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How should the regulatory framework evolve to create an investment friendly environment? - European Voice

Telecommunication is a market in constant transformation, whose future developments are difficult to anticipate. Technologies we use today were far from being imagined a few years ago. Even ten or fifteen years ago one would not have imagined that we would have the possibility to watch live TV on a mobile phone or to receive the goals from our favourite team via our mobiles during the World Cup 2006? Another example is the service of Voice over IP that is currently being launched all around Europe.

These developments are based on investments that carry high risks from new forms of competition and uncertain demand. Considering the potential of this rapidly developing market, we have to create a certainty for investments and to avoid over-, or incorrectly applied regulation which places restrictions on the industry???s capacity to exploit its potential. This sets an enormous challenge for the Commission to conduct an adequate review on the New Regulatory Framework for Electronic Communications that should be implemented in the Member States in 2009/2010.

The success of each participant in the value chain depends upon the deployment of capital by the industry. Although capital is available to the European ICT industry, it constantly faces competing demands particularly from high growth developing markets outside of Europe like the US. It is therefore vital that the Union policies support the investment climate within Europe.

The regulatory review should be about enabling European businesses to develop in an open and competitive environment that facilitates efficient businesses delivering innovative products at fair prices. To compete in the global economy, especially against generally loosely regulated markets such as in the US and Asia, Europe has to strive for the best economic environment. While regulation in such an industry can be beneficial, it should not be applied with the rigidity of the current framework. The added value for EU regulation in the field of electronic communications draws from the economies of scale of the internal market, guaranteeing a level playing field for the market players on one hand and allowing consumers to benefit from mobility and competitive pricing on the other. These are illustrated by the aims of the Commission for symmetric interconnection pricing of the operators, and by the Commission proposal to lower roaming rates. In the long run both initiatives lead to healthier competition and more affordable pricing to end-users.

However, in addition to establishing regulation, the Commission and the national authorities need to apply competition law principles and economic analysis more rigorously than has been the case to date to ensure that sector based regulation decreases in line with the Better Regulation agenda of the Barroso Commission.

Guiding principles that should underpin the regulation include:

1. Healthy and sustainable competition will deliver the most benefit for all the participants in the value chain, from manufactures, operators, service providers and customers.

2. The electronic communications market is currently evolving and changing towards an all-IP world. Therefore there is a need to act carefully concerning the review of the regulatory framework, so as not to inhibit or stifle the development of new market models.

After the new framework is in place, the Commission, National Regulatory Authorities (NRAs) and National Competition Authorities (NCAs) must ensure its effective implementation. And we as legislators have to make sure that they have the necessary instruments for follow-up, and if needed, the possibility for imposing substantial sanctions in case of failures.

The objectives of the New Regulatory Framework are based on promoting a competitive environment and reducing regulation over time. It is also supposed to set out a comprehensive set of regulatory tools for businesses to invest with certainty and stability. A number of reports, including an extensive study of the GSM industry presented to the Commission from London Economics during the last year, have shown that regulatory uncertainty was an important aspect that affected investment decisions negatively.

As legislators we need to look forward and even beyond what is possible to expect in the decades to come in the ICT sector, when we now conduct the review of the New Regulatory Framework. If not, we risk tying our European industry to segmented rules characterised by detailed regulation, and by that holding back potential investment. Instead, we need to give the tools to the ICT sector; to continue to be an essential motor for productivity, job creation and growth in Europe.
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