Europe’s Competition Comr. Mario Monti praised a European Commiss...

on the draft document on remedies under the new regulatory framework for electronic communications networks and services, Monti called the document a “very substantial contribution to policymaking.” But while he agreed with Information Society Comr. Erkki Liikanen that the issue of remedies was of critical importance to the e-communications sector, he said remedies must be viewed not in isolation but in relation to the nature and aim of regulation and to competition policy in general. Monti stressed the difference between antitrust enforcement and regulatory intervention remedies. Regulatory remedies are imposed ahead of specific problems with the goal of creating a procompetitive environment in the long run, he said, while in the short term giving benefits to end users that the market would offer if it were truly competitive. Antitrust remedies, on the other hand, simply aim to punish behaviors that have occurred in the past and that are viewed as detrimental to the welfare of end users. “In a way,” Monti said, “the aim of regulatory remedies should be to allow antitrust remedies to be the only ones needed in the long term.” He pointed to the “fine balance” between short- term and longer term consideration, saying the issue of regulatory remedies under the new regulatory framework “seems to have sparked rather heated discussions.” One area of contention is between those who advocate a facilities-based competition model and those who favor an access-based model. Monti’s position -- as he made clear last month (CD Dec 11 p4) -- is that the 2 models don’t necessarily contradict one another, he said. “Access services are essential in opening up previously monopolistic market structures,” he said. “Even the ‘purists’ of facilities-based competition, who often happen to enjoy a satisfactory market position in at least one Member State, would probably admit that they would not be able to enter a new market… were it not for the availability of some type of access service.” However, he said, because new entrants must be given the right incentives, the regulatory framework must “privilege” operators that build their own infrastructure because they are more likely to increase competition in the market. To reconcile access- and facilities-based competition, Monti said, the “time dimension” must be taken into account. “National regulatory authorities should provide incentives for competitors to seek access from the incumbent in the shorter term, and to rely increasingly on building their own infrastructure in the longer term,” he said. Monti also said the EC would ensure the “crucial interplay” between infrastructure and content -- which is becoming increasingly blurred -- to prevent it from falling under the control of companies with a high degree of market power. Speaking at the same hearing, Liikanen said new entrants must be allowed access to incumbents’ infrastructure. But, he said, they also must “continually strive to reduce this dependence wherever feasible.” New entrants must be given incentives to make incremental investments in their own infrastructure, Liikanen said. However, he said, because competition between infrastructures sometimes isn’t feasible in the short term, national regulatory authorities will have to clarify the boundaries between replicable and nonreplicable infrastructure and subject the latter to regulation. Moreover, he said, because under the new e-communications regulatory framework regulation is to be imposed only in cases of “enduring market failure,” allowances must be made for emerging markets to develop according to market forces. Any potential abuse of position in an emerging market, Likkanan said, should be dealt with under competition law. Meanwhile, European telcos Mon. criticized the European Union consultation paper outlining how anticompetition remedies should be set under new e-communications regulations. The document, unveiled late last year by the European Commission (EC) and the European Regulators Group (ERG), aims to ensure that antimonopoly remedies are applied consistently across the European Union. But the European Telecom Network Operators’ Assn. (ETNO) called the draft “ill-defined” in many policy areas and said it must be clarified “to avoid the twin risks of perpetual regulations and discouraging investment in crucial e-communications technologies.” ETNO’s comments were part of a comprehensive review of the document. The group took part in Mon.’s public hearing in Brussels on the proposal. Because it’s the final piece in a comprehensive new telecom regulatory framework, one with key commercial implications for the sector, “it is critical that the remedy document’s wording is balanced, consistent and precise,” ETNO said. The group’s criticisms include: (1) The document didn’t define emerging markets, potentially opening the door to “endless regulation covering not only legacy networks but all other new products and services related to them.” (2) The paper’s theoretical approach was out of touch with the real issues governing the telecom sector. “It would have national regulators designing remedies for theoretical competition issues instead of first identifying market failures and then applying a proportionate and temporary remedy to them,” ETNO Dir. Michael Bartholomew said.