Regulation of the deregulation of the telecommunications market. Principles and policies

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Regulation of the deregulation of the
telecommunications market. Principles and
policies

• Angelina LiakovaDirector of Legal
  DepartmentCommunications Regulation Commission

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Main topics how we see

• The trends in development and regulation of the
  telecommunications markets
• The applicable regulatory framework what we can
  do now for the business
• The transition to new regulatory framework - our
  strenghts and weaknesses
• Forthcoming challenges

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Telecom Regulatory Developments

• Regulatory framework in the EU prior to 2002
  Regulatory Package
• Aim to manage transition from monopoly to
  competition, i.e. creation of a competitive
  market and guaranteeing the rights of new
  entrants
• Market developments
• rapidly changing technologies
• convergence between services, networks and
  technologies
• challenges of the newly liberalised markets
• fast growing competition
• more and more demanding consumers
• 2002 Regulatory Package Europes transition to
  Information Society
• Aim to respond to the dynamic and largely
  unpredictable communications markets
  characterized by significant increase in the
  number of market players

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Regulation - what does it mean in a fast growing
markets?

• Protection of the rights of the consumers
• Making conditions for effective competition
  environment
• Softening the licensing and registration regimes
• Promotion of the application of new technological
  solutions

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Current state of play

• Regulatory framework 98 TL Act of 2003
  implements the conditions from the start of the
  European market in 98
• The Regulator has to impose regulatory measures
  suitable for the conditions of a liberalized
  market

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Regulatory powers now

• Defined in the law defining the SMPs and their
  obligations
• Right for intervention in order to protect
  consumers, interoperability between services and
  effective competition
• Imposing obligation for USO

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Regulatory instruments

• The markets are subject to ex ante regulation and
  are defined in the law
• SMPs when having 25 mshare and additional
  criteria in case of lower mshares
• The obligations are automatically imposed

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Why regulate?

• Imperfect competitive conditions
• Telecommunications industry originated in
  state-run monopolies
• Continued regulation is therefore essential to
  ensure a level playing field for new market
  entrants until development of a fully functioning
  market system
• Market forces alone may lead to the exclusion of
  some social groups from essential public services
  
• The new regulatory system therefore recognises a
  universal service obligation to ensure basic
  services at affordable prices to all consumers

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What is the regulatory impact on the market?

• The regulators monitor the level of competition
  and take decisions for specific obligations of
  the maktes players
• Impose obligations for the SMPs or for all of
  the players on the relevant market
• Define the regulatory intervention proportional
  to the affected balance of competition

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Key principles of the new regulatory framework

• Ex-ante regulation
• As opposed to current ex-post regulation
• Technological neutrality
• Regulation now refers to "electronic
  communications" - not only "telecommunications
• Cutting red tape
• Minimum regulatory intervention
• General authorisation replaces individual
  licences
• - undertakings are required only to notify the
  regulator before they start
• their activities
• - granting of specific rights for use of
  limited resource (radio frequencies and
• numbers) is subject to issue of
  authorisation
• concours or tender procedure
• Legal certainty and consistency across the
  European market
• Operators need to be assured that their
  investments can be planned in a stable regulatory
  environment, consistent and predictable
  throughout the EU's single market

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National Regulatory Authority

• Key role of national regulatory authority (NRA)
  in
• regulation
• NRA has detailed knowledge of the national market
• NRA bears the major responsibility to ensure
  that
• competitive conditions are only constrained by
  ex-ante regulation in markets where competition
  is not effective

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New regulatory policy

• Aims
• Promotion of competition
• Opportunities for greater choice, quality and
  prices
• Guarantees the use of minimum set of services
  universal service
• Tools
• Larger number of markets
• Notification instead of registration
• Dispute resolution by the regulator
• Spectrum trading
• Transparency and public consultation

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Role of the European Commission

• EC guidelines and recommendations regarding
  markets, market analysis and assessment of SMPs
• cooperation with the EC to ensure the development
  of consistent regulatory practice and consistent
  application of the new regulatory framework for
  the electronic communications
• Notification of SMPs and draft measures to the EC
  and to the NRAs in other Member States

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New concept for National Regulatory Authority

• Independence from government and market players
• guaranteed by self-financing through
  administrative fees
• Larger discretion in regulation of the market
• Flexibility in taking decisions and reacting to
  market developments as opposed to the current
  strict normative regulation of the
  telecommunications market and the limited powers
  of the regulator

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New concept for National Regulatory Authority

• Greater responsibility of the regulator to apply
  the rules
• Need for larger competencies market analysis
• Follows the market trends and ensures the
  condition for competition

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Principles applied by NRA the general
principles of community law

• Transparency
• Introduction of obligatory consultation and
  public
• discussions for measures with significant
  impact on the
• market
• Publication of NRAs decisions together with full
  reasons
• Business confidentiality

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Principles applied by NRA

• Non-discrimination
• Objective analysis
• Equal treatment among undertakings providing
  electronic communications networks and services
  in similar conditions

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Principles applied by NRA

• Proportionality
• general principle of EC law
• the action should not go beyond what is necessary
  to achieve
• the objective
• the measure must be suitable to achieve the
  desired end
• the measure must be necessary to achieve the
  desired end
• the measure must not impose a burden which is
  excessive in relation to the objective sought

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Market definition and market analysis procedures

• Current state of play
• 3 markets
• fixed voice services
• mobile voice services and services provided via
  mobile networks
• - leased lines
• Defined in law
• Not possible to define new markets
• The new law
• 18 indicative markets
• Subject to regular analysis and definition
• Coordination with the EC

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Regulatory Controls on SMPs

• An undertaking is considered to have significant
  market power if it is in a position to behave
  independently of competitors, customers and,
  ultimately, consumers
• Incumbent undertaking
• Imposition of specific obligations

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Specific powers of NRAs

• The regulator can gather information from market
  players in order to carry out its task
  effectively
• Proportionality
• Confidentiality
• Publication

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Specific powers of NRA

• Access and interconnection
• Where commercial negotiation fails, NRAs may
• - impose obligations on undertakings that
  control access
• to end-users
• - impose obligations to implement a cost
  accounting
• system in order to support price controls

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Specific Powers of NRA

• Authorisation
• In order to ensure a level playing field and to
  facilitate
• negotiation of interconnection between public
  communications
• networks, NRAs may
• - impose penalties for non-compliance with
  conditions
• under the general authorisation

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Specific powers of NRA

• Universal Service
• In order to guarantee the provision of universal
  service, NRA may
• - impose certain obligations to all providers
  of publicly
• available telephone services at fixed
  locations
• - impose all obligations on providers of
  significant market
• power and universal service operators

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Specific powers of NRA

• Dispute Resolution
• between undertakings providing electronic
  communications services and networks
• Procedure to reach an agreement
• Procedure for issue of binding decisions (max. 4
  months)
• Court Appeal

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Aim of Regulation

• Obligations and Tasks of NRA
• To promote competition
• To contribute to the development of the internal
  market
• To promote the interests of the European citizens

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• Thank you