“maintain it with some little cost”*: Termination Rates Recommendation

Posted on May 20, 2009 | Filed Under communication technologies

Today, the Commission Recommendation of 7 May 2009 on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EU (2009/396/EC) was published in the Official Journal. Presenting the recommendation two weeks ago, Commissioners Reding and Kroes were excited with the prospect of “cutting the price of phone calls” and “ending the fixed-mobile-subsidy“, even though on the face of it it is just a recommendation that should lead to a more harmonized approach of national regulatory authorities (NRAs) in applying remedies in the fixed and mobile-termination-markets, and especially in the cost models that NRAs use to set the appropriate rates.

The Commission’s approach is laid out in greater detail in an explanatory note, and there is additional information in a further staff working document on implications for industry, competition and consumers.

Summing up the recommendation:

  • NRAs are expected to “set termination rates based on the costs incurred by an efficient operator. This implies that they would also be symmetric.”
  • The evaluation of efficient costs should be “based on current cost and the use of a bottom-up modelling approach using long-run incremental costs (LRIC) as the relevant cost methodology.”
  • It is, however, ok to “compare the results of the bottom-up modelling approach with those of a top-down model which uses audited data with a view to verifying and improving the robustness of the results and may make adjustments accordingly”.
  • Any deviation should be “justified by objective cost differences which are outside the control of the operators concerned. Such objective cost differences may emerge in mobile termination markets due to uneven spectrum assignments.”
  • The “appropriate efficient scale of the modelled operator” is set at 20 % market share for mobile operators .
  • “In case it can be demonstrated that a new mobile entrant operating below the minimum efficient scale incurs higher per-unit incremental costs than the modelled operator, after having determined that there are impediments on the retail market to market entry and expansion, the NRAs may allow these higher costs to be recouped during a transitional period via regulated termination rates. Any such period should not exceed four years after market entry.”

Also today, Ofcom published its consultation document on future regulation of wholesale mobile voice call termination (consultation website).  

In addition, and probably not directly linked, Ofcom today also announced a pay freeze (Ofcom’s “CEO” Ed Richards, by the way, made GBP 417.581 [around € 473.000] in 2007-08, according to the Taxpayers’ Alliance - even if the the freeze for him means missing out on the bonus, he won’t really feel cold, I presume).

I am still waiting, however, for Ofcom’s bottom up-model of an efficient regulator.

*) Shakespeare, King Richard III, Act III, Scene 2

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“Who would be thence that has the benefit of access”*: C-192/08 TeliaSonera

Posted on May 19, 2009 | Filed Under communication technologies

Does the access directive 2002/19/EC permit a member state to require operators of electronic communication networks to negotiate interconnection (or access) agreements with a provider of SMS- and MMS-services? The ECJ will have to address this issue in the case C-192/08 TeliaSonera, and last week, advocate general Colomer delivered his opinion (not yet available in English). To sum it up briefly:

The obligation to negotiate interconnection as laid down in article 4 of the access directive applies only to operators of electronic communications networks, not to providers of electronic communications services. As this is not a case of minimum harmonisation, member states may not impose such an obligation also on service providers. Whether the SMS- and MMS-service provider in this particular case is to be regarded as a network operator or a mere service provider will have to be determined by the national court.

But even if there is no obligation to negotiate, regulatory authorities could, under article 5 paragraph 4 of the access directive (and article 20 of the framework directive 2002/21/EC) “intervene …  in order to secure the policy objectives of Article 8 of Directive 2002/21/EC (Framework Directive), in accordance with the provisions of this Directive and the procedures referred to in Articles 6 and 7, 20 and 21 of Directive 2002/21/EC (Framework Directive).”

Advocate general Colomer, who has a reputation for quoting fine literature (even if the relevance to the case is sometimes hard to see), this time quotes C.M. Cipolla’s Fundamental Laws of Human Stupidity (in footnote 30, to paragraph 50). I have tried hard to understand what Colomer wants to tell us with this reference, but I have not yet found an answer. I am grateful for hints!

*) Shakespeare, The Winter’s Tale, Act V Scene 2

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No rubber stamp after all: EP vote on the telecoms package

Posted on May 7, 2009 | Filed Under communication technologies

The Czech Presidency of the Council had expected the European Parliament to “rubber-stamp” a compromise reached in the trialogue on the telecoms package (see this post); and I had no reason to doubt that. But surprisingly, there was dissent at yesterday’s plenary meeting of the European Parliament and, to quote Parliament’s press release, by “amending an informal agreement reached with Council, MEPs send the whole ‘telecom package’ to conciliation.”

The “dissent” only concerns the amendments on the framework directive, but as the three proposals are interlinked, it will probably keep up the complete package.

Here is a link to the texts as voted on in Parliament, more here, here or here.

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EC-commissioned study on media pluralism indicators: draft version online

Posted on May 2, 2009 | Filed Under digital content

Media pluralism is not really a favourite topic for the Commission, and understandably so: it’s not an issue that lends itself to easy answers, much less to quick fixes, and above all any policy on media pluralism worthy of its name by necessity will run into heavy criticism by the most powerful media. So I was sceptical of the efforts the Commission announced quite a while ago (see my post in this blog), and I still am. But nonetheless, I have to welcome that a preliminary version of the study on indicators for media pluralism is now online, complete with the prototype of what the authors call a “Media Pluralism Monitor”, an Excel file (plus user guide) to be filled with data from the respective member states - then showing a red, orange/yellow or green sign (here’s the dedicated website of the Commission).

Obviously, the researchers did a fine job of collecting and condensing information on possible indicators for media pluralism. I am not convinced of the Excel sheets in a lot of details, but at least the questions adressed there (and in the user guide that elaborates how one should arrive at the answers to put into the Excel sheet) give precise topics that can be discussed point by point. I would dispute the relevance of some questions (for instance I do not see any value in asking whether the respective member state has ratified the European Convention on Human Rights, much less in asking whether it also has “ratified” [!] some EC directives), and I also suspect that there is a slight tendency of bias towards more regulation and more regulatory oversight, but still every question I read so far is well worth to be asked and, hopefully, answered in all member states. [On the practical side, it would be nice to have the user guide integrated into the Excel-file, but maybe the final version will be more user-friendly]

I am sure there will be a lot of critcism, in general and in the details, but as the “media pluralism monitor” is a tool that can also be used by academics or NGOs, I look forward to a developing media pluralism discussion - and even if the Commission will not issue a recommendation, academics or NGOs could go ahead and put the indicators to a reality test.

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