5 European electronic communications
regulations and markets
| (28519)
8089/07
COM(07) 155
+ ADDs 1-2
| Commission Communication: European Electronic Communications Regulations and Markets 2006 and Annex (Commission Staff Working Paper Volumes I and II)
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| Legal base | — |
| Document originated | 29 March 2007
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| Deposited in Parliament | 3 April 2007
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| Department | Trade and Industry
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| Basis of consideration | Minister's letter of 8 June 2007
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| Previous Committee Report | HC 41-xxi (2006-07), para 11 (9 May 2007)
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| To be discussed in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
5.1 This Communication, which we considered on 9 May, is the twelfth
report on the overall market for electronic communications in
the EU, and the third on the new regulatory framework introduced
in 2003.
5.2 The 2003 legislative package consisted of six
Directives and a Decision:
— Framework
Directive: general principles,
objectives and procedures;
— Authorisation Directive: replaces
individual licences by general authorisations to provide communications
services;
— Access and Interconnection Directive:
sets out rules for a multi-carrier marketplace, ensuring access
to networks and services, interoperability, and so on;
— Universal Service Directive: guarantees
basic rights for consumers and minimum levels of availability
and affordability;
— e-Privacy or Data Protection Directive:
covers protection of privacy and personal data communicated over
public networks;
— Directive on Competition: consolidates
previous liberalisation directives; and
— Radio Spectrum Decision: sets
the principles and coordination procedures essential for the development
of a coherent EU radio spectrum policy.
5.3 The Framework also establishes a number of committees
and policy groups to manage and implement the new system:
- Communications Committee:
which advises on implementation issues;
- European Regulators Group:
to encourage cooperation and coordination between NRAs and the
Commission, in order to promote the development of the internal
market for electronic communications networks and services and
consistent application, in all Member States, of the provisions
set out in the Directives;
- Radio Spectrum Policy Group:
to enable Member States, the Commission and stakeholders to coordinate
the use of radio spectrum; and
- Radio Spectrum Committee:
to deal with technical issues around harmonisation of radio frequency
allocation across Europe.
The Commission Communication
5.4 In preparing the Report, Commission officials
visit each Member State to interview Government officials, regulators
(Ofcom in the UK), industry players (e.g. BT, C&W, Orange,
Vodafone) and consumer groups. A Commission Staff Working Paper
accompanies the Communication. Volume I (289 pages) reviews the
state of EU electronic communications services markets (fixed,
mobile and broadband) and looks at the regulatory environment,
consumer interests and spectrum management; it also includes a
detailed annex on national markets and regulatory performance
of each Member State. Volume II (167 pages) gives a comprehensive,
detailed overview of national and EU markets. It is fully outlined
in our previous Report.
5.5 As we noted in our previous Report, the documents
contain a lot of good news — e.g., investment in the sector
again 5% higher, the fourth year-on-year increase and the value
of the sector up nearly 25% in three years. There also continued
to be much to commend in the UK's performance and approach. But
even though the UK was one (at sixth) of 6 Member States who exceeded
it, we felt that a broadband take-up rate performance threshold
of 20% might be regarded as somewhat low, particularly when coupled
with the lower broadband speeds in Europe than in the US, Japan
and Korea.
5.6 In her accompanying Explanatory Memorandum, the
Minister of State for Industry and the Regions (Margaret Hodge)
noted the German approach to this latter concern — a regulatory
"holiday" to encourage Deutsche Telekom to build a higher-speed
broadband network — and the Commission's, and her own, unhappiness
with it (the Commission having started legal proceedings against
Germany which, she said, were likely to lead to a case at the
European Court). But she did not suggest what her own views are,
given that European performance is clearly lagging, and needs
to be improved if, for example, the Lisbon ICT targets —
with all their implications for jobs and growth — are to
be met.
5.7 Given that this Annual Report sets the scene,
in part, for the Commission's proposals for amending the legislation,
which are expected in the summer, we reported it to the House.
In clearing it, we also asked the Minister to expand more fully
on what the German approach is, what is wrong with it and how
the Government would see this particular challenge best being
tackled.[15]
The Minister's letter
5.8 The Minister responds in her 8 June as follows:
BROADBAND AVAILABILITY, TAKE-UP RATES AND NEXT GENERATION
BROADBAND
"The 12th Implementation Report states
that take-up rates of the best performing EU countries (which
includes the UK) are growing faster than "other places such
as Japan and Korea". Recent research by Ofcom[16]
has shown that at the end of last year 50% of adults in the UK
live in households connected to broadband, up from 39% the previous
year, which is excellent progress.
"Access to internet services is not restricted
to those who have broadband at home. UK Online Centres, libraries,
mobile devices, other public access points and access at work
are alternatives for those who cannot, or choose not, to have
access to broadband at home.
"While I am content that, given the current
trend of UK take-up and broadband availability, we should be on
track to meet Lisbon ICT targets, I am not complacent. I continue
to monitor progress, with a focus on the impact of higher bandwidth
broadband on UK and EU competitiveness and digital inclusion.
GERMAN APPROACH TO REGULATION OF NEXT GENERATION
BROADBAND INFRASTRUCTURE
"The Commission has started legal proceedings
against Germany on the basis that new German telecoms legislation
is incompatible with EU law. The legislation could have the effect
of allowing the German incumbent telecoms operator, Deutsche Telekom
(DT), to be free of regulated access to its higher bandwidth broadband
infrastructure (using technology called "VDSL+"). The
upgrade would be to DT's monopoly "access" network (between
exchanges and premises), a part of the network that is prohibitively
expensive to replicate nationally by another operator (hence the
monopoly nature of this local access network).
"This could mean that competitors to DT wanting
to offer higher speed services to their customers would only be
able to buy broadband services from DT at retail rates, thus removing
any hope of a profit margin or that they could offer their own
retail prices that could compete with DT. Competition, consumer
choice and prices could suffer if access to DT's monopoly next
generation access network was not effectively regulated from day
one. DT argues that it cannot afford to invest in new infrastructure
without the security of monopoly supply, for at least a few years.
It will be the regulator and not the German government that decides
whether and how access to DT's upgraded monopoly network will
be regulated.
UK APPROACH
"In my view, effective regulation of wholesale
access to monopoly networks is key to ensuring that we continue
to benefit from competition. In the UK, the Openreach model (independent
management and accountability of BT's monopoly local network)
has led to a significant increase in investment in network and
services by BT's competitors, increasing choice and further lowering
prices for consumers. BT has accepted that if it were to upgrade
its monopoly local network, access to it would be regulated by
Ofcom from day one.
"Ofcom has launched a public debate on the future
of broadband regulation via a discussion paper and seminars. The
aim of which is to determine how best to regulate future markets
by encouraging investment and promoting competition. I do not
believe, as some EU incumbent operators claim, that competition
and investment conflict with each other. I will continue to work
with the Commission to ensure that the revised regulatory framework
(to be negotiated from autumn 2007) continues to build on the
remarkable progress of the original framework and does not take
us backwards, as freedom from access regulation of monopoly infrastructure
would do".
Conclusion
5.9 We are grateful to the Minister for this
helpful exposition. The challenge nonetheless remains: even if
the UK is doing well on the take-up front, if only six Member
States have surpassed the 20% broadband take-up threshold, and
overall broadband speeds are lower than in Europe's main competitors,
both will have to improve if the Lisbon targets are to be met.
5.10 As to the "how", we fully endorse
her approach, which we hope to see reflected in whatever proposals
the Commission brings forward later this year with respect to
revising the regulatory framework.
15 See headnote. Back
16
The Communications market: Broadband 2006. Digital progress report.
http://www.ofcom.org.uk/research/cm/broadband_rpt/ Back
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