Review of Legislative Framework for Electronic Communications A Mobile Perspective

1. Review of Legislative Frameworkfor Electronic CommunicationsA Mobile Perspective Rob Borthwick 4 February 2000

2. M-Commerce - Europe as Leader • Governmental recognition of M-Commerce leadership • Two options to reach e-objectives: • “Omniscient” regulatory intervention • Flexible market forces delivery • Success of market forces in the mobile arena

3. M-Commerce – Leadership at Threat • 99 Review directionally correct • Implementation is contradicting policy • Withdrawal statements not matched by action • 99 Review / current regulatory trends are ONP-based

4. The failure of regulation to meet real market needs • Competition -v- Regulation • Competition delivers consumer benefits through a process • Regulation based on a market situation snapshot • Regulation inherently utilitarian but mobile product is personal • Utilitarian regulatory implementation fails to deliver Revolutions

5. The failure of Regulation to meet real market needs (2) • Examples include: • MNP – hugely expensive ‘one size fits all’ • CPS instead of commercially negotiated wholesale products

6. The solution • Radical change for the electronic revolution • Regulatory withdrawal is the correct approach: • Dynamic mobile markets • Market based solutions to regulatory concerns constantly emerging • Minimise intervention • statutory duty to forbear • “forbear unless” as opposed to FCC “do not forbear when”

7. The solution (2) • Separate current conflicting roles of SSR • SSR monitoring role • SSR deal with historical institutional incumbencies • SSR administrator of politically defined social objectives • Building in monitoring, cost/benefit and sunset conditions

8. A regulatory framework for the mobile future Regulatory Regulatory Examples of areas Examples of areas Market grasp filter Market grasp filter Potential issues Potential issues Treatment Treatment requiring specific regulation requiring specific regulation Cost/benefit Cost/benefit USO USO Political Political Timing and/or Timing and/or ADMINISTER ADMINISTER Data protection, privacy Data protection, privacy objectives objectives economic viability economic viability with ex with ex - - ante definition ante definition Health & safety Health & safety … … Exogenous Exogenous Cost/benefits Cost/benefits Current regulation Current regulation Fixed PTT interconnection Fixed PTT interconnection factors factors Historical Historical Monopolistic control of Monopolistic control of INTERVENE INTERVENE Spectrum allocation Spectrum allocation incumbencies incumbencies essential facilities essential facilities with ex with ex - - ante tools ante tools Numbering management Numbering management Simultaneously: Simultaneously: 1. Promote competition 1. Promote competition Limit of SSR role Limit of SSR role Monitoring process Monitoring process 2. Promote consumer interests 2. Promote consumer interests 3. Deliver political objectives 3. Deliver political objectives FORBEAR FORBEAR Market Market Endogenous Endogenous process process factors factors or intervene ex or intervene ex - - post post Abusive pricing Abusive pricing Abuse of dominance Abuse of dominance with competition rules with competition rules Anti Anti - - competitive behaviour competitive behaviour

9. A regulatory framework for the mobile future (2) Regulatory Examples of areas requiring specific regulation Potential issues Market grasp filter Cost/benefit Treatment USO USO Political Political Timing and/or Timing and/or ADMINISTER ADMINISTER Data protection, privacy Data protection, privacy Current regulation objectives objectives economic viability economic viability with ex with ex - - ante definition ante definition Health & safety Health & safety Exogenous Exogenous … … Cost/benefits Cost/benefits Simultaneously: Simultaneously: Fixed PTT interconnection Fixed PTT interconnection factors factors 1. Promote competition 1. Promote competition Historical Historical Monopolistic control of Monopolistic control of INTERVENE INTERVENE Spectrum allocation Spectrum allocation incumbencies incumbencies essential facilities essential facilities with ex with ex - - ante tools ante tools Numbering management Numbering management 2. Promote consumer interests 2. Promote consumer interests 3. Deliver political objectives 3. Deliver political objectives Limit of SSR role Limit of SSR role Monitoring process Monitoring process

10. A regulatory framework for the mobile future (3) Current regulation Current regulation Simultaneously: Simultaneously: 1. Promote competition 1. Promote competition Limit of SSR role Limit of SSR role Monitoring process Monitoring process 2. Promote consumer interests 2. Promote consumer interests 3. Deliver political objectives 3. Deliver political objectives FORBEAR FORBEAR Market Market Endogenous Endogenous process process factors factors or intervene ex or intervene ex - - post post Abusive pricing Abusive pricing Abuse of dominance Abuse of dominance with competition rules with competition rules Anti Anti - - competitive behaviour competitive behaviour

11. Implications for 99 Review - Licensing • Forbearance leads to general authorisations • Exception: institutional (often technical) incumbencies • spectrum • numbering

12. Implications for 99 Review – Access and Interconnection • Important to consider concept of prospective competitiveness or transient market failure • Evidence of commercially negotiated wholesale product • Forbearance principles • enable competitive forces to flow

13. Implications for 99 Review – Spectrum • Sector specific oversight while technical issues exist • Spectrum is finite rather than “scarce” • Transient • new technologies • wholesale (either through secondary trading or unbranded airtime products) • re-farming • “Scarcity” - not lever to regulate mobile

14. Implications for 99 Review – USO • Legitimate role of policy maker to set scope of USO • Not at expense of delivering innovation, choice and quality • Enduring role for market neutral sector specific administration of consumer issues

15. Conclusion • Our New Model – achievable framework for the Commission’s objectives • Europe’s future leadership role in m-commerce requires bold and forward looking steps by Commission