EC Presses For Compliance with Telecom Laws, Ahead of Major Review
The European Commission (EC) took action Thurs. against several more slow-moving member states for either failing to review their telecom markets for competition problems as required by the new telecom regulatory framework (NRF), or bungling the transposition of the framework into national law. The move to push countries to complete work on the 18 market reviews comes in part because of the EC’s impending (2006) review of the 5 directives that make up the NRF, said Information Society & Media Comr. Viviane Reding. That regulators in 3 “old” EU states, Belgium, Greece and Luxembourg, haven’t even adopted the NRF into national law -- although it’s been in force for over 2 years there -- shows the EC has to be “really tough,” Reding’s spokesman told us.
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The actions launched against Belgium, the Czech Republic, Estonia, Cyprus, Latvia, Luxembourg and Poland are the first stage in the EC’s infringement procedure for bringing member states into line with EU laws. In formal notice letters, the Commission cited the 7 countries for not analyzing any of the 18 markets they must assess for competition problems. The EC also went after Estonia for failing to ensure that its national regulatory authority (NRA) can define markets, for preemptive regulation at variance with the NRF and for not maintaining established antitrust obligations on dominant telcos until new rules are put in place. Slovenia and Cyprus were cited as having inadequate safeguards to ensure NRAs’ independence from govt. A “2nd-stage,” or reasoned opinion, proceeding against Malta alleged the NRA failed to ensure number portability for all subscribers to the publicly available telephone system.
“We're not doing so badly” on enforcing the NRF, the EC spokesman said. These and the many other infringement actions the EC has had to file against member states over adoption of the NRF don’t signal problems with the regulatory scheme, he said, because most of the countries cited in the actions are new member states whose govts. may have been slow in adopting the NRF, holding back their NRAs. Moreover, some regulators have recently become independent. In any case, there will “certainly” be more rounds of infringement filings, he said.
Some incumbents may believe reviewing 18 markets to determine significant market power may be too much because they're already over-regulated, the EC spokesman said. But to draw the conclusion that 18 is too many is misleading, because many new member states have never had a competitive telecom environment, making the complex analyses necessary. Besides, he said, only by gauging the state of the different markets can an NRA decide whether deregulation of some is warranted. Not all market reviews lead to more rules, the spokesman said.
Analyzing the 18 markets “makes sense,” said Sandro Bazzanella, dir.-EU affairs, European Competitive Telecom Assn.: It’s true it takes time, but that’s because this is the first time NRAs have had to deal with such a complex and fine-tuned process. Some regulators complain about the lengthy process, but they acknowledge it has forced them to improve the quality of their output, he said. Reviews will likely become because NRAs will be more familiar with the system and have better data.
Once the NRF has been suitably adopted into national law, the 3rd stage of EC oversight comes into play. Under the “Art. 7” procedure, the EC reviews all NRA market assessments and can order regulators to change or redo them. The Commission warned that infringement actions will be filed against all countries that fail to complete the reviews by July, ahead of the 2006 review. Eighteen member states have notified the Commission of market reviews, the EC told the Communications Committee -- a panel established by the NRF Oct. 12. An EC communique examining how the Art. 7 process has worked the past 2 years is due in Nov.
Incumbent telcos sought a comprehensive NRF review to ensure that EU regulations anticipate changes and spur necessary investment in tomorrow’s networks, said European Telecom Network Operators’ Assn. Dir. Michael Bartholomew. New players that aren’t subject to the same regulatory burdens as older operators are increasingly offering new services while traditional telcos are expanding into new arenas. That calls for a “deregulatory approach,” he said.