Review of the Framework Some issues under discussion by regulators

1. Review of the FrameworkSome issues under discussion by regulators Jim Niblett International Policy Director 22 December 2005

2. In this presentation …… • More questions than answers • No agreed Ofcom view yet • Not intended to be an exclusive set of issues but …. • ..... these are issues which European regulators are talking seriously about

3. Scope and objectives • Are there some areas where the presumption about regulation should be reversed from 2007? • What does convergence imply about scope? • Objectives remain relevant • Prioritisation of objectives? • Ensuring right conditions for investment • Flexibility to tune regulatory regime to fully reflect national market conditions is important and should be retained

4. Convergence and technological development • What does convergence imply about scope? • Economic markets will evolve, reflecting commercial and technological developments • Fixed/mobile convergence? When? • Voice/data convergence in core network? When? • Evolution not at uniform pace across Europe • Recommendation on relevant markets needs in-built flexibility to allow NRAs to deal effectively with evolution • Less single company dominance – more oligopoly?

5. Spectrum management • Spectrum trading and liberalisation • Massive potential benefits identified from the introduction of trading and liberalisation across the EU • Commission suggestion of introducing on a mandatory basis? • Flexibility in spectrum management • Removing unnecessary constraints on spectrum use • Increasing flexibility and enhancing harmonisation • Approach to harmonisation • Harmonisation should not mean reservation for particular services or technologies • Harmonisation can deliver benefits but need to ensure decisions are appropriately justified

6. Single market aspects • General view that there is “not enough” harmonisation but .. • ….no common understanding of depth of harmonisation needed • Most services within regulated areas national in scope, for example • Access to local loop • Interconnecting leased lines • Greater apparent need for more intensive harmonisation of services which have cross-border impact • Mobile international roaming • VOIP • Ofcom commissioning expert advice to gain insights into appropriate depth of harmonisation

7. Article 7 procedures • Procedure very resource-intensive, both for NRAs and Commission • Over and above resources needed to run effective national consultation • Are benefits commensurate with resources deployed? • Degree of uniformity of market definition but … • …. would there be much less uniformity without Article 7 • Commission contentment with SMP assessment no guarantee of NRA success in appeal tribunals • Need agreed measure of added value • Need rigorous prioritisation and streamlining

8. Competition and access regulation - SMP • SMP/dominance appropriate threshold for intervention in markets with a single large player • Almost unworkable concept for oligopolistic markets • Less single company dominance in future – more oligopoly? • Merger control procedures would prohibit certain mergers on competition grounds, even if no certainty of creation of dominant position but ….. • ..... Currently not possible to impose ex-ante regulation

9. Competition and access regulation – investment incentives • Some have argued for forbearance from regulation of major new infrastructure investments • Investors need good understanding of regulatory policy before taking major commercial decisions but …… • ….. can the appropriate investment incentives only be delivered via a policy of forbearance? • How would adverse effects on consumers of monopolisation or limited competition downstream be avoided?

10. Competition and access regulation – cross-market issues • Framework formulated to deal with competition problems in individual markets • Usually those problems are expressed in adjacent or downstream markets • E.g. lack of wholesale competition leads to high prices for end-users • In formulating remedies, regulators need to look at issues right across the value chain • Remedies focused solely on services in the SMP market may not form an effective package • Reformulation desirable to promote holistic approaches

11. Consumer protection, users’ rights • Ensuring legal base remains adequate for dealing effectively with issues around Premium Rate Services, Codes of Practice, Alternative Dispute Resolution, Quality of Service • Incentivisation of good commercial practices • Better formulation of powers to fine • Protection from spam • Better targeting of retail remedies applied to SMP players: • Avoidance of hard-wiring of markets or remedies into Directives • Reformulate provisions which apply to PATS • Market and end user needs have moved on

12. Universal service • Affordability of broadband and mobile in longer term • National discretion for appropriate measures for disabled users • Including measures relating to availability of suitable terminal equipment • Effect of new technology on disabled users

13. Other issues • Deepening regulatory co-operation through ERG & RSPG • Appeal processes in many countries too long and too tilted in favour of SMP players • Review of definitions - e.g ECS, ECN and PATS • This is not intended to be an exclusive list of issues……….

14. Review of the FrameworkSome issues under discussion by regulators Jim Niblett International Policy Director 22 December 2005