Mr Erkki Liikanen,
Member of the European Commission, responsible for Enterprise and the
Information Society,"Mobile Communications and the EU's
New Regulatory Framework", IFT World Mobile
Communications Conference,
Ladies and
gentlemen,
It is a
pleasure to speak here today at this important conference on the mobile sector.
Let me
take a few moments to give you my thoughts on the broader context.
We now
understand the important role that early adoption and diffusion of ICT plays in achieving sustained growth in productivity. We
also know that this is at the heart of the divergence in EU
and US experiences in recent years. The
However,
there are areas where the EU is the leader.
Telecommunication services are an important example.
Of
critical importance to this success is the mobile sector. The mobile sector is
moving towards higher speed connections. Data services are emerging. The EU needs to take actions now to ensure that our previous
success is maintained. The need is highest in areas where co-ordination
failures are likely to arise. Interoperability may be one such area.
The impact
of ICT on productivity comes from a possibility to
share databases.
Mobile
broadband connectivity will mean that you can share databases anywhere,
anytime. This is why it can have a big role in productivity growth.
It is in
all our interests that we address the barriers to adoption of these
technologies head on.
The New
Regulatory Framework
So, what
is the role of the EU level to push this agenda
forward? Firstly, it is on the regulation front.
The new
regulatory framework recognises that consumers buy services rather than
technologies. Thus, technological neutrality is an important underlying feature
of the new framework.
Firms on
the market place seek legal certainty, which is imperative for long-term
business planning. The conceptual clarity that characterises the new framework
enables operators to predict what type of obligations may be imposed on them.
Legal
certainty must be seen against a background of a dynamic and changing
communications industry. The new regulatory framework involves both
forward-looking analyses on the part of National Regulatory Authorities and
periodic reviews. Both of these are required to "future proof" the
framework.
The new
regulatory framework represents an important opportunity to re-focus regulation
on areas where the markets actually fail. This might involve some regulation
where there was previously none, but also the removal of existing regulation
that has become unnecessary. Important too, is the fact that regulation will be
removed once effective competition is established in a given market.
Mobile
communications and the new regulatory framework
How does
the new regulatory framework affect the mobile sector?
Regulation
of the mobile sector arises in one of two ways.
Firstly,
there are obligations that can be imposed on all undertakings that do not
relate to market power.
These
general obligations on mobile operators include, for example, the obligation to
negotiate interconnection and the obligation to allow users to have access to
number portability.
Interconnection
allows other network operators to deliver traffic to users, access to whom is
controlled by another network operator. Number portability is important as it
enables users to retain their own number on the public telephone network
independently of who actually provides the service.
Secondly,
obligations can be imposed on mobile operators who are designated as having
Significant Market Power following a three staged process.
The first
stage of the process is the identification of a market that is susceptible to
ex ante regulation. The Commission has adopted a Recommendation on relevant
markets. This identifies the 18 markets that are susceptible to ex ante regulation.
The
markets directly concerning the mobile sector are:
·
First, mobile access and call
origination,
·
Second,
call Termination and
·
Third,
international roaming.
The second
stage of the process involves analysing the market to see if Significant Market
Power exists. The concept of Significant Market Power is aligned with the
competition law concept of dominance. We have also given guidance on this
concept.
Looking at
the three mobile markets identified as being susceptible to regulation, our
position is that the access and origination market is not considered likely to
appear in future in a revised Recommendation. However, we should wait and see
the result of the market analyses of each National Regulatory Authority before
reaching a firm conclusion.
On call
termination on individual networks the competition problem is that of a
monopoly once subscribers have chosen a network. As current technology stands,
from a competition perspective, this conclusion is inescapable. Proportionate
regulation is leading to a situation where termination rates are coming down
over time. In this way, we can protect consumers and effective competition,
without placing disproportionate adjustment costs on firms. The lowering of
termination rates will also help to ease friction in our international trade
relations.
International
roaming requires a coordinated response across National Regulatory Authorities.
In taking an action in a given
Article 7
Taskforce and the mobile sector
The
Commission also plays an important oversight role - with the potential to veto
over the decision on their competition law issues by National Regulatory
Authorities. Our Taskforce, which oversees this process,
and some National Regulatory Authorities have already made some important
precedent decisions in the mobile sector.
For
example, Oftel's decision concerning the market for
mobile access and call origination in the
Another
important decision was that relating to mobile termination in
Remedies
The
application of remedies is the third and final stage of the process. In line
with the principle of subsidiarity the decision on
remedies is delegated to National Regulatory Authorities. However, National Regulatory
Authorities must co-operate with each other and with the Commission to ensure
the consistent application of the framework.
This is
necessary to support the development of the internal market. In particular,
National Regulatory Authorities must "seek to agree" on the remedies
to be applied to particular circumstances on the marketplace.
The
National Regulatory Authorities - through the European Regulators Group - have
recently adopted a Common Position on remedies.
National
Regulatory Authorities should take utmost account of this document. It sends an
important signal to market players that the National Regulatory Authorities are
fulfilling their duty to develop the internal market.
With the
Common Position as a background, I expect that National Regulatory Authorities
will become more active in promoting a consistent application of the framework
throughout the EU. Working in such a manner will
allow the quick transmission of best practice and will allow each National
Regulatory Authorities to obtain the benefit of the experiences of others.
What we
are after is a system of regulation that is predictable across the EU. This system of regulation must be conceptually clear
and consistently applied.
This will
give market players sufficient legal certainty to be able make plans to enter
new markets and pursue new opportunities. This will be to the benefit of both
the EU consumer and industry.
The
Remedies document also has something to say about emerging markets. It
clarifies that mobile broadband data services, for example, are considered as
an emerging market. This is because the current state of that market makes it
impossible to apply the 3 criteria used in the Commission Recommendation to
define markets that are susceptible to ex-ante regulation.
Convergence
is becoming a reality for consumers. The process of convergence is creating new
and exciting market opportunities.
However,
convergence highlights the need for interoperability within systems and between
systems. This is recognised in our recent policy paper on open platforms. Convergence
is an area where industry needs to take the lead, but where public authorities
need to be alert to potential market failures.
The new
framework is designed to tackle some known market failures, in particular,
market power. However, there may be co-ordination failures that also need to be
addressed. Such issues are beyond the scope of individual market players to
overcome.
The
success of the 2G industry in the EU is in no small
part down to the universally adopted GSM standard. This was developed by the
European Telecommunications Standards Institute (ETSI)
with the support of the European Commission.
However,
the movement from 2G to 3G increases exponentially the need for
interoperability. What us more, this needs to occur along an ever expanding
value chain. Given the complexity of the 3G world, operators along this the
value chain may have divergent goals.
From my
perspective, for 3G to be successful there is a need for a globally, open and
interoperable standards. This is required to encourage the development of new
and exciting services that will be decisive in driving consumer take-up.
Actions
underway
Now let me
quickly appraise you of some of the actions on mobile that are currently
underway at the European Commission.
(i) The
Last
October the CEOs of 14 major players in the sector
were invited to discuss 3G roll-out in a forum called "The Mobile
Platform". In January of this year a first comprehensive report was
issued.
This made
a range of recommendations on R&D, interoperability, barriers to rollout,
standards, security, content and international issues.
The CEOs will meet again next month to review progress. Then,
we will issue a Communication with a focus on the mobile sector only in July
2004 in response to this work. We will focus on the public policy and
regulatory issues needed to support the rollout of advanced mobile data
services. The key issues are the need to ensure interoperability, to take a
strategic approach to R&D and to create the right environment for media
rich content on mobile.
(ii) M-Payments
The Mobile
Platform identified security, and in particular how this relates to m-payments,
as a priority issue.
I would
urge you to contribute actively to the forthcoming public consultation to be
launched by the Commission to find an acceptable solution in the short term
that takes account of the lower risks represented by mobile operators payment
services.
Personally,
I am anxious that regulation of this area should be proportionate and should
facilitate the deployment of innovative services.
(iii) Spectrum
Issues
A
few words on spectrum issues. There are a number of
important issues in relation to spectrum.
Firstly,
there is a need to plan for sufficient spectrum resources for mobile
communication. The Commission in cooperation with the CEPT
has paved the way for new spectrum resources to become available by 2008 in a
timely manner.
Secondly,
the Commission has initiated discussion of secondary trading of spectrum rights
in the Radio Spectrum Policy Group. Secondary trading is expected to lead to
more flexibility in accessing radio spectrum and in boosting innovation for
wireless communication. We are of course aware that secondary trading may
constitute a major change and will see to it that its introduction does not
disrupt the market place.
Our
political objective is to let different access platforms compete in the market
place. With respect to spectrum, this means that we probably will need to
depart from technology constraints attached to spectrum allocation (e.g.
frequencies for 2G or 3G) and develop a regulatory approach which looks at
markets and services as the categories which should determine the way spectrum
usage rights are issued.
(iv)
The availability of content
As
mentioned, Convergence is fast becoming a reality for consumers. TV is being
delivered over broadband networks. 3G mobile phones allow you to watch a replay
of your favourite goal.
To ensure
that the mobile sector is able to play a full role in the convergence process,
we have instituted a sector inquiry into the availability of high value content
on 3G networks.
The aim of
the inquiry is to get a clear picture of audiovisual rights in the EU and ensure that access to premium rights (notably sport
rights) is open and takes place under fair terms and conditions.
Conclusion
Let me
make some final concluding comments.
The mobile
sector has developed to a large extent free from the "old ways". It
is a young and dynamic sector, in which the EU has a
comparative advantage. We must strive to maintain and build on our advantages
in the area.
Firms in
the mobile sector have a clear commercial focus. To this end, I would like to
stress the importance of normal commercial negotiation between parties in the
sector. Commercial negotiation is preferable to a regulated outcome. It is also
more robust going forward as regulation is progressively removed.
I would
ask all mobile operators to engage with National Regulatory Authorities and the
Commission, to find ways to overcome the competition problems that still remain
in the mobile sector. In the end, if these can be overcome, it is better both
for industry and for consumers.
We must
also recognise those areas, such as interoperability, where there may be a need
for greater co-ordination.
I would
ask all companies involved in the Mobile Platform to re-double their efforts to
ensure to outline the concrete steps that can be taken to develop the mobile
broadband sector.
The sector
is re-bounding after the hard times of the past few years. Business and
consumer confidence is again picking up. However, we all need to play our
individual roles in ensuring that the EU maintains
its pre-eminent position in the mobile sector.
Thank you.