Documents considered by the Committee on 27 October 2010 - European Scrutiny Committee Contents

9 Next Generation Access Networks


C(2010) 6223

SEC (10) 1037

Commission Recommendation: Regulated access to Next Generation Access Networks

Legal base
Document originated20 September 2010
Deposited in Parliament28 September 2010
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 14 October 2010
Previous Committee ReportNone; 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)
To be discussed in CouncilTo be determined
Committee's assessmentPolitically important
Committee's decisionCleared


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.


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 for further information. Back

68   For further information, see for instance "EU Business" at, 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 Back

70   The latest Ofcom consultation document is at 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 Back

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