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Overview of Arcep’s institutional framework Overview of Arcep’s challenges in the mobile markets

Blending competition and regulation New Dehli, December 5, 2006 Benoit Loutrel, Director, Regulation of fixed and mobile markets Department AUTORITE DE REGULATION DES COMMUNICATIONS ELECTRONIQUES ET DES POSTES (ARCEP). AGENDA. Overview of Arcep’s institutional framework

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Overview of Arcep’s institutional framework Overview of Arcep’s challenges in the mobile markets

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  1. Blending competition and regulationNew Dehli, December 5, 2006Benoit Loutrel, Director,Regulation of fixed and mobile markets DepartmentAUTORITE DE REGULATION DES COMMUNICATIONS ELECTRONIQUES ET DES POSTES (ARCEP)

  2. AGENDA • Overview of Arcep’s institutional framework • Overview of Arcep’s challenges in the mobile markets

  3. The liberalization of the telecommunication sector : an EU framework implemented on a national basis EU level : 1996 Telecommunication directives -> mandates the liberalization of the sector through the introduction of carrier selection for international, national and local traffic. 2001 Local loop unbundling direct regulation -> mandates incumbent operator to give access to the “last mile”. 2002 Electronic communication directives -> a toolbox for regulators and a set of check and balances. 2007 European roaming direct regulation (?) National level : the case of France 1997 Telecommunication law -> creates the independent regulator, Arcep. 2004 Electronic communication law

  4. Supreme Court (Administrative Law) Supreme Court (Constitutional Law) Supreme Court (Commercial Law) Upper Chamber Lower Chamber Independence and accountability Legislative Branch Executive Branch Judiciary Branch Government • Issue tier II regulation • Endorse tier III regulation • Appoints 3 board members, including the president • Set license & frequency fees ARCEP • Issue opinion on draft Tier I & II regulation • Issue tier III regulation • Implement & enforce Tier I-II-III regulation • Consult stakeholders prior to any decision • Report to Parliament • Set the objectives • Issue tier I regulation • Appoints 4 board members of Stakeholder : consumers, corporate clients, … telcos

  5. Symmetric and asymmetric sectoral regulation Symmetric regulation : • derives from the specificities of the sector • numbering plan, frequencies, intercommunion, public order,… • may impact the level of competition Asymmetric regulation : • non-competitive market (structurally or temporarily) • derives from the liberalization process • should be transitory to the extent possible and articulated with general competition law

  6. Principles of asymmetric regulation : market, significant market power, obligations

  7. Check and balances in asymmetric regulation Market definition : • 18 pre-identified markets at EU level by the EU Commission • Creating new markets : the test for expanding regulation • High barriers to entry • No perspective for effective competition • Insufficient effectiveness of competition law Ex-ante check and balances : • Requirement to conduct a public consultation • Requirement to receive the opinion of the competition authority • Prior notification of draft decision to EU Commission and 24 other EU Regulator. The Commission can veto the market definition & designation of SMP operator and can issue public comments on proposed obligations Ex-post check and balances : • Judicial review on obligation

  8. NRA and NCA : Substitute or complementary • NRA = national regulation authority in each EU member • NCA = national competition authority in each EU member • Symmetric regulation : Complementary. • Asymmetric regulation : • Complementary at the beginning of the liberalization process • Substitute in case of success ! • In any case, NRA is not a substitute of NCA even in early stage of regulation.

  9. Overview of Arcep’s challenges in the mobile markets • Phase I – 1997 – 2003 – light touch symmetric regulation • allocating frequencies, checking that coverage targets were met • allocating numbering resources • Setting the limit to the “calling party pay” principle • (Mobile termination rate) • Phase II – Since 2004 – Strengthening symmetric regulation and considering asymmetric regulation • Low intensity of competition on retail markets • High barriers to entry on the supply side • Importance of switching costs for end-users • Strengthen portability requirement and reduce artificial switching costs • Introduce mobile virtual operator and thus create a competitive wholesale market • Introduce specific regulation for roaming services

  10. THANK YOU Additional information on www.arcep.fr

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