Market reviews in Oftel

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Market reviews in Oftel

• Elaine Axby
• 31 October 2002

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Agenda

• EU requirements
• defining markets
• assessing competition
• remedies for dominance
• current issues

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Requirements of the new regime

• review current SMP designations, licence
  conditions, obligations
• define appropriate markets
• decide whether SMP exists
• specify appropriate obligations
• obligations (generally) only where SMP exists
• take utmost account of EU guidelines

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Defining markets

• should be economic markets based on competition
  law principles
• Commission Recommendation on relevant product
  and service markets is the key document
• NRAs can define own markets
• but the Commission has a veto

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Commissions draft Recommendation

• currently twelve markets
• - fixed retail access - wholesale leased lines
• - fixed retail services - retail leased lines
• - fixed call origination - broadcasting
• - fixed termination - mobile access call
• - fixed transit origination
• - broadband Internet - mobile call termination
• access - mobile international
  roaming
• further segmentation envisaged
• Oftel also considering large business segment

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Oftels reviews (1)

• fixed wholesale access, call origination and
  transit - Selina Chadha
• fixed call termination - Mike Galvin
• retail price control - Alan Pridmore
• international direct dialling - Alex Shepherd
• DQ - Alex Campbell

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Oftels markets (2)

• wholesale narrowband Internet termination -
  Justin Moore
• broadband market - Tim Cross
• leased lines - Brian Malone
• DSL - Naaz Rashid
• local loop unbundling - Lawrence Knight

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Oftels markets (3)

• mobile markets
• access and call origination - Nic Green
• international roaming - Chris Handley
• call termination - Roberto Ercole
• broadcasting markets
• Margaret Doherty, Anil Patel

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Market definition - main issues

• EU Recommendation likely to be broadly liveable
  with
• level of detail in market definition
• eg international calls
• timing of the final Recommendation
• not likely until January?

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Definition of SMP

• SMP competition law concept of dominance
• an undertaking.either individually or jointly
  with others..enjoys...the power to behave to an
  appreciable extent independently of competitors,
  customers and ultimately consumers.
• so dominance can be held by 1 firm (individual
  dominance) or more (collective dominance)

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Criteria for assessing SMP

• based on Framework Directive Commission
  Guidelines
• Oftel document published August 2002
• should be consistent with standard competition
  analysis
• a key part of EU harmonisation NRAs must follow
  the Guidelines

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Some SMP criteria

• EU defined
• market shares
• barriers to entry
• economies of scale scope
• countervailing buying power
• technological advantages
• financial advantages
• Oftel defined
• excess pricing, switching, non-price competition

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Key issues

• interpreting the EU Guidelines
• what is collective dominance?
• getting good evidence
• protects against challenges
• need to take a forward look
• judging the most important criteria and evidence

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Approach to remedies

• use minimum regulation necessary
• promote sustainable competition
• stop promoting competition where competition is
  effective (no SMP)
• use competition law if possible against
  anti-competitive behaviour
• evolution, not revolution

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Potential AID remedies

• Article 8 of the AID provides remedies that
  regulators can use following a finding of SMP in
  a particular market
• transparency (Art 9)
• non-discrimination (Art 10)
• accounting separation (Art 11)
• access (Art 12)
• price control and cost accounting (Art 13)

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Non-AID remedies

• retail price controls
• under the USD where wholesale controls are
  insufficient
• informal action by providers/Oftel
• eg for consumer information
• competition law
• can use instead of sectoral controls?
• monitoring the market

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Remedies approach to assessing options

• Oftel regulatory option appraisal
• think of different ways to solve the problem -
  including no regulation
• assess advantages/disadvantages
• for different types of stakeholder
• publish the analysis in consultation
• single stage approach
• must cover full range of remedies

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Market review process
Data gathering/analysis
Consultation docs published
12 week consultation per review
Statements published
Sept Oct Nov Dec Jan
Feb Mar Apr May Jun
Jul
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Key issues

• approach to remedies
• high resource requirements
• tight timescales
• management co-ordination
• to ensure consistent approach to reviews
• consultation with the Commission and
  co-ordination with other NRAs
• impact of delay to Recommendation