Electronic Communications: European Commission outlines plans to regulate certain markets, February 2003

The European Commission published a Recommendation on 12 February 2003 listing 18 markets in the electronic communications sector where national regulatory intervention might be justified to ensure fair competition. The Recommendation is a key element of the new regulatory framework for electronic communications, which was adopted by the European Commission in June 2002 and is due to enter into force in the Member States in July 2003.

The new regulatory framework for electronic communications was proposed by the European Commission in July 2000 in response to technological developments in the telecoms sector and the growing convergence between various technologies, which highlighted deficiencies in the former legal framework. The aim of the new regulatory framework is to provide the best conditions for a dynamic and competitive communications industry in Europe by striking a balance between liberalisation and harmonisation, competition and public service and between ex ante versus ex post regulation.

According to the European Commission the latest Recommendation represents the final piece of the jigsaw for the new framework on electronic communications. Its main aim is to 'roll back regulation where it is no longer required and provide greater legal certainty for suppliers of communications networks and services'. The Recommendation foresees national regulators undertaking an analysis of the listed markets and assessing if these markets are subject to a situation where one market operator has a significant market power (SMP). Should such a situation exist, national regulators will be able to impose sector-specific obligations following approval from the other national regulators in the European Regulators Group (ERG). Even if the ERG accepts the imposed measures, the European Commission can still veto the proposed measures if it believes them to be out of line with the EU's own competition rules.

Member States may only intervene in market sectors other than those identified in the Commission's recommendation if the following three criteria are seen to be met by the European Commission:

• The existence of high barriers to entry in the market concerned

• The absence of dynamic competition in spite of these barriers

• The fact that competition rules are not sufficient to address the perceived market failures

The Recommendation is a joint initiative of the European Commission's Directorate-General for Information Society and the DG for Competition. Commenting on the proposals, the two Commissioners responsible - Erkki Liikanen and Mario Monti - said:

'This Recommendation is a key building block of a stable and forward-looking technology-neutral regulatory framework based on competition law concepts. Our joint initiative will promote consumer benefits and provide a clear perspective of decreasing regulation.'

The reaction to the Recommendation form Europe's communications sector has been mixed. The European Competitive Telecommunications Association welcomed the Recommendation, saying:

'Today's Recommendation puts competition at the heart of the eEurope broadband agenda. ECTA wholeheartedly agrees with the Commission that giving consumers a real choice of solutions by competing operators and ISPs is the best way to achieve the ambitious eEurope targets.'

According to the Financial Times, the European Cable Communications Association also gave an unreserved welcome to the Recommendation. However, bigger European telecom companies such as Vodafone have been more critical in their response, suggesting that deregulation is taking too long and the mobile phone sector could yet face heavier regulation.

Links:
European Commission:
	12.02.03:	Press Release: Commission puts in place final piece of new framework for electronic communications [IP/03/221]
	Commission Recommendation on Relevant Product and Service Markets within the electronic communications sector susceptible to ex ante regulation [C(2003)497]
	Recommendation on relevant markets: Explanatory memorandum
	SPEECH/03/73: Recommendation on relevant markets and New regulatory framework
European Sources Online: Financial Times:
	13.02.03:	New European telecoms rules get a mixed reception
	11.02.03:	Brussels chiefs at odds over telecoms
European Competitive Telecommunications Association:
	Homepage
	12.02.03:	Press Release: Wholesale broadband access market key for ensuring competition, says ECTA
	Position Paper: Key issues in the Recommendation on relevant markets [December 2002]

Helen Bower

Compiled: Thursday, 13 February 2003

The European Commission published a Recommendation on 12 February 2003 listing 18 markets in the electronic communications sector where national regulatory intervention might be justified to ensure fair competition