Oftel News 55: new EU regulatory framework: impact of the new EC directives

New EU regulatory framework: Impact of the new EU Directives

Following over a year of negotiations, the European Parliament and Council have adopted four EU Directives and a Decision which form a major part of a new regulatory framework for electronic communications networks and services.

The Directives (see below) will enter into force shortly. From entry into force, Member States and National Regulatory Authorities (NRAs) have 15 months to bring all processes and procedures in line with the new Directives and to
transpose them into national law.

The new Directives establish a set of procedures to ensure the harmonised application of the regulatory framework throughout the Community. The new Directives simplify rules for market entry, with new authorisation rules across the EU that remove the requirement for individual licences. and provide NRAs with tools to cope with evolving future technology and market changes.

The legislation aims to reduce regulation as competition becomes effective in specific markets. The adoption of the new Directives is expected to stimulate more competition as it will create a clear and consistent regulatory framework across the EU for all telecoms operators.

In addition to the new Directives and the Radio Spectrum Decision, the Commission has also proposed a consolidated Commission Competition Directive.

Competition Directive

The aim of this Directive is to replace, by a single text, all existing liberalisation Directives in the telecommunications sector previously adopted by the Commission. A draft of the Directive has been submitted to public consultation and it is envisaged that the Directive will enter into force at the same time as the above Directives.

Decision on radio spectrum policy

The aim of this Decision is to establish a policy framework to coordinate regulatory approaches to radio spectrum across the EU, and a legal framework to ensure harmonised conditions for the availability and efficient use of radio spectrum.

This Decision is scheduled to enter into force at the same time as the four Directives.

Other work

The Commission is currently finalising a number of follow-up measures related to the new EU regulatory framework which are scheduled for adoption shortly.

A Commission Recommendation on Relevant Product and Service Markets
(under the Framework Directive) will set out the different markets that NRAs will be expected to review over the 15-month implementation period. Commission Guidelines on market analysis and the calculation of Significant Market Power (under the Framework Directive) will provide the tools for NRAs to carry out these reviews to a common standard.

The Framework Directive also provides for the establishment of the Communications Committee (COCOM), a Commission-chaired group attended by Member State representatives to address implementation issues, while a separate Commission Decision will establish the European Regulators' Group (ERG) which provides a formal forum for NRAs to meet and establish joint working - in addition to the existing Independent Regulators Group.

To complement the Decision on radio spectrum regulation, the coming months will also see the establishment of the Radio Spectrum Committee and the High Level Spectrum Policy Group.

What does this mean for the UK?

Like the rest of the EU, the UK market is most likely to benefit from a modern and simplified EU regulatory environment for electronic communications. A withdrawal from regulation where competition is effective, together with simplified market entry rules, will create a level playing field for all telecoms operators and consumers across the EU.

As announced in Oftel's 2002/2003 draft Management Plan, the new regulatory framework will have an impact on Oftel's workplan. During the transitional period (from entry into force until transposition of the Directives into national law) Oftel must:

work with the DTI to transpose the Directives;
carry out market reviews as set out in the Framework Directive and Recommendation on Relevant Product and Service Markets; and
adjust all its processes and procedures to be in line with the new Directives including the introduction of particular procedures to meet Oftel's obligation to contribute to the harmonised application of the new framework across Europe.

On the day after the Directives enter into national law:

all individual licences will be revoked and the new authorisation regime will apply;
all regulatory actions will be carried out under the new Directives;
Oftel will publish its determinations of SMP and specific obligations on SMP operators; and
Oftel will publish designations of Universal Service Operators, details of universal service obligations and specific interconnection and access obligations.

Oftel will ensure that all stakeholders are consulted on how the UK intends to transpose the new Directives and more specifically on the proposed new General Conditions to be included in the new authorisation regime.

For further information, please contact Heather Clayton (tel: 020 7634 8979 / e-mail: heather.clayton@oftel.gov.uk) or Rachel Coldeboeuf (tel: 020 7634 5306 / e-mail: rachel.coldeboeuf@oftel.gov.uk).

Further details may be obtained on the European Commission's website: http://europa.eu.int/information_society/topics/telecoms/regulatory/new_rf/index_en.htm

Framework Directive (FD)

Sets the overall framework for regulatory decisions, including objectives and principles which NRAs including Oftel must take into account when making regulatory decisions.

Sets out the principle used in Oftel's work that NRAs must carry out market reviews to establish the level of competition in a market before any regulation is imposed. Regulation can only be imposed if a market is found not to be effectively competitive. NRAs will work from a new definition of Significant Market Power, which is equivalent to the competition law concept of dominance.

Requires NRAs to consult with the Commission and other NRAs before taking decisions and implementing procedures, to ensure the objective of harmonisation across Europe is met.

Authorisation Directive (AD)

Abolishes existing licensing regimes and replacing them with "general conditions" - obligations set out in the AD. Providers of electronic communications networks and services will no longer be required to obtain explicit approval before they can offer services. In the UK, the DTI will begin work on implementing the new regime once the Directives have entered into force.

Access and Interconnection Directive (AID)

Deals with wholesale relationships between providers of networks and services and associated facilities and places general obligations on operators to negotiate interconnection. It sets out NRAs' responsibilities (and the limits of their discretion) to ensure operators' obligations related to access or interconnection are met. For the most part, such obligations can be imposed only on those found to have SMP in the relevant wholesale market.

Universal Service Directive (USD)

Establishes the procedure for designating providers of universal service.

Specifies a minimum set of services that operators must provide. Gives details of specific obligations that may be imposed on providers with SMP in retail markets (as the AID does for wholesale markets). The USD also sets standards for consumers' contracts with telecoms providers, number portability and procedures for providing consumers with an out-of-court dispute resolution process.

Data Protection Directive (DPD)

The DPD will set out how telecoms users' personal data can be used and ensure consumers' right to privacy, was negotiated as part of the same process which led to the adoption of the other Directives. However discussion on the DPD is still ongoing and the DPD is expected to be adopted by June 2002.