Plans for policing telecoms revised

Date: 20/04/2000

By Peter Chapman

ENTERPRISE Commissioner Erkki Liikanen is set to unveil plans for a tough new regime to police the behaviour of powerful telecoms firms after his original proposals came under attack from users, member states and the industry.

In a consultation paper published last autumn, the Commission said telecoms and network operators with a market share of 25% or more should be prepared to negotiate with rivals seeking access to their networks. It also called for firms with a 50% share of their respective markets to be forced to offer cost-based interconnection to rivals.

Liikanen is now set to drop this approach in favour of a "more flexible mechanism", which could result in some companies outside the current thresholds being forced to comply with a raft of rules and regulations, while others which now fall within the regulators' net could escape altogether if they operate in competitive markets.

The move, which will be discussed at a public hearing next month, follows complaints that the market share figures in Liikanen's original proposal were too rigid and failed to take into account differences between markets. "The problem with the 25% rule, for example, was that it focused on the position of one company alone and not on the degree of competition as a whole in a particular market," said Simon Hampton of Internet giant America Online.

The new proposals will recommend a 'two-step' approach to policing the market. In the first, Liikanen intends to issue a notice detailing areas where 'ex ante' or advance regulations might be necessary to police those parts of the industry where competition might not have taken full effect.

Officials say the list of problem areas is likely to include the local access network, fixed-call termination and mobile-call termination - where a telecoms operator links up with a rival's fixed or mobile network to complete a call. National officials would then decide whether these sectors warranted regulation or not, and would only be able to act in areas which tallied with the Commission's 'hit list'.

In the second stage, the Commission would ask national regulators to inform it of sectors where firms enjoyed "substantial market control". If the EU executive agreed with the regulators' assessment, it would sanction the imposition of "appropriate regulatory obligations" on the firms concerned to prevent them from abusing their market power.

This could include requiring firms to ensure "non discrimination and transparency" by publishing separate accounts for different business units; offer cost-based prices for rivals in areas where "competition is not effective in controlling prices"; and offer 'unbundled access' to a particular service "where an operator controls that facility".

Officials say clear and unambiguous rules would be laid down for national regulators setting out what sanctions could be imposed and how they should be applied. The Commission would be able to overturn such decisions after consulting two expert groups made up of national representatives.

Iain Osborne, of pan-European long-distance operator GTS, said the move would be welcome provided the Commis-sion ensured that national regulators' actions were consistent, safeguarding the single market for telecoms services.

Enterprise Commissioner Erkki Liikanen is set to unveil plans for a tough new regime to police the behaviour of powerful telecoms firms after his original proposals came under attack from users, Member States and the industry. Plan unveiled 26.4.00.