Content

Margit Vanberg, History of telecommunications regulation in Europe in:

Margit Vanberg

Competition and Cooperation Among Internet Service Providers, page 152 - 153

A Network Economic Analysis

1. Edition 2009, ISBN print: 978-3-8329-4163-5, ISBN online: 978-3-8452-1290-6 https://doi.org/10.5771/9783845212906

Series: Freiburger Studien zur Netzökonomie, vol. 14

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152 as a critical means to increase infrastructure-platform competition in broadband access. The government could increase available spectrum; it could open spectrum use to any kind of service that the owner of the spectrum would like to offer, and state and municipal policy concerning the use of public right-of-way could be reformed (Speta, 2004: 62). Others have argued for establishing a property rights system in spectrum and allowing spectrum to be traded, such that it can be allocated to its most efficient use (Faulhaber, 2006; Hazlett and Munoz, 2004). In conclusion, the U.S. legal framework, as laid down in the 1996 Act and interpreted by the Triennial Review Order of 2003 (FCC, 2003), in the Order on Reconsideration of 2004 (FCC, 2004), as well as in the Triennial Review Remand Order of 2005 (FCC, 2005) in theory meets many of the demands the disaggregated regulatory framework places on regulation. However, the regulatory practice is not always grounded in this theory. To improve U.S. communications-markets regulation, the FCC needs to consistently verify whether entry barriers are hindering actual or potential competition in a market and regulate non-discriminatory access when monopolistic bottlenecks can be located and remove regulations in all other cases. 9.2 The Regulatory framework in the European Union 9.2.1 History of telecommunications regulation in Europe144 Traditionally, European countries had state-owned monopolies for the provision of telecommunications services. As in the U.S., an underlying rationale was that telecommunications services were generally regarded to be natural monopolies. Public ownership was justified by the social objectives pursued by telecommunications regulation such as universal service provision. As part of the European integration process, the European Commission encouraged a common policy for the communications industry. In a 1987 Green Paper on Telecommunications Services, the Commission introduced the concept of open network provision (ONP), which was to further the goal of establishing a common market for communications services (Knieps, 2000: S92). With ONP policy, equal access to national communications infrastructure was to be achieved. The Commission commenced the liberalization process in 1988 by opening the markets for terminal equipment. In 1990 the Commission declared the exclusive rights of national telecommunications carriers in the markets for value-added network services to be in violation of the common market. When the Maastricht Treaty of 1993 provided the legal basis for further measures, the Commission began a consultative process on full telecommunications liberalization. In this process, the European Parliament accepted the goal to liberalize telecom services and telecom net- 144 For an overview of telecommunications regulation in Europe see Knieps (2000) and Oldale and Padilla (2004). 153 works from January 1998 onwards. In the meantime, the provision of satellite services and satellite equipment was liberalized in 1994. In 1995 the Cable Directive allowed Cable-TV companies to enter the market for telecommunications services to closed user groups and value-added services.145 Most EU member-states fully liberalized telecommunications services and infrastructure provision on January 1, 1998. Regulation initially focused on competition by interconnection at non-discriminatory, reasonable and transparent conditions. The interconnection charges of providers of public telecommunications services with a dominant market position were to be regulated ex-ante and were additionally required to be based on costs.146 All incumbent carriers were assumed to have such a dominant market position. The more invasive instrument of network element unbundling for access to the local loop, including line-sharing, was enacted by the Commission on January 2001. As an EU regulation, this enactment immediately became national law in all member-states.147 9.2.2 The present regulatory framework in Europe Fast technological developments in the market as well as the trend towards the convergence of telecommunication, Internet, and media services led the EU to adopt a new regulatory framework for electronic communications in March 2002. The framework consists of five directives, among these the Framework Directive148, the Access Directive,149 and the Universal Service Directive,150 and several accompanying documents.151 This framework was implemented into the national law of the member-states by October 2003. 145 The EU directives that were issued until the 1998 liberalization of most telecommunications markets in the EU are subsumed under the term “1998 regulatory package.” The European Commission has an informative, archived site on the 1998 regulatory package at: http://ec.europa.eu/information_society/topics/telecoms/regulatory/98_regpack/index_en.htm; site last visited on Feb. 15, 2008. 146 At the time, the Commission suggested that market shares above the threshold of 25 percent are indicative of market power (Knieps, 2000: S94). 147 Directives, in contrast, need to be implemented into national law by the member-states, in order to become effective. 148 Directive (2002/21/EC available at: http://europa.eu.int/eur-lex/pri/en/oj/dat/2002/l_108/l_10820020424en00330050.pdf; site last visited on Feb. 15, 2008. 149 Directive 2002/19/EC available at: http://europa.eu.int/eur-lex/pri/en/oj/dat/2002/l_108/l_10820020424en00070020.pdf; site last visited on Feb. 15, 2008. 150 Directive 2002/20/EC available at: http://europa.eu.int/eur-lex/pri/en/oj/dat/2002/l_108/l_10820020424en00510077.pdf; site last visited on Feb. 15, 2008. 151 The two other directives are the Authorisation Directive and the Data Protection Directive.

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Zusammenfassung

Die Konvergenz der Netztechnologien, die dem Internet, der Telekommunikation und dem Kabelfernsehen zu Grunde liegen, wird die Regulierung dieser Märkte grundlegend verändern. In den sogenannten Next Generation Networks werden auch Sprache und Fernsehinhalte über die IP-Technologie des Internets transportiert. Mit den Methoden der angewandten Mikroökonomie untersucht die vorliegende Arbeit, ob eine ex-ante sektorspezifische Regulierung auf den Märkten für Internetdienste wettbewerbsökonomisch begründet ist. Im Mittelpunkt der Analyse stehen die Größen- und Verbundvorteile, die beim Aufbau von Netzinfrastrukturen entstehen, sowie die Netzexternalitäten, die im Internet eine bedeutende Rolle spielen. Die Autorin kommt zu dem Ergebnis, dass in den Kernmärkten der Internet Service Provider keine monopolistischen Engpassbereiche vorliegen, welche eine sektor-spezifische Regulierung notwendig machen würden. Der funktionsfähige Wettbewerb zwischen den ISP setzt jedoch regulierten, diskriminierungsfreien Zugang zu den verbleibenden monopolistischen Engpassbereichen im vorgelagerten Markt für lokale Netzinfrastruktur voraus. Die Untersuchung zeigt den notwendigen Regulierungsumfang in der Internet-Peripherie auf und vergleicht diesen mit der aktuellen Regulierungspraxis auf den Telekommunikationsmärkten in den Vereinigten Staaten und in Europa. Sie richtet sich sowohl an die Praxis (Netzbetreiber, Regulierer und Kartellämter) als auch an die Wissenschaft.