[A2k] ECs open network concerns

[jeff@democraticmedia.org]

excerpt:  " In regard to net neutrality, the EC wants to ensure that
regulators can impose, in a pan-European way, mini-
mum quality-of-service requirements, in addition to their existing powers
to ensure interoperability.  The Commis-
sion wants to insure that operators in the European Union will not be able
to discriminate against customers by of-
fering 2-speed Internet service, officials said.  The EU=92s concern isn=92=
t
as strong as in the U.S., Reding said, voicing
hope that competition will address this problem."

from Communications Daily (US), June 30, 2006


Single Regulator Urged

EC Urges Regulatory Revisions for Telecom Market

 Brussels =96 European Commission (EC) telecom networks and service
providers would be regulated
separately and a single European Union regulator would oversee the
telecommunications sector under a Thurs.
proposal by EC telecom commissioner Viviane Reding.  Separating a telecom
company=92s network from its ser-
vices would inject competition into the sector and =93the moment the market
is open we can scrap the rules or
phase them out,=94 Reding said.

 Reding suggested offering incumbent telecom companies=92 infrastructure to
startup rivals on the same terms
as the incumbents give to service divisions.  She cited the U.K., where
the national regulator successfully instituted
a similar system with BT Group.  That resulted in a =93good experience,=94 =
she
said, =93so why not look at this good ex-
perience and maybe apply it Europe-wide?=94

 Reding isn=92t thinking of adapting the U.S. divestiture model, in which
AT&T was broken up into 7 =93Baby
Bells=94 in 1984, she said.  Her idea is to require companies to establish
separate divisions of their networks and their
services, she said.  For wireless services, she said, she=92d like a more
market-based approach, obtained by opening
more parts of the spectrum to trading.

 The EC recommended lifting controls on almost all retail calls but
keeping them in many wholesale mar-
kets, regulating 12 markets instead of the 18 it envisioned before.

 Other areas for change include consolidating the market, strengthening
consumer and user interests and im-
proving security.  The EC will push to improve national regulators=92
oversight of security and integrity issues and to
keep the networks safe against terror attacks, Reding=92s plan said.
Operators would have to report breaches of security or
loss of personal data and regulators would have to inform people when a
breach happens and personal data are stolen.

The EC believes telecom companies continue to benefit from a dominant
market share and government aid
given to them to build an infrastructure, the plan said.  The EC said slow
progress toward liberalization by broad-
band has prompted it to include a proposal for a European kind of a =93supe=
r
regulator=94 to ensure efficient markets by
ironing out differences and disputes in member states=92 application of
remedies.  Issues would go to the super regu-
lator only when =93irreparable harm=94 to the appellant can be shown.  The
=93super regulator=94 would be seen as a decen-
tralized function, with one European Union regulator that ensures fast
remedies.

 The EC urged tougher enforcement with more powers to national regulators
to address breaches of licenses
or authorizations, for example, via fines and penalties and letting
regulators pursue spammers.

 The plan would strengthen disabled users=92 right to access emergency
services via =93112,=94 and improve
availability of caller location information to emergency authorities for
=93112" calls so that the caller could be
located more easily.

 In regard to net neutrality, the EC wants to ensure that regulators can
impose, in a pan-European way, mini-
mum quality-of-service requirements, in addition to their existing powers
to ensure interoperability.  The Commis-
sion wants to insure that operators in the European Union will not be able
to discriminate against customers by of-
fering 2-speed Internet service, officials said.  The EU=92s concern isn=92=
t
as strong as in the U.S., Reding said, voicing
hope that competition will address this problem.

 Competition is sufficient in most retail networks, and competition for
international calls has become espe-
cially fierce, Reding said.  The only change the EC plans applies to the
remaining market -- accessing the public
telephone network from fixed location.  The EC also intends to keep
control of many wholesale markets, it said.

 For the first time, mobile services such as SMS messages would be
regulated.  Wholesale SMS termination
would be included explicitly in the wholesale market for mobile call
termination.  This would subject the whole
market for SMS termination to periodic checks by national regulators for
any dominance by an operator.  This is
expected to lead to lower wholesale rates and ultimately lower retail
costs for sending SMS messages.  Each mobile
network operator has a monopoly in terms of how it charges other operators
to reach its customers, the EC said, and
this is as true for SMS termination as for termination of voice calls.
Since the market power is the same for both
voice and SMS termination and as both services are sold in the same mobile
cluster at retail and wholesale, they
will be dealt with as part of a single termination market per operator,
the plan said.

 Reding announced creation of a European spectrum agency to function as a
spectrum trading agency and
enable anyone who owns spectrum to use it or sell it.  The goal is a new
policy approach to spectrum management
and a lesser procedural burden associated with regulation, the plan said.
The new approach foresees more freedom
for spectrum users to use the technology and services they choose, and to
establish that identical blocks of spectrum
can be used under common conditions in all European Union member states.

 Trading in spectrum will be introduced in selected bands across Europe,
where operators can trade in mem-
ber states, as permitted, while guarding the public interest and existing
rights holders=92 legitimate interests, the plan
said.  The European spectrum management approach will be market-based,
allowing transfer of spectrum usage
rights between users with no need for administrative permission.  Common
conditions and rules will be used in all
EU member states, for example, for interference protection.

 Another approach is the =93unlicensed structure,=94 meaning shared usage, =
no
individual rights or protections
and easy access.  The administrative approach will continue for agreed
public purposes such as transfer of spectrum
usage rights, subject to administrative control.  Sometimes coordination
will be needed, such as for identifying
where trading or =93general authorization=94 applies across the European Un=
ion
as well as usage conditions.

 A commission public consultation on the proposed reforms will run until
Oct., with the EC floating legisla-
tion in the European Parliament and EU member states at year=92s end.  The
EU executive intends to adopt the new
rules in Q1 of 2007, with transposition into national laws due by 2010.

 The controversial proposals will face resistance from EU member states,
likely to be unwilling to relinquish
control.  Eastern European member states have voiced reservations about
complete liberalization of spectrum trad-
ing, citing a danger that it will end up in the hands of the big telecom
companies.

 The sector=92s revenue growth generally outpaces the EU economy=92s growth=
.
In 2005 the ICT sector=92s value
was 614 billion Euros, with the value of services that rely on spectrum
pegged at 200 billion Euros and investment
in Europe comparable to that in North America and Asia.

Separation =91Confusing=92

 Some observers were left scratching their heads at Reding=92s apparent
interest in enabling national regu-
lators to force incumbents to split infrastructure from service provision.
 Gauging the impact of proposed
changes to the NRF, the EC discussed structural separation as one of 3
options for boosting investment in net-
works, but decided against it.  Nevertheless, Reding played up the idea in
a Tues. speech at BITKOM, saying
such a policy could =93answer many competition problems that Europe=92s
telecom markets are still facing today.=94
She said yesterday she hasn=92t made up her mind about it, then added that
British Telecom=92s (BT) Openreach
concept might be applied EU-wide.

 =93I=92m confused,=94 Strategy Analytics broadband analyst Martin Olausson
said.  He said he reads Reding=92s
focus on structural separation in the face of the EC=92s evident lack of
support for the concept as a warning to incum-
bents to =93play nice=94 when they discuss regulation.  And Reding=92s refe=
rence
to BT is unclear, he said.  Pressed by
the Office of Communications (Ofcom), BT agreed to an organizational --
not a structural -- separation of its
wholesale and retail arms within the same company, he said.

 Full structural separation certainly would neutralize the network
neutrality argument, Olausson told us.  It
would put every market player on the same level, though newcomers like
Yahoo and BSkyB, which control content
and vital services, could find themselves in extremely strong positions.
On the other hand, he said, full structural
separation could slow investment by removing the incentive to install next
generation networks.

 Some new entrants have broached the idea of incumbents being separated
into differently regulated func-
tions but existing under the same roof, said Innocenzo Genna, a EuroISPA
board member who represents the Italian
ISP Assn.  The EC opposed that, but perhaps Reding has decided to run with
it at the Cabinet level, he told us.
ISPs think functional separation could be a good remedy, but only if the
EC clarifies the term=92s meaning and ties it
to retail market deregulation, Genna said.  The European Competitive
Telecom Assn. (ECTA) welcomed Reding=92s
call for separation, pointing to the functional separation model adopted
by BT.

 The EC should explain =93structural separation,=94 incumbents said.  The
European Telecom Network Operators=92
Assn. (ETNO) voiced surprise =93that the Commissioner refers to it as a
valuable option considering that even the Com-
mission=92s impact assessment rejects it.=94  Separation would be difficult
and economically unfeasible, ETNO said.

 BT Chief Exec. Ben Verwaayen said he was pleased the U.K. was cited as a
regulatory  model.  The U.K.
Dept. of Trade & Industry appreciates =93the direction of EU thinking on
these issues, which support the competitive
and open markets approach followed by=94 the govt. and Ofcom, said Nigel
Hickson, European e-commerce and tele-
com regulatory framework head.

 The EC proposals call for deregulation of at least 6 of 18 telecom
markets now potentially subject to pre-
emptive regulation, while adding a new market for SMS termination.  ETNO
urged deregulation of more wholesale
or access markets when alternative networks exist;  wholesale mobile
markets, including SMS termination, are al-
ready competitive, it said.  BT=92s Verwaayen called the reduction =93anoth=
er
encouraging development.=94

 Alternative providers disagreed.  Simply deregulating markets while
dominant operators remain so strong
worries ISPs, Genna said.  ECTA complained that deregulating retail
markets now could leave incumbents with a
competitive edge over new players.

 Vodafone said it welcomes the EC deregulatory approach but said it=92s
being applied unevenly to markets,
such as international roaming and SMS termination, that are fully
competitive.  SMS prices are 10% cheaper than they were, a spokesman said.
--