refarming Directive 2009/114 does not grant O2 an automatic right to use GSM frequencies for UMTS services. The judgment is available here.

The case focuised on the notion of "making available" of 900 MHz for UMTS use, which according to the Directive should occur by 9 May. The Court considered that "making available" means that "any measures necessary should be put in place to ensure that, by 9th May 2010, the 900 MHz and 1800 MHz bands are available throughout EU Member States to be authorised for use with UMTS technology, and are thereby capable of being made use of".

Interestingly, the Court also notes that "O2 does not contend that the GSM Amendment Directive itself takes effect, without any action by OFCOM, to remove its licence restrictions. This concession is, in our judgment, fatal to O2’s approach".

It is also interesting to see how the CAT goes much further than deciding on O2's right to actually criticizing Ofcom's way of handling the implementation of the Directive.

Court case-law on financing of universal services.

2010-10-06T14:53:00.003+02:00

The Court of Justice today rendered two landmark decisions in BASE and others and Commission v. Belgium. Both cases relate to the financing of universal service obligations. They are particulraly interesting on the need to take the situation of each operator into consideration.

The first case, is a preliminary ruling requested by the Belgian Constitutional Court. The case focus on (i) the possibility for the State to act as an NRA, (ii) the possibility to determine the existence of an "unfair burden" on the basis of the incumbent's costs and (iii) the need to make an analysis for each operator.

In particular, the CJEU held that:

- the Universal Service Directive does not in principle preclude, by itself, the national legislature from acting as national regulatory authority within the meaning of the Framework Directive provided that, in the exercise of that function, it meets the requirements of competence, independence, impartiality and transparency laid down by those directives and that its decisions in the exercise of that function can be made the object of an effective appeal to a body independent of the parties involved, which it is for the national court to determine.

- Article 12 does not preclude a national regulatory authority from determining generally and on the basis of the calculation of the net costs of the universal service provider which was previously the sole provider of that service that the provision of universal service may represent an ‘unfair burden’ for those undertakings designated as universal service providers.

- Article 13 precludes that authority from deciding in the same way and on the basis of the same calculation that those undertakings are effectively subject to an unfair burden because of that provision, without having undertaken a specific examination of the situation of each of them.

The second case is an infringment procedure. The Court held that Belgium failed to fulfil its obligations under the Universal Service Directive by

– failing to take into consideration, in the calculation of the net cost of provision of the social component of universal service, the market benefits, including intangible benefits, accruing to the undertakings responsible, and

– making a general finding on the basis of the calculation of the net costs of the erstwhile sole provider of universal service that all undertakings now responsible for the provision of universal service are in fact subject to an unfair burden on account of that provision and by having done so without carrying out a specific assessment both of the net cost which the provision of universal service represents for each operator concerned and of all the characteristics particular to each operator, including the quality of its equipment or its economic and financial situation

Increasing the fight against Cyber-attacks

2010-09-30T17:12:00.003+02:00

The Commission released 2 proposals to fight cyber-attacks: a proposal for a Directive to deal with new cyber crimes and a proposal for a Regulation to strengthen and modernise the ENISA. The draft regulation on ENISA and the press release are available here.

Under the proposed Directive, the perpetrators of cyber attacks and the producers of related and malicious software could be prosecuted, and would face heavier criminal sanctions. The Directive also include the obligation for Member States to make better use of the existing 24/7 network of contact points by treating urgent requests in a specified timeframe and provide for the establishment of a system to record and trace cyber attacks.

Kroes' recent speeches

2010-09-27T18:35:00.005+02:00

Commissionner Kroes delivered two speeches recently: one on NGA - broadband and one on ICT fundings. Some slides on the ICT event are also available here.

I also discovered that "Nelly" is a fellow-blogger on the net. Her blog is available here. Although not truly provocative (if you are a dutch mobile operator, see however her post of 22 July ;-)), her blog seems quite popular and even influencial (see her post of 23 July).

Some toughts on the NGA Recommandation

2010-09-24T11:07:00.005+02:00

Having read trough the recent NGA recommandation, I would like to share a few toughts:

1. Market definition. There are some interesting elements on the Commission's view on market definition in footnote 28 of the staff working document that is joined to the Recommandation:

"From a short-term point of view, mobile-for-fixed substitution at present is actually waning in many parts of the EU. In the long-term, while mobile HSPA services might arguably be regarded as at least partially substitutable for the typical ADSL connections serving the mass segments of the current EU broadband market (65% of all users), they clearly are not substitutable for VDSL or even GPON. LTE technology, offering much higher bandwidth, as yet needs to be deployed. Large-scale LTE deployment in the EU will probably require further spectrum resources (not only in the 790-862 MHz band), and will remain subject to the familiar – and important - capacity constraints of cellular networks, with a large - and varying - number of users having to share the total bandwidth of one cell. LTE networks will also have to be much denser than current mobile networks – i.e. in need of significantly more base stations – and will be expensive to build. Overall, commercial deployment appears likely only by 2013 or 2014".

2. Efficiency. I am always surprized by the way the Commission adopts very diverging views in its different recommandations: in its recommdnation on termination rates, the emphasis is "efficient costs" to justify reducing access costs (termination rates) while in the NGA recommandation the emphasis is on "efficient infrastructure" to justify increasing access costs (risk premium on access to NGA)...

In this regards, it is also intersting to note that the Commission classify market shares as "uncertain factors", suggesting that they have nothing to do with efficiency.

In this context, "Efficiency" seems nothing more than the perfect word for regulators to justify any kind of regulatory policy, even diverging ones...

3. Margin squeeze. The Recommandation supports price control obligations based on margin squeeze tests. The Recommandation makes cristally clear that the REO test is to be preferred over the AEO test in an ex ante context. In this regard, see previous posts on AG opinion and the article I co-authored below.

4. Risk premium/risk sharing. The Recommandation provides some guidelines for the application of the principle of risk premium and risk sharing in annex I. Among those, is the fact that risk premium should be regularly assessed and should decrease as risk diminish.

The Commission published its 3 september broadband master pieces!

2010-09-20T11:50:00.004+02:00

The Commission today published its three main policy documents on ultra-fast broadband, namely (i) the NGA recommandation, (ii) the proposal for a Decision to establish a Radio Spectrum Policy Programme and (iii) a Broadband Communication.

The political aim is to guarantee basic broadband for all by 2013 and fast and ultra fast broadband by 2020.

The press release is available here and the documents here.

Comments on German market 5

2010-09-13T12:06:00.004+02:00

The Commission published its comment on German market 5. The Commission criticize cost-orientation through ex post control: BnetZa must set ex ante control through a cost model.

Verbatim: "the Commission reminds BNetzA that ex-post price controls are not appropriate to remedy the competition problems identified in the wholesale market in question. In particular, in order to ensure regulatory certainty for access seekers
and, thus, promoting efficient investment by all operators access prices need to be truly cost-oriented and transparent on an ex-ante basis. In accordance with the regulatory framework, such prices can be appropriately adjusted for investment risk, in order to drive both competition and investment in (next generation) infrastructure. As a result, the Commission invites BNetzA to impose an ex ante price control based on cost orientation and, in order to increase transparency, to set out in the final measure a cost model on which cost-orientation will be based

In addition, the Commission sets a 6 months notice period as reasonable for pricing changes to guarantee non-discrimination.

Verbatim: "incumbent should be obliged to up-date its wholesale Bitstream offer in time before it launches a new retail service based on fibre in order to allow competing operators enjoying access a reasonable period to react to the launch of any such product. The Commission considers that six months could be seen to be a reasonable period to make the necessary adjustments, unless other effective safeguards exist, which guarantee non-discrimination in this regard".

Other relevant comments on geographic segmentation and inclusion of cable.

Towards a new GSM/GSM/LTE entrant in Denmark?

2010-09-10T12:50:00.004+02:00

The Danish ITST has announced an auction for 900 and 1800 MHz auction on 20 and 25 October. The auction will be held online.

One nationwide license of 2 x 5 MHz in the 900 MHz frequency band and one nationwide license of 2 x 10 MHz in 1800 MHz frequency band is offered. Existing opérators are excluded from the auction. the minimum bid is 8 million DKK for the 900 MHz license and 4 million DKK for the 1,800 MHz license. Registration for the auction can be submitted until 29 September 2010.

Margin squeeze again.

2010-09-03T14:17:00.003+02:00

In its Comments to the Greek regulator, the Commission highligthed once again (see its recent comments in Italy quoted in the post below) that the reasonably efficient operator test is the most appropriate for assessing margin squeeze in an ex ante context.

In yesterday's opinion, the AG also highlithed that in ex post "In my Opinion in Case C‑280/08 P Deutsche Telekom v Commission, [...] I recognised that it is not inconceivable that there may be cases in which the Reasonably-Efficient-Competitor-Test may be appropriate as a secondary and additional test".

For more on REO/EEO, see the following article here.

Margin squeeze: Opinion of AG Mazak in Telia Sonera

2010-09-02T11:31:00.005+02:00

AG Mázak'opinion in the TeliaSonera case is out today. The Opinion aligns margin squeeze on refusal to deal. The AG argues that "TeliaSonera is right when it argues that a margin squeeze is abusive only where the dominant undertaking has a regulatory obligation to supply the input in question, or where that input is indispensable" and that "if there is no regulatory obligation compatible with EU law on a dominant undertaking to supply the products in question or if those products are not indispensable, then that undertaking should in principle not be charged with an abusive margin squeeze simply on the basis of the insufficient spread between wholesale and retail prices." Otherwise, the prices could only be abusives if predatory or excessive.

Commission comments on margin squeeze test in Italy

2010-08-13T19:19:00.003+02:00

The European Commission has issued interesting comments to the Italian telecoms regulator Agcom over its proposed guidelines for ex-ante margin squeeze test for telecoms services involving regulated products such as wholesale broadband.

The Commission seems to recognize the reasonably efficient operator test as the best test in ex ante regulation and to reject the globalization of products

I copy the comments below:

On the basis of the present notification and the additional information provided by AGCOM, the Commission has the following comments:Consequences of non-compatibility of TI's offers with the proposed price test The Commission notes that AGCOM, in its proposed regulatory measure, indicates that in case a retail offer does not pass the margin squeeze test, it will immediately inform TI hereof and TI can provide further information to justify the proposed price setting. T

The proposed measure, however, does not indicate in which way AGCOM intends to intervene if after analysis of the additional information provided by TI there appears to be insufficient justification for the planned pricing. The Commission invites AGCOM to clearly indicate in its final measure that any retail offer of TI concerned by the proposed regulation must either receive a positive assessment from AGCOM before commercialisation or be withdrawn by TI.

Potential regulation of competitive retail broadband and calls markets The margin squeeze test guidelines proposed by AGCOM intend to prohibit TI's retail offers that are not replicable, according to the formula proposed, by alternative operators. This seems to potentially result in regulation of markets that are no longer susceptible to regulation in Italy, in particular the retail broadband and calls markets. The Commission therefore invites AGCOM to modify the final measure in a way that clarifies that AGCOM would, in such a case, normally request TI to modify the related wholesale prices.Price squeeze testThe methodology proposed by AGCOM applies a "production mix" (based on the availability of LLU) in order to estimate the cost incurred by an Equally Efficient Operator in the provision of a retail service.

To this end, AGCOM calculates the wholesale costs as a weighted average of the costs of LLU and the remaining relevant wholesale services that vary depending on the particular retail product. The Commission considers that, in the specific context of ex ante price controls aiming to maintain effective competition between operators not benefiting from the same economies of scale and scope and having different unit network costs, a reasonably efficient competitor test could be more appropriate. In this respect, the Commission invites AGCOM to ensure that the margin squeeze test guidelines are in line with the NGA Recommendation once adopted.With regard to AGCOM's use of certain weights (defined and periodically updated by AGCOM) of individual wholesale products (i.e. markets 4 and 5 where TI has SMP) to assess whether an alternative operator is able to enter the market profitably, the Commission notes that AGCOM does not analyse the margin between prices of the individual products included in markets where TI has SMP and the corresponding downstream products (e.g. between markets 4 and 5 and between market 5 and the corresponding retail market).

AGCOM only carries out a margin squeeze test on the production mix as a whole. As a result, it cannot be excluded that the incumbent's individual products are not offered with a sufficient margin in line with competition law principles.

The Commission also takes note of AGCOM's claim that in Italy, competition is mainly based on infrastructures and that recourse to WBA offers in areas open to unbundling is residual. However, the Commission nevertheless wishes to point out that alternative operators may, in certain areas and temporarily, depend on WBA even if LLU is available to reach sufficient customer density before actually investing in infrastructure access services in that particular area. In this respect, AGCOM's approach, i.e. to use TI's LLU costs in areas where physical infrastructure network access is available and TI's WBA costs in areas where LLU is not available, may fail to take sufficient account of alternative operators' financial leeway to climb up the ladder of investment throughout the national territory.

The Commission thus invites AGCOM to carefully identify where and to what extent LLU offers are effectively available/viable and to thereby estimate in the best possible way the optimal mix of wholesale products that would remedy any potential margin squeezes and give the appropriate incentive to alternative operators to offer retail broadband products in the whole territory.

Consultation on the e-commerce directive

2010-08-12T18:34:00.002+02:00

Although not directly linked to telecom market regulation, it is interesting to note the consultation launched on 10 August by the Commission on the e-commerce directive. Response must be submitted for 15 October.

The Commission wishes to consult interested parties directly and receive their reaction and experience on a number of subjects:
1 The level of development, both national and cross-border, of information society services.
2 Issues concerning the application of Article 3(4) by the Member States (administrative cooperation).
3 Contractual restrictions on cross-border on-line sales.
4 Cross-border on-line commercial communications, in particular by the regulated professions.
5 The development of on-line press services.
6 The interpretation of the provisions concerning the liability of intermediary information society service providers.
7 The development of on-line pharmacy services
8 The resolution of on-line disputes.

Section 7 seems most interesting for telcos and ICT compagnies.

consultation on BAK charging method

2010-08-09T19:06:00.004+02:00

At the end of July 2010, TERA published for consultation the Draft Final Study Report of on the study made for the Commission on "The Future of interconnection charging methods".

The purpose of the study is:

1. to analyse the likely evolution as well as the impact of an introduction of BAK on the migration process towards IP network interconnection, assuming a lowering of network termination fees in the medium term, and

2. to identify any necessary regulatory requirements at national and European levels so as to avoid regulatory fragmentation and to ensure the appropriate level of co-ordination in regulatory intervention across the EU.

It is open for consultation until 3 September. See here.

Funding of broadcaster through telecom tax is not state aid

2010-07-20T11:57:00.004+02:00

The Commission today approved the spanish and french telecom tax to support public broadcasters. The Commission already approved the first part of the French scheme in 2009. However, this first approval is subject to appeal before the Court (see T-520/09).

However, the fact that the funding of broadcasters is compliant with state aids rules does not mean that the fact that the broadcaster funding is based on a tax that only target telecom compagnies is compliant with the EU framework. On the contrary, the Commission started proceedings against such taxes.

Part-Time LLM in Competition law

2010-07-20T09:39:00.005+02:00

The Federation of Enterprises in Belgium and Prof. Petit of the University of Liège (where I am research fellow) have launched a speficic part-time program in Competition Law and Economics targeted to lawyers and economist working in Brussels. The website of the programme can be found here.

Ruling on Portugal telecom golden share

2010-07-08T12:37:00.003+02:00

The Portuguese State’s holding of ‘golden’ shares in Portugal Telecom constitutes an unjustified restriction on the free movement of capital, decided the Court today. The case is available here.

This follows a well-established line of case-law (see e.g., Joined Cases C‑282/04 and C‑283/04 Commission v Netherlands [2006] ECR I‑9141). Notwithstanding this case-law, it ought to be remembered that golden shares are still applicable in some countries' incumbent operators, such as in Italy.

ECJ decision in Polska Telefonia Cyfrowa

2010-07-01T18:36:00.003+02:00

In a preliminary ruling held today, the ECJ held that: "Article 30(2) of Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service
Directive) is to be interpreted as obliging the national regulatory authority to take account of the costs incurred by mobile telephone network operators in implementing the number portability service when it assesses whether the direct charge to subscribers for the use of that service is a disincentive. However, it retains the power to fix the maximum amount of that charge levied by operators at a level below the costs incurred by them, when a charge calculated only on the basis of those costs is liable to dissuade users from making use of the portability facility".

Consultation on net neutrality

2010-06-30T12:19:00.004+02:00

Today the commission launched a consultation on net neutrality. It covers such issues as whether internet providers should be allowed to adopt certain traffic management practices, prioritising one kind of internet traffic over another, whether such traffic management practices may create problems and have unfair effects for users, whether the level of competition between different internet service providers and the transparency requirements of the new telecom framework may be sufficient to avoid potential problems by allowing consumers' choice and whether the EU needs to act further to ensure fairness in the internet market, or whether industry should take the lead.

On the basis of this consultation, the Commission should propose a Communication on net neutrality by the end of this year to set out its thinking on whether additional initiatives or guidance are required.

Asyou will remeber, the new 2009 framework includes a commitment to respect net neutrality and introduces the powers for NRAs to set minimum quality levels for network transmission services.

roaming report.

2010-06-29T16:23:00.002+02:00

The Commission has published an interim report on the state of development of roaming services within the European Union. While the Report states that implementation of the amending Roaming Regulation has gone smoothly and operators have complied with the new provisions so that consumers are benefiting from reductions in the prices for voice and SMS roaming services and from increased transparency, it considers that consumers are not yet enjoying fully the reductions seen at wholesale level for data and that competition in the roaming markets has not developed sufficiently and structural problems persist.

The Roaming Regulation, as amended, is valid until 30 June 2012. The Commission must produce its full review of the functioning of the Roaming Regulation by 30 June 2011. According to the Commission such review will analyse whether further regulation of roaming services will still be necessary, either in the form of price regulation or through some alternative long-term approach, or whether the Regulation should expire in 2012, leaving roaming services to market forces alone.

Towards Bill and Keep....

2010-06-11T12:09:00.003+02:00

BEREC has recently published its Common Statement on Next Generation Networks Future Charging Mechanisms / Long Term Termination Issues .

BEREC has assessed the pros and cons of BaK and CPNP.

BAK is proposed as a long term solution that could be expected to trigger significant higher usage and lower price per minute and consequently to higher consumer and total welfare.
However, the CPNP regime could continue at least for the short and medium term and the effects of lowering terminating rates under the CPNP regime should be first monitored before the step to BaK is made.

Some further inresting points are made:

- With BaK the potential to exploit control of the termination bottleneck is not available but if there is sufficient competition at the retail level.

- the assessment could vary between Member States.

- NRAs would need to carefully manage the transition process taking account of national circumstances including legal issues.

Roaming Regulation is confirmed.

2010-06-08T11:23:00.003+02:00

Today, the Court of Justice decided that the Commission could impose retail and wholesale caps for roaming charges on the basis of Article 95 (old) of the EC Treaty. The decision of the Court follows the opinion of the AG.

However, it remains to be seen if the maintenance of a retail and wholesale price regulation with specific rates established at the EU level is a viable solution in the long term... In this regard, the Commission has already commissioned a study to evaluate how to regulate roaming. In view of the Commission's lack of power to adopt binding decisions on remdies in the new framework (if one exclude Article 19 decisions), it will be interesting to see what option are proposed...

Article 7 Report

2010-06-01T17:14:00.003+02:00

The Commission released a Communication on article 7 notifications.

The Commission report outlines major trends and issues arising from the Article 7 procedure over the past two years. and highligths gioveergences in fibre access regulation, access and interconnection pricing and functional separation.

BEREC in Riga.

2010-05-31T15:38:00.004+02:00

EU Telecoms Ministers confirmed today that the BEREC Office will be based in Riga, Latvia.

At the last IEJE conference (see post below for the slides), the BEREC Chairman pointed out that until this decision was made, recruiting staff was a particular challenge for BEREC as people did not know where they will be working. Yet, it remains to be seen whether Riga will attract many applicants.

On a side note, it seems that obtaining the seat of an agency becomes one of the main goal of Member States' diplomatic agendas. It could be questioned whether, apart from supporting the airlines industry, such dispertion of agencies across Europe facilitate Europe's efficiency and help reducing its costs...

the 15th Implementation Report is out.

2010-05-25T22:09:00.003+02:00

The 15th Implementation report has just been published by the Commission. It comes more than a month later than usual. The press release flags the divergent application of EU law in the Members States.

digital dividend awarded in Germany

2010-05-21T10:01:00.001+02:00

Bnetza has concluded the auction for spectrum the digital dividend and other bands. Vodafone, O2, Deutsche Telekom and E-Plus all got their part. It is reported that BnetZa might carry out a review of the result of the auction to assess whether the distribution of spectrum has generated any anticompetitive effects.

digital agenda is out!

2010-05-19T12:40:00.003+02:00

The Commission published today its Digital agenda that should provide more clarity on Kroes' inetentions for her term in office. There is even a specific website allocated to this objective.

This follows a report on Europe Digital Competitiveness, published two days ago together with the latest BIAC Report .

Slides of IEJE Conference on new regulatory framework

2010-05-06T15:00:00.004+02:00

Last Friday, I organized, together with Prof. Nicolas Petit, director of the Institute of European Legal Studies of the University of Liege, a conference on " What Comes Next in Electronic Communications? A Review of the New EU Framework". It was a true success and a real hotpotch of interesting thoughts shared by lawyers, economists, NRAs and Commission officials.

The slides used by some of the speakers are now available on the website of the ieje and on the blog of my colleague and friend Prof Nicolas Petit.

More on digital dividend

2010-05-06T12:44:00.003+02:00

According to today's press release and memo, "The European Commission has adopted a Decision establishing harmonised technical rules for Member States on the allocation of radio frequencies in the 800 MHz band that contribute to the deployment of high-speed wireless internet services by avoiding harmful interference. In several Member States the 800 MHz frequencies are being freed up as part of the so-called "digital dividend" resulting from the switchover from analogue to digital television broadcasting. If Member States decide to change the existing frequency allocation (for broadcasting) they must immediately apply the harmonised technical rules laid down by the Decision to make these frequencies available to wireless broadband applications. Today's decision does not itself require Member States to make available the 790-862 MHz band for electronic communication services. However, the Commission is considering such a proposal in the forthcoming Radio Spectrum Policy Programme, which will take account of a recent consultation on the subject and the 22-23 March Spectrum Summit organised by the Commission and the European Parliament".

Just married!

2010-05-04T18:55:00.007+02:00

Sorry, for late blogging due to wedding planning and (well deserved?)honeymoon. I am now back on track. Some developments in the last months:

- Kroes and BEREC on track.

- Third (and final?) draft of NGA recommandation in interservice consultation.

- Consolidated version of the new 2009/2010/2011? framework available here.

- New Guide to the case law of the Court in the field of telecoms available here + recent case-law update here.

- Opinion of AG mazak in DT case which confirms General Court's ruling. See summary here and full text of AG here (including footnote 26 ;-)).

- Public consultation on Universal service principles in e-communications (from 2 March 2010 to 7 May 2010), available here.

- Tender on Roaming, closed in March 2010 (available here).

Another blow for Sarkozy? France brought to ECJ for "telecom tax"

2010-01-28T14:23:00.004+01:00

After the judgement clearing former French prime Minister de Villepin in the Clearstream case, Sarkozy is facing another blow on his 55th Birthday as the Commission has opened an infringement procedure against France's telecoms tax. This tax heavily promoted by the French President was imposed on the turnover of telecommunications operators to compensate the termination of public advertising on public channels such as France 2 and France 3. The Commission seems to consider that this tax violates Article 12 of the Authorization Directive. France has now two months to provide a response, before the Commission decide whether to turn to the ECJ.

The press release is available here.

Conference on Google Book Settlement

2010-01-22T16:57:00.004+01:00

The IEJE organizes, together with Saint Louis, a very interesting half-day conference on the Google Book Settlement in Brussels, on February 12th 2010. This raises complex issues at the crossroad of IP and competition law. Speakers include Commission officials, high level scholars, in-house counsels and practitioners. In addition, pricing is (almost) predatory...

The programme can also be found here.

New report on the "Options for the Ubiquitous Internet Society"

2009-12-02T17:54:00.007+01:00

The Commission has published an external study prepared by Rand entitled
"Trends in connectivity technologies and their socioeconomic impacts".
This study set out to review technology trends that relate to the notion of an emerging
ubiquitous Internet Society – renamed in the study as ‘Internet of X’. It aims at giving food for thought to elaborate new strategies for the period 2010 - 2020 after the termination of the i2010 programme. Suprizingly, the report also try to set a balance between ex ante and ex post regulation.

Some interesting quotes:

"Anticompetitive behaviour can’t always be detected or prohibited ex ante, but ex post remedies (after lockin has occurred) may be too late, and there may be no counterfactual evidence to demonstrate that alternatives are viable if lock-in is widespread. Moreover, many of the specific activities that firms might use for predatory purposes (e.g. proprietary standards, low “penetration” pricing, etc.) are also essential in order to attract complementary content and services to Internet platforms capable of providing effective competition. Therefore, conventional antitrust policy may be less effective than consumer protection policy or supporting activities that enable users to coordinate moves to superior entrants, and participatory self-regulation may be more effective than IPR policy in deterring or overturning “stealth patents” in public standards".

and in relation to spectrum:

"Spectrum allocation as powerful ex ante tool. Traditional ex ante regulation and ex post control of the wireless domain is increasingly difficult. Spectrum allocation can be a substitute (ex ante) policy instrument to support innovation, new technology, and more competition. However the use of auctions has lead to mixed outcomes in balancing different policy objectives (technical, economic, and societal) and much available spectrum is hoarded or left idle. Allocation chanisms are shifting towards a combination of market-based regulation, societal regulation and regulatory withdrawal’. The EU may monitor the effectiveness of these mechanisms and also support policy convergence and standards to support a strong internal market for hardware in Europe."

ECTA Conference.

2009-12-01T17:01:00.004+01:00

The annual ECTA regulatory conference will take place 7-9 December 2009. More info here. Together with the IBA conference on competition and telecommunications (and to a lower extend the IBC conference), this is probably the biggest event on EU telecom regulations.

Kroes for DG Infosoc!

2009-11-30T12:47:00.004+01:00

Rumors confirmed! As such, there is little doubts that N. Kroes will fit well in Reding's shoes: same consumer approach, same style.

She also has some sector expertise, having been in the board of O2, New Skies Satellites and Lucent.

Thus, I believe she is also unlikely to lower the Commission's stance on Roaming or MTRs. Yet, it remains to be seen whether she would side in favor of competitive operators or incumbents. In this regards, her previous comment that 2 is not enough (see below) could be remembered in due time when discussing appropriate level and symmetry for MTRs or in-building fiber-networks sharing...

It also remains to be seen what are her plans for media and copyrights.

For the time being here is her CV:

Personal

Born: July 19, 1941Rotterdam, The Netherlands

Education

Erasmus University, RotterdamDoctoraal Examen Economie (Masters of Science in Economics) 1965

Previous employment

2004-2009: Commissionner in charge of DG Competition

2000 - September 2004 : advisor/board member (inter)-national companies

1991 - 2000 : President Nyenrode University

1989 - 1991: Advisor to the European Transport Commissioner, Brussels, Belgium

1982 - 1989 : Cabinet Minister of Transport, Public Works and Telecommunication

1977 - 1981 : Vice Minister of Transport, Public Works and Telecommunication

1971 - 1977 : Member of Parliament

1969 - 1971 : Member of the Rotterdam Municipal Council, Member of the Rotterdam Chamber of Commerce

1965 - 1971 : Assistant Professor Transport Economics, Erasmus University

Kroes for Infosoc DG?

2009-11-26T00:52:00.002+01:00

Rumors are increasing that current commissionner for Competition Nelie Kroes might take over Reding's post in the next Commission...

EU Framework adopted.

2009-11-24T12:13:00.002+01:00

Today the European Parliament finally adopted the telecoms package in third-reading vote following agreement on amendement 138 (see below). The package was approved with 510 votes in favour and 40 votes against, with 24 abstentions,. It consists of three directives: the better regulation directive modifying the current access and framework directives, a directive establishing the BEREC, and a directive on users rights and universal access obligations.

Member states will now have to implement the package into national law.

Parliament report on NGN

2009-11-12T16:06:00.003+01:00

The parliament published a report prepared by WIK on NGN regulation.

It proposes 9 recommendations:

1. Adopt the pending Review package.

2. Make greater use of sub-national markets and/or sub-nationally differentiated remedies.

3. Refine and complete the draft Recommendation onNext Generation Access (NGA).
4. Develop a solid understanding of the societal benefits of migration to NGA.

5. Evaluate policy instruments that could be used to achieve greater deployment of fibre-based NGA.

6. Initiate a political discussion to establish goals, and means of achieving them.

7. Consider possible implementation of Bill and Keep call termination arrangements.

8. Monitor the migration to IP-based interconnection.

9. Make more high quality spectrum available for fixed and mobilewireless broadband access.

ECJ decision in telia/Sonera

2009-11-12T12:15:00.005+01:00

The European Court of Justice today gaves its decision in the TeliaSonera/iMEZ dispute. This dispute arose following TeliaSonera's refusal to provide SMS and MMS interconnection to iMEZ on the basis of the fact that it was not registered in Finland and was not a provider of public electronic communication networks.

The reasoning of the Court is quite interesting:

First, it adopts a restrictive view. The ECJ ruled that interconnection obligations cannot be applied to operators other than those designated by the national telecoms regulator as running public communications networks.In particular, the framework "precludes national legislation in so far as it does not restrict the possibility of relying on the obligation to negotiate on the interconnection of networks solely to operators of public communications networks."

Second, the Court is more lenient. The obligation to negotiate is independent of whether the undertaking concerned has significant market power, and does not entail the obligation to conclude an interconnection agreement, but merely an obligation to negotiate such an agreement and interconnection obligations should also apply "where an undertaking which does not have significant market power proposes interconnection to another undertaking under unilateral conditions likely to hinder the emergence of a competitive market at the retail level." The Court also emphasize the reciprocal nature of interconnexion agreements. In my view, this suggests that interconnection obligations applies as much to the conditions of the services provided by the operator requesting interconnection than to the services provided by the operator to which interconnection is requested.

Third, the Court is even more lenient. First, based on the any-to-ant obligation, the ECJ states that a NRA may require an undertaking which does not have SMP but which controls access to end-users to negotiate in good faith with another undertaking for either interconnection of the two networks concerned if the undertaking which requests such access must be classified as an operator of public communications networks. This is fairly logical in view of the above. However, the ECJ also adds that NRA can require such undertaking to negociate for interoperability of SMS and MMS message services if the undertaking which requests such access does not qualify as an operator of public communications networks. Thus, on the basis of the any-to-any obligations, the restrictive bniew of point 1 is annuled by the extensive view in point 3.

Here is the wording of the answers to the Court's questions:

1. Article 4(1) of Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (the ‘Access Directive’), read in conjunction with recitals 5, 6, 8 and 19 in its preamble and with Articles 5 and 8 thereof, precludes national legislation such as the Communications Market Law (Viestintämarkkinalaki) of 23 May 2003 in so far as it does not restrict the possibility of relying on the obligation to negotiate on the interconnection of networks solely to operators of public communications networks. It is for the national court to determine whether, having regard to the status and the nature of the operators concerned in the main proceedings, they may be classified as operators of public communications networks.

2. A national regulatory authority may take the view that the obligation to negotiate an interconnection has been breached where an undertaking which does not have significant market power proposes interconnection to another undertaking under unilateral conditions likely to hinder the emergence of a competitive market at the retail level where those
TELIASONERA FINLAND I - 17
conditions prevent the clients of the second undertaking from benefiting from its services.
3. A national regulatory authority may require an undertaking which does not have significant market power but which controls access to end-users to negotiate in good faith with another undertaking for either interconnection of the two networks concerned if the undertaking which requests such access must be classified as an operator of public communications networks, or interoperability of SMS and MMS message services if that undertaking is not covered by that classification.

agreement on amendment 138.

2009-11-05T17:36:00.003+01:00

Members of the "conciliation committee," between the Parliament and the Council reached an agreement on the last outstanding bone of centantion in the draft regulatory framework, namely amendment 138 on the need to have judicial authorization for cutting off consumer's internet access. The all issue is very much linked to the adotpion of the hadopi law in France which allowed to cut off the internet access without ex ante judicial review. The UK is also expected to adopt similar legislation.

The wording of the compromise is not available but it seems to be referring to the need of fair and impartial ex ante procedure (without referring expressly to the judicial courts, thus suggesting an administrative court would be sufficient), the presumption of innocence and the right to be heard. Under those principles, the Hadopi II law risks to be held unlawful, since there is no audition foreseen.

The compromise reached is still subject to final approval by the parliament in plenary and by the Council. The plenary vote is scheduled for 23-26 November and the council's meeting on 26 October.

Digital dividend communication and recommandation

2009-10-29T16:44:00.003+01:00

The Commission published a communication on "Transforming the digital dividend into social benefits and economic growth" and a recommandation on "Facilitating the release of the digital dividend in the European Union".

Currently, this is the status on the switchover:

- switch off completed:BE (Flanders) , DE, FI , LU, NL, SE
- switch-off date end 2010 or earlier: AT , DK, EE, ES, MT , SI
- switch-off before end 2012: BE (Brussels and Wallonia) , BG, CY, CZ, EL , FR, HU, IT, LT, LV, PT, RO, SK, UK
- switch-off after 2012 or no confirmed switch-off plans available: IE, PL

The Recommandation requires Member States to :

- take all the measures necessary to ensure that all terrestrial television broadcasting services use digital transmission technology and cease using analogue transmission technology on their territory by 1 January 2012;

- support regulatory efforts towards harmonised conditions of use in the Community of the 790-862 MHz sub-band for electronic communications services other than, and in addition to, broadcasting services, and refrain from any action that might hinder or impede the deployment of such communications services in that sub-band.

The Communication calls for strategic actions:

1 to decide, following a debate with the European Parliament and Council, whether and when all Member States should open the 790-862 MHz sub-band for uses other than high power broadcasting;

2 to adopt a common EU position, to be endorsed by the European Parliament and Council, in future international negotiations on the digital dividend;

3 to consider requiring all Member States to apply a minimum level of spectrum efficiency for future uses of the digital dividend.

4 to allow further increases by using the "white spaces", i.e. the unused spectrum between two TV coverage zones;

5 to ensure the smooth migration to other spectrum bands of existing applications operating in the same Ultra High Frequency spectrum as secondary uses, such as wireless microphones;

6 to facilitate research in order to improve future equipment's capability to use the digital dividend spectrum

Now, the Commission will define the harmonised technical conditions for the use of the 790-862 MHz sub-band for new services and conduct a debate with the European Parliament and the Council on its proposed strategic actions in view of a political agreement in 2010. The point 4 to 6 above will be further discussed with industry and consumer representatives.

Consultation on a Digital Single Market for Creative Content Online

2009-10-22T14:10:00.004+02:00

The Commmission published for consultation a paper encapsulating its "reflection on a Digital Single Market for Creative Content Online".

This follows two previous consultations in 2006 and 2008. It also follows the conclusion of the a stakeholder discussion group named "Content online platform"
(This was the "Reding stakeholer group" - not to be confused with the "Kroes" stakeholder group on online commerce/music which recently also adopted two joint
statements).
The mutliplication of those platforms and consultations (3 in 4 years) suggest that the EU is till fighting to determine a common vision (not to say even a strategy) to adress the online markets.

Answers to this latter consultation should be provided by January 5th.

Directive and decision on 3G in GSM frequencies adopted

2009-10-21T11:50:00.006+02:00

The Directive modernising the GSM Directive to allow 3G and 4G in GSM frequencies has been published yesterday in the Official journal. This follows the agreement of July (see post below). The Commission also published a decision which set outs the technical parameters for the co-exietnce of 2G and 3G systems in the same bands.

The new rules allow the introduction of UMTS in the GSM bands. LTE will alos be allowed by the Commission when it has proven compatible with GSM and UMTS.

The process of opening up frequencies is already on its way (if not achieved) in numerous EU countries (e.g., Belgium, France, Sweden). National administrations have six months to transpose the Directive and to implement the Decision so that the GSM spectrum bands are effectively made available for 3G.

In this process, the NRAs must examine possible distortions of competition, resulting from uneven spectrum allocation. Thus, it might trigger a refarming of the frequencies.

ERG Report on transition from ex ante to ex post regulation.

2009-10-19T18:32:00.003+02:00

The ERG has published a report on the transition from sector-specific (ex-ante) regulation to competition law (ex-post).

The report concludes that NRAs have a role to play even when market are deregulated, amongst other in assisting a competition authority in monitoring whether effective competition in a market is maintained.

The Report covers:
- issues that may arise during the "transition period" foreseen under Article 16(3) of the European regulatory framework that enables a progressive withdrawal of SMP obligations once effective competition has been declared in the considered markets ;

- issues that may arise after the "transition period", once NRAs no longer intervene on account of significant market power regulation (Section 5).

The end of termination services?

2009-10-16T11:01:00.007+02:00

In the ERG meeting in Switzerland earlier this month, the ERG advocated for the move towards BAK once NGN infrastructure is in place. According to the ERG press release,
"bill and keep is more promising that CPNP (calling party network pays) as a regulatory regime for termination for the long term".

Thus, the ERG is holding a Public Consultation on a Draft CP on NGN Charging Mechanisms/Long term termination issues. This approach is not novel: The ERG already published a consultation promotting Bill and Keep (BAK) for IP-interconnection which resulted in a common statement on a work program towards a common position.

From a legal point of view, it remains open whether BAK could actually be imposed under the current regulatory framework. From a practical viewpoint, it would be interesting to assess the consequences of imposing BAK in one country while CPP is applicable in others.

Responses should be sent to the ERG Secretariat by 10 December 2009.

It is noteworthy that the Commission recently launched a call for tender for a study on "the future of interconnection charging in Europe, the purpose of which is to "analyse the likely evolution as well as the impact of an introduction of "Bill and Keep", among other interconnection charging methods, on the migration process towards IP network interconnection, assuming a lowering of network termination fees in the medium term, and to identify any necessary regulatory requirements at national and European levels so as to avoid regulatory fragmentation and to ensure the appropriate level of co-ordination in regulatory intervention across the EU".

OECD Report published

2009-08-20T11:01:00.002+02:00

Earlier this months, the OECD published its communication outlook which presents the most recent comparable data on the performance of the communication sector in OECD countries and on their policy frameworks. It contains usefull pricing comparaison. Of course, those are not immune of (numerous) criticism but, to date, this is often the only source available for comparisons.

Digital economy report and consultation on a strategy for Europe

2009-08-10T11:27:00.004+02:00

On August 4th, the Commission published its Digital Competitiveness report. Europe has now reached more mobile subscribers than citizens. The Commission also launched a consultation on the digital strategy for Europe.

UMTS in 900/1800 MHz

2009-07-31T15:58:00.006+02:00

On July 27th, the Council adopted the review of the GSM Directive to allow UMTS in the 900 MHz frequency band. The updated Directive will be signed by the Presidents of the European Parliament and the Council of Ministers in September and be published in the EU's Official Journal. At the same time, the Commission
will adopt a Decision, which will enter into force on the same day as the updated Directive, setting out the technical measures allowing for the co-existence of GSM (2G mobile phones) and UMTS systems (3G phones that add high-speed mobile internet to regular phone ervices) on GSM frequencies in line with the Directive.

This is expected to trigger further refaming of the frequencies by NRAs.

some thoughts on risk premium vs. risk sharing rethoric in the draft EU framework.

2009-07-29T15:19:00.002+02:00

It is widely known that the remaining bone of contention between the Council (essentially France which has recently adopted its so-called "ADOPI" law) and the Parliament for the adoption of the regulatory package is the so-called amendment 138 relating to striking the right balance between respecting internet privacy v. fighting internet piracy.

However, I do not agree with the other widely published view that the Council and the Parliament favor risk sharing over risk premium for regulating next generation networks ("NGN"). While both risk sharing and risk premium are addressed in the draft directives, risk premium is, in my view, a much more precise and compelling obligation.

Indeed, risk sharing is set out as a general regulatory principle to be followed by national regulatory authorities ("NRAs") and the terms of this obligation are rather loose: NRAs must "[permit] various cooperative arrangements between investors and parties seeking access to diversify the risk of investment". Furthermore, it is noteworthy that this statement is immediately followed by the statement that such arrangements must also guarantee that "competition in the market and the principle of non-discrimination are preserved".
On the other hand, risk premium is a very precise obligation that is mandated when a NRA imposes a cost-orientation obligations ("To encourage investments by the operator, including in next generation networks, national regulatory authorities shall take into account the investment made by the operator, and allow him a reasonable rate of return on adequate capital employed, taking into account any risks specific to a particular new investment network project"). Therefore, I believe that the new draft EU framework imposes a less stringent obligation for NRAs to apply risk sharing than to apply risk premium.

ERG action plan on VoIP

2009-06-24T09:58:00.002+02:00

The ERG has published an action plan to achieve conformity with its common position paper of 2007. It gives an overvioew of the action taken at national level so far and adresses specific issues such as access to emergency services, nomadic services, number portability, etc...

Commission publishes 2nd consultation on the NGA recommandation

2009-06-12T12:34:00.003+02:00

The Commission just publishes its 2nd consultation on the NGA recommandation.

Some useful principles seems to be recognized such as the reasonably efficient operator test:

A margin squeeze can be demonstrated by showing that the SMP operator's own downstream operations could not trade profitably on the basis of the upstream price charged to its competitors by the upstream operating arm of the SMP operator. ("equally efficient competitor" test). Alternatively, a margin squeeze can also be demonstrated by showing that the margin between the price charged to competitors on the upstream market for access and the price which the downstream arm of the SMP operator charges in the downstream market is insufficient to allow a reasonably efficient service provider in the downstream market to obtain a normal profit ("hypothetical reasonably efficient competitor test"). In the specific context of ex-ante price controls aiming to maintain effective competition between operators not benefiting from the same economies of scale and scope and having different unit network costs, a "reasonably efficient competitor test" will normally be more appropriate. Whatever method is chosen, NRAs should properly specify in advance the imputation test, the parameters to be used and the remedial mechanisms in case of established margin squeeze.

two is not enough!

2009-06-10T10:53:00.004+02:00

In a recent press release, Competition Commissioner Neelie Kroes said: " If only two mobile operators can offer national coverage, then this is not enough to ensure that consumers are well served."

This statement was made in relation to the European Commission's endorsement of Slovenia's telecoms regulator's (APEK) plan to require Slovenia's largest mobile operator, Mobitel, to provide national roaming to competitors.

Commission finaly published Termination recommandation

2009-05-07T13:43:00.003+02:00

The European Commission today published its recommendation on mobile termination rates, aimed at lowering and harmonising the rates mobile operators charge for incoming calls to their networks. The purpose his will make Mobile termination rates converge to approximately 1.5 euro cents to 3 euro cents per minute by the end of 2012.

Acciording to the Commission symmtric rates based on LRIC cost model should be promoted and asymetry could be justified by differences in frequencies and market entry (with a maximum of 4 years). In my view, it remains questionnable whether this recommandation would be entirely conform to the ECJ's case-law in Arcor and Mobistar.

After the telecom EU regulator, an Internet EU regulator?

2009-04-27T16:14:00.004+02:00

In a video posted on her website this morning, Viviane Reding pleaded for a "Mister Cyber Security" or "Cyber Cop" (sic!) to combat cyber attacks such as spoofing, phishing, etc... Her speech is also available in writing here. Sher criticizes ENISA for being limited to being a platform to exchange information and not a "European headquarters of defense against cyber attacks". She does not explain however if she fovors an increase of ENISA's powers or the establishment of a new regulator for cyber security.

In any event this might sounds like a faithfull wish and it is very unlikely that she will see it materialize before the end of her mandate as commissionner...

The 14th Commission Report is out!

2009-03-25T19:14:00.002+01:00

The Commission published today its 14th report on the Implementation of the Telecommunications Regulatory Package. As usual, a useful source of information....

NB: The picture bears no hidden relation with the report but is just nice...