Memorandum by T-Mobile
A. THE CURRENT
STATE OF
THE SINGLE
MARKET
1. What has the impact of the recent enlargements
of the European Union been on the single market?
The EU enlargement is clearly beneficial for
the European Economy as a whole, as it further supports economic
and financial integration and increases competition, productivity
and economic growth. Both the new and old Member States benefit
from the enlargement, creating a win-win situation.
Deutsche Telekom invests massively in state
of the art mobile and fixed telecommunication networks in the
new Member States. Today, Deutsche Telekom operates in the Czech
Republic, Poland, Slovakia, Hungary and Bulgaria and also in Croatia,
Montenegro and Macedonia. The enlargement of the European Union
clearly helps us fulfil our commitment to offer state of the art
telecommunications networks in these countries.
2. Is there a need for greater cooperation
between National Regulatory Authorities?
In the telecommunications sector, National Regulatory
Authorities (NRAs) cooperate and interchange information through
the European Regulators Group for electronic communications networks
and services (ERG), established by the European Commission. Contrary
to the deregulation requirements of the EU telecommunications
legal framework the guidelines issued by the ERG have increased
the scope of intervention. Although the ERG does not issue formally
binding documents, such institutions always bear a certain risk
of creating "soft law" sidestepping democratic checks
and controls and therefore need to be questioned.
Concerning the cooperation between the EU Commission
and NRAs, the current pragmatic model of co-operation should be
retained.
3. Are the current remedies available to the
Commission to enforce single market legislation adequate; and
are they used effectively?
In the telecommunications sector, the EU Commission
criticizes that not in every Member State similar sets of remedies
have been applied in the past and this would have negative effects
on the consistent regulation across the EU. Further centralization
is demanded. However, harmonization does not mean applying the
same remedies in all Member States, but to apply the same principles.
NRAs must take into account different situations in various countries
such as the momentum of liberalization and different market and
cost situations. As a consequence, different remedies have to
be applied according to the particular market situation.
The EU Regulatory Framework gives the European
Commission powers to oversee the national regulatory measures
(the so-called Article 7 procedure). NRAs are required to conduct
a national and a Community consultation on the intended regulatory
measures prior to adoption. This procedure has led to a significant
increase in bureaucracy without significantly promoting deregulation.
To achieve the goal of deregulation, the incentive structures
should be shifted to allow the Commission and NRAs more opportunity
to define themselves not solely in terms of more but of less regulation.
Although a certain amount of Europe-wide standard basic competition
policy principles is required, Europe also needs to develop competition
around the "right" regulatory approach within the principles
of general competition law. Additional centralised competences
will not only add an extra layer of bureaucracy, but would also
not be adequate to take into account the differences of the 27
national telecommunications markets and the principle of subsidiarity.
4. What is your view of the Country of Origin
Principle, whereby a company registered to provide services in
one Member State is automatically qualified to provide those services
in any other Member State on the basis of home country regulation?
Does this Principle constitute the best basis for single market
measures? How is cross-border activity by small businesses helped
or hindered by the Country of Origin Principle?
In the context of the current Review of the
EU telecommunications framework, the Commission proposed a common
approach to the authorisation of services with pan-European or
internal market dimension (See COM(2006) 334, p.9). The authorisation
system would be complementary to the current system and would
be applied only in specific cases. We see some merits in this
proposal of the Commission. This could be a contribution to removing
red tape provided that no further bureaucracy is established.
In particular in the area of online services the country of origin
principle is of great importance.
5. Do the concepts of the "national champion"
and "economic nationalism" pose a threat to the single
market?
Deutsche Telekom offers modern telecommunications
services in numerous countries in Europe and around the globe.
We are convinced that in a globalised economy any "national"
approach will not be promising.
Nevertheless, we do observe with great concern
that Europe is falling behind other leading economic regions,
such as Asia or the US, precisely in the area of electronic communication
networks and services, which drives productivity and innovation
in modern economies. Europe's ICT sector is weakening in important
market indicators, such as size of the economy, market revenue
growth, R&D, investments and labour productivity. Instead
of creating incentives for additional growth by reducing state
intervention, urgently required investment is being discouraged
by unnecessary bureaucracy in the sector. Only deregulation is
the option to foster innovation, investment and growth in the
telecommunications sector and to achieve the goals of Lisbon.
Recent economic studies point a clear link between a light touch
regulatory approach and increased investments into the sector.
Increased investment in telecommunications networks will ultimately
lead to more economic growth. The USA can serve as a good example
for the positive effects associated with the reduction of sector
specific regulation. European telecommunications operators must
be able to compete on a "level playing field" with operators
from eg the USA and Asia. Only if the regulatory conditions allow
for it, "European champions" who can compete with large
operators worldwide will evolve.
6. Should there be a greater role for technology
and research in facilitating the single market?
Technology and research are certainly key drivers
for economic growth. Especially telecommunications infrastructure
plays an important role connecting businesses and consumers throughout
Europe and the world. It is therefore vital for the single market
to enable the technology sectors, especially ICT, to contribute
to economic growth and welfare. To enable the private sector to
massively invest into Research and Development (R&D), these
investments must also pay off. The regulatory framework for new
markets must allow R&D activities to result in concrete products.
This can only be achieved by a light-handed regulatory approach.
B. SECTOR-SPECIFIC
QUESTIONS—TELECOMMUNICATIONS
7. Is the EU telecommunications market genuinely
cross-border at present?
For historical reasons, telecommunications markets
in the EU are, to a large extend, national markets. This does,
however, not impose any threat to the single market or imply any
necessity for intervention. Competition policy should focus on
creating the necessary conditions conducive to economic activity.
In relation to the single European market, the aim is essentially
to facilitate Europe-wide market entry. This condition exists
today. To this extent the Common Market for telecommunications
services is already a reality. If economic factors support the
idea of additional integration of the European telecommunications
market, the market will follow. In this respect, particular note
needs to be taken of the emerging consolidation in the European
telecommunications landscape. Cross border mergers and market
entry into third countries should be market driven and should
not be hampered by unnecessary regulatory obligations.
8. Is the current EU regulatory framework
for telecommunications sufficiently technology neutral?
The legal framework tries to marry the principle
of technological neutrality with the technical development and
the associated technical and service-related convergence. This
approach is unsuitable, as it does not adequately reflect actual
market dynamics which provide a wider choice of networks and services
thus leading to more network and service competition. In effect,
virtually none of the NRAs have embraced the principle of technology
neutrality to reduce the amount of regulation but have used the
principle to extend regulation whereby new technologies and products
have been included in markets that have already been regulated.
The technology-neutral approach entails the inherent risk that
services provided on the basis of infrastructures, which, according
to non-compliance with the three-criteria-test, should actually
not be subject to sector-specific regulation yet are included
in markets that have already been regulated and, in turn, are
then also subject to regulation. Examples include services that
are provided on the basis of new infrastructure set up in a competitive
environment and yet are included within the existing regulation
based on the legacy network by virtue of the technology neutral
approach. Such arguments apply also to all issues relating to
fixed/mobile substitution so that the risk exists that services
provided essentially on a competitive basis in the mobile communications
sector could end up under conventional fixed network regulation.
Instead of expanding sector specific price and access regulation
to the "new" infrastructure, economic regulation of
the "old" infrastructure should be significantly reduced,
since market dynamics are increasing.
9. Does this regulatory framework require
modernisation?
Yes indeed. Sector specific price and access
regulation in the telecommunications sector was from the beginning
designed to last only for a transitory period. This transitory
period was meant to end as competition evolves and supervision
of the sector left to competition law as in any other sector.
This is the clear message that can be found in manifold EU-documents
and statements (eg the 1999 Communications Review) and is recognised
by the Commission. But any concrete steps towards an end of sector
specific price and access regulation are postponed to the next
review process.
Looking at the state of competition today, vital
competition is already determining the telecommunications sector
in Europe with lower prices, better products and more choice for
the consumer. Competition will—until the current review
becomes effective with national implementation—further increase
with powerful players from the content and software industries
entering the converging telecoms market which are not subject
to comparable regulatory regimes.
In this competitive environment, it appears
to be appropriate to significantly reduce sector specific price
and access regulation to the minimum required and to largely rely
on the oversight of competition authorities under general competition
law. Ironically and to the contrary, regulation is getting more
and more comprehensive and complex the more competitive markets
become. We see more regulation today than was necessary to open
up the telecommunications markets back in the mid 1990's. It is
important to emphasize that deregulation does not lead to an "unlegislated"
space. Modern competition law will continue to effectively combat
abusive practices and to provide competitors a right to access
essential facilities. Each modification to existing access services
remains subject to controls of abusive practices.
16 July 2007
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