The Monopolies Commission opposes the tightening of mobile telecoms regulation in the European Union. The further reduction in cross-border tariffs for mobile calls and charges for international roaming, the extension of regulation to cross-border data services, and the rather drastic reduction in charges for wholesale and retail services may appear positive from the consumers’ perspective in the short term, but may exceed the capacity of smaller mobile network operators in particular. Harmonisation of the methods used to calculate termination charges is not necessary.
The Monopolies Commission welcomes the fact that gaps in broadband coverage are to be closed swiftly. When allocating spectrum from the digital dividend, competition should be safeguarded by ensuring that usage rights are subject to roaming obligations where appropriate. Should serious competition problems arise following the allocation of mobile network frequencies, this may lead to market regulation under European and German telecommunications law. With regard to coverage obligations, the Monopolies Commission advocates structuring these in such a way that underserved areas can be developed on the basis of economic considerations, rather than prescribing coverage based on population figures. In doing so, inefficient duplication of infrastructure must be avoided.
Like the Federal Government, the Monopolies Commission recognises the need to support the expansion and development of high-performance broadband networks. The question of efficient forms of funding remains a matter of debate. Of particular importance for companies’ investment behaviour is the predictability and stability of the regulatory framework, as well as competition from rival infrastructure, such as (TV) cable networks. Uncertainties regarding future regulatory conditions should be reduced by transposing the new European regulatory framework for telecommunications markets into national law as swiftly as possible. The competitiveness of cable network operators in the telecommunications markets could be strengthened if the vertical separation of network layers and the fragmentation of the retail market could be overcome.
The Monopolies Commission takes a rather critical view of growth- and innovation-oriented regulation, as its incentive effects are overestimated and the measures are often detrimental to competition. This applies both to cooperation on network expansion and to risk-sharing arrangements between network operators and those seeking network access. The extension of regulatory periods is, in principle, to be welcomed, as it contributes to greater planning certainty. However, the proposed period of five to ten years is problematic. Such long regulatory periods are not sensible given the lengthy commitment periods and the high level of market dynamism that exists at the same time. It is particularly important that the level of competition achieved to date is maintained during the transition to next-generation networks. To this end, it is necessary, amongst other things, to ensure efficient market entry even when main distribution frames are dismantled as part of network expansion.
The Monopolies Commission is fundamentally opposed to the state provision of broadband networks or their subsidisation on a large scale.
The new European regulatory framework for the telecommunications markets contains provisions to improve consumer and data protection, spectrum management and access to emergency services. The further strengthening of the independence of national regulatory authorities is to be wholeheartedly welcomed. The Monopolies Commission takes a critical view of the introduction of a co-regulatory procedure designed to ensure the uniformity of regulatory measures across the Community. This will make the consultation process at Community level more complex and bureaucratic, and prolong the duration of the procedure. Another point of concern is that the European Commission will in future be able to issue decisions on the harmonised application of directives. This will restrict the ability of national regulatory authorities to take flexible account of the specific characteristics of national telecommunications markets. The establishment of a Body of European Regulators marks a further step towards the centralisation of regulation in Europe. This comes at the expense of flexibility and prevents competition between regulatory systems. Furthermore, there is a risk that the level of regulation will increase rather than decrease.
In the retail markets for fixed-line telephony, the intensity of competition has continued to increase over the past two years. This applies to call markets and, in particular, to the market for local loops. Whilst call markets have already been deregulated, the complete deregulation of the market for local loops is not yet possible. However, it is possible to reduce the intensity of regulation. The risk that the incumbent operator might attempt to defend its market position through abusive practices such as unjustified bundling, price-cost spreads or price dumping can be adequately addressed through ex post regulation.
Regulation of the majority of wholesale services remains essential, as competitors’ offerings in the retail markets depend to a large extent on the infrastructure of the dominant provider.
