EC expert advice calls for reduced regulation

Fewer telecom markets should be regulated at EU level, and there is no need for renewed EU-level regulation of broadcasting, according to an expert advice report presented to the European Commission. However, it notes that the the particularities of broadcasting market means that it cannot be considered to be “effectively competitive”.

The study, which recommends that fewer markets should be included on the Commission’s list than under current EU rules, and that no new markets should be added to the list, will feed into the EC’s review of the 2007 Recommendation that defines the wholesale and retail telecoms markets which are likely to require regulation of a dominant operator by national regulatory authorities.

The report is principally concerned with the various telecom markets, and it recommends that the wholesale market for call origination on the fixed public telephone network should be removed from the list of regulated markets, while fixed and mobile termination markets should be kept on the list.

The report also recommended that the local loop unbundling market should be refined and clarified while two separate wholesale markets for bitstream access, currently treated as one, should be defined to better respond to the different needs observed at the retail level of mass and business market.

The report also suggests that it should be up to individual national regulators to consider whether the wholesale business bitstream market should form a single market with the terminating segments of leased lines.

In its analysis of the local loop unbundling and wholesale bitsream access markets, the report discounted local access via cable networks because “It is uncertain whether cable operators are technologically able to offer a local access service”, because “there remain doubts whether local access-seekers regard the service as a substitute because it cannot offer national ubiquity” and because cable on average only accounts for 15% of the market across the EU.

With regard to wholesale central access, the report said that cable was capable of offering a service, but there was a question market over whether cable operators were willing and able to offer such services and whether they presented credible alternatives to potential central access seekers.

Regarding the broadcasting market, the report said that where while ex-ante regulation remains justified in some member states – notably where a large number of end users rely on the terrestrial platform and there is a need to “restrict the transmission prices payable by public service broadcasters to levels consistent with a competitive market”, the EC’s decision to remove broadcasting from its list of regulated markets in 2007 stands and there is “no need for re-insertion”. For cable networks, it said that must carry rules were usually appropriate to deal with the need for broadcasters to access platforms.

However, the report highlighted a number of reservations about broadcasting, which unlike other EC-deregulated markets remains regulated at national level by 14 member states.

The report said that pay TV and free-to-air broadcasting could be considered as two separate markets, with little or no substitution between them, a fact that “has not been included in the current version of the Recommendation”.

According to the report’s authors, 12 EU member states consider the terrestrial platform to be a “separate market” to other platforms as it is ubiquitous and seen as a free-to-view service. Access remains regulated in most states, which do not believe that infrastructure competition between transmission platforms is effective.

Barriers to entry remain high due to lack of competition in the transmission infrastructure market, and the report concluded that although broadcasting had been removed from the list of regulated markets, “it seems difficult to conclude that the [broadcasting market] is in general effectively competitive across the EU”.

It concluded that “the [broadcasting market] does not seem to be effectively competitive across the EU, and the special feature of this market has not yet been fully grasped by the Recommendation.”