Late Christmas Markets: The Markets Recommendation in the OJ

Posted on December 28, 2007 | Filed Under communication technologies

Finally, the Commission has decided on the revised Recommendation on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC (contrary to what the press releases made us believe, the formal decision was not taken on 13 November 2007, but on 17 December 2007; however, on 13 November 2007 the Commission had agreed “in principle” - see the minutes of the Commission meeting [in French] here).

Today the Recommendation was published in the Official Journal.

  1. Access to the public telephone network at a fixed location for residential and non-residential customers.
  2. Call origination on the public telephone network provided at a fixed location.
  3. Call termination on individual public telephone networks provided at a fixed location.
  4. Wholesale (physical) network infrastructure access (including shared or fully unbundled access) at a fixed location.
  5. Wholesale broadband access.
  6. Wholesale terminating segments of leased lines
  7. Voice call termination on individual mobile networks.

The new recommendation also moves the “Three Criteria Test” from the recitals to the body of the recommendation. Number 2 of the recommendation now reads:

“When identifying markets other than those set out in the Annex, national regulatory authorities should ensure that the following three criteria are cumulatively met:
(a) the presence of high and non-transitory barriers to entry. These may be of a structural, legal or regulatory nature;
(b) a market structure which does not tend towards effective competition within the relevant time horizon. The application of this criterion involves examining the state of competition behind the barriers to entry;
(c) the insufficiency of competition law alone to adequately address the market failure(s) concerned.”

For more background on how the markets were defined, for (some of) the reasons why certain markets are not included anymore in the new recommendation, see the explanatory note (a Commission Staff Working Document).

For instance the explanatory note concludes that the wholesale market for broadcasting transmission services to deliver broadcast content to end-users (former market 18) “is not deemed to meet the second criterion in a majority of Member States, and on the basis that access problems related to public interest objectives can be addressed under must-carry provisions, the market is withdrawn from the recommended list.”

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“To be so anger’d with another letter”* - An epistolary novella unfolds

Posted on December 21, 2007 | Filed Under communication technologies

No text messages, no phone calls - even in the (DG) Information Society, the fine art of letter writing is not dead. Personal letters, starting with a handwritten “Dear Roberto, Dear Dániel” or “Dear Commissioner“, personally signed, are all the rage. The only concession to modern technology seems to be that these letters are then scanned, e-mailed and published on the web.

But as the strained relationship between the ERG and Commissioner Reding evolves (see for instance here for a comment on the legendary “joint statement”), both sides - otherwise not known for being overly transparency minded - keep publishing the letters they exchanged back and forth. So now we have this relationship drama unfolding in the form of an epistolary novella right there on the Website of the European Commission.

In the latest letter, some suspicion of infidelity spices up the plot, as Commissioner Reding addresses the recent decision of the IRG-Members to set up a private-law association for the IRG:

“Obviously, the legal establishment of the new private-law body ‘IRG’, which takes place outside the scope of Community law, adds some complexity and yet another player to the regulatory process in addition to the ERG.” 

Unless ERG and Commissioner Reding agree to a mediator soon, I do expect a follow up letter by the ERG, since - as Shakespeare (Romeo and Juliet, Act V, Scene 2) said -

“The letter was not nice but full of charge
Of dear import, and the neglecting it
May do much danger.”

* The quote in the title of this post is taken from Shakespeare, The Two Gentlemen of Verona, Act I, Scene 2 

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“She has the mends in her own hands”* - Commissioner Reding saving the day for SMEs?

Posted on December 21, 2007 | Filed Under communication technologies

attention slippery surfaceNever let the facts stand in the way of a good story - Commissioner Reding, a former journalist, seems to stick to this (alleged) maxim of tabloid journalism (see for an earlier instance e.g. here). A few days ago, she accepted an award given to her by a German publisher, honoring her achievements for small and medium-sized enterprises. Reding’s speech at this event mainly consists of the usual telecoms-reform marketing phrases, as always slightly geared to the event; so here she pointed out that the Commission, when drafting the proposals, thought foremost of SMEs. It is an interesting revelation, since SMEs are mentioned neither in the Communication accompanying the proposals nor in the Impact Assessment summary, and are just briefly mentioned in passing in the complete 150-page Impact Assessment. So obviously a lot of thinking done by the Commission about SMEs did not make it into the texts.

But the really striking passage of her speech is this sentence:

“Erst vor wenigen Tagen habe ich auch im TK-Bereich kräftig dereguliert, in dem ich 50% der Regulierungsmaßnahmen und -verfahren von einem Tag auf den anderen abgeschafft habe.”

(Here is my rough English translation for this: “Just a few days ago I substantially deregulated the telecoms-sector, by doing away with 50% of regulatory measures and procedures from one day to the next.”)

This, of course, is plain nonsense. Obviously, what Reding refers to is the Recommendation on Relevant Markets, and we know from press releases that the Commission has decided on 13 November 2007 to amend this recommendation by reducing the number of relevant markets (see earlier posts here and here). I don’t particularly mind that (a) 13 November 2007 was more than “a few days ago”, (b) the new recommendation still is not published in the Official Journal (update/correction: as the recommendation is addressed to the member states, it takes effect once it is notified to them), and (c) it was the Commission, rather than Reding all by herself, who decided that. (Still it would be nice if there were at least one true piece of information in this sentence.)

But stating that she did away with 50% of regulatory measures from one day to the next is not only silly, but also discredits the recommendation itself. Should the recommendation be published some day in the future (there is still hope!), nothing changes in the substance of the market analysis that NRAs have to carry out according to the Framework Directive, the only changes are procedural and concern the Commission’s veto-powers under Article 7 of the Framework Directive. And while these procedural changes should not be underestimated, one thing is certain: changing the recommendation does not remove one single regulatory measure anywhere in the EU. Â

I am aware that speeches or press releases may need to be simplified. But they need not be in complete disregard of the facts.

* Shakespeare, Troilus and Cressida, Act I, Scene 1

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Audiovisual Media Services Directive in the Official Journal

Posted on December 18, 2007 | Filed Under digital content

it’s the law While the Commission still has not managed to publish the revised Markets Recommendation in the official journal, even if more than a month has passed now since the well publicized Commission decision, the publication of the revised “Television Without Frontiers”-Directive did not take as long. So in today’s Official Journal we find the

DIRECTIVE 2007/65/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 December 2007 amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities

henceforth to be known as Audiovisual Media Services Directive (see our last update on that directive here). Member States now have two years for implementation, exactly until 19 December 2009.Â

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ECJ: must carry must be transparent, must be objective, must be non-discriminatory

Posted on December 15, 2007 | Filed Under communication technologies

The judgement of the European Court of Justice in the case C-250/06 UPC Belgium, delivered on 13 December 2007, is completely in line with the Advocate General’s opinion (for my post on this opinion see here). As the Advocate General had proposed, the Court did not answer the first two questions, relating to the issues of “special rights” under Art. 86 EC and to a potential abuse of a dominant position, because the national court requesting the ruling had not provided the ECJ “with the factual and legal information necessary”.

The Court then notes that the present case does not need to be examined in the light of the Universal Serivce Directive 2002/22/EC, since this directive had not been in validity when the national must carry-decisions under scrutiny here were taken.

So what remains is the question whether or not must carry-obligations are compatible with the freedom to provide services according to Art. 49 EC. The Court concludes that the must carry-obligation at issue constitutes a restriction on the freedom to provide services within the meaning of Article 49 EC. According to established case-law, such restrictions may be justified only where they serve overriding reasons relating to the general interest, are suitable for securing the attainment of the objective which they pursue and do not go beyond what is necessary in order to attain it.

The Court states that the maintenance of pluralism which the must carry-obligation seeks to safeguard is connected with freedom of expression. Consequently, the Court accepts that the national legislation at issue pursues an aim in the general interest, and it also holds that the must carry-obligation is an appropriate means of achieving the cultural objective pursued.

As regards the question whether the legislation at issue is necessary in order to attain the aim pursued, te Court accepts a wide margin of discretion for the national authorities, but stresses that the requirements imposed “must in no case be disproportionate in relation to that aim and the manner in which they are applied must not bring about discrimination against nationals of other Member States”.

  • “Therefore […] the award of must-carry status must first of all be subject to a transparent procedure based on criteria known by broadcasters in advance, so as to ensure that the discretion vested in the Member States is not exercised arbitrarily.”
  • “Next, the award of must-carry status must be based on objective criteria which are suitable for securing pluralism by allowing, where appropriate, by way of public service obligations, access inter alia to national and local news on the territory in question. Thus, such status […] must be strictly limited to those channels having an overall content which is appropriate for the purpose of attaining such an objective. In addition, the number of channels reserved to private broadcasters having that status must not manifestly exceed what is necessary in order to attain that objective.”
  • “Lastly, the criteria on the basis of which must-carry status is awarded must be non-discriminatory. In particular, the award of that status must not, either in law or in fact, be subject to a requirement of establishment on the national territory.”

So even if Art 31 of the Universal Service Directive was not yet applicable in this case, the Court set out criteria that are also laid down in this directive. According to Art. 31 of the Universal Service Directive, Member States may impose reasonable “must carry” obligations for the transmission of specified radio and television broadcast channels and services:

“Such obligations shall only be imposed where they are necessary to meet clearly defined general interest objectives and shall be proportionate and transparent. The obligations shall be subject to periodical review.”

The first case where the Court will have to examine Art. 31 of the Universal Service Directive is C-336/07 Kabel Deutschland: the national law in question provides for the possibility that a national regulatory authority imposes must carry-obligations resulting in the full use of the channels available to a cable network operator. It’s hard to see how this could be reasonable and proportionate.

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Rubbing it in: Reding, regulators, and the EECMA

Posted on December 11, 2007 | Filed Under communication technologies

Regular readers of this blog might have noticed that from time to time I take the liberty of quoting Shakespeare. It started when I noticed the poetic language used - and especially the poetic liberty taken (e.g. here) - by EU-Commissioners explaining the world of electronic communications regulation to us. Only the bard himself could match the elegant speechwriting of the Commissioners, especially of Viviane Reding.

And after exactly 24 posts quoting Shakespeare, for this special 25th edition of “Shakespeare on Electronic Communication”, I can refrain from choosing a Shaespeare-quote myself, because Commissioner Reding herself took care of that. In her speech at the ECTA Regulatory Conference on 28 November 2007, she went straight to the heart of the probably most famous Shakespeare monologue - here is what she said:

“Good regulation will also create certainty especially given the scale of investments involved. But here lies the rub, the existence of 27 regulators each with its own idea of what is good regulation, is not an incentive for either incumbents or new entrants when it comes to carrying out new investments. And then, there’s the absence of any real say by the Commission over the remedies chosen.” [emphasis added]

Of course this is slightly different than Hamlet’s “ay, there’s the rub”, but it’s close enough. Reding obviously believes that what “must give us pause”, as Shakespeare said, is the existence of 27 regulators with own ideas (which means: not with those of the Commission), and so there is an urgent need for central command a real say by the Commission.

Read more

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Maximising International Impact: Ofcom’s plans for the next two years

Posted on December 11, 2007 | Filed Under communication technologies

Sometimes, thinking about the proposed European Electronic Communications Markets Authority (EECMA), I envisage some kind of Brussels branch office of Ofcom (or possibly a Barcelona branch office, or whereever the Authority might be located), with an added layer of EU-style bureaucracy (see also my earlier post, pointing out my vision of Ofcom SWAT-teams, carrying out market analysis on behalf of the EECMA in other EU Member States, as part of a voluntary [in kind] contribution to this new Authority).  

And then Ofcom publishes its (draft) work plan for the next two years (full text as pdf here), and there it is - two activities “that cut across all areas of Ofcom’s work” are specifically singled out:

“These are: continuing to reduce regulation and minimise administrative burdens; and maximising our impact on international policy development to best represent the interests of UK citizens and consumers.” [emphasis added]

Compare this with the wording for the five main areas on which Ofcom will focus its work. These are:

  • “driving forward a market-based approach to spectrum;
  • promoting competition and innovation;
  • ensuring the delivery of public interest objectives;
  • improving empowerment, protection and enforcement for citizens and consumers; and
  • considering the legal and economic frameworks for communications regulation.”

It is the language of consultants, of course (but it’s Ofcom, so what would you expect?). The interesting thing is that there is no “maximising” here, just “driving forward” (for the one issue that is really close to the heart of the Authority) and the - less enthusiastic - “promoting, ensuring, improving, considering” (for all the other issues). The only field where Ofcom aims for unrestricted maximum impact is international policy (and make no mistake, this being the UK, “international” means everything “non-UK” - especially the EU).

Regulators from smaller EU Member States, especially from those that joined only 2004, might benefit from this UK-engagement, but it might come at a cost: ceding national authority not only to the nominally EU-controlled EECMA, but de facto to Riverside House on the banks of the Thames (by the way: looking for a picture I could link to, I just learned that Ofcom is a sub-tenant of the Financial Times LTD).

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(In)dependent regulators: CRC, UKE, Ofcom, …

Posted on December 9, 2007 | Filed Under communication technologies

Independent national regulatory authorities are, as the Commission keeps pointing out, a key element of the regulatory framework for electronic communications networks and services. In the current legal texts, the term “independence” only refers to the NRAs’ relation to the regulated industries - Article 3, second paragraph, of the Framework Directive states:

“Member States shall guarantee the independence of national regulatory authorities by ensuring that they are legally distinct from and functionally independent of all organisations providing electronic communications networks, equipment or services. Member States that retain ownership or control of undertakings providing electronic communications networks and/or services shall ensure effective structural separation of the regulatory function from activities associated with ownership or control.”

So the current framework does not exclude (even day-to-day) directions given to the NRA by -Â for instance -Â a member of government (as long as this member of government does not have any say in the running of a [partly or wholly] “state-owned” operator). Even by these standards, the Commission sees the NRAs of Poland and Bulgaria as not sufficiently independent and has started infringement procedures (see here, here, and here). But whether independent or not, the NRAs are members of the ERG, and the Commission now has updated the ERG-Decision to include - almost a year after accession - the Romanian and Bulgarian NRAs (see the Official Journal of 8 December 2007).

In the reform proposals, the Commission wants to take independence a step further. Article 3 of the Framework Directive, according to the Commission proposal, would then include the following sentence:

“National regulatory authorities shall not seek or take instructions from any other body in relation to the day-to-day performance of the tasks assigned to them under national law implementing Community law.”

It is an interesting concept: obviously, some instruction-giving would be ok, but not “day-to-day”. So if a cabinet member retains the right ot give directions to the head of an NRA in matters of particular importance (let’s say: market analysis, which might mean just a few decisions every other year), it could be in line with an indepent NRA according to the proposal. I do not think that is what the Commission intends, but on the other hand it would not really matter to the Commission as long as it gets the power to veto such decisions in the market analysis-procedure. Â
But even the UK-regulator Ofcom, including the mantra “We are the independent regulator and competition authority for the UK communications industries” in all of its consultations and almost every other document, is not independent from political directions. In a recent document detailing the spectrum issues surrounding the 2012 Olympic Games in London, Ofcom shows it is clearly displeased with the Secretary of State for Trade and Industry having guaranteed “the waiving of fees payable for the allocated frequencies required for the Games”. So Ofcom finds it necessary to include some sort of a disclaimer in this paper:

“It should be noted that the Secretary of State has the power under the Communications Act 2003 to give us directions in respect of our spectrum management”

It is quite clear why Ofcom is not comfortable with the decision by the Secretary of State: it is not immediately obvious how this decision could be compatible with Article 9 of the Framework Directive, requiring Member States to ensure “that the allocation and assignment of such radio frequencies by national regulatory authorities are based on objective, transparent, non-discriminatory and proportionate criteria”.

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“You must translate: ’tis fit we understand them”*: COM-Documents delayed

Posted on December 4, 2007 | Filed Under communication technologies

English Version not available (4 Dec 2007)

“Awtorità tas-Suq Ewropew tal-Komunikazzjonijiet ElettroniÄ‹i”- this is the name of the European Electronic Communications Markets Authority in Maltese language, according to the Commission proposal, COM(2007)0699 Final (for the Gaelic Version, see an earlier post). The proposed regulation establishing this Authority (or - if you prefer Finnish - this markkinaviranomainen), is one of the core elements of the proposed reform of the regulatory framework for electronic communications networks and services, so proudly presented by the Commission on 13 November 2007.

Isn’t it remarkable then that three weeks later the Commission still has neither managed to publish the new markets recommendation in the Official Journal, nor to put translations of the reform package in English, French and German on the official website - especially since all other languages are available? Wouldn’t we expect that the decision of the Commission was taken based on documents in English, French and maybe German as the de facto working languages of the Commission - so why is there such a long delay in exactly these languages?  Not that it woud really matter much, but I’m just curious (and the longer the delay in publication gets, the more interesting it might be to see where the differences are betweeen the preliminary publication of an English version on 13 November and the “final” COM-documents).

And just remember what President of the Commission Barroso said on 13 November 2007: “Mil-lum ‘il quddiem, m’għadux biss ħolma is-suq uniku mingħajr fruntieri għall-operaturi u l-konsumaturi Ewropej tat-telekomunikazzjonijiet” (or, if per chance you are not fluent in Maltese: “From today onwards, a single market without borders for Europe’s telecoms operators and consumers is no longer only a dream”).Â

Never mind, then, that Commissioner Reding had already declared that the last border would disappear with the Roaming Regulation (see for instance here and here) - she just might have been dreaming, as Barroso elegantly reminded us.

* Shakespeare, Hamlet Act IV, Scene 1

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