Telecom
Italia welcomes the opportunity to comment on the public consultation on a draft
ERG Work Program 2007.
The draft
work programme describes three main areas of activity: the contribution to the Review of the European
e-communications regulatory framework, the guarantee and fostering of the
harmonization throughout the EU and the correct regulatory addressing of
innovative services and technologies.
1. The Review
The Draft
proposals provide:
“It should also be mentioned that ERG mandate
is to advise and assist the Commission and that such advisory duty formally
ends up when the power of legislative initiative has been exercised by the
Commission itself. At that stage, ERG will no longer be requested to provide
advice and opinions on final legislative proposals issued by the Commission.
On the other hand, monitoring of
legislative processes and investigations, and impact analysis of the
legislation in place are of utmost interest to NRAs.
Such lines of activity would therefore continue within the IRG side if
necessary.
The following deliverables are
proposed:
1a) Response to proposed
legislation: This will be the general IRG view on proposed legislation by the
Commission
Deliverable: Give advice to the
Commission, where appropriate in relation to the legislative proposals (up to
their finalisation in the EU Council and Parliament). Following
adoption, analysis of the legislative process, including expert opinions”.
Deadline: continuous
Consultation: No
Telecom
Italia comments:
In February 2006, in response to the Commission Call for input, the ERG
delivered its initial vision of the key issues at stake in the Review. In
October 2006, ERG will deliver its response on the consultation launched by the
Commission in June 2006.
Both responses are oriented in advocating the importance
of harmonization in the implementation process.
We fully share this view.
In particular
we underline the importance to treat consistently market structures with
“broadly similar” characteristics, supporting a coordination mechanism between NRAs to ensure that “best practices” are followed and any
deviation from them is motivated in the relevant NRAs
decisions.
As far as the revision of art. 7 is concerned we would like to express the
following remarks.
The IRG/ERG elaborated its position on the revision
of art. 7 of Framework Directive and has investigated on the value of this
article in relation with the implementation process.
The notification
process appears to be a very valuable tool to ensure consistency in the
interpretation and application of the current framework.
Therefore
this article appears crucial to ensure harmonization.
The
current framework is a very flexible tool that allows the application of
several different remedies in relation with:
Ø
the ascertainment of dominance and
Ø
an assessment of the competitiveness of every relevant market.
This
needed flexibility requires the existence of some legal mechanism to avoid a
fragmented and inconsistent interpretation of the market analysis across
Art 7
appears to be an appropriate legal instrument to serve this purpose.
The notification of the market analysis results is
key to ensure that dominance and the assessment of a market failure is interpreted
consistently across
Coordination between NRAs, as advocated in the ERG responses, is
relevant nevertheless it is an instrument that should work in parallel with
the notification process as described by the legal framework.
For the reasons expressed above we would like also to
recall that the legal structure of the current framework is very open to allow
that the regulatory strategy is tuned with markets developments.
Nevertheless
we think that the amount of flexibility already provided by the current
framework is appropriate to deal with market changes and should not be further
expanded.
To allow a consistent regulatory policy for the
internal market we think that the following ERG suggestions raised by the previous
ERG positionings on the Review:
Ø
“Regulators need to have the
flexibility and the regulatory tools to respond to changing technological and
market trends.
Ø
the Framework review needs to
guarantee appropriate flexibility to enable regulators to address the issue of
convergence
Ø
A key feature of the Framework is
the flexibility for regulatory authorities to define markets based on national
circumstance,”
should not
entail an extension of discretionality in the interpretation of key issues such
as the list of relevant markets and the regulatory intervention on markets
characterized by innovation.
Telecom Italia believes that IRG reports on proposed
legislation as well as ERG position on the implications for the application of
the legislation (deliverables 1a and 1b) should be made available (released) to
the public. ERG opinions on the legislative process and on procedural issues such
as the measures to be followed for the transition from the previous
recommendation and to the recommendation to be released in January 2007 are
of vital importance to achieve the longed for goal of harmonization. These
documents have to be publicly available so that compliance may be monitored and
NRAs may be asked to provide further justification in
case they intend to deviate from a procedure identified or suggested by ERG.
Indeed Telecom Italia believes that this procedures
are so important that, time constraints permitting, interested party should
have the opportunity to comment on these issues through public consultation.
2. The issue of harmonization
On
this issue the ERG/IRG Draft WP for 2007 provides:
Harmonisation is a clear mission for the ERG (see ERG Decision, Article 3); all of the
ERG
initiatives, over the years, have been
specifically targeted to improve harmonization and to
disseminate best regulatory practices across
harmonization emerge also from stakeholders.
Moreover, harmonization is bound to be a major
issue within the Review process and it is
expected to address the Commission proposals for
amendments, especially on article 7.
During 2007,
it will be an objective of the ERG to improve work undertaken in 2006 to
deliver
clear and concrete input towards
harmonization; the Work Programme for 2007 will therefore
devote specific attention to this end. The
ERG believes that effective and targeted harmonization
is the best way to work towards the
Framework’s single market goals. This starts with an
assessment of the degree of in the areas where
harmonization is necessary and desirable. In
close collaboration with stakeholders,
the ERG intends to identify key areas where a common
approach might significantly help deliver
benefits of a single market for electronic
communications products and services.
To
complement its existing Common Position on regulatory remedies, the ERG will
develop
guidance dealing with the choice of remedies
in specific markets, starting with priority areas.
ERG will
continue to develop “best practice indicators” against which the results of
regulation in
terms of competitive levels can be
measured, taking into account national circumstances”.
Telecom Italia comments:
The Issue of Harmonization is
indicated as a central topic in the WP for 2007.
In the course of 2006 the ERG has
been committed in strengthening the ERG role on this topic.
Telecom
Italia believes that harmonization is a very relevant issue in the
implementation process.
In
particular we support an application of the framework that will allow the establishment
of a level playing field across
In order to reach this objective we
think that:
Ø Clarity is needed in the revision of the current set of directives and
in the formulation of national regulator powers to apply remedies
Ø The current art. 7 procedure of notification should be subject to a
rationalisation that does not imply a weakening of supervision at EU level
Ø Accountability on the legal nature of the Commission letter published
following the notification will favour harmonization.
In light of further harmonisation, IRG/ERG could
analyse the possibility to include a common calendar of market analysis. This could facilitate common policies towards
same markets.
The current ERG Chairmanship has
reiterated that harmonization is a tool to allow “consistency of outcomes”. Along
these line of thought “outcomes” have been described has the establishment
of a competitive market structure in every Member States.
Telecom Italia suggests that
harmonization does not implies merely the achievement of this economic
objective which is described, in the current framework, as one of the several
objectives of the EU regulatory policy.
Harmonization should instead ensure that
the objectives of the law, should be pursued in a consistent
way, granting legal certainty on the application of the law, in
particular in relation with the set of remedies to be applied.
For
this reason we think that to pursue this objective it is desirable clarity in
the legislative revision process, and at the same time that it is important to ensure,
at European level a mechanism to grant effective harmonization.
Effective harmonization relies both
in the appropriate definition of the obligations that can be enforced in a
given situation of market failure, and the legal procedure and tools that
allow that these remedies are applied consistently and are enforceable in an
effective way .
For these reason Telecom Italia
believes that a central mechanism of control it is required to ensure effective
harmonization.
At this stage of the Review the
Commission appears to be the more natural candidate to ensure the consistent
application of EU legislation by a twofold approach:
Ø Art 7 notification process and the possibility to extend the
Commission enforceable evaluation to remedies
Ø Guidance through the legislative tools
applicable i.e. Recommendation, Guidelines, Communications
We agree with the ERG analysis
that a common approach on remedies is the most crucial achievement.
For this reason we think that
guidance is needed from the Commission in the appropriate definition of the legal
tool that are available in the current framework to deal with situations of
market power in the different relevant markets.
At the same time the ERG can support
the process through its advice to the Commission on the “best practices”
applied across different Member States: the ERG advisory role in parallel
with Commission guidance is indeed mostly relevant to ensure effective
harmonization.
We think that a “best practice” system
alone, as a description of examples of “best implementation” could lack of
accountability whereas the role of guidance from the Commission through the
legislative system at EU level could ensure legal certainty to the process.
Telecom Italia believes that more
harmonisation could be reached through the publication of “remedies benchmark”.
More in details Telecom Italia is of the view that ERG should include in its work
program the publication of benchmark on remedied adopted by NRAs
on specific issues such as fixed reverse termination. In fact the first step to
be made towards a more harmonised regulatory approach is to identify markets that
despite similar competitive conditions have suffered from the application of
profoundly different obligations i.e. markets that are most in need of more
harmonisation. In relation to the market of call termination on individual
public telephone networks provided at a fixed location (market 9 of the current
recommendation) for instance it would be useful to publish a benchmark on the
maximum price for call termination allowed by NRAs of
member states.
III. New issues /
Innovation
On
this topic the ERG/IRG Draft WP for 2007 provides:
1) NGN’s deployment and its related regulatory impact will be investigated in
2007. While the revised regulatory framework is expected to come fully into
force by 2009-2010, NRAs have already been facing NGNs regulatory challenges, therefore clear and timely
guidelines for a harmonised regulatory approach on this issue are needed.
The recent
fast technological developments and the actual market trends anticipate the successful
strategy of the earlier introduction of Next Generation Network where the
evolution of former separate services and networks are going towards a
converged platform which will be able to provide different mobile or fixed,
voice or data services via the same platform (possibly implying changing market
borders). The development of this also means a challenge for the individual NRAs in order to find the balance between the different national
market development trends or actual situations and the necessary harmonized way
in regulating in order to promote competition.
After some
first-hand experiences in the early implementation of NGN and in between the review
process of the regulatory framework this is the right time to:
Ø
list
and describe the potential technical, economical and legal problems which could
continue to exist in an NGN environment;
Ø
to
investigate blurring of boundaries between access and core networks, and its
regulatory impacts.
Deliverable: CP on NGN regulatory
principles (based on the Report on NGN)
Deadline: Q2 2007
Consultation: Yes
2) ERG will consider the processes of convergence and the development towards a
multi-play communications market as a topic for 2007. Convergence also impacts
relationship between communications and broadcasting markets (mobile-TV).
Access to content (related to access to, not the content itself, which falls
outside the scope of the framework), net-neutrality, interoperability, bundling
of broadband services (flat-rate, triple and quadruple play offers) and consumer
protection issues could be successfully investigated by ERG WGs
and PTs.
Major topics
include:
- access
to networks;
- access
to content (related to “access to”, not “the content” itself, which falls
outside the scope of the framework);
- bundling
of broadband services (flat-rate, triple and quadruple play offers) and related
consumer protection issues.
Telecom Italia comments
Some issues on NGN developments are
closely related to innovation and linked with the emerging market issue.
The current framework already
provides that a careful approach need to be taken into account when emerging
markets are at stake.
This
light approach for markets characterised by innovation is confirmed in the
current revision process.
Furthermore the Commission has reiterated in
the Draft Text of the Recommendation on relevant markets under revision that
emerging markets should not be subject to inappropriate regulation.
In principle we share the Commission
following views expressed in the revised draft of the recommendation of
relevant markets:
Many firms are planning or in the process of
updating the core of their networks to both provide new and innovative services
and to provide existing services more efficiently. These plans are normally
referred to as the next generation networks (NGNs)…The
final impact of these technological developments on defined markets is unclear at
a European level and will be further assessed in subsequent editions of this Recommendation.
As far as NGN access investments are
concerned we think that the regulatory strategy should avoid a mechanistic
application of the ladder of investments but should focus on a tailored
intervention on enduring bottlenecks.
In
particular, and although TI believes that a European approach is advisable and
necessary on the topic, we think that the
ERG proposal for the year 2007 “to
list and describe the potential technical, economical and legal problems which
could continue to exist in an NGN environment” is
premature due to the fact that NGN access network to support high speed
broadband innovative services are not yet available across Europe on a wide
basis.
The current regulatory strategy in mature
markets has shown a clear tendency towards micro-management.
As far as convergence is concerned
the risk to distort market dynamics should be duly taken into account, in
particular when retail offers are under examination under a framework for ex
ante interventions.
When
the market targeted by a premature regulatory intervention is characterised by
innovation regulators should carefully monitor the cost and benefits of ex ante
remedies.
Due to the challenges
inherent with an appropriate Regulatory intervention close to the market place TI would like to take this
opportunity to encourage IRG/ERG to develop and intensify its contacts with the
Industry. Market players are the
immediate source of information arising from the market place. And market players
are the immediate source of innovative technologies and offers. Hence, it may be advisable to set already at
this stage a series of thematic
encounters with the Industry to analyse the most relevant topics in the
e-communications markets and its prospects.
Finally, as far as
the processes of convergence and the development towards a multi-play
communications market is concerned, TI believes that leaving a common position
to be adopted only towards the end of 2007 may lead to an undesired outcome
regarding the harmonisation process. At a moment when the market is witness of
numerous and of great variety of convergent commercial offers, IRG/ERG may
consider accelerating its work in this area, moving it up a quarter (Q2 2007).