International Bar Association Communications Law - Round Table Thursday 21 September 2000, Amsterdam, Nederland

Panel members

• Almudena Arpón de Medivil (Gómez-Acebo & Pombo) - Moderator
• Jens Arnbak (OPTA)
• Gloria Calvo (CMT)
• Marjolein Geus (Houthoff & Buruma)
• Gernot Schumann (Schlesweg-Holstein State Broadcasting Authority)
• Ewan Sutherland (INTUG)

Comments prepared by Ewan Sutherland.

Regulatory bodies have a remarkable capacity to find work. They can usually find a justification for a longer life. Governments do not seem to understand the term temporary. (The best example from the UK is of Income Tax which was a temporary measure introduced by Mr Pitt to finance the Napoleonic Wars. Her Majesty's Inspectorate of Taxes continues to collect that tax today. The USA has just abolished a telegraphy tax introduced to pay for the Spanish-American War.)

Many operators are not unhappy to see a continuing role for regulators. They are often more robust and antagonistic in their home market than abroad. When they are the incumbent they like to see the home market made different to accomodate their special circumstances. When they are the new entrant, they want someone to control the incumbent.

INTUG does not see any immediate reason to wind up the activities of regulators. Indeed, we are very sceptical of those who call for exclusive reliance on competition law. Ex ante regulation is there to replace competition when it would not otherwise be present. Competition is in evidence, but it is flawed and patchy, it is the exception and not the rule. We have, perhaps, been a little slow in shifting our attention from NRAs to competition authorities, which we are trying to remedy.

A major concern of users is that delay favours the incumbent. An appeal often allows the incumbent months or years in which to pre-empt development of a market. New entrants often need those crucial first months to develop their business. Some operators have a remarkable capacity to frustrate the ambitions of new entrants. The intervention of an ex ante regulator may be preferable to sitting for four years waiting for a judgement of the European Court of Justice. (In my native city of Glasgow there was a legal firm known colloquially as Delay, Worry and Expense. That is certainly how some people view recourse to the law.)
 

Can the role of the regulator be assumed by an anti-trust authorities?

In theory yes. In practice, it requires considerable specialist expertise. This can be through co-habitation, coordination or the creation of a special area with the competition authority. It requires an agility which is not common in bureaucratic processes. It is not at all clear that the analytical tools and the remedies available in competition law are well suited to regulating this type of market.

Tomorrow, there will be a hearing in Brussels at the Competition Directorate-General of the European Union. It will present the intermim results of an investigation into leased lines. Although a well-known activity in the telecommunicaitons sector, it is hard to apply competition law to the problem. The original complaint was made in 1995, but INTUG has raised issues about the market for leased lines for over twenty years. (see (http://www.intug.net/views/europe_leased_lines.html)

There is a second investigation into roaming prices, one which is a good deal more complicated. It arises from our survey of international roaming prices (http://www.intug.net/surveys/gsm/). We first expressed our concerns in mid 1998 and the inquiry may be finalised in 2001. The results of the present phase will come later in the year.

Here in the Netherlands we have had raids on the offices on Libertel and KPN Telecom as part of the investigation into mobile termination prices. That complain was made by Worldcom. This is making life in telecoms much more exciting. It was treated very differently in France where the Ministry last week modified the licence conditions. It is rather less dramatic and, arguably, more effective. Certainly it is faster.
 

Are regulators needed in a converging scenario?

Certainly in Europe, content is a highly sensitive and contentious issue. There is little agreement beyond objections to child pornography. There is considerable sensitivity about language and cultural content, about advertising to children, race hate, defamation and many other issues.

Keeping content out of telecommunications is the best course of action for pragmatic reasons. That is not to say that operators will not bundle content and transport, they will. Moreover, they will try to obtain leverage from one market to another. We need to be alert to such market abuses through leverage.

Given the speed of developments in markets it would pay not to rush convergence of regulatory functions. We will need to be flexible as we see how things develop.
 

If a regulator is needed, should a single regulator cover all sectors or does the market require independent regulators for different sectors?

The structure is less important than that their is coordination of policies and practices. This requires a sharing of expertise and regular meetings. This is true both at national (and Bundesländer) and international levels. We need to ensure that different types of regulators get to understand each other.
 

Clearly many markets are now multi-country if not yet fully global. One of the major complaints of users is that they cannot buy all their telecommunications services from a single supplier. With that goes the fear that they can, but that it would be from a very short list, an oligopoly.

Consolidation in the industry moves us towards a position where none of the regulators is able to cope and where the bigger operators are able to play one NRA off against another.
 

Reality or utopia

In the European Union it is not realistic in the short term to expect an EU regulatory agency. The windfall taxes from auctons will mean that member states will not want to miss a chance to gather in that particular harvest. Member states cannot even agree even to a central allocation of numbers.

Globally, it is fiercely resisted by the USA. Any attempt by the International Telecommunication Union (ITU) to take an interest in the Internet is denounced in the strongest terms by the Department of State. A supra-national regulator would be viewed by the US Senate as little short of communism.

Of course other global bodies would want to stake aclaim, such as the World Trade Organisation (WTO) and UNESCO.
 

The proposed scope and its effect on local sovereignty

The true threat to national sovereignty is from the increasingly oligopolisitic global operators which would be able to impose their will on NRAs or to bypass their regulation.
 

The approach of the European Commission and the FCC

The EU has in the Fifth Report (and will again in the Sixth Report) on Regulatory Implementation shown the lack of harmonisation. In the July Legislative Package it has proposed some harmonisation measures, to get regulators to work together and with DG  Information Society. If these are finally accepted, they will certainly help. However, there is still a long way to go.