How Ofcom works with Europe. Will Hayter 11 September 2013

Transcription

1 How Ofcom works with Europe Will Hayter 11 September 2013

2 Purpose of these slides We work with the European Commission and various other EU bodies on a range of topics: Spectrum Post Content, internet Much of our competition work is focused on conducting telecoms market reviews which we are required to conduct every three years In the course of this calendar year we will have completed two market reviews (business leased lines and fixed voice calls), will be close to completing two further market reviews (wholesale local access and wholesale broadband access) and will have initiated a review of the mobile termination market These slides provide an overview of the regulatory and European context for our telecoms competition work 1

3 Our work is guided by the European Framework Directive, as enacted in UK law Legal framework European Framework Directive sets out Ofcom s general duties Which markets Art 15 requires Commission to publish a Recommendation on Relevant Markets susceptible to ex ante regulation (2003 and revised in 2007; currently under review) How to conduct a market review Procedures identification and definition of markets, market analysis and designation of operators with significant market power (SMP) Powers and duties on finding SMP Circumstances when remedies can be imposed e.g. finding of SMP List of potential remedies (e.g. access, non-discrimination, transparency and price regulation) Legal tests for application of remedies Right of appeal The EU Directives require that there be an effective right of appeal to an independent body, with appropriate expertise, which takes the merits duly into account. Provisions of the European Framework have largely been enacted into UK law in the Communications Act 2003 Ofcom must take due account of EC Recommendations and Guidance Ofcom has two principal duties: To further the interests of citizens in relation to communications matters (s.3(1)(a)) To further the interests of consumers in relevant markets, where appropriate by promoting competition (s.3(1)(b)) UK appeal process Ofcom decisions on telecoms (including spectrum) matters may be appealed to the Competition Appeal Tribunal (CAT) Where the appeal includes price control matters the CAT must refer those matters to the Competition Commission There are provisions for decision of the CAT to be appealed to the Court of Appeal on a point of law 2

4 The Framework Directive was revised in 2009, with some significant implications Changes to framework Review cycle reduced from four years to three years: our previous practice was four years, but it is now a legal requirement to review the markets every three years, which means we now generally start work on new market reviews only months after we have finished the previous review Timing of notification to the EC: a new requirement was included that national regulators must notify the Commission after national consultation rather than at the same time; Commission and BEREC have one month to comment; we have to take utmost account of their comments EC veto on market definition and SMP: Commission powers under Art 7 / 7a extended EC has always had veto on market definition and SMP; now also has option to review remedies (but no veto) In last two years, we have seen a significant increase in Phase 2 proceedings (e.g. Germany and Netherlands on mobile termination, Poland, Spain, Estonia, Italy on WBA, Austria on leased lines) New remedies in the framework: functional separation 3

5 We are required to review a minimum of seven markets, although the list is under review List of markets EC Recommended markets (2007)* 1: Access to the public telephone network at a fixed location for residential and non-residential customers (retail) 2: Call origination on the public telephone network provided at a fixed location (wholesale) 3: Call termination on individual public telephone networks provided at a fixed location (wholesale) 4: Wholesale (physical) network infrastructure access (including shared or fully unbundled access) at a fixed location Ofcom Market Review name(s) Retail narrowband market review (deregulated ex Hull since 2009) Wholesale Narrowband Market Review (WNMR) Wholesale Narrowband Market Review (WNMR) Fixed Access Markets Review (FAMR) 5: Wholesale broadband access. Wholesale Broadband Access Market Review (WBA) 6: Wholesale terminating segments of leased lines, Business Connectivity Market Review (BCMR) irrespective of the technology used to provide leased or dedicated capacity 7: Voice call termination on individual mobile networks Mobile Calls Termination Market Review (MCT) (wholesale). The EC is currently reviewing its Recommendation in light of market and technological developments since 2007 revised list expected to be in place in

6 BEREC also plays an important role in the market review process Role of BEREC Body of European Regulators of Electronic Communications Established by an EU Regulation of 2009 Includes all 28 regulators from across the EU Replaced the European Regulators Group National Regulatory Authorities (NRAs), like Ofcom, have to take utmost account of BEREC s advice, in particular Common Positions, when carrying out our market reviews BEREC also plays a key role in the Art 7 / 7a Phase 2 process, issuing an opinion on the Commission s views Commission must take utmost account of BEREC s opinions As must NRAs 5

7 There are a number of current relevant initiatives at European level that could affect our work Highlighted relevant developments in Europe Initiative Digital Agenda for Europe Connected Continent Draft recommendation on nondiscrimination and costing methodologies Review of list of markets Proposal for Regulation reducing the cost of deploying high-speed networks Notes Aims to maximise superfast broadband roll-out and take-up Calls for flexibility on NGA pricing Aims for a single European telecoms market Builds on 2010 NGA recommendation Pushes equivalence of inputs Calls for bottom-up LRIC+ price-setting Possible streamlining of list of markets still being considered by the Commission Aims to open access to existing physical infrastructure, ensure new-builds are broadband ready and improve coordination of civil works 6

8 We have seen a step change in the number of our decisions being appealed over the last few years Brief history of market reviews Market Fixed Access Market (FAM) Wholesale Broadband Access (WBA) Retail Narrowband no SMP finding Wholesale Narrowband Lines Calls Leased Lines (Business Connectivity) Mobile (termination) BT Undertakings introduced completed and appealed completed Underway 7

9 Increasingly the focus of our market review work is on forms of access to bottlenecks and pricing Focus of market reviews Through a process of having being through several rounds of reviews we have been able to streamline a number of areas: our work now tends to focus on refining our approach to the regulation of enduring bottlenecks and setting charges Areas of contention: Pricing: the absolute level (and the relationships between different products/forms of access) of the price and the methodology and basis for assessing the cost of provision Form of access: determining the type of access remedy to achieve an efficient basis for effective competition Quality of service: ensuring that issues related to quality of service do not undermine effective competition and consumer outcomes Appeal and review cycle: the three year review cycle and high risk of appeal means that we need to develop robust decisions in a short time frame Forceful engagement by stakeholders during the process and the high likelihood of appeal is resulting in us needing to spend ever-increasing man hours on market reviews 8