ERG Plenary 4-6 October 06

Kip Meek, ERG ChairBrussels, 12 October 2006

Agenda

• Framework Review

• Harmonisation

• Development of ERG

• Broadband, VoIP and NGNs

• 2007 Work programme

• International Roaming

• Q&A

Framework Review 2006

Highlights from the forthcoming ERG response (1) • No need for substantial revision of the current framework

• Support for proposals which will promote effectiveness/efficiency of regulation, in particular:– spectrum management reform supported but no transferal of

powers to EU and no European spectrum agency. We assume that pan European services will be narrow and clearly defined

– overall support for consumer proposals, but there is a need to clarify details

– support Commission consultants proposal of ‘white list’ of markets or circumstances which do not require notification

– support new remedy of functional/operational separation, as means of ensuring more effect non-discrimination and where it is clear that a remedy is required across a range of relevant markets

Highlights from the forthcoming ERG response (2)There are some areas where ERG members have concerns or seek clarification:

• Commission’s proposals to simplify market review notifications will not reduce administrative burden significantly for NRAs nor for stakeholders

• Proposals to introduce a Commission regulation to cover all aspects of the Article 7 market review procedures too prescriptive

• Do not support the extension of the Commission’s veto of national regulatory remedies– note that Commission’s consultants (Hogan & Hartson / Analysys) also

opposed– believe our own initiatives to promote harmonisation more effective

• Should be changes to the Commission’s existing veto powers, particularly the need for a transparent appeals process and a requirement for the Commission to obtain external experts’ input prior to a veto

Highlights from the forthcoming ERG response (3)In addition ERG members are also looking for:

• Need for a review of SMP Guidelines

• Need to clarify that NRAs should have power to impose cross market remedies

• ERG recognizes the importance of the security issues raised by the Commission - but concerned that measures proposed are vague

• Greater clarity in relation to the net neutrality proposals

Evolution of regulation - role of ERG

• The ERG was set up in 2003 by the European Commission to provide advice on the implementation of the EU Regulatory Framework particularly to contributing to the development of the internal market and seeking to agree on the types of instruments and remedies best suited to address particular circumstances in the market place

• In May, the ERG began work on a project to re-examine its working practices to improve its operational effectiveness, in particular to deliver a more rigorous approach to harmonisation

Harmonisation

Harmonisation 1

• What does it mean?– same regulatory obligations on SMP players throughout Europe?– appropriate regulation of SMP players to achieve similar market

conditions throughout Europe?– appropriate regulation of SMP players to achieve similar end-user

experience throughout Europe?– similar regulation throughout Europe of cross-border services?– exchange of best practice amongst regulators?– or something entirely different?

• How much do we need and why? And who is best placed to deliver this?

Harmonisation – the problem as perceived by IEN

MarketDefinition

MarketAnalysis

RemediesDecision

RemediesImpl‘tn

Art 7 FDComments or

Veto

Art 7 FDComments

„Utmost Acct“

Advise the Commission

Ensure consistent application

NRA

Commission Powers

ERG role underexisting FWK

Option used by ERG today, e.g. through Recommendation on Appropriate Remedies, Accounting Systems, Common Positions etc

Option at the avail of ERG under the existing framework

ERG influence to remedies decisions too abstract

ERG does not play advisory role in Art 7 cases

ERG members do not take Section 4.4 of ERG RoP („take into utmost account“) seriously enough

• Language problems

• Easy recourse to national circumstances

• Honor among thieves

Ways in which harmonisation might arise• Harmonisation can arise from:

– Un-coordinated market processes– Un-coordinated policy decisions – just converge on good policy– Coordinated market based initiatives– Coordinated policy decisions (treaties etc)– Government mediated market based initiatives

Regulate to promote harmonisation only when the benefits of intervention outweigh the costs relative to alternative mechanisms, including doing nothing

When is harmonisation beneficial?

• Harmonisation is beneficial when the benefits exceed the costs

Very good framework, but not informative on its own!

Potential costs of harmonisation

• Policies that do not reflect local circumstances

• Lose ability to learn from cross sectional variation

• Eliminate regulatory competition that would otherwise reduce information asymmetries

• Rigid harmonisation could reduce trade in goods and services between Europe and rest of world

• Slow to adapt, lock in inferior policy or standard

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Prioritising harmonisation of approaches to regulation

Benefits appear greatest in the following circumstances:

1. Services with pan-European potential where a high degree of uniformity required, e.g. Voice over IP (VoIP)

2. Services with a significant cross-border dimension e.g. international roaming

3. Key access services needed for efficient national markets• In this case, near-uniformity of remedies is often undesirable and

impractical, • But there is a strong case for consistency and transparency of

methodology for choice of remedies ….• … and effective dissemination of best practice

Harmonisation – taking forward

• ERG ideas introduced at Industry workshop on 27 September

• Have agreed collective action to:– develop stronger common position on VOIP to release pan-

European potential– develop common positions on SMP Remedies in specific

markets• consultations on broadband access markets in November• priority also to termination markets

• Have also agreed a systematic approach to identification of SMP remedies and to transparency over reasons for choice of remedies– Will hold public workshop following launch of consultation

ERG Development

Role of ERG

• Network of Heads of European Regulatory Authorities

• An advisory Group to Commission

• Assist in development of internal market

• Promote consistent application of Regulatory Framework

ERG Mission

• Serve as a body of reflection, debate and provision of advice

• Co-operate to identify appropriate regulatory instruments to promote greater harmonisation in the application of Framework

• Improve colloboration, mutual assistance and information exchange between NRAs and the Commission

• Work transparently in consultation with industry stakeholders and with European institutions

ERG Strategy and Policy Commitments 1

• To review and keep up to date the priority areas for harmonisation

• Develop case studies of regulatory best practice in respect of key markets

• To take utmost account of ERG Common Positions and provide reasoned regulatory decisions with reference to the CPs

ERG Strategy and Policy Commitments 2

• To agree a way of monitoring and comparing regulatory approaches across key markets

• NRAs with relevant experience and knowledge to provide technical assistance to each other on implication of the Framework

• Implement future work programme in a targeted fashion using dedicated project teams for individual work items

Next steps

• A small project team led by ERG Chairman to take forward

• Will consider implications of commitments – for level and organisation of resources available– The arrangements for an efficient and effective secretariat

• Decisions at December Plenary

2007 Work Programme

NGN, VoIP and broadband

Broadband, VoIP and NGN

• ERG Plenary discussed and agreed to publish :– 2006 Broadband Competition Report based on 15 country studies– report on IP interconnection – report on VoIP consumer aspects

• ERG discussed NGN regulatory principles following workshop on 25 September

• NGN work to continue focussing on access issues

International roaming

Latest ERG views on roaming

• Agree that EC Regulation is appropriate

• “Better Regulation” to allow wholesale regulation reasonable time to take effect

• Retail cap should come into effect only where necessary, via a “sunrise clause”

• Severe concerns whether methodology for wholesale regulation will deliver Commission objectives

• Level proposed for retail cap for calls made will suppress competition and tariff innovation

Documents Published

• For Consultation– Broadband Competition report– IP Interconnection– PIBs on WACC– Work Programme 2007

• For information– Report on VoIP Consumer Aspects– Tariff transparency on international roaming prices

Any questions?