Review of Legislative Frameworkfor Electronic Communications

A Mobile Perspective

Rob Borthwick

4 February 2000

M-Commerce - Europe as Leader

• Governmental recognition of M-Commerce leadership

• Two options to reach e-objectives:– “Omniscient” regulatory intervention– Flexible market forces delivery

• Success of market forces in the mobile arena

M-Commerce – Leadership at Threat

• 99 Review directionally correct

• Implementation is contradicting policy

• Withdrawal statements not matched by action

• 99 Review / current regulatory trends are ONP-based

The failure of regulation to meet real market needs• Competition -v- Regulation

– Competition delivers consumer benefits through a process

– Regulation based on a market situation snapshot

• Regulation inherently utilitarian but mobile product is personal

• Utilitarian regulatory implementation fails to deliver Revolutions

The failure of Regulation to meet real market needs (2)

• Examples include:– MNP – hugely expensive ‘one size fits all’ – CPS instead of commercially negotiated

wholesale products

The solution

• Radical change for the electronic revolution

• Regulatory withdrawal is the correct approach:– Dynamic mobile markets– Market based solutions to regulatory concerns constantly

emerging

• Minimise intervention– statutory duty to forbear– “forbear unless” as opposed to FCC “do not forbear when”

The solution (2)

• Separate current conflicting roles of SSR– SSR monitoring role– SSR deal with historical institutional

incumbencies– SSR administrator of politically defined

social objectives

• Building in monitoring, cost/benefit and sunset conditions

A regulatory framework for the mobile future

Simultaneously:

1. Promote competition

2. Promote consumer interests

3. Deliver political objectives

Current regulation

Exogenous factorsEndogenous

factors

Political objectives

Historicalincumbencies

Marketprocess

Market grasp filter Potential issues

Timing and/oreconomic viability

Monopolistic control of essential facilities

Abuse of dominance

RegulatoryTreatment

ADMINISTERwith ex-ante definition

INTERVENEwith ex-ante tools

FORBEAR

or intervene ex -post with competition rules

Examples of areas requiring specific regulation

Cost/benefits

Cost/benefit

Fixed PTT interconnectionSpectrum allocationNumbering management

Abusive pricingAnti-competitive behaviour

Monitoring processLimit of SSR role

USOData protection, privacyHealth & safety …

Simultaneously:

1. Promote competition

2. Promote consumer interests

3. Deliver political objectives

Current regulation

Exogenous factorsEndogenous

factors

Political objectives

Historicalincumbencies

Marketprocess

Market grasp filter Potential issues

Timing and/oreconomic viability

Monopolistic control of essential facilities

Abuse of dominance

RegulatoryTreatment

ADMINISTERwith ex-ante definition

INTERVENEwith ex-ante tools

FORBEAR

or intervene ex -post with competition rules

Examples of areas requiring specific regulation

Cost/benefits

Cost/benefit

Fixed PTT interconnectionSpectrum allocationNumbering management

Abusive pricingAnti-competitive behaviour

Monitoring processLimit of SSR role

USOData protection, privacyHealth & safety …

A regulatory framework for the mobile future (2)

Simultaneously:

1. Promote competition

2. Promote consumer interests

3. Deliver political objectives

Exogenous factors

Political

objectives

Historical

incumbencies

Timing and/or

economic viability

Monopolistic control of

essential facilities

ADMINISTER

with ex -ante definition

INTERVENE

with ex -ante tools

Cost/benefits

Fixed PTT interconnection

Spectrum allocation

Numbering management

Monitoring processLimit of SSR role

USO

Data protection, privacy

Health & safety …

Simultaneously:

1. Promote competition

2. Promote consumer interests

3. Deliver political objectives

Current regulation

Exogenous factors

Political

objectives

Historical

incumbencies

Market grasp filter

Potential issues

Timing and/or

economic viability

Monopolistic control of

essential facilities

Regulatory Examples of areas requiring specific regulation

Treatment

ADMINISTER

with ex -ante definition

INTERVENE

with ex -ante tools

Cost/benefits

Cost/benefit

Fixed PTT interconnection

Spectrum allocation

Numbering management

Monitoring processLimit of SSR role

USO

Data protection, privacy

Health & safety …

A regulatory framework for the mobile future (3)

Simultaneously:

1. Promote competition

2. Promote consumer interests

3. Deliver political objectives

Current regulation

Endogenousfactors

Marketprocess

Abuse of dominance

FORBEAR

or intervene ex -post with competition rules

Abusive pricingAnti-competitive behaviour

Monitoring processLimit of SSR role

Simultaneously:

1. Promote competition

2. Promote consumer interests

3. Deliver political objectives

Current regulation

Endogenousfactors

Marketprocess

Abuse of dominance

FORBEAR

or intervene ex -post with competition rules

Abusive pricingAnti-competitive behaviour

Monitoring processLimit of SSR role

•Forbearance leads to general authorisations

•Exception: institutional (often technical) incumbencies

– spectrum – numbering

Implications for 99 Review - Licensing

Implications for 99 Review – Access and Interconnection

• Important to consider concept of prospective competitiveness or transient market failure

• Evidence of commercially negotiated wholesale product

• Forbearance principles– enable competitive forces to flow

•Sector specific oversight while technical issues exist

•Spectrum is finite rather than “scarce”

•Transient– new technologies– wholesale (either through secondary trading or unbranded

airtime products)– re-farming

•“Scarcity” - not lever to regulate mobile

Implications for 99 Review – Spectrum

•Legitimate role of policy maker to set scope of USO

•Not at expense of delivering innovation, choice and quality

•Enduring role for market neutral sector specific administration of consumer issues

Implications for 99 Review – USO

Conclusion

• Our New Model – achievable framework for the Commission’s objectives

• Europe’s future leadership role in m-commerce requires bold and forward looking steps by Commission