Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on market reviews under the EU Regulatory Framework (3rd Report) - Further steps towards the consolidation of the internal market for electronic communications {SEC(2010)659}
Date: 2010-06-01
Institutions: European Commission
Subjects: electronic mail, information society, regulation of telecommunications, report, single market, transmission network

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EUROPEAN COMMISSION 

Brussels, 1.6.2010 
COM(2010)271 final 

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

on market reviews under the EU Regulatory Framework (3rd report) 

Further steps towards the consolidation of the internal market for electronic 
communications  

{SEC(2010)659} 

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TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

Introduction .................................................................................................................. 3 

Progress on market analyses ........................................................................................ 3 

More streamlined and focused regulation .................................................................... 4 

Commission guidance under the Article 7 procedure — cross-cutting issues............. 4 

Commission initiatives under Article 19 of the Framework Directive ........................ 5 

Regulatory developments............................................................................................. 6 

Fixed retail access and wholesale call origination ....................................................... 6 

Fixed and mobile termination ...................................................................................... 7 

4.3.  Wholesale broadband markets ..................................................................................... 8 

4.4. 

4.5. 

5. 

Leased lines.................................................................................................................. 9 

Outlook....................................................................................................................... 10 

Conclusions ................................................................................................................ 11 

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1. 

INTRODUCTION 

The  regulatory  framework  for  electronic  communications  which  entered  into  force  in  2003 
introduced the 'Article 7 procedure' — an EU consultation mechanism which aims at ensuring 
a  consistent  regulatory  approach  within  the  EU.  The  recently  revised  telecoms  rules1 
confirmed the central role of the Article 7 procedure in promoting a competitive single market 
for electronic communications services. They give the Commission additional responsibilities 
for imposing and implementing remedies. This is intended to give market players greater legal 
certainty when they invest in telecoms across borders. 

Since  2003,  telecoms  markets  have  become  more  competitive  and  services  and  products 
increasingly accessible across Europe. This is partly the result of action by national regulatory 
authorities  (NRAs),  for  example  imposing  access  and  pricing  obligations  on  operators  with 
significant market power (SMP), and partly because the Commission’s supervision of NRAs` 
draft  regulatory  measures  has  ensured  a  consistent  approach  to  regulation  across  the  EU. 
Regulation  has  undoubtedly  become  more  focused  on  persistent  bottlenecks,  and  regulatory 
procedures have become more streamlined and effective. 

However,  problems  remain.  The  single  market  for  telecoms  is  far  from  being  a  reality  and 
further efforts need to be made. Not all Member States are advancing at the same pace with 
their market reviews. Not all NRAs follow the appropriate regulatory approaches, especially 
when it comes to remedies for tackling competition problems. The resulting complex picture 
of  competitive  conditions  that  differ  from  one  Member  State  to  another  thus  continues  to 
hamper the further development of the internal market. While incumbent operators generally 
still have SMP, particularly in upstream fixed telephony and broadband access markets, Next 
Generation  Access  (NGA)  networks  are  being  rolled  out  across  Europe.  Their  deployment 
requires substantial investment, but the demand for services that need high-speed broadband 
connections remains uncertain. To foster investment and innovation, it is therefore necessary 
to provide regulatory certainty for investors while maintaining effective competition.  

the  major 

trends  and 

This  Communication  presents 
the 
Commission’s 2007 Communication on the market review process2, up to the end of 2009. It 
shows  how  and  to  what  extent  the  Commission’s  oversight  role  under  Article 7  of  the 
Framework Directive3 has been instrumental in working towards a single European telecoms 
market. Finally, it identifies several key areas in which the Commission may be required to 
provide further guidance to Europe’s telecoms regulators to ensure a level of consistency and 
predictability that will give market players the confidence to further invest in the EU market. 

issues  encountered  since 

2. 

PROGRESS ON MARKET ANALYSES 

NRAs  have  made  uneven  progress  with  their  market  analyses  under  Article 7  of  the 
Framework Directive. Some have started their third round reviews, while others are still in the 
first  round4.  The  Commission  has  reviewed  more  than  1000  notifications  from  NRAs  and 

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The revised EU telecoms rules, adopted on 25.11.2009, to be transposed by 25.05.2011. (See OJ L 337, 
18.12.2009, p. 37.). 
COM(2007)401 dd. 11.07.2007. 
Directive 2002/21/EC, OJ L 108, 24.4.2002. 
An overview can be found in Annexes II, III and IV of the Staff Working Document (SWD). 

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issued comments on about 60 % of them. In about 4 % of cases, NRAs withdrew their notified 
draft  measure  after  receiving  reasoned  advice  from  the  Commission.  In  less  than  1 %  of  all 
cases  the  Commission  objected  to  the  intended  regulation5.  The  Commission  has  always 
responded to NRAs’ draft measures in order to provide guidance and ensure a consistent yet 
appropriately nuanced regulatory approach across Europe. Experience shows that, on balance, 
NRAs take due account of this guidance.6 

3. 

MORE STREAMLINED AND FOCUSED REGULATION 

Ongoing  technological  developments  and  the  enforcement  of  telecoms  regulation  in  the 
Member  States  have,  over  the  years,  lowered  market  entry  barriers  and  enabled  alternative 
operators  to  increasingly  constrain  the  market  power  of  SMP  operators.  To  re-focus 
regulatory  efforts  and  resources  on  key  competition  bottlenecks,  it  was  necessary  to  re-
evaluate the 2003 Recommendation on relevant markets7 and to further streamline the Article 
7 procedure. 

A key insight of the 2007 Communication on the market review process was that the Article 7 
procedure  had  been  particularly  successful  in  ensuring  a  consistent  interpretation  of  where 
regulation is appropriate, but less successful in identifying which regulation is needed. Since 
then,  however,  several  NRAs  have  found  that,  within  certain  telecoms  markets,  effective 
competition  came  to  some  geographical  areas  sooner  than  others.  The  question  as  to  where 
regulation is appropriate was thus raised again. 

Regulatory remedies still vary across Europe, even where the underlying market problems are 
very  similar.  This  is  a  serious  impediment  to  achieving  a  true  single  market.  In  particular, 
NRAs  continue  to  apply  divergent  price-setting  methodologies  when  regulating  key  access 
products  that  enable  alternative  operators  to  compete  against  the  dominant  undertakings 
which  own  most  of  the  access  infrastructure.  The  Commission  has  urged  NRAs  to  use 
appropriate cost-accounting methods and to consult the actual level of regulated access prices 
across the EU.8 

3.1. 

Commission guidance under the Article 7 procedure — cross-cutting issues 

3.1.1.  Geographical differentiation 

Regulation  of  wholesale  inputs  for  broadband  services  has  allowed  competitors  to  invest  in 
their own infrastructure (LLU9), and this has led to more competition, particularly in densely 
populated  areas.  Some  NRAs  have  considered  regionally  differentiated  competitive 
conditions when defining the geographical market, and have adjusted their regulation to take 
account of those differences between sub-national markets. Other NRAs have considered such 
differences when imposing remedies. To ensure a consistent approach to identifying genuine 
differences in competitive conditions, the Commission has advised NRAs to define separate 

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In nearly 3 % of the cases the Commission opened an additional assessment period (Phase II). 
An overview of the Article 7 procedure can be found in Annex I. 
Commission Recommendation 2003/311/EC, OJ L 114, 8.5.2003. 
LT/2009/0990, SI/2009/1010, SE/2009/1018, DK/2009/1023. 
Local loop unbundling. 

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geographical  markets  only  when  the  competitive  conditions  in  different  geographical  areas, 
and the boundaries between these areas, are stable over time.10 

3.1.2.  Functional separation and commitments 

than 

Discussions  on  different  forms  of  business  separation  of  incumbent  operators  have  been 
increasing in a number of Member States11. Under the current EU telecoms rules, NRAs can, 
in  exceptional  circumstances, 
traditional  access-related 
impose  remedies  other 
obligations,  if  authorised  by  the  Commission.  One  such  remedy  is  functional  separation, 
which requires  a  dominant network  operator to separate organisationally its network and its 
service provider businesses. The Commission has been stressing that commitments offered by 
SMP  operators  and  accepted  by  NRAs,  insofar  as  they  aim  at  enforcing,  modifying  or 
replacing  existing  regulatory  obligations,  must  be  considered  as  directly  related  and/or 
ancillary  to  those  existing  regulatory  obligations.  As  such,  they  must  be  subject  to  national 
and  EU  consultations  before  adoption,  to  ensure  the  transparency  of  the  process  and  an 
adequate  involvement  of  all  stakeholders.  NRAs  must  also  ensure  that  separation 
commitments do not negatively affect investment by the incumbent and new entrants, and that 
alternative  operators  have  at  least  the  same  access  possibilities  under  a  commitment-driven 
approach as under a purely regulatory approach. 

3.2. 

Commission initiatives under Article 19 of the Framework Directive 

3.2.1.  Procedural Recommendation 

In  2008  the  Commission  adopted  a  revised  Procedural  Recommendation12  to  reduce  the 
administrative  burden  of  the  regulatory  process.  To  increase  legal  certainty  for  NRAs  and 
market  players  and  to  ensure  a  timely  implementation  of  regulatory  measures,  the  revised 
Recommendation  invites  NRAs  to  notify  simultaneously  the  market  analysis  and  the 
(withdrawal of) remedies. To streamline procedures for NRAs and the Commission, it allows 
NRAs  to  use  a  'short  form'  to  notify  four  types  of  measures13.  In  principle  the  Commission 
will not comment on such notifications. 

Since then, the Commission has received mostly short notification forms for markets that are 
no longer listed in the Recommendation on relevant markets and where the NRA considered 
that the market no longer warrants ex ante regulation.14 In one of these cases the Commission 
nonetheless  urged  the  regulator  to  mandate  an  appropriate  period  of  notice  before  actually 
withdrawing  the  existing  obligations.15  Only  a  few  cases  related  solely  to  changes  in  the 
technical details of a remedy.16 

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UK/2007/0733, PT/2008/0851, ES/2008/0805, FI/2009/0900. 
UK, SE, SL, IT, PL, PT. 
Commission Recommendation 2008/850/EC, OJ L 301, 12.11.2008. 
Namely, decisions (i) to de-regulate markets no longer listed in Recommendation 2003/311/EC; (ii) not 
to  regulate  markets  included  in  the  Recommendation  but  which  remain  effectively  competitive;  (iii) 
amendments  to  technical  details  of  a  previously  imposed  remedy;  and  (iv)  the  extension  of  existing 
measures to another market player in a similar situation. 
e.g.  ES/2008/0817,  PL/2008/0831,  CZ/2008/0840,  NL/2008/0849,  CZ/2008/0857,  CZ/2009/0872, 
SI/2009/0893,  SK/2009/0954,  SE/2009/0968,  PL/2009/0971,  FI/2009/0985, 
IT/2009/0998, 
IT/2009/0999, SK//2009/1008, DK/2009/1024. 
IT/2009/0999. 
e.g.  IT/2008/0842,  BE/2009/0882,  UK/2009/0901,  IE/2009/0928,  PT/2009/0956,  RO/2009/1003, 
PT/2009/1011, PT/2009/1012, FR/2009/1028. 

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3.2.2.  Termination Rates Recommendation 

Termination  rates  are  on  a  downward  trend,  yet  there  are  still  large  gaps  between  mobile 
termination  rates17  and  between  fixed  and  mobile  termination  rates.  The  Commission's 
assessment of notifications regarding these markets revealed that these discrepancies are often 
due to differing regulatory approaches in terms of price control types, costing methodologies, 
the  treatment  of  asymmetries  and  the  implementation  of  glide  paths.  In  its  comment  letters, 
the  Commission  therefore  consistently  invited  NRAs  to  work  towards  the  application  of  a 
coherent cost-accounting method, to apply a forward-looking long-run incremental cost model 
to bring termination rates down to a level reflecting the cost of an efficient operator, and to 
establish  without  delay  glide  paths  to  symmetric  termination  rates,  so  as  to  continue 
encouraging operators to become efficient as quickly as possible.  

To  consolidate  these  principles,  the  Commission  adopted  a  Recommendation  on  the 
Regulatory  Treatment  of  Fixed  and  Mobile  Termination  Rates  in  the  EU18,  giving  general 
guidance on this issue. This Recommendation sets out clear costing principles to be applied 
by NRAs when calculating termination rates. It states that termination rates should be set at 
the  level  of  efficient  costs  as  from  31  December  2012  at  the  latest,  although  less  well-
resourced NRAs may apply alternative methodologies aiming at the recommended objective 
until 1 July 2014. 

4. 

REGULATORY DEVELOPMENTS 

4.1. 

Fixed retail access and wholesale call origination 

4.1.1.  Market definition 

The  Recommendation  on  relevant  markets  no  longer  distinguishes  between  residential  and 
non-residential  customers  in  the  retail  fixed  access  market  since,  in  most  Member  States, 
contractual  terms  do  not  differ  significantly  between  the  two  types  of  access.  Nevertheless, 
the Commission has accepted the need to maintain this distinction in some countries19 in view 
of  particular  national  market  circumstances.  When  it  comes  to  including  broadband  access 
services  in  the  retail  access  market,  the  Commission  has  pointed  out20  that  NRAs  must 
demonstrate  that  unbundled  broadband  and  narrowband  access  products  are  substitutes, 
especially  in  terms  of  their  function  and  their  pricing  structure.  The  Commission  has 
expressed  its  doubts  on  the  inclusion  of  wholesale  access  services  in  the  wholesale  call 
origination  market,  as  access  services  complement  rather  than  substitute  call  origination 
services.21  

4.1.2.  Remedies 

In both  of the above markets, incumbents still have around 90 % market  share  in  almost  all 
Member  States.  The  Commission  was  concerned  with  the  effectiveness  of  both  retail  and 

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BG/2009/866 and MTR Benchmark Snapshot, ERG (09) 23_final_090604. 
Commission Recommendation 2009/396/EC, OJ L 124. 
AT, BG, FR, IT, NL, UK. 
IT/2009/0890, DE/2009/0897, BG/2009/0911, SE/2009/0965, RO/2009/1001. 
DK/2005/0141, NL/2008/0822. 

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wholesale  regulation22  and  stressed  that  NRAs  should  analyse  the  effects  of  existing 
wholesale remedies when assessing the need for retail regulation. Carrier (pre-)selection and 
wholesale line rental (WLR) are imposed in most Member States either in the access or in the 
call  origination  market.  WLR  allows  alternative  operators  to  climb  the  investment  ladder 
towards full unbundling and to bundle their offers in the retail markets. Where WLR was not 
imposed  or  properly  implemented23,  the  Commission  invited  the  NRAs24  to  reconsider  this 
obligation. 

In its comment letters, the Commission mainly addressed the proposed price control and cost 
accounting remedies.25 It invited NRAs to impose or maintain price control obligations where 
wholesale  regulation  had  not  yet  proved  sufficient  to  ensure  competition  at  retail  level26  or 
where  there  was  a  risk  of  overpricing  by  the  SMP  operator27.  In  several  cases,  comments 
concerned the lack of detail in the notifications28, as this fails to ensure adequate transparency 
and  legal  certainty  for  market  players.  In  addition,  the  Commission  commented  on  the 
differentiation of the transparency obligation within the same relevant market29 as well as on 
the  non-imposition  of  accounting  separation30.  In  one  case,  the  Commission  reminded  the 
NRA  that  commitments  offered  by  the  incumbent,  replacing  or  supplementing  existing 
remedies or introducing new ones, must be notified under the EU consultation procedure.31 

4.2. 

Fixed and mobile termination 

4.2.1.  Market definition 

NRAs  continue  to  define  each  individual  fixed  and  mobile  network  operator  as  a  distinct 
relevant  market  for  call  termination  and  have  also  consistently  found  SMP.  In  mobile 
telephony,  some  NRAs  have  identified  relevant  call  termination  markets  for  mobile  virtual 
network operators (MVNOs) where such operators can determine their commercial terms and 
conditions for termination independently of their host networks32. 

4.2.2.  Remedies 

Both in its comment letters and its Termination Rates Recommendation, the Commission has 
urged  NRAs  to  set  termination  rates  at  the  cost  of  an  efficient  operator33,  thus  implying  a 
symmetric  level34.  In  particular,  the  Commission  pointed  to  the  use  of  a  forward-looking 

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CZ/2006/0356, EE/2007/0637-638, DE/2006/0402, SK/2007/0676, SK/2007/0696 and AT/2007/0579-
580, NL/2008/0821, BG/2009/0911, LV/2009/0960, MT/2009/0979, LV/2009/0994. 
e.g. DK, EE, DE, HU, LV, SK, AT, CZ. 
EE/2007/0637-638, HU/2007/0662-663, SK/2007/0740, LV/2009/0960, LV/2009/0994, 
RO/2009/1001-1002, DE/2009/1006. 
e.g. ES/2008/0815, LU/2006/0526-527, BE/2007/0640, DE/2006/0402, IE/2007/0632, AT/2006/0543, 
CZ/2006/0351, SK/2007/0740, UK/2009/0898,DE/2009/1006. 
EE/2007/0637-638, SK/2007/0696. 
ES/2008/0815, CZ/2008/0755. 
LV/2007/0565-566, GI/2007/0710-711, EE/2007/0637-638, IE/2007/0632, PL/2006/0380, 
GI/2007/0716, LV/2009/0994. 
ES/2008/0815. 
DE/2006/0402, LV/2007/0565-566, SK/2007/0696, LV/2009/0994. 
IT/2009/0890. 
ES/2007/0706, DE/2008/0813, DK/2009/1014. 
FR/2007/0669, FI/2008/0778, IT/2008/0779, PL/2008/0794, DK/2009/1014, GI/2009/0976-0977. 
ES/2007/0598, PT/2007/0707, DK/2008/0785, GI/2009/0976, PL/2009/0996. 

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LRIC35 model36 and underlined that glide paths towards an efficient rate should be set without 
delay37 and  notified under  the  Article 7  procedure38. In seeking to define relevant costs, the 
Commission continued to highlight the importance of LRIC models using the current costs of 
an  efficient  operator  employing  efficient  technology39.  Furthermore,  the  Commission 
underlined that relevant costs considered for wholesale call termination charging purposes are 
typically  the  additional  costs  involved  in  providing  the  service40.  NRAs  are  increasingly 
committing  themselves  to  apply  the  costing  approach  set  out  in  the  Commission’s 
Termination Rates Recommendation41. 

4.3.  Wholesale broadband markets 

4.3.1.  Market definition 

The efficient roll-out of NGA networks is, as highlighted in the Digital Agenda42, a priority 
for the Commission. NGA deployment had a particularly strong impact on market definition 
—both  in  the  market  for  wholesale  fixed  network  infrastructure  access,  including  shared  or 
fully  unbundled  access  (LLU),  and  in  the  market  for  wholesale  broadband  access  (WBA). 
This was because NRAs had to decide on the inclusion of access products based on different 
types of infrastructure (FttN43, FttH44 or VDSL). 

The Commission has repeatedly held that, where similar services can be provided over both 
copper  and  fibre  networks,  both  should  be  regarded  as  substitutes  and  part  of  the  same 
relevant market. Accordingly, where NRAs decided to include fibre-based access products in 
the  definition  of  the  LLU  and  WBA  markets45,  the  Commission  endorsed  this  inclusion. 
Where NRAs excluded such products46, this was in general due to factors such as the lack of 
(an extensive) fibre access network deployment. In such cases, the Commission called on the 
NRAs to monitor market developments, taking into account the increasing availability of fibre 
networks and operators' rollout plans.47 

A recurrent issue was the inclusion of cable in the WBA market, on the basis of direct48 or 
indirect constraints49. The Commission acknowledged that, even in the absence of a relevant 
wholesale  cable  access  offer,  competition  at  the  retail  level  from  vertically  integrated 
undertakings could exert an indirect constraint, but that this constraint should not usually alter 

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Long run incremental cost. 
BG/2009/0866, DK/2009/0914, CZ/2009/0959, SE/2009/1018. 
IE/2008/0746, CZ/2009/0959. 
DE/2008/0813. 
UK/2006/0498, EL/2008/0786, IT/2008/0802, PL/2009/0991. 
EL/2008/0786, IT/2008/0802, SE/2009/0941, DK/2009/1014. 
FR/2008/812,  IT/2008/0802  (hereafter  regulator  committed  to  adopt  a  cost  model  in  line  with  the 
Recommendation by 2010), BG/2009/0865, BG/2009/0866, RO/2009/0878, AT/2009/0910. 
On 19 May 2010, under the umbrella of the Europe 2020 strategy (COM (2010) 2020), the Commission 
adopted a Digital Agenda for Europe. 
Fibre to the Node/Cabinet. 
Fibre to the Home/Building. 
E.g.  EE/2009/0942,  FI/2008/0839,  FR/2008/0780,  IE/2009/0875,  NL/2008/827,  PT/20080850  (LLU 
and  BE/2009/0950,  EE/2009/0943,  FI/2009/0900,  FR/2008/0781, 
market);  BE/2007/0736 
NL/2008/0827, PT/2008/0851 (WBA market). . 
E.g. CY/2009/0869, CZ/2009/0933 withdrawn by NRA, DK/2008/0860, EL/2009/0934, SK/2009/0929 
withdrawn by NRA (LLU market); CY/2009/0870, CZ/2008/0797, EL/2009/0935 (WBA market). 
e.g. AT/2009/0970, CY/2009/0870, CZ/2008/0797, EL/2009/0935. 
MT/2008/0803. 
More details can be found in Chapter 5.1 of Annex III in the SWD. 

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the  market  definition  and  should,  instead,  be  taken  into  account  in  the  context  of  the  SMP 
assessment.50 In one case, given present national circumstances, the Commission accepted the 
inclusion  of  mobile  broadband  connections  in  the  residential  retail  broadband  market  as  a 
direct  substitute  for  xDSL  and  cable  broadband  access  products.  This  allowed  the 
deregulation  of  the  wholesale  broadband  access  market  as  regards  the  supply  of  broadband 
connections to residential customers.51 

4.3.2.  Remedies 

The LLU market was found to be non-competitive and is regulated in all Member States that 
have  notified  it.  The  WBA  market  was  found  to  be  non-competitive  in  almost  all  Member 
States with the exception of Malta52. In the UK and Portugal, the market was geographically 
segmented and parts of the national territory were found to be effectively competitive.  

As  with  the  proper  delineation  of  markets,  the  most  important  developments  with  regard  to 
remedies are linked to the deployment of NGAs. In the LLU market, some NRAs put in place 
obligations to ensure access to the sub-loop, ancillary services (co-location) and appropriate 
backhaul in the FttN scenario53. As regards access to FttH, some NRAs mandated unbundled 
access  to  fibre  loops54  at  cost-oriented  prices,  including  a  risk  premium55.  Two  NRAs 
proposed to mandate access to in-house wiring on all operators rolling out fibre lines into the 
homes  of  consumers,  regardless  of  whether  these  operators  have  SMP.  This  is  known  as 
'symmetric'  regulation.56  Another  significant  development  is  the  proposal  to  oblige  the 
incumbent to grant access to civil works infrastructure57. Some Member States also explicitly 
addressed the issue of transparency58 and of migration from copper to fibre networks59. Where 
this was not the case60, the  Commission invited the  NRAs  to develop remedies spelling out 
the  details  of  the  migration  process,  since  business  cases  for  alternative  operators  are 
substantially affected by this migration and by the dismantling of exchanges. In any event, the 
variety  of  approaches  followed  by  NRAs  underlines  the  need  for  further  guidance  by  the 
Commission. 

In  the  WBA  market,  some  NRAs  imposed  limited  or  no  remedies  on  certain  networks  or 
functionalities,  considering  the  obligations  imposed  in  the  LLU  market.61  Here  the 
Commission  emphasised  the  need  to  monitor  the  market  to  ascertain  whether  remedies 
imposed in the LLU market are sufficient to produce effective competition at retail level and, 
if not, to impose the appropriate remedies in the WBA market.  

An examination of the methodologies applied for defining cost orientation has shown that the 
NRAs` approaches differ unnecessarily. What is needed here is a more coherent approach, to 
regulatory accounting for key inputs across Europe. 

4.4. 

Leased lines 

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e.g. UK/2007/0733, DK/2008/0862. 
AT/2009/0970. 
MT/2008/0803. 
e.g.DE/2007/0646, BE/2008/0801, SI/2009/0957. 
NL/2008/0826, SI/2009/0957. 
NL/2009/0868, SI/2009/0957. 
ES/2008/0820, FR/2009/993. 
e.g.FR/2008/0780, EE/2009/0942, ES/2008/0804, PT/2008/0851, IT/2009/0891. 
e.g. FR, ES, EL. 
e.g. BE, ES, NL, DK, EE. 
e.g. FI/2008/0839, IT/2009/0988. 
e.g.NL/2008/0827. 

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4.4.1.  Market definition 

Functioning  leased  line  markets  are  important  for  competition  and  NGA  deployment.  The 
precise  delineation  between  the  trunk  and  terminating  segments  of  leased  lines  is  highly 
dependent  on  the  topology  of  each  national  network.  Some  NRAs  segmented  wholesale 
terminating segments of leased lines according to bandwidth62. Other NRAs instead identified 
significant geographical variations in competitive conditions and proposed to define separate 
geographical  markets63.  One  NRA64  segmented  terminating  segments  of  leased  lines 
according to their intended use and proposed to deregulate leased lines connecting with base 
stations  of  mobile  network  operators.  The  Commission  accepted  that  it  was  technologically 
neutral to include in the market definition wholesale leased lines with alternative interfaces, 
such  as  Ethernet-based  products  that  are  functionally  equivalent  to  traditional  interfaces  in 
terms of their capacity and connectivity to leased lines.65 

4.4.2.  Remedies 

All  NRAs  that  notified  the  market  for  terminating  segments  of  leased  lines  found  that  the 
fixed incumbent operator had SMP66. The Commission stressed that the scope of the proposed 
obligations should be limited to remedying the lack of competition in the market concerned.67 
Regulatory obligations should not be imposed for too long a period if competitive conditions 
are  likely  to  improve  in  the  short  or  medium  term68.  On  price  control  obligations,  the 
Commission  recommended  direct  regulatory  intervention  rather  than  self-regulation  by  the 
incumbent  operator69.  With  regard  to  the  markets  assessed  as  competitive,  the  Commission 
stressed  that  regulatory  obligations  should  be  withdrawn  only  after  a  transition  period  long 
enough to enable operators to eliminate remaining bottlenecks in their networks.70 

4.5. 

Outlook 

The  revised  EU  telecoms  rules  will  give  the  Commission  additional  responsibilities  with 
regard to the imposition and implementation of remedies by NRAs. In ensuring that the EU 
regulatory  framework  is  applied  consistently,  the  Commission  will  work  closely  with  the 
newly  created  Body  of  European  Regulators  in  Electronic  Communications  (BEREC),  in 
order  to  develop  a  single  market  for  electronic  communications  services,  to  the  benefit  of 
consumers and businesses. 

The  Article  7  procedure  has  allowed  the  Commission  to  identify  areas  where  more focused 
regulation  is  desirable,  where  new  forms  of  regulation  seem  to  be  emerging  and  where 
withdrawal of regulation could be possible. In this context, the Article 7 procedure provides 
key  insights  for  the  Commission’s  regular  review  of  the  Recommendation  on  relevant 
markets.  However,  the  Article  7  procedure  has  also  shown  that  NRAs  are  still  applying 
divergent  approaches  to  similar  competition  problems.  This  impedes  the  development  of  a 
true  single  market.  Examples  include  the  imposition  and  implementation  of  WLR,  the 

62 
63 
64 
65 
66 

67 
68 
69 
70 

LT/2006/0430, EL/2006/0422, UK/2008/0747, UK/2008/0787, NL/2008/0823, AT/2008/0836. 
UK/2008/0787, AT/2008/0836. 
IT/2009/1000. 
e.g. EE/2007/0643, DE/2007/0677. 
One  NRA  found  no  SMP  on  a  more  narrowly  defined  market  for  very  high  capacity  terminating 
segments of leased lines, i.e. UK/2008/0787. Another NRA found SMP only on the low capacity leased 
lines market, i.e. LT/2006/0430. 
NL/2008/0823-0825. 
UK/2008/0859. 
EE/2007/0643. 
IT/2009/0999-1000. 

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treatment  of  fibre  access  products  in  wholesale  broadband  markets  and  the  application  of 
costing  methodologies  for  calculating  access  or  interconnection  charges.  The  Article  7 
procedure has also revealed that regulatory approaches are evolving on the basis of separation 
commitments  by  incumbents  in  markets  where  traditional  obligations  have  been  found 
insufficient to tackle persistent market failures. This shows that NRAs need further guidance 
on  regulatory  principles  to  avoid  a  patchwork  of  approaches  across  the  EU,  as  this  would 
hamper  the  further  integration  of  markets  across  borders.  The  Commission  is  currently 
finalising  its  Recommendation  on  regulated  access  to  Next  Generation  Access  Networks 
(NGA), which builds on Commission guidance provided in the frame of national broadband 
market  reviews.  The  Commission,  together  with  BEREC,  may  need  to  provide  further 
guidance  to  NRAs  on  the  consistent  implementation  of  separation  commitments  and 
remedies. 

5. 

CONCLUSIONS  

By  ensuring  focused  and  consistent  telecoms  regulation  in  the  EU,  the  Article  7  procedure 
remains  key  to  promoting  a  single  market  for  electronic  communications  services.  The 
transparency built into the Article 7 consultation mechanism has already allowed it to provide 
very helpful guidance to NRAs. While notifying regulators generally took the utmost account 
of Commission comments, other NRAs have used them as guidance for their own regulatory 
strategies.  This  was  particularly  true  when  it  came  to  defining  product  and  geographical 
markets and assessing the competitive conditions in relevant markets. In addition, the revised 
Recommendation  on  relevant  markets  and  the  new  Procedural  Recommendation  have 
streamlined the regulatory process and focused the efforts of NRAs and the Commission on 
those markets where bottlenecks persist. To achieve greater consistency in applying remedies, 
the Commission has adopted the Recommendation on the regulatory treatment of mobile and 
fixed termination rates in the EU and is currently finalising its Recommendation on regulated 
access to Next Generation Access Networks. Finally, the telecoms reform package gives the 
Commission  and  BEREC  additional  responsibilities  pertaining  to  the  imposition  and 
implementation of remedies. This will further facilitate the development of a single market for 
electronic communications.  

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