157 the incumbent carrier to have SMP based on high market shares and control over not easily duplicated facilities. 13 of the 18 countries impose the entire spectrum of possible remedies on the incumbent (Kiesewetter, 2006: 46). 9.2.4 Current developments The 2002 regulatory framework has recently been reviewed by the European Commission. The Commission adopted reform proposals in November of 2007. These proposals will be debated by the European Parliament and by member-state governments in the coming two years. The Commission hopes to adopt a revised framework by 2010, which could then be incorporated into national laws in order to become effective. In its reform proposals, the Commission has identified two areas needing fundamental reform and some areas in which minor changes can improve the framework (see EC, 2006). The first area for fundamental reform is spectrum management. Perhaps most important, the Commission wants to strengthen the rights of service providers by giving them the freedom to use any technology of their choosing in combination with spectrum and the freedom to offer any services of their choosing on this spectrum. The second area identified for fundamental reform is the procedure for the review of relevant markets. The Commission plans to simplify the market analysis and notification requirements for those markets that were found to be competitive in a previous analysis or whenever the notification features only small changes compared to the previous notification. Among the further changes proposed by the Commission is the intent to enlarge the catalogue of remedies by the possibility of functional separation. NRAs could then require incumbent operators to split their service divisions and their networkinfrastructure divisions. The Commission also seeks a reduction in ex-ante regulation by reducing the list of relevant markets. The revised list proposes a removal of regulation in 11 of the 18 markets. The only retail market to remain on the list is the market for access to the public telephone network. The Internet-related wholesale markets (currently markets 8, 11, 12 and 13) all remain on the list. The regulation of NGNs The Commission’s guidelines for the 2002 regulatory framework state that emerging markets ...should not be subject to inappropriate ex-ante regulation. This is because premature imposition of ex-ante regulation may unduly influence the competitive conditions taking shape within a new and emerging market. At the same time, foreclosure of such emerging markets by the leading undertaking should be prevented (EC, 2002: §32). This vague instruction leaves much room for interpretation by the member-states. Are next generation networks (NGNs) to be considered as new and emerging markets? How is foreclosure to be prevented when the application of regulation to new markets is viewed so skeptically? 158 The European Regulators Group (ERG) published a draft consultation on regulatory principles for next generation access (NGA) in May 2007. In this document, it states that …the inclusion of the fibre loop into market 11 is compatible with the definition of the Access Directive, but would require a change of the Recommendation to include fiber into the relevant market…Market 12 does not require a change of the Recommendation as, by definition, it already comprises all kinds of wholesale broadband access products that can be delivered higher in the network (ERG, 2007: VII). The ERG therefore does not view NGA as a new market. The group discusses as possible remedies: “Unbundling the shortened local loop ending at the street cabinet implies the need for co-location at the street cabinet and backhaul service from the cabinet to the operator’s node” (ERG, 2007: 8).156 9.2.5 Assessment of telecommunications regulation in Europe The overview of telecommunications regulation in the U.S. showed that convergence there had the effect of curtailing regulations in the telecommunications sector. In Europe, in contrast, network convergence was answered by extending the scope of the regulatory framework to other platforms for electronic communication. The experience with the 2002 regulatory framework is still relatively short, considering that many countries took several years to complete the market analysis of the markets on the Commission’s list of recommended markets. The subsequent implementation of remedies took a long time and the effects of these remedies are often only now becoming apparent. Therefore, similar to the assessment of the current U.S. regulatory framework, the assessment of the European framework remains theoretical in many points. An essential positive aspect of the framework is that, in many respects, its provisions are based on economic theory. The Commission recognizes the importance of potential competition (EC, 2002: §74) and the control of bottlenecks (EC, 2002: §78) as criteria to establish whether a firm has SMP. The framework focuses on incentives for innovation and investment (Art. 8 (2c) of the Framework Directive). Furthermore, it includes a mechanism for eliminating regulatory obligations once these are made obsolete by market developments. A regular review process guaran- 156 The German national regulator, the Bundesnetzagentur (BNetzA), published a draft consultation in April 2007 for its market definition and market analysis for Market 11 and Market 12. The BNetzA comes to the same conclusion as the ERG. See: http://www.bundesnetzagentur.de/enid/4f2254ff98dab0d7b5b2ac263083f5e9,0/Archive/2__7 _-_April-June_45p.html#10534 ; site last visited on Feb. 15, 2008. The ERG recommendation for regulation in next generation access networks largely corresponds to the conclusion drawn from the disaggregated regulatory framework in chapter 8. Co-location at the street cabinet and duct sharing between the street cabinet and the end-user premises would allow competitors equal chances in FTTC markets.