Sophie BISMUT
Competition in European Telecom Markets
Key words: competition, access, convergence, multiple-play, fixed telephony, mobile services, broadband, VoIP, MVNO.

In recent years, the European telecommunications market has witnessed major developments, with rapid expansion in access to telecommunications networks and a surge in the number of available services and applications. While many factors have contributed to the transformation of the telecommunications industry, competition has played a key role in driving telecom players to invest in new technologies, to innovate and to offer new services. Increased competitive pressure is being felt across all market segments, even though significant differences remain across services and countries. Broadband roll-out has allowed operators to offer multiple-play services, thereby transforming traditional segment boundaries and competitive market structures.

Siôn JONES & Pau SALSAS
e-Communications:
Investment and the Regulatory Framework
Key words: e-communications, investment, regulation.

The EU regulatory framework for e-communications was adopted by the European Parliament and the Council in 2002, and became applicable from 2003. It has three primary objectives: (1) to promote competition; (2) to develop the single market; and (3) to promote citizens' rights. The European Commission's DG Information Society commissioned London Economics to estimate the level of e-communications investment in the EU and to examine its main drivers as part of a contribution to the Commission's 2006 review of the e-communications framework. This paper outlines some of the findings of that study. The paper provides a description of the process of collecting data on investment in physical infrastructure in the e-communciations sector by country and by sub-sector. It also presents the collected data, showing a decline in overall investment between 2001 and 2003 and a subsequent upturn in 2004. An econometric analysis of the drivers of investment over the period is undertaken, which suggests that better performing regulatory regimes, as measured by an OECD regulatory index, can contribute to higher levels of investment in the sector.

Ulrich STUMPF
Markets Susceptible to ex ante Regulation: Methodology and Commission Recommendation
Key words: EU regulatory framework, susceptibility to ex ante regulation, 3-criteria test, Relevant Markets Recommendation, market definition and modified Greenfield approach.

The EU regulatory framework for electronic communications services distinguishes between markets that are susceptible to ex ante regulation and those that are subject to competition law alone. The paper lays out the methodology for identifying relevant markets that may be considered for ex ante regulation. It also provides a summary of the relevant markets that should be susceptible to ex ante regulation based on an analysis of conditions likely to prevail in a ‘representative" member state. The paper finally addresses the role of the European Commission, and in particular its Relevant Markets Recommendation, as a means of providing guidance to NRAs.

Gérard POGOREL
The Road to More Flexibility in Spectrum Usage and Access: Are We There Yet?
Key words: Spectrum usage, Spectrum management, Spectrum policy, radio interferences, audiovisual policy.

In the spectrum sections of its "Proposed Changes" to the Review of the European Union Regulatory Framework for Electronic Communications Networks and Services, the European Commission establishes a coherent, comprehensive and original set of forward-looking spectrum policy principles. By emphasising the role of trading and market flexibility, technology and service neutrality, it departs from traditional, administrative spectrum management principles. But by stressing the need for a clear justification of exclusive usage rights, it differentiates itself from market-fits all propositions. Three issues should be examined to understand what kind of evolutions could occur: the prevention of interferences, harmonisation and standardisation, and lastly the weight of institutions. Technical progress in wireless, culminating in extended dynamic access, will mostly complement market mechanisms in fostering the efficient use of spectrum, as long as institutional factors do not interfere (barriers to entry) or are removed.

Jörg KITTL, Martin LUNDBORG & Ernst-Olav RUHLE
Infrastructure-Based Versus Service-Based Competition In Telecommunications
Key words: competition, telecommunication, ladder of infrastructure, ladder of investement, regulatory policies.

Unbundling of the local loop (ULL) has seen quite different "success stories" in the various countries across Europe. Although the obligation for the provision of ULL was implemented in the regulatory framework early and mostly parallel to other means of liberalisation, national implementation has been rather heterogeneous. One question of decisive importance for national regulatory authorities (NRAs) was whether to foster service-based competition in the first phase of liberalisation or to focus on infrastructure-based competition. The different NRAs chose to head down different roads. This paper analyses whether the strategy of NRAs has had any mid-term effect on the economic welfare created in the communications markets. It indicates that infrastructure-based competition has a positive effect on innovation. Moreover, infrastructure-based competition appears to be more important for business customers than for residential clients. On the other hand, service-based competition lowers call prices and appears to be more important to residential markets. The results of this study point out the importance of a balanced approach to both types of policies

Martin CAVE
Six Degrees of Separation
Operational Separation as a Remedy in European Telecommunications Regulation
Key words: telecomunications, regulation, operational separation.

Numerous proposals have been made for separation in the telecommunications sector, some of which have been implemented, including the break-up of the Bell system in the 1980s and the widespread implementation of accounting separation. In recent years, attention has been focussed on operational separation. This paper identifies the problem that this is intended to tackle, lists a number of possible variants and discusses experiences in the UK. Having specified the circumstances under which operational separation may be justified, it suggests how provisions for such separation could be made in European legislation.

David FLACHER, Hugues JENNEQUIN & Jean-Hervé LORENZI
Innovation, Investment and Regulation:
What are the Options for Regulation in the Near Future?
Key words: regulation, innovation, investment and industrial policy.

This paper addresses the question of what options are available to regulate the sector in the near future. In order to answer this question, the paper focuses on the problem of investment and innovation in an ex ante regulated sector. Relying on existing literature, we argue that ex ante regulation could represent a danger for the long-term development of the sector by delaying or cancelling investment projects, especially (but not only) concerning the construction of new infrastructures. We also argue that ex ante regulation is distorting investment itself: incremental investment is privileged as opposed to radical investment. In this context, we identify three possible options for regulation in the near future: 1) continuing ex ante regulation, 2) substituting ex post regulation for ex ante regulation and 3) implementing an industrial policy for macro-strategic reasons. After describing a few major mutations in the sector that must be taken into account by regulators and presenting the major dilemmas that the latter are facing, we propose two possible solutions inspired by foreign policy. The first solution consists of offering investors regulation holidays, with regular reviews to deem whether these holidays should be prolonged or not. The second solution consists of implementing an industrial policy that could take the form of a contract negotiated between the regulator and operators. This would guarantee the absence of ex ante regulation if the conditions of the contract (in terms of regional planning, price, quality of service, types of investment…) are met.

Pierre LAROUCHE & Maartje de VISSER
The Triangular Relationship between the Commission, NRAs and National Courts Revisited
Key words: Institutional framework, Article 7 procedure, accountability and judicial review.

In this article, the authors review the relationship between the Commission, the national regulatory authorities (NRAs) and national courts in light of the Commission's proposals for reform as laid out in the 2006 Review. They focus upon the Article 7 and Article 4 procedures of Directive 2002/21. They conclude that the Commission proposals leave key questions and their implications outside of discussion and fail to address core issues such as the standard of assessment under Article 7, the accountability for decisions taken upstream of the NRA, and the scope and depth of judicial review.

Sophie BISMUT is a telecom analyst at IDATE, working on regulatory issues and market trends in the telecommunications sector. She is in particular in charge of two annual publications: Telecoms in Europe and The World Telecommunications Services Market.
s.bismut@idate.org

Pierre CARBONNE joined IDATE in 2005 as a consultant. Prior to joining IDATE, he was economic adviser within the Chamber of Commerce and Industry of Tétouan (Morocco) and "chargé d'affaires" at ABD (consulting firm) where he focused on assisting equipment supplier groups in the telecom sector. Previously, Pierre worked in the banking industry where he was responsible for assessing strategic investment opportunities. He graduated from the school of management HEC, where he specialized in auditing and corporate finance
p.carbonne@idate.org

Martin CAVE is a professor at Warwick Business School, UK. He is a regulatory economist, specialising in the communications industry and co-editor of The Handbook of Telecommunications Economics (2002, 2005) and of Digital Broadcasting (2006). He advises a number of regulatory bodies in Europe and worldwide.
martin.cave@wbs.ac.uk

Fabio COLASANTI was appointed European Commission Director General for "Information Society and Media" in July 2002. He was previously Director General of the European Commission's "Enterprise" Directorate General, Deputy Head of the Office of Commission President Romano Prodi and a Director in the European Commission's "Budget" Directorate General, with responsibility for the "Resources" Directorate. From 1988 to the end of 1995 he served successively as head of the "Economic Forecasts" and "Macro-economic policy analysis" units of the Commission's Directorate General for "Economic and Financial Affairs". From 1985 to the end of 1987 he was a member of the Commission's Spokesman's Group with responsibility for economic and monetary affairs, regional policy, credit and investment, small and medium-sized enterprises. From October 1977 to 1984, he worked as an economist in the Commission's Directorate General for "Economic and Financial Affairs". Prior to this he occupied various positions with Italcable Spa of Rome. Fabio Colasanti holds diplomas in economics from the University of Rome and the College of Europe in Bruges.

Henry ERGAS is Regional Head for Asia-Pacific of CRA International, an economics-based consulting firm.

David FLACHER is a telecommunications engineer and associate professor of economics at Paris XIII University. He is a member of the Paris XIII Research Center in Economics (CEPN - CNRS UMR 7115).
David@flacher.fr

For more than fifteen years, Yves GASSOT has been at the head of IDATE (www.idate.org), an institute that has established itself as one of the leading research centres in Europe concerned with the telecommunications, Internet and media industries. In this position, he has taken part in numerous studies of the various markets and the strategies being pursued in the telecommunications sector. He is on the panel of several expert committees, including the Conseil Général des Technologies de l'Information and the Advisory Committee of the PTC, he is special adviser of the European Commissioner of the Information Society, he serves as director of the journal COMMUNICATIONS & STRATEGIES and is scientific head of the annual International Conference of IDATE. With a background as DPLG architect, he is a graduate of the Institute of Political Studies, Paris (3rd Cycle).

Hugues JENNEQUIN holds a Ph.D. in economics and works as a researcher at Paris XIII Research Center in Economics (CEPN - CNRS UMR 7115) and at the Orleans Laboratory of Economics (LEO - CNRS UMR 6221).
jennequin@seg.univ-paris13.fr

Siôn JONES is a divisional director at London Economics, where he leads the e-communications consultancy team. Siôn was previously a senior pricing manager at the Commission for Communications Regulation in Ireland, a senior consultant at National Economic Research Associates and an economic advisor at HM Treasury in the UK. Siôn has over 16 years experience as a professional economist and policy advisor, and as a consultant he has advised regulators, government departments and private clients on a wide range of economic, pricing, strategic and regulatory issues. Siôn has been heavily involved in work relating to the EU regulatory framework, both as a regulator and as an advisor to NRAs and telecoms operators.
sjones@londecon.co.uk

Jörg KITTL started his career in 1997 at the indirect access operator RSL COM after completing studies in business administration at the University of Economics in Vienna. After a successful year he joined UPC Telekabel, Austria's biggest alternative fixed access network and broadband operator. Initially he accompanied UPC as responsible product manager, before being promoted to the position of director of carrier relations. The new mobile technology UMTS encouraged Mr Kittl to pursue his career at the UMTS-licensee 3G Mobile Telecommunications, the mobile affiliate of Telefónica Móviles in Austria. In 2004 Mr Kittl joined the company PSC-AG and currently works as a senior consultant in its Vienna office.

Pierre LAROUCHE is Professor of Competition Law at Tilburg University and Co-Director of the Tilburg Law and Economics Center (TILEC). He is also a professor at the College of Europe (Bruges). He is a member of the Quebec Bar (1991). He graduated from the Faculty of Law of McGill University (Montreal) in 1990. He clerked at the Supreme Court of Canada in 1991-1992. In 1993, he obtained a masters degree from the Rheinische Friedrich Wilhelms Universität Bonn. Thereafter he practised law for three years within the European Community law unit of Stibbe Simont Monahan Duhot in Brussels. From 1996 to 2002, he was at the Universiteit Maastricht, working with Professor Walter van Gerven in the Ius Commune Casebooks Project, which led to the publication of the Casebook on Tort (2000). At the same time, he obtained his doctorate in 2000 (published as Competition Law and Regulation in European Telecommunications). His teaching and research interests include competition law, telecommunications law, media law, basic Community law and the common European law of torts. He is one of the chief editors of the journal Competition and Regulation in Network Industries. He was a guest professor at McGill University (2002) and National University of Singapore (2004, 2006).
pierre.larouche@uvt.nl
www.tilburguniversity.nl/tilec

Sylvie LIDGI holds a B. Sc. in mathematics, a M. Sc. in econometrics (Technion-Haifa, Institute of Technology, Israel) and a Ph.D. in social sciences (Public policy in urban studies). She is a research associate at the TMU laboratory (urban mutation theories) and teaches at the IFU Institut Français d'Urbanisme (University of Paris VIII). She is the director of Correlation, a consulting firm founded by herself in 1984. Correlation specializes in public policy evaluations, especially tourism development policies, and urban management analysis.
www.correlation-conseil.com

Jean-Hervé LORENZI is a professor at Paris IX-Dauphine University and a member of the IRI-CREA research center.
j-h.lorenzi@lcfr.fr

After graduating with a degree in economics from the Jönköping International Business School, Sweden, Martin LUNDBORG began his career as a freelancer in the venture capital market working for a subsidiary of a telecommunications incumbent and several IT-start-ups. In 2000 he became a consultant for Eutelis Consult GmbH in Germany. Martin Lundborg moved to Arcor AG & Co KG at the beginning of 2003. As a member of the department for regulatory affairs, his work focused on data communication (i.e. DSL and ATM). Martin Lundborg joined PSC AG in August 2004. At PSC AG, Mr Lundborg has been responsible for several regulatory projects with an emphasis on market analysis by NRAs according to the new regulatory framework, as well as the regulation of the mobile and broadband whole-sale sectors

Kip MEEK takes a leading role in developing Ofcom's international strategy. As Chairman of the European Regulators' Group (ERG), he now also oversees Ofcom's engagement with key European and international decision-making bodies. This includes Ofcom's participation in the review of the EU Television Without Frontiers Directive, the review of the EU Telecommunications Framework and the international regional radio Conference in 2006. He is also responsible for the Ofcom Content & Standards Group and for Ofcom's Legal Group. Prior to joining Ofcom, Kip Meek was managing director and co-founder of Spectrum Strategy Consulting. His consulting career focused on major decisions in the communications industry, particularly those involving integration of the media, telecommunications and information sectors. Kip has worked regularly in Europe, Asia, North America and South America. Prior to setting up Spectrum, he led the media and telecoms strategy practice at Coopers & Lybrand in London. His previous employes include the Boston Consulting Group, McKinsey & Co and British Telecom.

Gérard POGOREL is professor of economics and management at the Ecole Nationale Supérieure des Télécommunications (ENST, Graduate School of Communications Sciences) in Paris, France. He graduated from HEC Graduate School of Management (Ecoles des Hautes Etudes Commerciales, Paris) and holds a Doctorate in Economics from the Université de Paris Pantheon-Sorbonne. He is the author of numerous articles, books, and reports and is also scientific Advisor for the EU-IST project "Spectrum Policies and Radio Technologies for Viable Wireless Services (SPORT VIEWS)".
pogorel@enst.fr

Frédéric PUJOL joined IDATE in 1992. As head of the mobile services division, he is responsible for consultancy assignments and prospective studies in this sector. In recent months, he has produced a series of studies on the impact of technological innovation and the new rules of competition in this rapidly expanding sector. Prior to joining IDATE, he acquired in-depth experience in mobile network architecture while with the France Telecom Group (Sofrecom, Télésystèmes). Frédéric graduated as engineer from ISEN (Institut Supérieur d'Electronique du Nord, Telecommunications option, Lille, 1986) and CITCOM (Technologies communication engineering centre, Network architecture option, Paris, 1987).
f.pujol@idate.org

After completing his studies in economics, Ernst-Olav RUHLE worked at the Wissenschaftliches Institut für Kommunikationsdienste (WIK) in Bad Honnef. He was subsequently responsible for strategies and regulations at RWE Tellicance AG in Essen until September 1998. From October 1998 until March 2001, he worked as head of regulations and authorised representative at Telekom Austria. From April 2001 until June 2002, Dr Ruhle was director for interconnection, roaming and regulatory affairs at 3G Mobile Telecommunications. As of July 1st, 2004, he has been managing director of Piepenbrock Schuster Consulting AG. He has published over 100 papers, books and articles in trade publications, and co-published the Handbuch Recht und Praxis der Telekommunikation.

Pau SALSAS is a senior consultant at London Economics' London office specialising in policy evaluation and regulation, and has over ten years of experience in applied economics. After graduating from the University Autonoma of Barcelona, Pau obtained his Ph.D. at the University of Barcelona with Honours. His academic record includes publications in specialised economics journals. Prior to joining LE, Pau was assistant professor at the University of Barcelona and a visiting scholar at the Wharton School in the United States. Pau's principal areas of research include the application of economic principles and econometric techniques to issues across a wide range of sectors, including e-communications. He has acted as an advisor to the European Commission, government departments, regulators and private clients.
psalsas@londecon.co.uk

Ulrich STUMPF is Director at WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste, where he leads the telecoms regulation and competition department. Before joining WIK, he was a senior economist at the Monopolkommission, an advisory body for competition policy to the German Ministry of Economics (1983-1989) and assistant professor at the Technical University of Berlin (1978-1983). Ulrich Stumpf has over 20 years of experience in advising on regulatory and competition issues throughout Europe, particularly, in the telecoms sector. More recently, he has been extensively involved in advising National Regulatory Authorities and telecoms operators on market analysis and their selection of remedies under the new EU regulatory framework, as well as spectrum policy reform. In 2006, he was one of the three economic experts who advised the European Commission on the revision of the Recommendation on relevant markets susceptible to ex ante regulation.
u.stumpf@wik.org

Maartje de VISSER is a researcher at Tilburg University and a member of the Tilburg Law and Economics Centre (TILEC). She is currently working on a Ph.D. comparing the institutional frameworks for EC competition law and EC electronic communications law and assessing their value for wider application in European law. Prior to joining Tilburg University, she has obtained her Magister Iuris at the University of Oxford.
maartje.devisser@uvt.nl

Michel VOLLE is an economist and statistician. In 1983 he created CNET and subsequently founded consulting firms in the field of ICTs and information systems in the 1990s. He is the patron and delegate general of the club of information system clients (club des maîtres d'ouvrage des systèmes d'information). Michel Volle is also the author of several books on statistics, ICTs and information technology. His work is available on the web site:
www.volle.com