It is a common conception that Europeans take long summer vacations, and especially government employees. It is also a common conception, in certain quarters at least, that self-regulation is the future for telecoms regulation now that competition is established in most of Europe. Perhaps this month's bulletin will put an end to both of these misconceptions, as we look at some recent regulatory activity across Europe.
12 July
France
The French telecoms regulator, ART announced a public consultation on fixed telephony regulation from 2005 to 2007. The consultation is due to last six weeks, during which ART will reveal its proposals, including that of forcing France Telecom to offer line subscriptions at wholesale rates to competing operators. France Telecom, the incumbent (that is, former monopoly operator) is still a virtual monopoly according to ART, with more than 99% share of lines.
Slovakia
Having recently joined the EU, Slovakia is attempting to achieve the telecoms liberalisation targets placed on it by the EC. If you feel sorry for the French, you will feel even sorrier for the Slovakians. According to the Czech News Agency, "After accession to the EU in May Slovakia has created the conditions for a full liberalisation of the telecoms market but fixed-line operator Slovak Telecom (ST) remains the only operator there as the 18 other licensed operators have not launched their services yet. The reason is a dispute with ST over prices. The regulator Slovak Telecoms Office STU has not succeeded in resolving the problem, either. STU recently made a decision on conditions for interconnection but operators say the prices are too high. Slovak interconnection fees are among the highest in the EU and reach roughly a double of the EU average. ST, on the other hand, claims the price is below its costs, a Telecom spokesman told CTK."
We have heard it all before and hope STU manages to provide some consumer benefit in the near future.
13 July
France
According to newspaper Les Echos, French regulator ART revealed that the quality of France's mobile telephony network for those using mobile phones on French high-speed and suburban rail services still leaves much to be desired. (Living in the UK, where train services leave much to be desired, we are more concerned with hearing whether travellers using mobile phones on French trains got seats and arrived on time.)
Elsewhere, the results of ART's study into the network's quality were more positive. ART found that 97 per cent of mobile connections succeeded, with an average waiting time of eight seconds.
Spain
National newspaper El Pais reported that the national criminal court has rejected an appeal by Telefonica (the incumbent operator) against a Euro 18 million fine imposed on it by telecoms regulator CMT. The fine was imposed in July 2002, after CMT ruled that Telefonica had given unfair discounts to business associations in order to hinder competition. Telefonica has indicated it will lodge an appeal against the ruling with the high court. Interestingly, this is not the first major fine imposed on Telefonica by a regulator, but is the first to be confirmed by a court.
Only the previous week, the national criminal court suspended a Euro 57 million fine imposed on Telefonica by the Spanish restrictive practices court for hampering pre-allocation to other telecoms operators. Sounds like siestas will be suspended, too, until these issues are resolved.
15 July
Spain
According to El Pais, CMT forced Telefonica's ISP subsidiary Terra to suspend an advertising campaign for its 'ADSL Home' internet package. CMT said the suspension was due to "insufficient profit margin" on the product. CMT's action resulted from a complaint by competitor Wanadoo (a subsidiary of France Telecom), which objected to Terra selling the package at Euros 15 per month, half the normal price.
An FT (France Telecom) subsidiary complaining about a Telefonica subsidiary's actions in Spain? One could almost believe FT is pro-competition. And with 99% market share of subscriber lines in its home market, FT can afford to be pro-competitive in other countries.
16 July
Ireland
According to the Irish Independent; O2 Ireland, the country's second largest mobile operator, has admitted to overcharging 71,535 more customers than it had originally indicated. The figure came from a report given by O2 Ireland to telecoms regulator ComReg on overcharging 65,000 roaming users, admitted to earlier this year. There was no mention by O2 Ireland of the additional 71,535 customers at the time of admission of overcharging the 65,000 users. According to ComReg, O2 reported to the body that it had overcharged a total of 136,535 subscribers for international roaming and other services to the tune of Euros 700,000. ComReg said it was "was very disappointed that additional customers were affected."
Meanwhile, Vodafone Ireland also confirmed to ComReg that it had overcharged a total of 22,436 customers by Euros 150,000, as admitted to earlier. Vodafone said that all customers had had their accounts credited to cover the overcharging. Vodafone blamed human error for the overcharging, and O2 Ireland blamed a technical problem within its billing system. And no people are responsible for O2 Ireland's technical problem?
23 July
Spain
Le Pais reported that, at a staff meeting yesterday, the 150 employees of CMT opposed the government's plans to transfer CMT's headquarters from Madrid to Barcelona. Staff claim that the transfer not only threatens the regulator's independence and survival, but also poses a threat to free competition on Spain's telecommunications market.
Employees are determined to start 'negotiations' over the move with Spain's government, and are planning to take legal action if the government does not cancel the move.
And CMT thought it had enough problems with Telefonica.
26 July
Spain
Le Pais reports that CMT approved Telefonica's application to double the speed of its ADSL lines at no cost to its customers. But CMT's approval is caveated, and Telefonica must allow competitors to interconnect with its network so that they can offer similar deals.
Wanadoo will be pleased, but parent FT may not like the additional pressure this may bring to ART's consultation exercise (see 12 July, above) which includes proposals for FT opening its network to competitors.
28 July
France
Les Echos reports that the French government partially approved reductions in FT's (France Telecom's) ADSL wholesale charges in thinly populated areas. Government agreed the proposed 20% reduction in the charge for 2Mbps, but approved only a 10% reduction for 1Mbps where FT had applied for 15%. FT's other request concerning ADSL pricing were rejected.
The news of approval of the cuts came only two days after ART rejected a broader range of wholesale ADSL price reductions proposed by FT. ART believes that a reduction in wholesale prices could have a negative impact on FT's rivals, particularly those involved in unbundling. Government upheld ART's objections to the other price changes. But surely, after FT subsidiary Wanadoo's complaints about Telefonica subsidiary Terra in Spain, FT would not do anything anti-competitive in its home market, would it?
Spain
Government announced that the price cap on Telefonica's retail telephone charges would remain in place until CMT completes its study of 'relevant markets' in the telecoms sector. Previously, the government had indicated it would deregulate telephone charges from 2005. It seems unlikely that the CMT report will be completed this year, hence the likelihood that government will retain the price cap next year. But will the report be completed in Madrid or Barcelona? And could the CMT staff dispute over moving delay it further?
29 July
France
Le Figaro reports that FT was criticised in a report published by competition authorities over its 'charters' with France's regional 'departement' authorities. France's competition council said that, said that the charters could lead to conflicts of interest if regional or local authorities launch tenders for telecoms operators, as France Telecom would have privileged access to information at the expense of competitors. In April 2004, ART advised the competition council of its concerns of possible legal risks posed by the charter and the possibility of the abuse of dominant position.
As we said above (28 July), surely FT would not act anti-competitively in its home market while campaigning against alleged anti-competitive activity by its competitors in other countries?
31 July
Ireland
According to the Irish Independent, ComReg has advised the EC that it has found all four mobile operators (O2 Ireland, Vodafone Ireland, Meteor and 3 Ireland) to have significant market power (SMP) in relation to the call termination market. This will likely lead to price controls and in particular a price reduction formula for the next few years. But at least the mobile operators are unlikely to be able to overcharge in the call termination market (see 16 July, above).
2 August
Spain
El Pais reported that according to CMT's 2003 annual report, the cost of calls from mobile phones in Spain is 4.4 times more expensive than from landlines, at 0.20 Euros per minute compared with 0.045 euros per minute. CMT has criticised mobile telecoms operators for failing to lower their call charges, despite growth in subscriptions and in use. While Spain's three mobile telecoms operators (Amena, Telefonica Moviles and Vodafone) in theory compete on call charges and monthly subscriptions, in the last four years call charges have fallen by just 10%. Over the same period, average fixed telephony revenue per minute fell by about 40%.
Referring to our economics text books, does this constitute 'monopolistic competition' (a concept developed by Edward Chamberlain in the 1930s), where each brand is in essence a monopoly and can set its own price? On further reflection, no, it sounds more like plain old oligopoly.
3 August
Spain
Following on from the article the previous day, El Pais further reported that the Spanish consumers' association, the OCU, has demanded that CMT, implements measures to force mobile phone operators to lower their charges. CMT attributed the small decreases in charges to a lack of competition among the three mobile operators.
In Italy (and Lebanon) recently, mobile users held a 'strike', whereby for a short period no-one used their mobile phone, in an attempt to get mobile operators to reduce their call charges. If it is not careful, the Spanish mobile industry may suffer the same indignity.
5 August
France
According to Les Echos, ART proposed reducing over several years FT's local and long-distance call charges, as well as for calls to mobiles. ART, which until recently provided only an advisory role on telecoms pricing, has inherited an oversight role from France's finance ministry. Already, ART has suggested abandoning systematic control of all telephony prices in favour of discretionary investigations into pricing thought to be anti-competitive or excessively high. But surely, FT would not engage in anti-competitive pricing, would it, when it is so quick to complain in other countries?
In conclusion, however much Europe's telecoms regulators may wish they could close down for the summer, as in myth, they are unlikely to be able to do so until the European telecoms markets have become considerably more competitive. And incumbents have become considerably less dominant and predatory.
欧州通信規制の28日間