EU Should Eye Harmonized Telecom Rules, Ofcom Official Says

One challenge to the Commission is how to address the NRF’s perceived weaknesses without jettisoning principles everyone seems to embrace, Colasanti said. He acknowledged the NRF has problems. Though it took effect in 2003, some member states have yet to adopt it into national law, and many national regulators haven’t analyzed their 18 telecom markets to see if any players hold significant market power. The EC is embroiled in several proceedings to push laggards into compliance.

Colasanti cited the “case against the NRF": It causes too much regulation, its multiple market assessments are too burdensome and costly; EC members inconsistently implement it; and it discourages short- term investment. But, he said, merely looking at paperwork the NRF creates doesn’t give the whole picture, since more documents don’t translate into larger areas of the market being regulated. Does the effort required to analyze in painstaking detail 18 separate markets create too much work for national regulatory authorities (NRAs)? “This is an open question,” especially for smaller countries, he said. This is the first time for the process; subsequent analyses should be easier.

In defense of the NRF, Colasanti said, the transparency of its processes have improved market analyses’ quality, consistency and predictability. It also has underpinned deregulation of some markets in member states.

Europe’s spectrum management scheme is ripe for review, Colasanti said, due to a schism between the technical players, who want more flexibility, and politicians, for whom flexibility represents a “significant break with tradition” after years of a “command-and-control” approach. Market analysis methodology also needs another look, he told us, since the telecom sector changes constantly. Following the NRF review, one “could imagine” fewer markets requiring competition analysis, he said.

Harmonization a Core Question

Ofcom Senior Policy Officer Kip Meek agreed the NRF has problems as currently constituted Some see it as too slow, providing inadequate quality control, or lacking sufficient transparency. But Meek -- who in Jan. becomes head of the European Regulators Group (ERG) -- argued a key concern is that the NRF doesn’t address the core issue of whether it’s necessary to completely harmonize national methodologies for determining when regulation is needed.

Meeks posited 2 kinds of harmonization. The “weak form” allows some harmonization of regulatory methodologies where justified. The “stronger form,” on the other hand, would allow would-be European market investors to make decisions independent of national regulatory specifics. In the debate on the NRF, Meeks said, regulators and the EC must think more concretely about what benefits harmonization brings. But Colasanti told us this is an area where the Commission “has to be extremely careful” lest it be seen as trying to advance its hegemony. If industry wants that, it’s okay, he said, but the EC itself won’t ask for it.

Ofcom is nearly done with a comprehensive review of the U.K. telecom sector. It’s winning other regulators’ praise for focusing not only on structural issues tied to British Telecom’s (BT) network but on a decision to force the incumbent to change its behavior toward rivals or face an antitrust probe.

Meeks said ERG would look to the U.K. experience and perhaps incorporate some of its behavioral concepts into the ERG position paper on remedies for anticompetitive markets. The issue of behavior is “really important and tricky,” said OneTel Managing Dir. Ian El-Mokadem. Ofcom appears to have struck a good balance by ordering BT to provide equivalence of access to its system to competitors, but the proof is “what happens on the ground” at BT exchanges.

Regulatory Moratorium on NGN?

“Fuzzy thinking” seems to dominate efforts to handle NGNs, said Michael Bartholomew, dir.-European Telecom Network Operators’ Assn. He asked regulators for their thoughts on a proposal floated earlier this year by Information Society & Media Comr. Viviane Reding. She asked for a possible 3-year moratorium on NGN regulation. There were no responses from the panel. However Alun Michael, U.K. minister of state for industry and the regions, said “regulatory forbearance is not one of the answers” to securing investment in NGN.

Alternative carriers also rejected the idea. Speaking in advance of the Ofcom conference, European Competitive Telecom Assn. (ECTA) Managing Dir. Roger Wilson said “we see Edinburgh as the place to lay to rest the idea that governments should put their faith in the former monopolist and abandon the promotion of competition in the telecom sector.” The discussion is particularly timely, ECTA said, since German politicians have proposed a 3-year break for Deutsche Telekom while it upgrades its access network, “undermining competitors’ current and future investment plans.” Moreover, BT proposals for its 21st Century Network “led not to a moratorium, but to a full investigation” and remedies.