Regulatory Structure In Convergence

Regulatory structure in convergence Marianne Treschow, Director-general, PTS Lima, 2 October 2008

Regulatory structure in convergence (1) Electronic communications industry is at the forefront of Europe’s economy. Responsible for for significant technological advances; a key driver of growth, jobs and competitiveness; underpinning the development of many other sectors increasingly dependant on electronic communications services – education, health care, public services and communication Liberalization of this sector was a success story in Europe and in the Americas. Ongoing technological developments point to the merger of the Telecommunication, Information, Media and Entertainment (TIME) industry which is widely predicted to drive further economic gains with respect to growth dynamics and macroeconomic weight

Regulatory structure in convergence (2) Convergence is a reality in Europe but at different speeds in member states. By and large the EU electronic communications framework is “convergence – proof”. Why? Market access is open – authorizations (not applications) Market analysis is competition law-based Regulation is only put in place if there is a problem identified as a result of market analysis – remedies are adjusted Review of regulation is regular YET: broadcasting regulation needs revisiting – content regulation in or out?

1. Regulators converge In today’s world, regulation and regulatory intervention is subject to regular change. Overlapping nature of the functions of different regulators may lead to over-regulation Meaningful regulatory structure required Sectoral regulators with specific mandates and focused attention

2. Similar sectors converge under the same umbrella Telecom, Internet, cable, broadcasting, spectrum, postal regulation (i.e. convergence of ICT sector/TIME) Any form of content can be made available via transmissions. With convergence, services can be delivered over a number of different networks. Networks and services are increasingly independent of each-other. Examples: Web TV, Webcasting VoIP E-mail & web via mobile phones Data services over digital broadcasting platforms

3. Evolution in convergence Past Today Broadcasting, Radiocommunication, telephone services, IT, Internet, spectrum Integrated services Different platforms Integrated platforms Different laws Converging laws Regionalism Globalization

4. Challenges How to balance policy, regulations, legislations & institutions Services, markets & technologies Opportunities[1] & drawbacks[2] arising from convergence How to reach the overall goal of ex-ante regulation Increase competition Increase consumer benefits Create new backbone industry for the 21st century [1] New markets, job creation, social values [2] Increasing uncertainty in markets, borderless nature – more comlicated to control, cyber-crimes

5. Regulatory implications in Europe Converged regulatory bodies in some member states Different traditions and legacies regarding access to networks and contents; licensing and consumer treatment Central regulation v. national regulation Subsidiarity principle of EU membership Relationship with other regulatory bodies – especially with competition regulation

6. Regulatory principles with increasing importance Regulation should be limited to only where necessary Consumer focused regulation is the future Clear, effective and transparent regulatory decisions are required Independence of regulators should be indubitable

7. Ongoing review of telecommunication regulation in Europe – How does Europe try to respond regulatory challenges emerging from convergence? (1) The review of the European Telecommunications Framework is ongoing The European Parliament – a decisive player in the legislative process of the EU - just voted on the European Commission’s proposals last week Among the proposals, they identify a solemn move towards converged regulation (and away from EU wide regulatory fragmentation) as we see that spectrum is given a peculiar regulatory guidance – with oversight of the Parliament; a new bottom-up type umbrella institution (BERT) is proposed in the Framework Directive to assist the work of the national authorities taking utmost benefit of the NRAs expertise. The main purpose of this proposal is to serve as an institutional vehicle for regulatory cooperation amongst independent NRAs and the Commission;

7. Ongoing review of telecommunication regulation in Europe – How does Europe try to respond regulatory challenges emerging from convergence? (2) Parallel to the review the Independent Regulators Group (IRG) – with 33 members in Europe – has started to develop its profile . We think that a greater observation of the subsidiarity principle is needed, whilst harmonization is the overall objective. However, Europe’s shared interest comes into sight from the diversities amongst the EU’s member states, therefore no permanent centralization of regulatory powers in Brussels is wanted. EU tools for this : Harmonization across member states – overall objective is the single market Technological neutrality is embedded in the Framework directive Regulators make decisions on economic analysis rather than statutory definitions New – fluid – market definitions have also been suggested as part of the general review of the 2002 framework.

8. Regulatory goals in a converging environment – checklist for all (1) Stable and sound regulatory environment – to encourag e investment s Be it through remedies or deregulation Transparency and sustainable regulatory decisions for the converged markets Forward-looking decisions Evidence-based and sound judgments Intelligent regulation Preliminary impact assessment Utmost goal: consumer benefits Technology and service neutral regulation Industry associations, fiscal policy, competition authorities, and consumer associations are to work together

8. Regulatory goals in a converging environment – checklist for all (2) Technological evolution should be driven by industry, not regulators Industry is best placed to respond to consumer needs Regulation is only a derivative – only when market cannot protect consumers and user interests or there is a market failure, market cannot accomplish certain social objectives, e.g. universal service, public safety We need to review our legislation in order to be ready to address evolving competitive concerns Convergence may lead innovation and regulation can help Broadband: NGA recommendation Spectrum: GSM license, UMTS licenses Broadcasting: digital switchover plan for Europe

Conclusions There might be a need to adjust regulatory principles and review legislation in a converged environment Ultimate goal: address market imperfections and maintain focus on consumers with u pdated and flexible regulation Closely monitor regulatory challanges: shifting of market power of dominant firms, the consequences from bundling and leveraging practices, the vertical integration of contents, spectrum management, universal services or IP-networks Certainty and predictability will best serve the needs of markets, service-providers and consumers

Regulatory Structure In Convergence

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