INTUG - submission to ERG/IRG on 2004 work programme

INTUG - International Telecommunications Users Group

European Regulators Group - Independent Regulators Group

Work programme 2004

a submission by INTUG

introduction	INTUG welcomes the opportunity to comment on the joint work programme of the European Regulators Group (ERG) and the Independent Regulators Group (IRG) for 2004. The consultation adds considerably to the openness of the ERG-IRG, a subject of some criticism in recent months. It is a complex organisational structure with the participation of National Regulatory Authorities (NRAs) from the member states of the European Union, those countries that will join in a few months and those in the European Economic Area (EEA). The ERG and IRG act in tandem or in parallel, in a manner very poorly understood by non-regulators. We would encourage the ERG either to absorb the activities of the IRG or to publish a memorandum of understanding with the IRG setting out their respective roles. INTUG encourages the ERG-IRG to adopt even greater openness. It could follow the example of the Communications Committee (CoCom), where trade associations are permitted access to papers and to observe meetings. It is not obvious why the ERG-IRG does not already operate under the same procedures.

implementation	Implementation of the electronic communications directives as been achieved in only a few member states, with many having been delayed, some severely. One consequence is that analyses of the progress made is much more difficult than it should be. The results of any studies would be biased by the skewed sample that would be available. Regular assessments of the Article 7 notifications and market analyses will be important to implementation of the electronic communications legislation, though it seems very early to do so. So far, only a few dozen notifications of draft decisions have been made and less than half of all the analyses are likely to have have been completed by the middle of 2004. Fewer still will have been subject to decisions on appeal or to use in practice, thus depriving any analysis of true experience. Likewise, the review of the market definitions, intended to be completed by 30 June 2004, had been based on the supposition that transposition would be on time and that very much faster implementation would have been achieved. Consequently, the timing of that review needs to be reconsidered and, almost inevitably, delayed. A common position of NRAs on the new version of Significant Market Power (SMP) is a prerequisite for harmonisation and must be made a priority. The issue of remedies is the subject of a separate consultation on which INTUG will make a submission. It is of considerable importance and lies at the heart of the legislation, it is also very detailed and requires considerable efforts by those parties able to respond. Three criteria have been given to determine whether ex ante regulation is sufficient, these are set out in Clause 9 of the Recommendation on relevant markets (C(2003) 497): the presence of high and non-transitory entry barriers whether of structural, legal or regulatory nature those markets the structure of which does not tend towards effective competition within the relevant time horizon that application of competition law alone would not adequately address the market failure(s) concerned These have been the subject of many hopes by incumbent operators and some fears by other operators concerning the abandonment of ex ante regulation. So that it is appropriate to examine carefully the potential application of the criteria with great care. A study of the leveraging of power from one market to another will be a very useful piece of work. The reports by consultants to the European Commission on Next Generation Networks (NGNs), naming and addressing and barriers to competition will be valuable starting materials. The question of trans-national markets is an interesting one and overdue for consideration. Consequently, we welcome the proposed investigation. In fixed telecommunications there are global and pan-European Virtual Private Networks (VPNs) which are supplied by a small number of players in a competitive market. However, at the geographical edges such operators are reliant on the purchase of regulated wholesale inputs from incumbent operators. While there has been demand for trans-national mobile services for some time there is no supply. Likewise there is demand for trans-national converged fixed and mobile VPNs, but once again no supply. Any action which the ERG can make to help in the supply of such services would be very welcome. Progress on the European Telephony Numbering Space (ETNS) has been extremely slow. Further progress on the trans-national supply of freephone and local rate services would be welcome, as would action to open cross-border access to domestic services in other member states.

mobile	Fixed-to-mobile charges remain a serious concern and a priority for INTUG in all countries with Calling Party Pays (CPP), including those with Receiving Party Pays (RPP) for domestic calls but where calls to foreign mobile phones incur surcharges. The charges paid to call mobile networks remain much too high and are falling much too slowly. The political support for the "embattled" mobile network operators has too high a priority, with too little concern being given for the rest of the economy which has carried the burden of high fixed-to-mobile charges for many years during which revenues from excessive termination rates were spent in ways that seem to have done little for the mobile network operators let alone the users. The costs of international mobile roaming remain extremely high and any decline in prices has been very small indeed. Roaming is increasingly used by individual consumers on holiday, adding to the revenues of the operators. Roaming is lucrative and the operators and their shareholders know it and exploit it. INTUG submitted comments on potential remedies on roaming charges in May 2003 (see also in Español). Addressing the problem is not going to be easy because of the uncertainties surrounding the legal doctrine of joint dominance. Nonetheless, the sooner it is done the better. The proposed date of December 2004 should be brought forward. (n.b. the original INTUG complaint was made in early 1999.) It is worth noting that there are no roaming charges for voice telephony in China, that for the vast majority of users such charges do not exist within the USA and Canada, and that even India is now seeing roaming charges eliminated. It is in Europe where we continue to pay the price for crossing "domestic" borders. The excessive pricing of international mobile roaming charges have been extended from voice to data services (GPRS and EDGE). The potential benefits to the European economy from mobile data services will continue to be unobtainable while such charges are in place. They compare very unfavourably with developments for mobile data in North America, Japan and South Korea.

fixed	INTUG has commented before on the very wide divergence in performance of the member states in the adoption of broadband Internet access, despite a uniform legal framework. This appears to be largely due to differences in the implementation by the NRAs and the level of resistance put up by the incumbent operators. It is important for the ERG-IRG to improve its understanding of the differences in performance and to identify more clearly what is best practice. Comparisons also need to be made with the world broadband leaders, South Korea, Japan, Canada, the USA and China. The delays by the member states and by NRAs in addressing the problem of high fixed-to-mobile termination rates created the opportunity for "contamination" in the fixed networks. Some cable and city operators pushed up their termination prices. Had the fixed-to-mobile problem been addressed promptly, this would never have happened. Instead of trying to pump up revenues from incoming calls, the smaller fixed network operators might have tried to compete by offering free on-net calls and to move to IP telephony to reduce their costs. Now these high termination prices must be pushed down. Leased lines have been a concern of INTUG since 1974 and even in 2004, they remain an issue to which we attach considerable importance. The painfully slow progress holds back the development of competition. Action by the ERG-IRG on leased lines is very welcome. IP telephony raises difficult questions about the the market definitions for call origination and, possibly, termination. It will be necessary to decide what exactly is "telephony" and what is some other form of voice communication. It is already clear that the operators are achieving considerable savings from the use of IP telephony and these must be passed on quickly to consumers, without waiting for arcane debates on the definition of a telephone call.

accounting	INTUG welcomes further work to harmonise practice in cost accounting, accounting separation and Forward Looking-Long Run Incremental Costs (FL-LRIC). These are complicated issues where the benefits of experience must be quickly shared amongst NRAs.

consumers	INTUG is sceptical that Universal Service Obligations (USOs) are required in any of the present member states, there are sufficient examples where the USO is zero or would require the operator to pay for the privilege. It seems to be a form of special pleading and of subsidising the incumbent operator. Notwithstanding this, the methodology for the assessment of any USO needs to be thorough and to take account of experience across the EU, in particular in assessing the benefits to an operator of being the designated provider. It is important that Member States and NRAs utilise their powers under Article 8 of the Universal Service Directive to split the universal service into functions and into different geographical areas. They can then use reverse auctions to ensure the best outcome. We note that a review of the scope of universal service is due in the near future. At that time it would also be appropriate to change the name to universal access. INTUG considers it important that directory enquiry services become a competitive market, free from the direct or indirect control of the incumbent operator. The new rules for data protection on such services need to be brought into operation. Quality of Service (QoS) is increasingly important to users as competition develops beyond prices. NRAs need to ensure comparability of QoS indicators, between operators and between member states. The increasing use of various forms of IP telephony will make QoS more important for consumers. However, it is important to recognise the limits of such data in selection of service providers by users.

conclusions	INTUG welcomes both the work programme and its publication. It is an excellent way in which the ERG/IRG can seek general views, in addition to those of market players. We cannot fail to note its length and complexity of the workplan. It imposes a significant but vital and shared burden on NRAs, the European Commission and, in some instances, the Communications Committee (CoCom). It is important to set priorities in such a complex field and one where technological and market advances are so rapid. We continue to believe that long-standing abuses in the mobile market deserve a very high priority, as does broadband Internet access. It is essential to ensure that electronic communications makes as strong a contribution to the achievement of the Lisbon goals as possible. It is more than looking after operators or even competition, it is about economic growth. Concerns have been raised that the good work on harmonisation by the ERG-IRG may be swept away by the outcomes of appeals in the member states. A report on this subject would be welcome. The ERG-IRG should give further consideration as to how to combine the right of appeal with harmonisation of implementation. One option would be a single European regulatory authority but an alternative would be to combine national regulatory authorities with an EU-level independent appeals tribunal.

INTUG	INTUG, the International Telecommunications Users Group asbl, is an association of national telecommunications users associations, based in Brussels. INTUG was founded in 1974 in Den Haag at the suggestion of Vicomte Etienne Davignon, then a European Commissioner, to act as a single voice for users of telecommunications. The mission of INTUG is to ensure that users have access to affordable, interoperable telecommunications services and that their voice is heard wherever telecommunications policy is decided. For almost thirty years INTUG has argued for the introduction of competition in telecommunications and that all users must have access to the benefits of such competition.

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Last updated 15 January 2003.