9 Next Generation Access Networks
| (32022)
C(2010) 6223
SEC (10) 1037
| Commission Recommendation: Regulated access to Next Generation Access Networks
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| Legal base | —
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| Document originated | 20 September 2010
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| Deposited in Parliament | 28 September 2010
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| Department | Business, Innovation and Skills
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| Basis of consideration | EM of 14 October 2010
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| Previous Committee Report | None; but see (31638) 9981/10: HC 428-i (2010-11), chapter 28 (8 September 2010) and (31645)10245/10: HC 428-i (2010-11), chapter 29 (8 September 2010)
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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
9.1 An earlier Commission Communication of 19 May 2010, which
the Committee considered on 8 September, set out the Commission's
Digital Agenda for Europe — the first of seven flagship
initiatives under the "Europe 2020" strategy (a ten
year strategy for smart, sustainable and inclusive growth, designed
to prepare the EU for the challenges that it will face over the
next 10 years, and endorsed by the 25-26 March 2010 European Council).
[63]
9.2 At that same meeting we also considered a separate
Communication covering the Commission's annual research on communications
markets across the EU and its assessment of how well each Member
State has implemented the regulatory framework in 2009. Commission
officials visit each Member State to interview Government officials,
national regulatory authorities (NRA — Ofcom in the UK),
and industry and consumer representatives.
9.3 In his Explanatory Memorandum of 16 June 2010,
the Minister for Culture, Communications and Creative Industries
(Ed Vaizey) observed that the report acknowledged the benefits
the European consumer had derived from the existing EU Framework
(including increasingly affordable electronic communications)
but raised some concerns over the independence of NRAs and the
range of diverse regulatory approaches in national markets, "which
deliver some significant differences in wholesale and retail prices
in the sector", and noted the report's conclusion "that
consumers and retailers are still faced with 27 different markets
and are not able to take advantage of the economic potential of
a single market".
9.4 The Minister noted also that, while the Report
had no immediate legislative implications, it was generally seen
as significant in determining possible future policy and legislation
in the field of telecoms. He said that the latest round of policy
negotiations were concluded in November 2009, and that the NGA
Recommendation, which sets out the overall policy and regulatory
approach that NRAs should adopt when considering the roll out
of new high speed broadband networks, was to be adopted in September
2010.
9.5 We accordingly asked that, when it emerged, the
Minister should deposit it with his views thereon, notwithstanding
the fact that Commission Recommendations are not legislative acts
under the Lisbon Treaty. In so doing, we had in mind not only
the undertaking given by the previous Minister for Europe so to
do, but also the fact that such Recommendations contain much useful
analysis and insights into the Commission's thinking (which is
why the previous Committee sought such an undertaking from the
previous Minister for Europe).[64]
The Commission Recommendation
9.6 Though entitled "Recommendation on the regulated
access to Next Generation Access Networks", the document
in known in common parlance as the NGA Recommendation. It is one
of three documents, the other two of which we consider elsewhere
in this Report, that constitute the Commission's "Broadband
Package"; the other two documents being:
— the
Commission's Broadband Strategy (BBS);[65]
— the proposal for a Council Decision on
a first Radio Spectrum Policy Programme (RSPP).[66]
9.7 Next Generation Access — NGAs — Networks
are the networks that are replacing the traditional copper-based
networks that have been in place since the roll-out of telephone
services. Generally speaking, NGA networks use fibre-optic-based
technologies.[67]
9.8 In that the BBS has a role in providing an over-arching
EU strategy for the roll-out of fast, super-fast and ultra-fast
broadband networks in the EU, and the RSPP proposal deals with
ensuring that there is the necessary spectrum in order for mobile/wireless
solutions to play a full role (particularly important for rural
and remote areas), the NGA Recommendation is a document that suggests
a series of regulatory mechanisms to cover fixed networks.
9.9 In his Explanatory Memorandum of 14 October 2010,
the Minister explains that the Recommendation builds on the changes
brought about by the Telecoms Framework Review that was concluded
in November 2009 — principally in the updated Access and
Interconnection (2002/19/EC) and Framework (2002/21/EC) Directives,
which all Member States are expected to transpose fully by May
2011. As such, the Minister says, "it takes into account
the pro-competition, free-market based approach that UK supported
during those particular negotiations", leading to the expectation
"under these conditions, that new innovative services and
content will flourish."
9.10 The Minister draws attention to one particular
issue that this Recommendation addresses ("although not in
an explicit way"), that of "regulatory forbearance/holiday".
This, he explains, is where NRAs suspend the usual regulatory
framework for operators of new-build networks creating, in effect,
monopolies over content and products for the network owners: "This
very protectionist stance is in fact prevented by both the Framework
itself and this Recommendation."
9.11 The document has three sections:
— a
series of policy and regulatory principles, known formally as
"the Recitals";
— short sections that then set out: the
aim and scope of the Recommendation; the need for a consistent
approach and to take geographic factors into account; and, noting
a series of standard definitions, a series of possible actions
for NRAs to take when Significant Market Power (SMP) is ascertained
during periodic market reviews; and
— two concluding annexes: the first sets
out pricing principles to be considered by NRAs when enacting
regulatory measures; the second considers the application of the
principles of equivalence when regulating access to infrastructure
as a regulatory measure.
9.12 The Minister says that the Recommendation has
due regard to the principle of subsidiarity, noting that different
actions are appropriate for the EU, national Governments, NRAs
and industry stakeholders.
9.13 He also notes that the NRAs (i.e., Ofcom in
the UK) are asked to take "utmost account" of this Recommendation
when deciding which regulatory remedies to impose on undertakings
with SMP following the periodic reviews Ofcom must conduct of
the markets for Wholesale Local Access (Market 4, in the jargon)
and Wholesale Broadband Access (Market 7). As such, the Minister
says, the Recommendation therefore does not set an absolute requirement
to implement all of its provisions.
9.14 The Minister says that it is also worth noting
that the Recommendation allows for the application of "Virtual
Unbundled Local Access", which is considered by Ofcom and
most UK stakeholders to be the measure with the best prospects
of promoting competition in NGA.[68]
The Government's view
9.15 The Minister notes that the stated aim of the
Recommendation is to foster the development of the single market
by enhancing legal certainty, as well as promoting investment,
competition and innovation in the market for broadband services,
covering in particular the transition from copper to NGA (fibre)
networks and not explicitly addressing wireless broadband.
9.16 The Minister describes the aims of the Recommendation
and its proposed regulatory actions in order to achieve those
aims as:
"fully in line with Government policy and as
previously noted, supported (and indeed championed) by the UK
during negotiations. Indeed the UK was instrumental in ensuring
the Recommendation, while recognising that incentives are required
for investment in NGA, was pro-competitive and did not include
any notion of regulatory forbearance."
9.17 The Minister notes that most of the provisions
in the Recommendation are issues for NRAs to consider when deciding
which regulatory remedies to impose on undertakings with SMP and
concern principally the Wholesale Local Access (WLA). He says
that Ofcom has already been considering these issues in its latest
reviews, with the WLA market review having been competed on 7
October 2010 [69]
and the Wholesale Broadband Access (WBA) market review expected
to be completed by the end of 2010.[70]
9.18 The Minister also says that the Recommendation:
"relates to the potential decisions of Member
States in only one respect, in stating that they may (in some
circumstances) — separately to the market reviews considered
above — also impose reciprocal sharing of facilities on
undertakings operating an electronic communications network. [71]
The policy on this issue is already under consideration as part
of the BIS consultation on implementing the revised EC regulatory
framework for electronic communications."
9.19 Finally, the Minister says that the Recommendation
was adopted on 21 September after a consultative process with
the Communications Committee[72]
and the European Parliament.
Conclusion
9.20 We are grateful to the Minister for his
further helpful Explanatory Memorandum on this complex subject.
9.21 Though the Recommendation raises no legal
or political issues, we are drawing it to the attention of the
House because of the importance of broadband development in the
EU, and its part in the Commission's overall Broadband Strategy.
9.22 We now clear the document.
63 See headnote: see (31638) 9981/10: HC 428-i (2010-11),
chapter 28 (8 September 2010). Back
64
See headnote: (31645)10245/10: HC 428-i (2010-11), chapter 29
(8 September 2010). Back
65
See (31969) 13874/10: chapter 5 of this Report. Back
66
See (31965) 13872/10: chapter 4 of this Report. Back
67
The general idea behind Next Generation Networks (NGN) is that
one network transports all information and services (voice, data,
and media such as video) by encapsulating these into packets,
as on the Internet. The International Telecommunications Union
thus defines NGN as "a packet-based network able to provide
Telecommunication Services to users and able to make use of multiple
broadband, QoS-enabled transport technologies and in which service-related
functions are independent of the underlying transport-related
technologies. It enables unfettered access for users to networks
and to competing service providers and services of their choice.
It supports generalised mobility which will allow consistent and
ubiquitous provision of services to users." See http://www.itu.int/en/pages/default.aspx
for further information. Back
68
For further information, see for instance "EU Business"
at http://www.eubusiness.com/news-eu/telecoms-uk.206/, which says
that on 23 March 2010, Ofcom informed the Commission of its draft
plans to include within the wholesale local access market, a virtual
unbundled local access product (VULA); Ofcom explaining that VULA
is an electronic means to provide virtual, bitstream-type access
that is similar to local physical access (i.e. physical unbundling
of fibre or copper local loops and access to ducts), enabling
interconnection at local level and supporting many services, and
allowing alternative operators access to end users It also notes
that, though the Commission largely endorsed Ofcom's plans, it
also emphasised that telecoms regulators should, as a matter of
principle, mandate unbundled access to the fibre loop irrespective
of the network architecture used by the dominant operator, and
stressed that a VULA remedy should be just a transitory measure
and should be replaced by fibre unbundling as soon as it is technically
and economically feasible, as only fibre unbundling will give
alternative operators full and direct control over the product
they offer to end-users. Back
69
The final Ofcom statement is at http://stakeholders.ofcom.org.uk/consultations/wla/statement. Back
70
The latest Ofcom consultation document is at http://stakeholders.ofcom.org.uk/consultations/wholesale-broadband-markets/. Back
71
Under Article 12 of the Framework Directive. Back
72
The Communications Committee consists of senior officials from
the Member State authorities responsible for telecoms and was
established under the 2002 Framework Directive to assist the Commission
in carrying out its executive powers under the regulatory framework
governing telecoms in the EU. In addition, the Cocom provides
a platform through which to exchange information on market developments
and regulatory activities. For further information, see http://ec.europa.eu/information_society/policy/ecomm/implementation_enforcement/comm_committee/index_en.htm. Back
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