Communication from the Commission to the Council, the European Parliament, the European Economic and Social committee and the Committee of the Regions on Market Reviews under the EU Regulatory - Framework Consolidating the internal market for electronic communications {SEC(2006) 86}
Date: 2006-03-16
Institutions: European Commission
Subjects: approximation of laws, information technology, regulation of telecommunications, single market, telecommunications, telecommunications industry, transmission network

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.3.2006 
COM(2006) 28 final/2 

Corrigendum 
COM(2006) 28 final 6.2.2006 
concerning version EN, pages 1 and 6 ; and versions FR/DE, pages 1 and 7 
(footnote No. 14) 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on Market Reviews under the EU Regulatory Framework 

Consolidating the internal market for electronic communications 

{SEC(2006) 86} 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on Market Reviews under the EU Regulatory Framework 

Consolidating the internal market for electronic communications 

1. 

INTRODUCTION 

The  regulatory  framework  for  electronic  communications  set  up  in  2002  involved  a  major 
overhaul  in  regulatory  approach,  linking  sector-specific  regulation  and  competition  law  in  a 
novel  way.  The  previous,  more  mechanistic  approach  to  regulation  was  replaced  by  an 
economic approach where regulation is based on competition law principles. It requires 
national  regulators  to  conduct  “market  reviews”  in  order  to  determine  whether  a  particular 
market should be regulated. Where a given market is susceptible to ex ante regulation and a 
regulator  finds  one  or  more  undertakings  to  have  significant  market  power  or  “SMP” 
(equivalent  to  “dominance”  under  competition  law)  on  that  market,  it  must  impose 
appropriate  regulation.  Conversely,  regulation  must  not  be  imposed,  or  existing  regulation 
must be withdrawn, where no undertaking is found to have SMP. The market review process 
is  subject  to  scrutiny  by  the  Commission  under  the  Community  consultation  mechanism 
established under Article 7 of the Framework Directive. 

The  aim  of  the  regulatory  framework,  with  the  Community  consultation  mechanism  at  the 
heart  of  it,  is  to  foster  competition,  investment  and  innovation  and  hence  help  meet  the 
objectives  laid  down  in  the  i2010  Agenda,  the  Commission’s  strategy  to  boost  growth  and 
jobs  in  the  communications  sector,  and  the  relaunched  Lisbon  agenda  on  growth  and 
employment. 

This Communication assesses the functioning of the Community consultation mechanism for 
electronic communications and the experience gained so far in its application. In its first two 
years,  the  consultation  mechanism  under  Article  7  has  given  the  Commission  deep  insight 
into developments on e-communication markets across the EU. This process is unfortunately 
not  yet  complete,  but  the  Commission  nonetheless  considers  it  appropriate  to  share  this 
knowledge with a wider audience. The conclusions set out in this Communication are a first 
assessment of the procedures and findings of this new instrument. They provide input for the 
forthcoming 
the  Commission’s 
Recommendation on relevant markets, in 2006. 

framework, 

review  of 

regulatory 

including 

the 

2. 

ARTICLE 7 PROCEDURES: OVERVIEW  

The Article 7 consultation mechanism has three main aims: (i) ensuring consistent regulation 
across the EU on the basis of competition law principles; (ii) limiting regulation to markets 
where  there  is  a  persistent  market  failure;  and  (iii)  bringing  more  transparency  in  the 
regulatory  process.  These  procedures  are  thus  instrumental  in  consolidating  the  internal 
market for electronic communications.  

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Article  7  of  the  Framework  Directive1  requires  national  regulatory  authorities  (NRAs)  to 
notify  the  Commission  and  other  NRAs  of  their  findings  as  to  market  definition  and  SMP 
analysis  and  the  regulatory  obligations  they  intend  to  impose  (or  remove)  (their  “proposed 
measures”).  The  Commission  then  has  one  month  in  which  to  assess  the  notification  of  the 
proposed  measures  (the  “phase  one”  procedure).  The  vast  majority  of  cases  are  handled 
within  this  one  month  period  by  a  letter  to  the  NRA  concerned,  which  may  contain 
Commission  comments  as  to  how  the  measures  in  question  could  be  further  improved.  In 
cases  where  the  Commission  considers  that,  in  terms  of  market  definition  or  SMP  analysis, 
the proposed measures would create a barrier to the single market or if it has serious doubts as 
to  the  measures’  compatibility  with  Community  law  (and  in  particular  the  common  policy 
objectives that all NRAs should pursue),2 it can conduct a more detailed investigation lasting 
a further two months (“phase two”). Following this in-depth investigation, should its concerns 
be confirmed, the Commission may require the NRA to withdraw the draft measures (“veto” 
decision)  and  possibly  resubmit  the  market  analysis  in  question  at  a  later  stage.  For 
transparency reasons, the Commission has so far adopted a decision in every case, even where 
it has no comments. 

3. 

ENHANCED COOPERATION AND TRANSPARENCY 

3.1. 

Commission and national regulatory authorities 

The  Article  7  consultation  mechanism  requires  close  cooperation  between  the  Commission 
and NRAs, and between the NRAs themselves. 

Before submitting a notification, NRAs may meet informally with the Commission to present 
the key elements of their analysis. Such pre-notification meetings allow the Commission and 
NRAs to identify and discuss issues of particular concern at an early stage. The Commission 
also uses these occasions to provide guidance to the NRAs as to the information and level of 
analysis required to support their conclusions. 

Notifications  from  NRAs  normally  comprise  all  elements  of  their  proposed  measures 
together, although some NRAs notify in two stages, remedies following market analyses. The 
Commission notes that the latter approach unnecessarily prolongs the regulatory process. 

Once  a  notification  has  been  received,  the  Commission  can  make  written  requests  for 
further  factual  information  to  the  NRA  concerned.  NRAs  have  the  right  to  withdraw  a 
notification at any time during the procedure. 

3.2. 

The role of other interested parties 

The regulatory framework provides for “national” consultation, during which all interested 
parties  are  given  an  opportunity  to  comment  on  the  NRA’s  analysis  and  proposals  for 
regulation. As the primary interlocutor for all stakeholders, the NRA informs the Commission 
of  the  view  of  third  parties.  Only  occasionally,  when  circumstances  so  require,  does  the 

1 

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Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common 
regulatory  framework  for  electronic  communications  networks  and  services  (the  “Framework 
Directive”), OJ L 108, 24.4.2002, p. 33. 
These  objectives  are  set  out  in  Article  8  of  the  Framework  Directive  and  cover  promotion  of 
competition, development of the internal market and promotion of EU citizens’ interests. 

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Commission  directly  receive  submissions  from  or  meet  with  stakeholders  (normally  on 
request).  As  a  matter  of  standard  practice  in  second  phase  investigations,  the  Commission 
invites interested third parties to comment directly. 

Although the Community consultation mechanism formally involves the Commission and the 
NRAs  only,  it  seeks  to  ensure  transparency  for  all  interested  parties.  Such  transparency 
helps  to  ensure  greater  quality  and  objectivity  in  the  NRAs’  analysis.  Non-confidential 
versions  of  all  notifications,  and  the  NRAs’  final  measures,  are  published  on  the 
Commission’s  dedicated  website3  within  a  few  days  of  receipt.4  The  Commission  also 
publishes non-confidential versions of comments, no comments and veto decisions. 

Most  NRAs  conduct  the  national  consultation  prior  to  Community  consultation.  This 
allows them to reflect the views of market players in the Community notification and to avoid 
the need for a second Community notification where the results of the national consultation 
lead the NRA to amend its draft measure. The Commission strongly supports this approach. 

3.3. 

The role of national competition authorities 

Market definition and analysis under the regulatory framework are based on competition law 
principles. Consultation between NRAs and the national competition authorities (“NCAs”) is 
therefore  essential.  Sector-specific  regulation  and  competition 
law  enforcement  are 
complementary instruments to promote the development of effectively competitive electronic 
communications markets to the benefit of users. 

In most instances, the NRAs have consulted the NCA in advance and this has often improved 
the market analysis. The Commission therefore encourages NRAs to obtain the NCAs’ views 
prior to notification. 

4. 

INSIGHT GAINED FROM NOTIFICATIONS RECEIVED SO FAR 

4.1. 

Definition of the relevant markets 

NRAs must define relevant markets based on national circumstances, taking into account the 
Recommendation  on  relevant  markets5  and  the  SMP  guidelines.6  Markets  that  could  be 
subject  to  regulation  are  selected  on  the  basis  of  EC  competition  law  principles.  In  its 
Recommendation,  the  Commission  developed  the  “three  criteria”  test  to  assist  the  Member 
States in this regard.7 For the markets contained in the Recommendation, it is presumed that 
these requirements have been satisfied.  

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http://forum.europa.eu.int/Public/irc/infso/ecctf/home. 
The Commission now plans to extend the availability of translations to the general public. 
Commission  Recommendation  2003/311/EC  of  11  February  2003  on  relevant  product  and  service 
markets  within  the  electronic  communications  sector  susceptible  to  ex  ante  regulation  in  accordance 
with the Framework Directive, OJ L 114, 8.5.2003, p. 45 (the ”Recommendation”).  
Commission  guidelines  on  market  analysis  and  the  assessment  of  significant  market  power  under  the 
Community  regulatory  framework  for  electronic  communications  networks  and  services,  OJ  C  165, 
11.7.2002, p. 6. 
Namely: (i) the presence of high and non-transitory barriers to entry, (ii) the absence of dynamic market 
conditions tending towards effective competition and (iii) the insufficiency of competition law alone to 
address adequately any related market failure. See further Recitals 9 to 16 of the Recommendation. 

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So far, NRAs have defined the majority of markets in line with the Recommendation, but in a 
number  of  instances  they  have  defined  markets  more  narrowly  or  more  broadly.  The 
Commission  has  not  objected  to  such  diverging  market  definitions  provided  that  each 
individual market definition and SMP analysis is in line with EC competition law principles. 
The Commission has also verified whether the sum of markets analysed by NRAs covers the 
entire scope of the corresponding markets of the Recommendation. 

Overall,  the  market  definitions  included  in  the  Recommendation  and  explained  in  the 
Explanatory  Memorandum  have  enabled  NRAs  to  carry  out  their  analyses  of  electronic 
communications markets  as  required by the legal framework. It has been argued that where 
markets  have  been  further  refined  this  may  lead  to  over-regulation  and  amount  to  an 
unnecessary  administrative  burden.  However,  in  the  Commission’s  experience  to  date,  such 
refinement  has  actually  helped  to  deregulate  the  sector,  as  it  has  allowed  regulation  to  be 
rolled back in those markets where sustainable competition has developed. For example, the 
delineation  of  wholesale  leased  lines  by  bandwidth  has  permitted  existing  regulation  in 
respect of very high bandwidth to be lifted.8 

4.2. 

Analysis of significant market power 

The EU regulatory framework aligned the threshold for SMP on the competition law concept 
of “dominance”, replacing the previous threshold for intervention, which was based on a fixed 
market share (25%). The competition law-based assessment of SMP often involves a thorough 
examination  of  legal  and  economic  issues,  including  questions  such  as  the  presence  of 
countervailing buyer power and the criteria for establishing collective dominance. 

In  assessing  SMP,  NRAs  look  at  whether  a  given  market  is  or  will  become  effectively 
competitive  within  the  lifetime  of  the  market  review.  The  Commission  essentially  verifies 
whether  the  NRA’s  assessment  is  in  line  with  EC  competition  law  principles  and  takes 
theutmost  account  of  the  SMP  guidelines  and  is  sufficiently  supported  by  evidence.  While 
market  shares  remain  one  indicator,  other  factors  (including  market  dynamics,  barriers  to 
entry and potential competition) are just as relevant to the overall analysis. 

4.3. 

Imposition and withdrawal of regulatory remedies 

Where  SMP  is  found,  NRAs  must  impose  remedies  on  the  operator(s)  concerned.  The 
Commission considers whether these remedies are appropriate, i.e. whether they are based 
on the nature of the problem identified, proportionate and justified in the light of the policy 
objectives set out in the Framework Directive.9 While the Commission has no power of veto 
over  remedies,  it  may  make  comments  which  NRAs  must  take  utmost  into  account.  The 
Commission must be notified of the measures adopted; it monitors how Member States have 
taken account of the comments made, and acts accordingly. 

A  significant  proportion  of  the  Commission’s  comments  so  far  have  related  to  the 
appropriateness of the remedies proposed. The Commission has commented on remedies 

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9 

See cases UK/2003/0035 – 0039 in relation to terminating segments of leased lines. 
Pursuant to Article 8(4) of the Access Directive. 

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which solved only part of the competition problem identified,10 appeared to be inadequate11 or 
might have produced effective results too late.12  

In  addition  to  taking  the  utmost  account  of  the  comments  made  by  the  Commission,  NRAs 
should  ensure  full  and  effective  enforcement  of  the  remedies  proposed  within  the  shortest 
possible timeframe.  

If the enforcement of a proposed remedy requires additional time (e.g. because an appropriate 
cost  model  is  still  to  be  developed),  NRAs  should  already  provide  in  the  notified  draft 
measure for temporary remedies addressing the competition failure identified.13 

Generally, NRAs have applied similar sets of remedies to similar market failures. However, 
the  detail  and  implementation  of  those  remedies  have  differed  considerably  from  one 
Member  State  to  another.  Such  differences  are  manifest,  for  example,  in  pricing  (e.g. 
methodologies for cost orientation), which has significant implications for the internal market. 
The question thus arises as to whether, and if so how, greater consistency in the application of 
remedies  can  be  achieved.  The  question  will  be  addressed  in  the  upcoming  review  of  the 
regulatory framework. 

4.4. 

Requests for withdrawal of measures (‘veto’ decisions) 

The  Commission  has  adopted  a  decision  requiring  NRAs  to  withdraw  their  proposed 
measures in four cases out of 229 (assessed by 30 September 2005).14 Such “veto” decisions 
ensure  that  no  measures  are  taken  at  national  level  that  would  be  incompatible  with 
Community law and in particular the common policy objectives that all NRAs should pursue. 
So far, the Commission has vetoed draft measures where it has found the evidence supporting 
a market definition or SMP analysis not to be sufficient. 

In all these cases the Commission exercised its power of veto to ensure coherent application 
of competition law principles across the EU.  

4.5. 

Horizontal issues 

The  consultation  mechanism  occasionally  reveals  failures  in  the  transposition  of  the  EC 
regulatory  framework  into  national  law.  By  putting  such  implementation  issues  under  the 
spotlight, the consultation mechanism may provide additional impetus to resolve these issues 
as  a  complement  to  the  Commission’s  other  powers,  particularly  its  power  to  start 
infringement proceedings.  

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12 

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14 

As  in  a  case  where  mobile  termination  rates  were  only  regulated  for  calls  originating  on  mobile 
networks or abroad, but not for calls originating on fixed networks. 
As in cases where price regulation was not based on the most appropriate cost model or where choices 
of cost model and cost accounting rules were left to the undertakings concerned. 
As  in  a  case  where  cost-oriented  mobile  termination  rates  based  on  an  LRIC  cost  model  were  left  to 
private  negotiations  between  operators  first,  before  the  regulator  intervened  in  the  context  of  dispute 
settlement. 
This  could  be,  for  example,  a  benchmark  or  retail  minus-based  price  control  obligation,  pending  the 
adoption of a full cost model for cost orientation. 
See  Commission  decisions:  C(2004)  527  in  cases  FI/2003/0024  and  FI/2003/0027,  C(2004)  3682  in 
case FI/2004/0082, C(2004) 4070 in case AT/2004/0090, and C(2005) 1442 in case DE/2005/0144. 

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To ensure continuity of the regulatory framework, all existing SMP obligations must remain 
in force until an appropriate market review is completed. In cases where no regulation is 
currently  imposed,  NRAs  can  only  impose  new  regulation  following  the  completion  of  an 
appropriate market review. In exceptional circumstances, where there is an urgent need to act, 
NRAs  may  adopt  provisional  measures.15  The  validity  of  the  provisional  measures  must  be 
limited in time and the related market analysis should be notified as quickly as possible. This 
horizontal approach contributes to one of the main objectives of the consultation mechanism, 
namely ensuring consistent regulation across the EU.  

5. 

MARKETS OVERVIEW 

This section provides a brief overview of the main trends and conclusions that can be drawn 
from the market review process, notwithstanding that the first round of market analysis is not 
yet complete. It is complemented by the Commission Staff Working Documents annexed to 
this  Communication,  which  provide  a  more  detailed  overview,  in  tabular  form,  of  all  cases 
assessed by 30 September 2005.  

5.1 

Fixed networks and services 

In  all  Member  States,  the  incumbent  has  continued  to  be  dominant  on  the  market  for  retail 
“access” – i.e. connection to a fixed telephony network enabling calls and related services to 
be made and received. However, competition is gradually emerging on both the domestic and 
international calls markets. This process has been facilitated by the application of appropriate 
remedies  (notably  carrier  selection/pre-selection16  and  wholesale  line  rental17)  and  the 
introduction of competing technologies, in particular VOIP.18,19 

Wholesale  markets,  conversely,  have  shown  few  signs  of  sustainable  competition  save,  in 
certain  limited  cases,  for  the  market  for  transit  services.20  The  provision  of  call  origination, 
which is needed by alternative operators to enable them to provide their own retail telephony 
and dial-up Internet services, is still an enduring bottleneck for competition. However, where 
effective remedies are applied at this level, they help to develop sustainable competition in the 
downstream  retail  (calls)  markets,  thereby  enabling  retail  regulation  to  be  phased  out.  As 
regards wholesale termination (services which operators buy from each other to enable their 
customers to make calls to different networks), all operators, irrespective of their size, have 
been found to be dominant, since, in line with the Recommendation, each operator’s network 

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20 

Pursuant to Article 7(6) of the Framework Directive. 
Facilities allowing customers to make calls using an operator other than the access provider either for 
each  individual  call  (carrier  selection)  or  systematically  (carrier  pre-selection).  Under  the  Universal 
Service Directive, where an operator is found to have SMP “for the provision of connection to and use 
of  the  public  telephone  network  at  a  fixed  location”,  NRAs  must  require  the  operator  concerned  to 
allow carrier selection and carrier pre-selection. 
Permitting  alternative  operators  to  offer  retail  access  services  together  with  call  services  to  end 
customers.  As  opposed  to  carrier  selection  and  carrier  pre-selection,  which  must  be  imposed  on 
operators having SMP on the relevant market, an obligation of wholesale line rental is imposed (where 
appropriate) at the regulator’s discretion. 
Voice  over  Internet  Protocol:  the  transport  of  voice  traffic  using  Internet  Protocol  technology.  VoIP 
traffic can be carried on a privately managed network (“IP telephony”) or the public Internet (“Internet 
telephony”). 
The  Commission  contributed  to  the  emergence  of  VOIP  technology  in  2003  through  the  financial 
instrument of the Multi-Annual Programme (MAP) managed by the European Investment Fund. 
Conveyance and/or switching or routing of calls. 

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constitutes  a  separate  market  on  which  it  has  a  monopoly  for  terminating  calls.  Regulators 
have been able to reflect differences in the size of operators by imposing lighter remedies on 
smaller  ones  (i.e.  by  applying  “asymmetric”  remedies).  The  Commission  has  supported  this 
approach where justified. In addition, the Commission has been keen to ensure that remedies 
in  this  market  are  effective:  for  example,  an  accounting  separation  obligation  can  render 
internal transfers visible and complement other obligations, while cost controls may provide 
the necessary transparency and legal certainty for market players, as well as helping to reduce 
termination rates.  

Finally,  as  regards  the  “last  mile”  of  the  telephony  network,  connecting  it  to  the  end  user 
(otherwise known as the  “local loop”), the incumbent has invariably  retained its near 100% 
market share. Effective access (by means of “local loop unbundling”) and price regulation at 
wholesale level has been essential as a means of fostering the development of competition in 
the downstream markets, where alternative operators depend on local loop access to provide 
their services. 

5.2 Mobile networks and services 

Unlike  fixed  markets,  the  markets  for  mobile  networks  and  services  have  proven  to  be 
generally  more  competitive  and  regulation  is  as  such  much  more  limited.  There  is  no 
regulation  at  retail  level,  and  wholesale  regulation  has  on  the  whole  been  restricted  to 
wholesale termination. 

the 
Three  wholesale  mobile  markets  have  been 
Recommendation: (1) access and call origination,21 (2) call termination and (3) international 
roaming. Mobile call origination enables operators or service providers (sometimes known as 
“virtual” network operators or “MVNOs”) to supply calls to retail customers by using another 
mobile operator’s network. Call termination is the mobile equivalent of fixed call termination, 
and  thus  similar  principles  (as  regards  market  analysis  and  remedies)  apply.  International 
roaming enables customers to make and receive calls when travelling abroad. 

in  accordance  with 

identified, 

As regards the market for access and call origination, regulatory intervention has in the main 
proved  unnecessary  given  the  level  of  competition  generally  observed.  However,  a  limited 
number  of  NRAs  have  nevertheless  considered  regulation  necessary,  where  one  mobile 
operator  was  found  to  have  single  dominance  or  two  or  more  together  found  to  be 
“collectively” dominant. 

As was the case for fixed call termination, all mobile network operators have been found to 
have SMP in the market for mobile call termination, in accordance with the principle of “one 
network, one market”. Moreover, where MVNOs have the ability to set their own termination 
prices  independently  of  the  “host”  network,  they  may  also  be  found  to  be  dominant.22  The 
regulatory  remedies  imposed  have  led  to  a  gradual  reduction  in  mobile  call  termination 
charges, although this reduction has not been equally steep in all Member States. 

As  regards  wholesale  international  roaming,  no  NRA  had  as  yet  notified  this  market  on  30 
September 2005. The market analysis requires cross-border data collection, on which NRAs 
are  cooperating  in  the  context  of  the  European  Regulators  Group.  In  the  meantime,  the 

21 

22 

As compared with fixed telephony, where access and call originations are delineated separately. 
The  point  made  above  in  relation  to  fixed  networks  and  services  on  the  effectiveness  of  remedies  is 
equally applicable to mobile call termination. 

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Commission  has  also  created  a  website  bringing  together  a  sample  of  already  published 
roaming tariffs of mobile telephony operators across the EU in a bid to contribute further to 
the transparency of roaming charges.23 

5.3 Broadband and broadcasting 

Wholesale  broadband  access  or  “bitstream”  access  enables  alternative  operators  to  provide 
broadband services to end-users by combining their own backbone network with parts of the 
incumbent’s  network.  Bitstream  access  is  generally  considered  to  be  an  essential  stepping 
stone for new entrants towards investment in full-scale roll-out of their network on the basis 
of local loop unbundling (first through “shared” and then through “full” unbundled access). In 
all  cases  up  to  30  September  2005,  NRAs  have  required  incumbents  to  provide  bitstream 
access. This has helped competition, inter alia in the provision of retail broadband services, to 
flourish.  Until  now,  the  wholesale  broadband  access  market  has  only  comprised  services 
based  on  the  traditional  telephony  network  (or  “PSTN”)  –  i.e.  ADSL.  In  order  to  include 
competing  technologies  (such  as  cable  or  satellite)  within  this  market,  the  Commission  has 
insisted  both  on  evidence  of  a  veritable  cable  or  other  technology-based  wholesale  product, 
and on evidence indicating substitutability between such wholesale product and ADSL. 

The wholesale market  for  broadcasting  transmission services is a market where  NRAs have 
most  deviated  from  the  Recommendation.  Lack  of  substitution  between  different  platforms 
(cable,  satellite  or  terrestrial)  at  wholesale  level  has  led  NRAs  to  subdivide  the  market  by 
platform  used.  While  the  factual  circumstances  of  the  market  appear  to  vary  substantially 
across the EU, in most Member States the main bottlenecks for competition seem to arise in 
national  analogue  and  digital  terrestrial  transmission  systems.  Consequently,  only  terrestrial 
transmission has so far been subject to market analysis and SMP remedies.  

6. 

CONCLUSIONS AND OUTLOOK TO THE FUTURE 

The  Commission  considers  that  the  market  review  process,  including  the  Article  7 
consultation  mechanism,  set  up  under  the  Framework  Directive  has  led  to  more  consistent 
regulation  and  therefore  represents  an  important  step  towards  the  creation  of  an  internal 
market for electronic communications. 

The  system  of  market  reviews  has  ensured that regulation is based on a thorough economic 
analysis and is strictly limited to markets in which there is persistent market failure. This has 
resulted  in  better  regulation.  As  regards  the  development  of  a  joint  European  regulatory 
culture, it is important to point out that all NRAs follow a common methodological approach, 
based  on  EC  competition  law  principles.  A  transparent  consultation  mechanism  further 
contributes to this development.  

Consistency  has  mainly  been  ensured  in  relation  to  where  regulation  is  appropriate  (the 
markets  and  the  market  position  of  players  operating  in  them),  but  to  a  lesser  extent  which 
regulation  (remedies)  is  appropriate.  The  Commission  is  currently  working  with  NRAs  to 
ensure that their discretion with regard to remedies is exercised in a consistent manner. 

23

IP/05/1217, 4 October 2005. 

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Whereas certain markets have exhibited the characteristics of enduring bottlenecks, a number 
of markets have already become effectively competitive in several Member States, allowing 
existing  regulation  to  be  rolled  back.  For  example,  retail  calls,  mobile  access  and  call 
origination  and  trunk  segments  of  leased  lines  are  markets  where  effective  competition  has 
been identified.24 

The consultation mechanism has created greater transparency in the regulatory process. The 
fact  that  market  players  are  systematically  consulted  by  the  NRAs,  the  Commission  takes  a 
position  in  every  case  and  all  final  documents  are  published  are  just  some  examples  of  this 
transparency. 

The system of market reviews established by the regulatory framework has on balance proved 
to  be  a  success.  Even  though  it  necessitated  some  initial  investment  in  analytical  and 
organisational  capacities  on  the  part  of  the  NRAs  and  the  Commission,  it  has  led  to  an 
approximation of regulatory approaches and has thereby helped to pave the way towards an 
internal  market  for  electronic  communications.  It  has  also  ensured  that  all  regulators  base 
their decisions on sound economic considerations and that regulation of markets for electronic 
communications has been kept to the minimum necessary. 

Although a large number of national markets remain subject to regulation there are signs of 
sustainable competition in other markets. This is true in particular of retail markets, but it is 
conditional on the effective enforcement of regulatory remedies at wholesale level or on the 
existence  of  alternative  infrastructure.  The  introduction  of  new  technologies  may  create 
additional competitive pressure, which can lead to less of a need for regulation. 

The  Commission  will  look  for  ways,  in  the  context  of  the  review,  to  decrease  the 
administrative  burden  on  companies  and  NRAs  and  to  streamline  procedures  even  further. 
The  Commission  has  launched  a  call  for  input  on  the  review  of  the  regulatory  framework, 
which also covers the market review procedures. 

24 

These  developments  will  be  taken  into  account  in  the  review  of  the  current  list  of  18  markets  in  the 
Recommendation.  For  further  details  of  competitive  markets  where  no  SMP  regulation  is  applied  see 
Annex I. 

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