Strict Oversight of National Regulators’ Analyses Said to Be Good for New Players

The EU’s electronic communications regulatory framework requires NRAs to perform analyses of the various segments of their telecom markets to determine whether any need ex ante regulation. Article 7 of the EU’s electronic communications framework directive gives the EC, the power to oversee national regulatory measures. NRAs must notify the EC of proposed regulations, which are then reviewed by the Competition Directorate-Gen.’s Article 7 task force.

Twice in past weeks the task force has expressed “serious doubts” about whether an NRA’s draft measures comply with EU law. On Aug. 3, the task force told the Finnish Communications Regulatory Authority (FICORA) its finding that TeliaSonera has significant market power (SMP) in the market for access and call origination on public mobile phone networks wasn’t based on sufficient evidence. On Aug. 20, the EC said Austria’s Telekom- Control-Kommission decision to deregulate the market for transit services in the fixed public telephone network was off-base. And in a move some say could set precedents across Europe, the task force earlier this month critiqued (though minus the “serious doubts") the Greek NRA’s review of the market for voice call terminations on individual mobile networks, despite the fact that Greece hasn’t yet translated the e-communications directives into national law.

ECTA members “want to see intervention” by the EC where NRAs fail to deliver, particularly where a govt. still has shares in an incumbent telco and is pressuring the NRA to back off, Kiedrowski said. “There’s nothing an NRA will hate more than to be contradicted by the Commission,” he said. As for the letter to Greece’s National Telecom & Post Commission (EETT), Kiedrowski said, most ECTA members would welcome the EC’s approach. The adoption of the regulatory framework into national law is taking “far too long” in many countries “and this creates risk and uncertainty for new entrant companies that are already in a more vulnerable position than their far better-resourced incumbent brethren.” The Article 7’s letter to EETT should be a “wake-up call” to all NRAs in the 25 EU states that are lagging in their market reviews, he said.

The EC official said it’s “just by accident” that 2 “serious doubts” letters emerged around the same time. The idea that the Article 7 task force is beefing up its reviews of draft market regulations may have arisen from the fact that most of the earlier notifications to the EC dealt with easier market cases. As regulators get into the more complicated telecom markets, the official said, the task force has more serious doubts about NRAs’ analyses. Three serious doubts letters have issued so far, 2 to Finland and one to Austria. At the end of the investigation, the EC can veto an NRA’s action -- “a very strong intervention possibility,” the official said. Even where, as it EETT’s case, the task force issues a comment rather than a serious-doubts letter, the NRA must take the group’s concerns into strict account and amend its regulatory proposal.

The EC’s decision to comment on Greece’s market analysis shows the Commission isn’t refusing notifications from member states that haven’t transposed the directives into national law, the EC official said. The letter does warn the EETT that if its adoption of the directives affects the market analysis, the regulator must renotify the EC, he said.

While the EC always notes in letters to NRAs that each notification is handled on a case-by-case basis, it’s true that certain of its actions will set precedents, the Commission official said. Where different countries have similar market structures the EC will act in similar ways, he said. The new regulatory framework will soon introduce a harmonized approach to e-communications regulation, the official said, but for now, the markets vary widely among member states. Finland, for instance, has many independent, fixed network operators, while Germany has Deutsche Telekom, one very strong nationwide operator. NRAs must take these different situations into account, but the EC has an advisory role in smoothing out the differences, he said.

The European Regulators Group (ERG), whose members are NRAs, has been talking to the EC about its decisions, a knowledgeable source said. The Article 7 letters are a “sensitive” subject, the source said. ERG members will be meeting with Commission officials to discuss general problems such as what effect EU directives have before they're implemented into national law. At its meeting in June, the ERG said it intends to have more in-depth discussions of key issues at future plenary sessions. In particular, it said, the group “intends to discuss general problems arising in the context of procedures according to Article 7 of the Framework Directive.”

FICORA, which has now received 2 serious-doubt letters, said it has reviewed the latest missive from a national viewpoint, “and it is hard for us to say if the letter will set any precedent.” It’s important to remember the letter only opened the “Phase II investigation and it is not yet known if the Commission will finally make a ‘veto decision’ or if the Commission will be satisfied with further information FICORA will provide to explain why the proposed measure should be accepted,” said Johanna Juusela, head of economic regulation. - Dugie Standeford