The EU may soon see a significant shift in telecoms regulation. Look no further than the European Commission’s recent white paper on Europe’s digital infrastructure needs, latest statements by Commission officials, and the increasing calls for a policy shift as seen in the recently published Letta report.
The Commission’s regulatory narrative has been shifting. The upcoming DNA (Digital Networks Act), set to establish new priorities for EU telecoms regulation, will likely provide regulators with a new roadmap. While some uncertainty remains, in this note we explore the trajectory and discuss possible changes on the horizon.
The EU’s telecoms regulatory framework has long strived to promote infrastructure competition. Access remedies have traditionally been seen as a transitory measure allowing new entrants to use existing infrastructure before being capable of deploying their own infrastructure where economically viable.
“The growing focus on upstream regulation is embedded in the [European Electronic Communications] Code, which aims to promote the deployment of VHCN and to foster network-based competition.”
Explanatory Note Accompanying the Commission’s recommendation on relevant markets
However, there are now signals that the Commission is shifting the focus away from infrastructure competition by suggesting that it is no longer an objective to have multiple parallel infrastructures, referring to this as “overbuild” or “duplication”.
“Since we want to avoid overbuild, (…), we have to make sure that access is available. And that is where we have proposed a completely new approach which is a single remedy, access remedy, standardized at the European level.”
Roberto Viola, DG Connect Director-General, FTTH Council Conference 2024
National regulators may have to fend for themselves to impose remedies as the Commission halts recommending relevant markets
The Commission recently suggested they might stop recommending more relevant markets, a possibility they also consider in their White Paper. The standalone three-criteria test will still be part of the regulators’ toolbox. However, regulators will now have to define the markets susceptible to be regulated on their own.
“What we will do – and that is the Commission to do it – we will not recommend any more markets ex-ante to be analysed but we rely on what the code tells that each market should be analysed on its own merits with the so-called three-criteria test and then regulators will be able to actually specify a market which is good for regulation but on a basis of new criteria.”
Roberto Viola, DG Connect Director-General, BEREC Stakeholder Forum 2024
Historically, telecom regulation in the EU has largely applied to the relevant markets identified by the Commission as susceptible to ex-ante regulation.
While regulating a market always requires passing the three-criteria test, the Commission’s Recommendation provided a strong foundation for regulators to act and was aimed at fostering regulatory harmonisation in the block.
Number of markets deemed suitable for ex ante regulation by the European Commission
Although the Commission may be changing tack, it will be interesting to see whether regulators fall in line. BEREC recently endorsed a regulator’s decision to intervene by writing that “academic literature and NRA and National Competition Authority (‘NCA’) decisions generally suggest that the presence of at least three firms is conducive to effective competition” – at least suggesting that regulators may keep focus in regulation that promotes a market with competing infrastructures.
