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1.3.1 What is regulation?

Regulation is the process by which governments seek to influence markets in order to achieve social and economic objectives. Within the communications sector, regulatory intervention can be direct (for example, controlling prices) or indirect (establishing conditions under which the market can operate).

Economic regulation in the communications sector can be split into two broad categories, which are closely related. The first, ‘ex ante’ sectoral regulation, is mainly concerned with promoting effective competition and addressing market failures.

The second type of intervention is through the application of general competition law which primarily works ‘ex post’, and addresses specific instances of anti-competitive behaviour and abuses of market power.

This section is primarily concerned with examining the key issues relating to ex ante economic regulation. This is for several reasons:

• firstly, in this area the relationships between regulatory interventions and consumer benefits are more contentious;
• secondly, there are significant differences, both between sectors and between countries, in the ways in which regulation is applied;
• thirdly, the impact of technological advancement and in particular the convergence of communications markets, is having a major impact on assessments of where and when regulatory intervention is necessary; and
• finally, issues requiring ex-post regulation tend to be universal (for example, the protection of customers from scams and unfair practices) meaning that international comparisons are less revealing.

This section provides an overview of the regulatory authorities in the comparator countries included in this report. It then discusses the impact that convergence of communications services is having on the regulatory landscape, before highlighting the key regulatory issues and the different approaches taken by national and international regulators across our comparator countries.

1.3.2 Regulatory authorities in the communications sector

National regulatory authorities (NRAs) generally have much of the responsibility for defining regulatory policy and monitoring the communications sector within individual countries. In Europe and North America, as well as in many other regions of the world, NRAs have typically been founded by government statute, are independent of industry, are accountable to the government of the day (and some are fully independent of government), and many are funded by a levy on operators and broadcasters. Figure 1.9 lists the communications sector NRAs for the countries included in this report.

Figure 1.9 Communications sector National Regulatory Authorities

1 Ofcom inherited the duties that had previously been the responsibility of five regulatory bodies: the Broadcasting Standards Commission, the Independent Television Commission, the Office of Telecommunications (Oftel), the Radio Authority and the Radiocommunications Agency
2 ARCEP’s predecessor was ART, which was established in 1997
3 BNetzA’s predecessor was RegTP, which was established in 1998. Broadcasting is regulated at the state (Länder) level in Germany.
4 Aspects of regulation including some spectrum allocation and the licensing of cable services is devolved to state level
5 The BCI was established as the Independent Radio and Television Commission and changed its titled to the BCI in 2001
6 Broadcasting in Spain is currently regulated by the Ministry of Industry, Tourism and Commerce
7 The UKE replaced the Office of Telecommunications and Post Regulation, which was established in 2002

In some countries there are also tiers of regulation below the national level. For example, in Spain, the Consell de l’Audiovisual de Catalunya has responsibility for much content regulation in Catalonia, while in the US the licensing of cable services is devolved to local authorities. In Germany, the individual Länder (federal states) have jurisdiction over radio and television broadcasting. As a result there is no centralized regulatory authority for broadcasting. Instead, there are 14 State Media Authorities, the so-called Landesmedienanstalten, which deal with regulatory issues at state level.

In addition to national and regional regulators, a number of international institutions are active in the regulatory landscape. It is likely that their influence will continue to increase in the coming years as globalisation of the communication sectors continues and international standardisation increases in areas such as software protocols, spectrum use, international mobile roaming, intellectual property and content standards.

International organisations exercising particular influence on the regulatory landscape across the comparator nations covered in this report include the following:

• The European Commission has some regulatory authority across the 27 European Union member states. In August 2007, the implementation of price capping for international mobile roaming was probably its most significant intervention to date in the European telecoms market, while it is also active in defining minimum harmonised content standards in the broadcasting sector. A revised telecommunications European Framework was published in November 2007, setting out revised regulatory principles and redefining the Commission’s remit in the regulation of communications services vis-à-vis those of the national regulatory authorities. EU telecommunications regulation extends to Norway, Iceland and Liechtenstein under agreement with the European Economic Area’s EFTA Surveillance Authority.
• The International Telecommunication Union (ITU), a specialised agency of the United Nations, is active in ensuring standardisation of technologies across countries, allocating radio spectrum and facilitating interconnection arrangements for international phone calls.
• The World Trade Organisation (WTO) implemented a Telecommunications Service Agreement in 1997 which dismantled tariffs on telecoms services, thereby opening up markets to international investment, but also included the principle of universal service obligations, to protect consumers within national markets.
• The Organisation for Economic Co-operation and Development (OECD) gathers data about the communications sector and provides a setting where governments compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies. It has 30 members but also shares expertise and exchanges views with more than 100 other countries.

1.3.3 Regulators and convergence

The convergence of communications services is at the heart of many of the key issues facing regulators around the world. Spectrum management, infrastructure competition and content regulation all require a joined-up approach by regulators across the communications sector. Television, radio and telecommunications services can be delivered via the same IP networks and use the same radio spectrum. From a consumer perspective, the emergence of triple-play and quadruple-play services means that customers frequently have one billing relationship with a supplier of broadcasting and telecommunications services.

The convergence of communications markets has been accompanied by a convergence of regulatory approaches, and sometimes of regulators themselves. In the past, the regulation of telecoms and broadcasting tended to be distinct, with broadcasting regulation concentrating on content standards and telecoms regulation on access issues. In today’s communications landscape, content and access are inseparable and regulation increasingly reflects this. As Figure 1.9 indicates, ‘converged’ regulators covering both broadcasting and telecoms exist in many of our comparator countries. In cases where there are still separate regulators for broadcast and telecommunications (e.g. France, Ireland, Poland, Sweden and the Netherlands) an increased cooperation between the authorities is taking place.

Many of today’s regulatory debates have roots in the individual contexts of telecoms and broadcasting regulation. At risk of over-simplifying, it can be argued, for example, that a market-based view in which the role of the regulator is confined to ensuring public good through the efficient workings of a competitive market has been typically associated with the access-based telecoms regulatory model, while a more interventionist public service-oriented approach is characteristic of the broadcasting model, in which regulators were required to define content standards for broadcasting. Today, these different approaches continue to frame many of the regulatory debates around issues such as net neutrality and the digital dividend.

We now turn to some of the key regulatory issues around the world.

1.3.4 Spectrum management and the ‘digital dividend’

Management of the allocation of electromagnetic spectrum is one of the key roles of regulators around the world, and decisions on use of this scarce resource have major ramifications on the development of the communications industry. In the UK, uses of spectrum like mobile communications and broadcasting account for about 3% of the economy – more than the electricity and water industries combined.

The challenges currently presented are greater than ever before for three key reasons:

• Competition for spectrum is more fierce: Mobile phone operators (seeking spectrum for cellular services such as 3G and HSDPA and mobile TV as a broadcast service), internet service providers (seeking to launch wireless broadband services using technologies such as WiMax), broadcasters (in particular seeking to launch bandwidth-hungry high-definition TV channels) and others are all competing to acquire spectrum.
• ‘Digital switchover’, whereby analogue terrestrial television is replaced by digital terrestrial television, will make valuable spectrum available in the ultra high frequency band, which is much sought-after because of its data capacity and range. The availability of this spectrum is often known as the ‘digital dividend’ and is created because digital TV is around six times more efficient than analogue and therefore requires much less bandwidth per channel.
• There is increasing interest at EU level in creating a more harmonised approach to spectrum allocation to ensure compatibility of services, and to increase economies of scale and regional competitiveness.

Regulators are dealing with intense lobbying from various interest groups over the allocation of spectrum. For example, in October 2007 a report commissioned by Deutsche Telekom estimated that freeing up the majority of the digital dividend for use by mobile services would provide a significant boost to EU GDP, compared to the alternative scenario of making the spectrum available for TV broadcasting. Meanwhile, the European Broadcasting Union (EBU), together with a group of commercial broadcasters, has commissioned its own study to estimate the social and economic impact of making the spectrum available for digital television.

Attitudes to spectrum use and allocation vary between countries. In Japan, spectrum is being re-allocated for specific services (e.g. mobile communications) and incumbent licence holders are being compensated, whereas in the US spectrum has long been assigned by auction and is frequently traded.

Geographic and cultural differences have a major impact on decisions on the allocation of spectrum. In countries where several languages are spoken, such as Belgium, the digital dividend is reduced by the need to have TV networks in several languages, while countries with many borders, such as Germany or the Netherlands, face greater spectrum planning challenges than geographically more isolated countries like Australia.

In Europe, there has been a gradual movement from a policy-based to a market-based, service-neutral approach to spectrum management as a means to deliver innovation and promote the public interest. This is strongly supported by the European Commission’s current proposals in its Framework Review. However, there remain major differences in approach between countries. The Swedish government has already reallocated analogue television spectrum to digital terrestrial television (DTT) and has completed a bidding round for the new DTT channels. Italy has been criticised by the European Commission for its plans to re-allocate spectrum to its existing public-service broadcasters. In the UK, Ofcom’s approach is to promote a market-led rather than a regulator-led approach, favouring releasing the spectrum in a way that imposes as few constraints as possible on how it can be used and which encourages secondary trading.

In Canada, spectrum has historically been assigned both through a competitive licensing process and, more recently, through spectrum auctions. In February 2007 a public consultation on a framework to auction spectrum in early 2008 was announced, including spectrum for advanced wireless services. It is a condition that licences cannot be transferred without the consent of the relevant government minister, although secondary market trading in spectrum licences is encouraged in appropriate circumstances.

In the US, the market-led approach has extended to ‘open access’ provisions being included within certain blocks of the 700Mhz digital dividend, which is scheduled to be auctioned in January 2008. The winning licensees will be required to allow customers, manufacturers, developers and others to use devices and applications of their choice. Google has been a leading proponent of open-access provisions, in the interests of widening competition in wireless broadband access and so increasing demand for its own services.

1.3.5 Next-generation access networks

With operators worldwide rolling out next-generation core networks (NGNs), to replace multiple legacy core networks with a single IP-based network for the provision of all services, regulatory debate is now focusing on next-generation access (NGA). NGA networks are broadband access networks that provide a bandwidth quantity and quality significantly in excess of that available through the copper-wire networks traditionally used to connect telephone exchanges to customer premises. Most frequently, NGA deployment involves the replacement of part of the copper wire with fibre, although NGA can also be provided using digital cable or potentially using wireless technologies.

As discussed in Section 5.1.3, many different factors determine the level of development of NGA across the world. However, the regulatory debate is generally framed by balancing the consumer imperative of competition within the access network against the industry imperative of an appropriate expectation of return on investment. Put simply, investment costs and risks for NGA are generally very high and operators often argue that they need monopoly returns in order to justify this investment.

In the US, the FCC has facilitated investment in NGA by adopting a policy of ‘forbearance’ from ex ante regulation with respect to fibre access networks. This means that once incumbent operators have upgraded their access network to NGA, they are no longer obliged to offer access to it to other operators. The view of the FCC is that mandating competition at the access level is unnecessary because of the market structure in the US, in which incumbent telecoms companies already compete with cable operators for end-to-end infrastructure provision.

In Japan, NTT has been incentivised to invest in rolling out fibre access networks by an asymmetry of regulation whereby it is obliged to offer wholesale access to its copper access networks at very low wholesale rates, but is able to set its own wholesale rates for its fibre access networks.

The European Commission has emphasised the importance of competition as a way of driving both innovation and consumer protection, and the debate in Europe has centred on the issue of ‘regulatory holidays’. In Germany, following a request from Deutsche Telekom for exemption from regulation for a period of time as a prerequisite for its investment in a VDSL access network, an amendment to the German Telecommunications Act in 2006 empowered the regulator to forbear from regulating high-speed access networks. In June 2007, the European Commission announced that it was taking Germany to the European Court of Justice as a consequence of this, which it viewed as being in contravention of European law (which does not provide for regulatory holidays for emerging services and markets).

Ensuring access to ducts for the installation of access networks is another tool available to many regulators. In France, a government action plan announced in November 2006 included proposals to ensure access to, and effective sharing of, ducts and in-building cabling between operators. The European Commission has stated that “access to ducts could be an important part of any remedy imposed to address problems associated with physical network access”.

In the UK, Ofcom launched a consultation on NGA in September 2007 stating that it believed a market-led approach to NGA would be most beneficial to UK consumers in the long term, and noting that it did not believe there was a case for withdrawing from regulation of NGA networks given that they are likely to be bottlenecks and that the presence of competition has greatly benefited today’s broadband consumers.

1.3.6 Functional separation

In most of Europe the connections between customers’ premises and telephone exchanges are provided by the incumbent fixed-line telecoms operator. A key objective of the regulation of fixed-line networks is to enable fair competition by ensuring that alternative operators can get non-discriminatory access to the incumbent’s access network. Under the existing EU regulatory framework, this problem is addressed through a range of regulatory access remedies. In particular, the incumbent telecom operator is often required to supply wholesale services to rival communications providers and to itself on a non-discriminatory basis in order to facilitate fair competition in the provision of retail services to homes and businesses.

‘Functional separation’ complements these existing measures by placing the monopoly elements in a separate business unit. This allows any wholesale products and any associated services to be offered to both the incumbent's own retail businesses and to those of rivals, on equal terms.

Unlike structural separation, functional separation does not require the creation of a new company and so does not affect the private property rights of shareholders. Rather it allows the continued running of a vertically integrated telco to remain intact As functional separation does not require an operator to sell off its monopoly business, the telecoms model is a different remedy from the ‘ownership unbundling’ currently being discussed in the context of EU energy reform.

While regulators in other EU Member States are considering the merits of functional separation, the UK has had more than two years of experience in implementing the remedy. Ofcom accepted undertakings under national competition law in September 2005 from BT to place its access and backhaul businesses in a separate business unit called 'Openreach'. Ofcom's second annual evaluation report is due to be published in December 2007. New Zealand has since also introduced functional separation and it is under active consideration by several national regulators within the EU including those in Italy, Sweden and Poland.

On 13 November 2007, as part of its proposals to reform the existing EU regulatory framework, the European Commission included amendments to the Access and Interconnection Directive to allow national regulators to impose functional separation as a regulatory remedy. The European Regulators Group (ERG) issued an Opinion on functional separation (ERG (07) 44) in October 2007, supporting the inclusion of such a remedy in the revised EU Framework. However, neither the European Commission nor the ERG believe that functional separation should be imposed across the EU, but instead that it should only be done after a careful assessment of evidence on a case-by-case basis.

1.3.7 Net neutrality

Broadly, the issue of net neutrality concerns whether and where there should be a principle of non-discrimination regarding different forms of internet traffic carried across networks. The communications sector is entering a period where there is rapidly increasing traffic on the internet, such as video and peer-to-peer applications (for example, games and VoIP services). This rapid increase in traffic is generating substantial congestion in some parts of the internet. Moreover many of these applications are time-sensitive and are far less tolerant of delay than, say, email or web browsing. To respond to these new applications and their associated demands, service providers are developing a range of business models that facilitate the prioritisation of different types of traffic. This is enabled by improvements in network technology that are allowing greater identification of internet packets associated with different applications, which can then be prioritised, accordingly.

Proponents of net neutrality argue that it is fundamental to the protection of consumer choice and innovation on the internet, and advocates in the US have cited the First Amendment to the constitution, arguing that net neutrality is necessary to ensure freedom of speech. Some large internet application and content companies tend to be advocates of net neutrality, alongside some consumer rights groups.

Opponents to net neutrality argue that they should be able to offer different qualities of service, both in order to recover their infrastructure investment costs and to enable quality of service guarantees to improve the consumer experience for services such as VoIP or video streaming. In the United States, cable and incumbent telecom operators have also claimed that the First Amendment supports opposition to net neutrality, arguing that they cannot be compelled to promote speech with which they disagree.

A contrasting set of circumstances exists in the European Union, compared to the United States. Specifically, the net neutrality debate was triggered in the United States by the deregulation of wholesale access services including access to the internet. In the EU there are obligations to offer unbundled local loops and bitstream access and these continue to be seen as key tools in addressing competition problems.

As part of its proposals to amend the existing EU regulatory framework, the European Commission has proposed a range of measures to ensure that consumers have access to lawful content including proposals to ensure that consumers are made aware of changes to the terms of service offered by their communications provider and the ability to switch contracts with penalty. In addition, the Commission proposed to empower national regulators with the ability to imposed minimum quality of service obligations on communications providers subject to a set of standards agreed at European level.

Outside Europe and North America, the net neutrality debate has been slower to develop. In Japan, NTT prioritises its own service, Flet’s Square, which serves video on demand at speeds and levels of service higher than the generic internet service, while in South Korea VoIP is blocked on high-speed fibre networks except where the network operator is the service provider. In China, quality of service is less of an issue than the violations of the principle of net neutrality that occur currently in the filtering of certain types of websites.

Infrastructure competition: different contexts in Europe and the US

The regulatory debates over NGA, net neutrality and functional separation highlight a key difference between the regulatory landscapes in Europe and the US, in relation to what may be termed ‘infrastructure competition’.

The US regulator, the FCC, has not felt the need to emphasise ex ante regulation at the access level because of end-to-end infrastructure competition between the telecoms incumbents and a powerful cable industry. Around 90% of households have access to cable networks (rolled out from the 1950s to provide TV services), and cable operators have in recent years invested heavily in upgrading their networks to provide IP-based services, and compete with incumbent telecoms operators for the provision of broadband services. The view of the FCC is, broadly, that this level of inter-platform competition makes regulatory intervention at the access level unnecessary.

Across Europe, the situation is different. In the past, some regulators have looked to promote cable platforms in order to drive end-to-end infrastructure competition. However, with cable availability in most European countries far below that in the US, the focus in recent years has been on promoting competition within the access network (i.e. the network between telephone exchanges and customer’s premises). As a result, all incumbent European operators have been required to offer wholesale ‘bitstream’ services (with prices controlled by regulation) and to enable ‘local loop unbundling’ (LLU), whereby other operators are able to install their own equipment in incumbent-owned exchanges, enabling them to connect to customers’ premises using the incumbent’s local loop access network. The implementation of LLU is a requirement of European Union policy on competition in the telecommunications sector and has been introduced in all member states, although it is at various stages of development in different countries.

1.3.8 Content regulation

Content regulation concerns material available to users – traditionally through broadcasting, but now also through services accessed via the internet and via mobile cellular networks. Content regulation generally addresses issues of impartiality, harm and offence, privacy, and plurality. As with regulation of access networks there are fundamental differences between the models employed in the US and in Europe.

In Europe, there is a long-established dual model of public and commercial broadcasters. All member states recognise the role that public service broadcasters (PSBs) play in providing certain qualities and standards in programming, and in contributing to wider societal goals, representing the diversity of views within democratic societies. PSBs generally receive public funding (which is tested by the European Commission against state aid rules), are required to remain impartial, and are subject to tighter programming and production quotas than commercial broadcasters on the quantity of material commissioned from independent companies (i.e. not affiliated to a broadcaster) and on the level of European-originated programming.

By contrast, the main networks in the US do not receive significant public funding, have no PSB obligations, and their content output is largely determined by commercial interests. In 1987, the abolition of the Fairness Doctrine in the US released broadcasters from the obligation to report information without bias. This contrasts with the BBC’s obligation under its Charter that it “must do all it can to ensure that controversial subjects are treated with due accuracy and impartiality in all relevant output”, or French regulation which requires the PSB to declare any collaboration with external organisations and to meet production quotas which serve to protect the national language and culture.

Whereas in Europe PSBs are independent bodies and sit alongside commercial broadcasters, China’s broadcasting sector is 100% state owned and as a consequence the regulator (SARFT) controls all material submitted. Japan follows a similar model to Europe, with a PSB broadcaster (NHK) funded through a licence fee and multiple commercial broadcasters; restrictions are in place to ensure that commercial broadcasters are not taken over by foreign interests. The Broadcasting Act in Canada has Canadian content as its cornerstone, and the CRTC has established policies and regulations to ensure widespread access to Canadian content by addressing issues such as the level of Canadian-originated content and Canadian ownership and control of the broadcasting system.

The ability to deliver audio-visual content via an increasing number of networks and platforms is at the heart of the convergence process and, consequently, at the heart of regulatory debates around convergence. In Europe, recent debates have focused on the European Commission’s new Audiovisual Media Services (AVMS) Directive, which amends and modernises the current EU regulatory framework for cross-border television broadcasting. On 15 October 2007, after almost two years of negotiations, a common position was reached by the Council. The Directive is expected to be adopted in early December and member states will have two years for national implementation.

The new rules will apply to all ‘audio-visual media services’, defined as services which are under the editorial responsibility of a media service provider and whose principal purpose is the provision of television programmes via electronic communications networks. The Directive has thus extended its scope from traditional TV broadcasting to on-demand TV-like services (pulled services). Other forms of audio-visual material such as user-generated content or online games remain outside this scope. A minimum tier of basic rules will apply to all services, most prominently rules on protection of minors, human dignity and advertising standards. The new Directive also recognises the importance of self- and co-regulation, combined with media literacy, as effective ways of ensuring that viewers are protected in the new converged environment.

Hand-in-hand with these discussions, national regulators are also reviewing content regulation in the light of the changed industry landscape. Ofcom’s PSB review, which is taking place between September 2007 and early 2009, is looking beyond broadcasting to evaluate whether ‘other electronic communications services’ might become ‘substitutable for traditional linear services’ and, if so, how they could make a positive contribution to the delivery of public service content.

1.3.9 Mobile termination

A termination charge is levied by a telecoms operator for the service of terminating a call on its network. Without termination services, end-to-end telephone services between operators would not be possible.

Termination charges for fixed-line networks are not currently a major issue in most countries, as regulatory controls on charges have been enforced from an early stage. The movement from incumbent monopolies to a competitive environment generally involved controls on all interconnection charges including termination rates.

However, termination charges form a significant proportion of mobile operators’ revenues (for example, around 15% in the UK). Mobile operators argue that one of the reasons for the difference between termination rates charged by fixed operators and by mobile operators is the higher investment and operational costs in running a mobile network.

Most regulators now impose price controls setting maximum levels on the charges that mobile operators can impose. The UK first began regulating mobile termination charges in 1990, introduced further regulation in 1998, and European Union regulation was introduced in 2002. The level at which mobile termination rates is capped is a major issue for the industry and has a significant impact on the pricing of calls to mobiles for consumers.

In the European Union and in much of the rest of the world, termination rates are based on the principle of ‘Calling Party Pays’ (CPP). This means that the network on which a call originates is required to make a payment to the network on which the call terminates. In the US and Canada, the principle is of ‘Receiving Party Pays’ (RPP), meaning that the network on which the call terminates is responsible for all termination costs. A consequence is that in the US and Canada, mobile customers are typically charged for incoming calls in addition to their outgoing calls. In 2007 China moved from an RPP regime to a CPP regime.

Related to RPP, at the wholesale level there is some argument for the abolition of mobile termination rates and a migration to a ‘Bill and Keep’ (BAK) regime in which there are no wholesale charges between operators. While this approach would have similarities with the internet model, it would contrast with the established regime of regulated termination charges on traditional fixed-line networks. A widespread move to BAK seems unlikely in the near future.

A general tendency throughout Europe has been an overall reduction in mobile termination rates, and a reduction in asymmetry of termination rates between different mobile operators in the same country. The European Commission favours the reduction of mobile termination rates to a cost-based rate and the removal of asymmetry (unless appropriately justified by cost differences beyond an operator’s control) and has been supportive of moves made in 2007 by ARCEP in France to work towards these ends. While it welcomed the Italian regulator AGCOM’s notification in August 2007 that it is to impose price controls on the termination rates of 3G operator 3 Italy, the Commission commented that the rate of 16.26 eurocents per minute appears to be “at too high a level”. Currently, 13 of the EU-15 member states have some element of asymmetry in mobile termination rates and four of these have glide paths in place which should end asymmetry by 2009.

1.3.10 Mobile international roaming

Most of the regulatory issues discussed so far are generally related to national markets, and as such, national regulators have taken the lead in defining policy. However, there are aspects of international roaming which transcend national markets. Following a letter from the European Regulators Group in December 2005, pointing out that the existing European law was inadequate to deal with concerns expressed about high roaming charges, the Commission proposed a new Regulation. The final version adopted by the European Parliament and Council came into effect at the end of June 2007. Under this Regulation, all providers of roaming services must provide a roaming tariff under which customers can make and receive calls while roaming in the Eurozone for no more than 49 and 24 eurocents per minute respectively. Other tariffs may also be offered to meet particular customer needs. The average wholesale rate that one operator may charge another when a subscriber makes a call abroad was also capped (at 30 eurocents per minute).

The impact on consumers of the introduction of the ‘Euro tariff’ has been a significant decrease in roaming charges, which fell by up to 60% between June and September 2007. As far as operators are concerned, broader ramifications include a new awareness of the resolve of the European Parliament and Council to impose regulation. The ex ante regulation states that price regulation will be in place for three years, after which it will fall unless the Commission believes that market forces alone are still insufficient to keep prices down. SMS and data roaming charges remain unregulated, but the EU Telecoms Commissioner, Viviane Reding, has warned: “I hope that operators now understand the EU’s ability to act. My message to them: move now and bring SMS and data roaming charges down quickly, or we will be forced to also intervene there very shortly”.

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