Response to the European commission communication on the review of the regulatory framework / Synthesis document / February 2000
(This text is a translation. Please refer to the French version for the official ART response)
The ART praises Commission's work, which high value stems from the large amount of information gathered, making it possible to have an overall view of the market, of the regulation and of the effective degree of competition reached in each member State, as well as from the high quality of its proposals, result of a thorough reflection on the factors driving telecommunications market liberalisation.
The ART fully supports Commission's policy aiming at strengthening the harmonisation process within the European Union
1. Regulator's role
The French meaning of the term "regulation", contrary to the English, does not amalgamate the definition of the rules and their implementation. So, the regulator is responsible for enforcing legal texts adopted by the European Union and national public authorities (Government and Parliament). It draws from its experience of market mechanisms useful lessons, allowing it to make proposals or to advise the law-making authority. This is precisely what has decided the French Telecoms Act of 1996, that created the ART.
For this reason, the ART thinks that the Commission should better define what a regulator is. Using the traditional term of "National Regulatory Authority" (NRA), it omits the significant distinction of responsibilities between the institutions in charge of setting the law and those who enforce it; these latter should be empowered to act fully independently, i.e. using impartially their dispute settlement and competition powers.
2. Consumer's interest is the primary objective
For the ART, liberalisation and an increased competition are indispensable, but do not represent an end in themselves. They are only valuable if market development benefits essentially the citizen and the consumer.
The citizen must take advantage, whatever are his position and his geographical location, of the benefits that the new information society services are beginning to provide. The emergence of any form of "digital divide", possibly leading to social exclusion, must be avoided.
The consumer benefits already from the liberalisation, through the significant tariff cuts it brings. It is however necessary to pay a particular attention to the extension of these advantages to all basic services, and this confirms that the opening of the local loop to competition is a major stake. Consumer's rights also include an efficient protection of his interests and his privacy, to be adapted to new risks arising from the rapid development of information exchanges and electronic commerce.
The ART believes that the principle of Universal Service must remain a fundamental basis of the European communications law. Equal access of all to quality services at an affordable price, respectful of competition law, has an increasing importance with the emergence of the information society. Like the Commission, the ART is still in doubt about the possibility, for Governments, to include new services in the field of Universal Service, and, in particular, to extend it to the access to broadband networks, without prejudicing technological neutrality and financial fairness (§4.4).
The ART favourably welcomes initiatives aiming at improving the protection of consumers' interests. It nevertheless believes that Commission's proposals should comprise two additional points: the taking into account of Internet related problems, notably concerning the protection of privacy (§ 4.5.1), and the requirement of tariff transparency allowing the effective choice for consumers between several operators (§ 4.5.4).
The opening of the local loop to competition, finally, should be a priority of the reform. This question is dealt with in paragraph 5 below.
3. European industry's competitiveness
The ART believes that the role of public authorities in fostering competitiveness of European operators and manufacturers is essential on a market that is already global. It is of the opinion that the Commission should pay more attention to these stakes.
It seems desirable to include the promotion and defence of European economic interests in the policy objectives (§ 3.1)
4. To anticipate market's evolution
Market regulation includes necessarily a capacity to anticipate. Forward looking allows to forecast technical, economic, legal or social trends that will influence the state of competition in the years ahead.
This capacity to anticipate is particularly crucial when elaborating a reform which will enter into force in 2003 only, in a context that will have undoubtedly profoundly changed.
5. The architecture of the legal framework
Regulation of the telecommunications market is above all based on a set of legal rules, clearly fixing the rights and obligations of the different actors, and enabling the regulator to play his role of "competition watchdog". The general framework for the future rules and the decision-making procedures deserve therefore a thorough examination.
The ART approves Commission's general approach, aiming at setting up the fundamental principles of regulation, without excessive details, in the directives, at devolving increased competencies to the national regulators, and at creating new procedures, more flexible and nearer to the market, for the adoption of guidelines for national decisions (§ 3.1 and 3.2).
The ART is nevertheless wishing to see relatively precise provisions concerning the rights and obligations of market players enshrined in the directives, in order to ensure the strongest legal certainty.
In this respect, Commission's initial position concerning the drawing of the borderline between what the directives should contain and what can without disadvantage be devolved to so-called "soft law" measures lacks clarity (§ 3.3).
When analysing its proposals, it seems that this "soft law" would cover a very large field, including essential provisions, and that it could take the form of compulsory measures. If that were the case, the ART would consider that this approach would not reach the legal security objective, nor the objective of a "near-the-market"and subsidiarity respectful regulation.
Concerning the adoption of implementation or "soft law" measures, the ART does not share Commission's point of view on the most adequate institutional scheme.
Obviously, compulsory measures must be adopted following the usual committee procedure. But it would be more sensible to entrust to the regulators themselves, acting in a co-operative way within the Independent Regulators Group, the drafting and the enforcement of non-compulsory guideline measures. The acknowledgement of such a role for the IRG, besides that of the COCOM, would make redundant the creation of the "High Level Group of Communications", in the form defined by the Commission (§4.8).
6. The confirmation of sector-specific competition rules
The present regulatory framework has allowed full liberalisation of the telecommunications markets, which should be carried on. Strongly inspired by the principles of general competition law, the sector-specific telecommunications law has proven its necessity and its efficiency by establishing rules adapted to the particular conditions of the market, notably concerning the licensing and interconnection regimes and the management of scarce resources.
Any idea aiming at a substantial change of these rules must therefore be taken with prudence, to avoid breaking a momentum that begins to produce tangible results. It is in this spirit that the ART has examined Commission's proposals.
The ART is of course fully supporting the objective of applying, in the longer term, the general competition law to the telecommunications market. But, given the persistency of dominant, or even quasi-monopolistic positions of incumbent operators on certain segments of the market, notably the local loop, the ART is of the opinion that it would be unrealistic to pretend to reach this objective in a very near future. Sector-specific rules remain indispensable, and are the more adequate mean of deepening the liberalisation process and reaching a real balance on the market.
The ART disagrees with the proposal to introduce two distinct thresholds to determine the operators' obligations, whether they have a "dominant" or a "significant market power" position. This reform would lead to useless complications, and introduce confusion between concepts belonging to the general competition law and the present sector-specific rules (§ 4.7.2).
Concerning the licensing regime, given the already very liberal scheme applied in France, the ART is ready to study the proposal of an increased recourse to general authorisations, provided that sufficient guarantees be maintained within the new framework (§ 4.1).
Concerning access and interconnection, the ART favours the continuation of an asymmetrical regulation, imposing specific duties to SMP operators, notably in the field of interconnection, where a reference offer should be submitted to prior approval of the regulator. The Commission is asked to maintain in the directives an obligation for these operators, not only to negotiate, but also to offer interconnection (§ 4.2).
The ART supports Commission's intentions to open the local loop to competition, beginning with the crucial question of unbundling (§ 4.2.3). In addition to the recommendation currently being prepared, rules should be introduced on this matter in the directives themselves, in order to place the scheme on a solid legal basis and to strengthen the regulators' action.
Concerning the management of scarce resources, the ART is not of the opinion that the present national numbering plans form a barrier to market entry or to the deployment of pan-European services. On the other hand, competent international bodies, paying due respect to transparency and non-discrimination principles (§ 4.6) should deal with problems raised by naming and addressing in the context of Internet.
For the radio frequencies, which represent an important stake, any change in the Community law should take due account of the subsidiarity demands, and avoid affecting the enforcement competencies of public authorities, notably through the setting up of a secondary market, which the ART considers as inopportune (§ 4.3).
In both cases, the ART believes that a greater European cohesion during international negotiations is a good objective, provided that the efficiency of existing pan-European co-ordination procedures (C.E.P.T.) is not hampered.
7. Importance of standardisation
Technical aspects play a great role in market evolution and dynamism. It is the role of public authorities to take this fact into account and to anticipate changes, as was underlined in paragraph 3. Standardisation (§ 4.2.6) is a domain where they have long exerted a major responsibility. This latter has been partially transferred to market players, more able to forecast the real trends of innovation, but States and the European Union still have a great influence in determining standards that shape the market, as illustrated by the UMTS example.
Like the Commission, the ART thinks it is indispensable to apply the technological neutrality principle to regulation. Nevertheless, this attitude is not an obstacle to a more proactive policy, when the implementation of European standards, designed by manufacturers and operators, seems likely to sustain market development, to increase players' visibility and to benefit the consumer through a better interoperability.
The ART believes, on the other hand, that private bodies, in the accomplishment of the competencies they received in the field of standardisation, should comply to the same requirements of transparency that apply to public authorities; the Commission is invited to add relevant provisions in its proposals.
