ERG Delivers Opinions on Regulatory Principles of NGA and on Functional Separation
Today, Roberto Viola, Chairman of the European Regulators Group (ERG) handed over the ERG Opinion on Regulatory Principles of NGA to the EU Commission. The document was requested by EU Commissioner Viviane Reding in order to enable the European Commission to draw upon the Opinion for the upcoming proposals on the Review of the ECNS Regulatory Framework.
The ERG hopes that these two documents will prove useful for the Commission when drafting its legislative proposals.
NGNs and NGA
The introduction of NGNs, leading to a multi-service network for audio (including voice), video (including TV) and data, as well as new plans and investment in next generation access (NGA) sets the communications sector on the verge of a new era.
Creating competitive markets for electronic communications services within and across EU member states as well as providing incentives for efficient infrastructure investment, promoting innovation and thereby maximizing benefits for consumers constitute the main objectives of the Framework. Furthermore the balance between service and infrastructure competition (ladder of investment) taking into account the existence of other infrastructure (e.g. cable) needs to be considered in light of the dynamics caused by NGA roll-out.
As new plans and investments in NGA networks are gaining momentum in several member states, the ERG considers that this is the correct moment to prospectively analyze the developments in this area. As long as competitive conditions have not changed, the roll-out of NGAs does not provide an opportunity to roll back regulation on existing services. Also, given the pace of recent developments differing across and within member states, regulators need to define common regulatory principles rapidly and set clear and detailed guidance in order to affect the competitive nature of the (access) markets in a positive way.
In its Opinion on Regulatory Principles of NGA, the ERG has analyzed the impact of NGA deployment on the scope of regulation and the way in which regulatory principles may need to be adapted. The overall conclusion of the document is that the regulatory approach based on the existing ECNS Regulatory Framework can be considered fundamentally sound. Subject to adjustments the principles remain suitable and allow NRAs to deal with the regulatory challenges posed by the roll-out of NGA.
Functional Separation
In addition, an ERG Opinion on Functional Separation has been delivered to the EU Commission as well. The Opinion follows and elaborates upon the proposals on Functional Separation submitted by the ERG to the Commission, as part of the consultation on the review of the Regulatory Framework launched in June 2006.
The Opinion goes further by providing a definition of Functional Separation and a detailed description of its components; it argues that these components should be considered in a dynamic fashion. In the Opinion the ERG states that the introduction of Functional Separation as an evidence-based remedy will improve the effectiveness of the existing framework.
The document provides an explanation of the supporting reasons to introduce functional separation in the European regulatory framework: functional separation seeks to ensure full equivalence of access to key wholesale products, acting as a complementary remedy to traditional wholesale non-discrimination remedies.
The Opinion states that functional separation arrangements have to be flexible enough and periodically reviewed in light of technology and marked developments. It is clarified that functional separation does not imply any legal break-up of vertically integrated operators and that it should not be confused with a “structural separation” option.
In line with the principle of proportionality, functional separation can be introduced by national regulators only after a thorough cost-benefit analysis. National regulators will need to base their decision on completed market reviews covering the full range of the wholesale markets; as in some cases, the strengthening of the non-discrimination obligation might be sufficient to address the competitive issues.
Finally, the degree and the design of separation proposed in national markets should be carefully tailored to national circumstances: functional separation will not be a “one size fits all” solution, says the ERG.
ERG’s Opinion reports also on the UK’s positive experience so far – highlighting the benefits for competitors and consumers, as well as on incentives to invest – and recalls the ongoing discussion taking place in the EU member states Sweden and Italy.
Source: ERG
