Rethinking electronic communications : Europe and the others : annual conference On 27 May 2016, the Florence School of Regulation, Communications and Media Area (FSR C&M) Robert Schuman Centre for Advanced Studies European University Institute San Domenico di Fiesole, Florence.
Date: 2016-11-29
Institutions: Robert Schuman Centre for Advanced Studies
Subjects: data protection, digital technology, electronics industry, information technology, mobile phone, regulation of telecommunications

Issue 2016/01 
November 2016

Rethinking Electronic 
Communications: Europe and 
the Others
Anna Renata Pisarkiewicz and Silvia Solidoro

Annual Conference

On 27 May 2016, the Florence School of Regulation,  
Communications and Media Area (FSR C&M)

Robert Schuman Centre for Advanced Studies

European University Institute

San Domenico di Fiesole, Florence

On 27 May 2016, the Florence School of Regulation Communications 
and  Media  (FSR  C&M)  held  its  seventh  Annual  Conference. 
Following the adoption of the new Digital Agenda by the European 
Commission in May 2015, the event sought to look at ‘Europe and the 
Others’ to discuss whether the European Union has put in place the 
correct policies so as to seize the opportunities offered by the digital 
economy.  The  Conference  was  divided  into  three  sessions,  which 
dealt respectively with (i) experiences of other jurisdictions and the 
lessons to be drawn with respect to broadband deployment, the use of 
mobile technologies and data protection in the online world; (ii) risks 
and  opportunities  facing  the  European  electronic  communications 
sector in the near future and insights for reshaping and modernising 
European  regulation;  and  (iii)  challenges  related  to  the  Internet  of 
Things (IoT) and online platforms. 

The  event  gathered  different  stakeholders  together,  which  included 
representatives  from  National  Regulatory  Authorities  (NRAs), 
international  organisations,  academia,  and  industry,  as  well  as  law 
and consulting firms. The diversity of views ensured a lively debate. 
While participants agreed on various issues, the discussion revealed 
the need for further research on those issues that have as yet not been 
sufficiently  explored.  This  policy  brief  summarises  the  main  points 
raised during the discussion and seeks to stimulate further debate.

BRIEFPOLICYCopyright:IStock/JumpeestudioEurope and the Others

The objective of the first session was to look beyond Europe 
and to discuss the experiences of other jurisdictions with 
a view to identifying interesting policy lessons that could 
be  useful  to  further  boost  the  widespread  deployment 
and adoption of broadband technologies in Europe, and, 
more generally, to ensure that people and businesses can 
benefit  from  the  opportunities  brought  by  the  Digital 
Economy. 

First,  participants  looked  at  broadband  deployment  in 
selected Asia/Pacific countries (in particular, Hong Kong, 
Korea,  Japan,  Singapore,  New  Zealand  and  Australia), 
and  benchmarked  them  with  the  EU.  This  comparison 
revealed  that  although  broadband  has  been  widely 
adopted,  it  is  not  very  evenly  distributed.  For  example, 
in terms of mobile data, Finland not only uses more data 
than  anyone  else  in  the  world,  but  also  the  difference 
between Finland and other countries is quite substantial. 
With  respect  to  statistical  international  comparison, 
participants stressed that in order to properly reflect and 
compare  the  status  of  broadband  markets  in  individual 
countries, policy makers must proceed with caution and 
must take into account a range of indicators; in particular 
penetration, usage, coverage, price, services and speeds.1 
Only  with  a  wide  range  of  broadband  indicators,  can 
policy makers design and put in place effective broadband 
policies. 

The  discussion  confirmed  that  levels  of  competition 
in  national  broadband  markets  continue  to  vary  both 
among  countries  and  between  rural  and  urban  areas 
within  countries.  In  markets  where  end-users  have  a 
limited choice of broadband providers, prices for Internet 
access tend to be high. Participants also noted that there 
has been a remarkable evolution of broadband plans. For 
example,  residential  customers  in  Japan  and  Singapore 
are among the first to be offered 10 Gbps (at USD 90 and 
USD 131 monthly, respectively). 

With  respect  to  broadband  traffic  and  pricing,  a  much 
discussed issue is the so-called zero-rating. This practice, 
which  can  take  various  forms,  consists  of  not  charging 
subscribers  with  limited  or  metered  data  plans  for  data 
that is used by specific applications or Internet services. 

1.  With respect to Internet speed, it is important to differentiate between 
the advertised speed and the actual speed that is provided by the Inter-
net Service Provider (ISP). 

2 ■  FSRC&M | November 2016

Regulatory  authorities  across  the  world  have  adopted 
different approaches to zero-rating. While some consider 
it to be anti-competitive (as, among other things, it violates 
the principle of non-discrimination by a service provider 
with  significant  market  power)2  or,  in  contravention  of 
net neutrality regulations (i.e., Canada, Chile, India, the 
Netherlands), others have chosen to refrain from taking 
any action against such conduct. 

From  an  economic  perspective,  a  distinction  should  be 
made  between  zero-rating  that  involves  payment  from 
content providers to Internet service providers, and zero-
rating  that  does  not  involve  any  direct  payment.  In  the 
first case, it may be possible to identify zero-rating as part 
of  an  anti-competitive  strategy  on  behalf  of  a  powerful 
content  provider  who  seeks  to  gain  even  more  market 
power. The Internet service provider could, in this case, 
be  neutral  if  the  payment  received  compensates  for  the 
loss  of  revenue  on  the  data  user’s  side.  Often,  though, 
zero-rating happens to occur in the second case, in which 
Internet providers initiate zero-rating programs to attract 
subscribers,  riding  on  the  positive  network  effects  that 
powerful content providers trigger. In fact, the main pro-
competitive effect of zero-rating is that it allows firms to 
differentiate  the  products  and  services  that  they  offer, 
and it generates positive network effects which, in turn, 
increase consumers’ welfare. As Eisenach notes: 

“Most  zero-rating  programs  are  carrier  initiated  and 
do not involve payments to carriers by the providers of 
the  zero-rated  content.  Particularly  in  the  absence  of 
payments, zero-rating cannot plausibly be characterised 
as  anticompetitive  foreclosure  by  content  providers. 
Rather, to the extent that carriers elect to include certain 
content  providers  in  a  zero-rating  plan,  the  decision 
reflects the carrier’s unilateral determination that doing 
so improves the value of its platform”.3 

Zero-rating  may  be  an  optimal  strategy  that  exploits 
the  positive  multi-sided  network  effects  of  an  Internet 
provider’s  platform.  In  this  sense,  it  would  not  be  anti-
competitive  and  may  also  be  welfare  enhancing.    Zero-
rating is likely to be less of an issue when it is adopted in 
competitive markets and where data allowances are high 

2.  For example, if a given social media service is provided by mobile op-
erators  for  free,  while  users  of  other  services  have  to  pay  for  the  data 
consumed  while  using  the  service,  there  is  a  risk  that,  in  such  a  case, 
zero-rating may discriminate unfairly between services, thereby harm-
ing competition and limiting innovation. 

3.  NERA Economic Consulting (2015), The Economics of Zero Rating by 

Eisenach, J.A. 

or unlimited.4 Regulatory authorities, however, should be 
cautious,  as  zero-rating  can  have  detrimental  effects  on 
competition  among  content  providers  in  markets  with 
limited competition and demand-side lock-in effects. In 
any case, zero-rating constitutes a departure from strict 
net  neutrality,  which  some  consider  to  be  a  threat  to 
Internet growth. 
Attendees agreed on the need to analyse the compatibility 
of  EU  rules  with  domestic  legal  frameworks  governing 
net  neutrality,  taking  into  account  the  ultimate  goal  of 
reaching  a  harmonised  approach  throughout  the  EU. 
Although,  in  some  countries,  such  as  the  Netherlands, 
there  are  rules  forbidding  all  price  differentiation, 
so  that  no  form  of  zero-rating  is  allowed,  the  new 
European regulatory framework seems to leave room for 
interpretation. BEREC guidelines are supposed to clarify 
most of the aspects that are located in this ‘grey area’.5 

Participants  also  discussed:  (i)  different  forms  of 
incumbent operators’ separation – functional, structural 
and  ownership  -  that  have  been  adopted  over  time  in 
various  Asian  countries,  (ii)  the  extent  of  private  and 
public participation in broadband projects; and (iii) the 
impact of both on broadband deployment. It was noted 
that  while  separation  of  the  incumbent’s  wholesale  and 
retail  activities  mostly  concerned  copper  operations, 
recently  this  remedy  has  also  been  used  in  the  context 
of Next Generation Access Networks (NGANs). The aim 
of the remedy is to prevent the accumulation of market 
power by firms deploying such networks, thereby limiting 
their  ability  to  engage  in  anti-competitive  behaviors. 
Structural  separation  with  respect  to  NGANs  has,  for 
example,  been  adopted  in  Singapore,  Australia  and 
New  Zealand.  In  these  countries  structural  separation 
was  preferred  over  functional  separation  as  the  latter 
was  considered  insufficient  and/or  inapplicable  in  the 
respective national contexts. 6 

Given  the  importance  of  broadband  to  the  overall 
economy, various countries have decided to invest public 
funds  to  foster  the  development  of  communications 
markets.  Public  investment  typically  sought  to  extend 

4.  OECD (2015) Digital Economy Outlook.

5.  BEREC  (2016),  Draft  Guidelines  on  the  Implementation  by  National 

Regulators of European Net Neutrality rules.

6.  Functional  separation,  which  represents  a  stricter  form  of  operational 
separation, requires the creation of so-called ‘Chinese walls’ to separate 
the incumbent\s wholesale division from its retail division. In Europe, 
for example, this model was adopted in the UK with Openreach. 

access to underserved, mostly rural, areas and to upgrade 
existing networks with very high speed lines in areas where 
intense  service  competition  is  possible.7    Participants 
deliberated about the right level of public investment in 
communications  networks  to  reach  a  market  structure 
that would leverage the necessary investment without the 
need for public intervention. 
Next,  the  Conference  attendees  discussed  the  extent  to 
which  the  EU  model  of  regulation,  which  is  based  on 
the  concept  of  Significant  Market  Power  (SMP),  can  be 
meaningfully applied in other jurisdictions, in particular, 
Sub-Saharan  Africa,  which  in  many  aspects  exhibits 
features 
different  geographic  and 
than  the  EU.  One  of  the  main  differences  concerns  the 
importance  of  mobile  communication  in  relation  to 
other  technologies.  In  Africa,  mobile  communication 
allows  more  people  to  be  connected  than  any  other 
technology.  For  instance,  fixed  broadband  with  9.8 
million connections has a penetration rate of 1.4 per cent 
whereas 198 million mobile broadband connections have 
a penetration rate of 17.2 per cent. 

socio-economic 

Participants remarked that the EU SMP framework was 
based on the essential facilities doctrine, as it was initially 
thought of as a solution to monopoly problems that were 
raised by fixed infrastructure.8 However, the framework 
also  applies  to  mobile  communications  markets.  This 
implies  that,  as  a  matter  of  principle,  the  EU  model 
does  not  necessarily  need  re-thinking  in  order  for  it 
to  be  applied  in  countries  where  the  fixed  network  has 
scant penetration and is unlikely to become ubiquitously 
available.  If  properly  understood  and  implemented,  the 
SMP  framework  is  sufficiently  flexible  to  account  for 
the  specificities  of  mobile  markets.  However,  in  order 
to  benefit  from  this  flexibility,  regulatory  authorities 
need  to  have  sufficient  resources  that  will  allow  them 
to  properly  define  relevant  markets  that  are  in  need  of 
regulatory  intervention,  instead  of  simply  using  the  EU 
2003 or EU 2007 list of markets that are susceptible to ex 
ante regulation. The problem is that some countries may 

7. 

In  New  Zealand,  for  example,  the  government  adopted  the  Ultra-Fast 
Broadband (UFB) Network initiative, under which it allocated NZD $1.5 
billion to FTHH deployment, with a view to reaching 75% of households 
and businesses. The remaining 25% should be reached under the Rural 
Broadband Initiative.

8.  This  is,  of  course,  because  fixed  communications  markets  have  tradi-
tionally been characterised by the presence of a monopolist incumbent 
who benefited from exclusive rights granted by the State. Accordingly, 
to address problems raised by the presence of such incumbents, the EU 
developed its regulatory framework on the premise that market failures 
had been caused by the accumulation of market power by one firm. 

3 ■ Rethinking Electronic Communications: Europe and the Others

mechanically  incorporate  the  forms  of  the  EU  model, 
without  really  embracing  its  substance  and  its  main 
underlying principles. 

Participants acknowledged that effective enforcement of 
the EU regulatory framework is fully dependent on the 
independence of NRAs. Some participants remarked that 
the independence of the authorities seems to be working 
well as long as there is no economic and financial crisis. 
When  independence  is  not  assured,  ensuring  effective 
competition  in  the  communications  markets  becomes 
particularly  challenging,  especially  when,  in  a  given 
country,  there  is  no  competition  authority  that  will 
enforce  competition  law  ex  post.  Lack  of  competition 
enforcement is important, in particular, in the light of the 
last criterion of the EU three criteria test, which is used to 
determine whether a given market should be regulated. 
The  requirement  is  that  competition  law  alone  must  be 
insufficient to adequately address a given market failure. 

Attendees finally concluded that while the EU electronic 
communications  regulatory  model  has  a  number  of 
advantages and is sufficiently flexible to be meaningfully 
applied in other jurisdictions, it also suffers from various 
shortcomings which need to be addressed. For example, 
functionally equivalent services are sometimes regulated 
differently.9  According  to  the  BEREC  Report,  “OTT-1” 
services are defined as services that potentially compete 
with  traditional  electronic  communications  services, 
but  that  do  not  qualify  as  such.  The  EU  electronic 
communications regulatory model may also not be best 
suited to address freemium products (or multi-platform 
businesses).  In  fact,  in  accordance  with  the  definition 
provided  by  the  Framework  Directive  2002/21/EC,  an 
electronic communications service is a service normally 
provided  for  remuneration  (emphasis  added).  As  such, 
freemium services fall outside the scope of the application 
of the Regulatory Framework. 

To  conclude  the  first  session,  participants  discussed 
potential  privacy  issues  that  are  raised  in  the  context 
of  electronic  communications.  It  was  noted  that  the 
European  Directive  2002/58/EC,  also  known  as  the 
‘e-privacy  Directive’  complements  the  existing  data 
protection  regime  and  sets  out  more-specific  privacy 
rights  on  electronic  communications.  The  framework, 
in particular, covers: (i) marketing by electronic means, 
including  marketing  calls,  texts,  emails  and  faxes;  (ii) 

9. 

 BEREC (2015), “Report on OTT services”, BoR (15) 142.

the  use  of  cookies  or  similar  technologies  that  track 
information  about  people  accessing  a  website  or  other 
electronic services; (iii) the security of public electronic 
communications  services,  and  (iv)  the  privacy  of 
customers using communications networks or services as 
regards specific aspects. One of the aspects that certainly 
raises many questions is the extent of the territorial scope 
of the Directive in a context where local data protection 
authorities are increasingly scrutinising cross-border data 
processing  transactions.  There  is  a  need  for  worldwide 
companies  to  identify  exactly  whether,  and  which,  EU 
data protection law(s) apply to the processing of personal 
data that takes place either wholly or partially outside of 
the EU.

Participants  pointed  out  that  some  of  the  Privacy  and 
Electronic Communications (EC Directive) Regulations 
2003 (PECD) rules, which are directly derived from EU 
law and aim to implement the e-privacy Directive, only 
apply  to  organisations  that  provide  a  public  electronic 
communications  network  or  service.  However,  certain 
provisions  may  apply  to  firms,  even  if  they  are  not  a 
network  or  service  provider.  In  particular,  the  PECD 
will apply if a company: (i) markets by phone, email, text 
or fax; (ii) uses cookies or a similar technology on their 
website; or (iii) compiles a telephone or a similar public 
directory. Participants also pointed out that while privacy 
has  long  been  recognised  as  one  of  the  fundamental 
social  values,  the  emergence  of  a  market  for  data  calls 
for a better understanding of the value of that data and 
of how data protection regulation affects businesses. For 
example,  it  was  noted  that,  in  terms  of  marketing,  the 
choice to use opt-in or opt-out as the default option has a 
significant impact on online firm’s revenues.10 

Europe looking at the future 

the  evolution  of 

During the second session of the Conference, participants 
the  communications 
examined 
markets  in  the  EU  and  the  challenges  facing  both  the 
market  players  and  NRAs.  In  particular,  the  discussion 
focused  on  (i)  the  issues  raised  by  the  transformation 
of fixed communications markets from monopolistic to 
oligopolistic structures, and (ii) the challenges posed by 
the standard access regulation.

10.  The terms ‘opt-out’ and ‘opt-in’ refer to options given to individuals to 
either  avoid  receiving  unsolicited  marketing  materials,  or  to  indicate 
their interest in receiving such materials.

4 ■  FSRC&M | November 2016

Fixed  communications  markets  and  the  evolution 
from monopolistic to oligopolistic structures 

In Europe, one of the key objectives of the Digital Agenda 
is the transition to NGANs. First, participants reflected on 
the evolution of the communications markets in Europe, 
and,  in  particular,  on  how  the  situation  has  changed 
with  the  deployment  of  fibre.  Whereas,  in  the  past, 
national  communications  markets  in  the  EU  Member 
States  were  characterised  by  the  presence  of  a  single 
fixed  infrastructure  owned  by  the  incumbent  operator, 
nowadays, a number of markets can best be described as 
(tight)  oligopolies,  i.e.,  highly  concentrated  markets  in 
which a few firms are dominant. In some countries, this is 
due to the head-to-head competition between cable and 
telecoms  operators,  which  has  completely  changed  the 
competitive dynamics of the sector. For example, in 2011, 
around 80 per cent of fibre lines were provided by new 
entrants,  i.e.,  by  cable  firms,  whereas  in  2015,  the  fibre 
lines provided by such firms accounted for 55 per cent.

law.  Given 

Participants  conceded  that  whereas  the  concept  of 
single firm dominance had come to be well understood, 
joint  dominance,  or  tacit  collusion,  has  always  been, 
and  continues  to  be,  one  of  the  most  elusive  concepts 
that  fixed 
in  European  competition 
communications  markets  have  moved  away 
from 
the  traditional  notion  of  single  dominance  to  more 
oligopolistic  structures,  participants  pondered  about 
whether there is any need to adapt the current regulatory 
framework  in  order  to  address  potential  competition 
problems that may arise in terms of joint dominance. The 
main concern was that if the concept of joint dominance 
is not properly used, the risk of collusion in the electronic 
communications  sector  may  remain  unaddressed, 
thereby  causing  harm  to  consumers.11    For  example,  in 
the  Netherlands,  the  position  of  both  the  incumbent 
and  the  cable  operators  is  equally  balanced  in  terms  of 
market  shares,  which  illustrates  the  disappearance  of 
the traditional single dominance position. However, this 
does  not necessarily mean that the market  is  effectively 
competitive. Participants discussed whether  the current 
regulatory  regime  is  able  to  address  this  duopolistic 
situation  in  an  optimal  way,  and  they  stated  that  it 
probably is not. In particular, there is a risk of potentially 
costly  errors:  if,  following  a  withdrawal  of  access 

regulation,  access  seekers  disappear  from  the  market, 
then  they  will  not  return  very  easily,  even  if  access 
regulation is reintroduced. Even in oligopolistic markets, 
access  regulation  cannot  be  considered  useless.  In  fact, 
the total absence of regulation may lead to the creation of 
an environment that is quite conducive to coordination. 
Hence,  the  participants  agreed  that  access  regulation  is 
still necessary. 

However,  attendees  also  remarked  that  standard  access 
regulation  fails  to  adequately  address  the  duopoly 
problem.  Horstmann  et  al.  (2016),  for  example,  argue 
that  a  duopoly  leads  to  suboptimal  market  outcomes, 
since  it  is  prone  to  tacit  collusion  and  produces  high 
static  inefficiencies.12  It  was  also  noted  that  asymmetric 
regulation  in  a  symmetrical  duopoly  may  be  inefficient 
as  access  regulation  reduces  the  incentives  of  regulated 
telecoms firms to invest in respect of cable operators that 
are not subject to access regulation. 

An  additional  assessment  was  conducted  using  a 
comparative  analysis  of  other  markets,  where  there  is 
no  access  regulation,  as  is  currently  the  case  in  the  US. 
One  might  wonder  whether  this  market  delivers  the 
optimal  outcome  for  consumers.  Conference  attendees 
came to the conclusion that it probably does not, taking 
into  account  the  facts  that  prices  are  quite  high  and 
competition is scant. 

Finally, some participants submitted that, ideally, access 
regulation  should  secure  markets  with  at  least  three 
infrastructure-based players since, with two players, the 
risk of tacit collusion and high static inefficiencies is high. 
However, when less than three fixed infrastructure-based 
operators  effectively  compete,  all  fixed  infrastructure 
should be subject to sharing obligations. Such regulation 
should  then  be  symmetrical  so  as  to  secure  fair 
competition  and  investment  incentives.  It  should  also 
be  imposed  according  to  a  division  into  different  local 
areas,  at  one  single  access  level  per  area,  as  well  as  per 
infrastructure. 

11.  For analysis of competition issues that are raised by oligopolistic struc-
tures  in  the  communications  sector,  see,  for  example,  BEREC  (2015), 
Report on oligopoly analysis and regulation. 

12.  Horstmann,  N.,  Kraemer,  J.  and  Schnurr  D.  (2016),  Number  effects  in 
oligopolies:  How  many  competitors  are  enough  to  ensure  competition? 
Working Paper. SSRN 2016. 

5 ■ Rethinking Electronic Communications: Europe and the Others

The Challenges Posed by Standard Access Regulation 

The question of whether access is necessary in oligopolistic 
communications markets led to a wider debate about the 
degree to which regulators’ choices on access can shape 
the market. 

The  Conference  attendees  noted  that  network  access 
regulation continues being a topic of great impact. In the 
light of the European Commission’s public consultation 
on  the  evaluation  and  the  review  of  the  regulatory 
framework  for  electronic  communications,13  the  first 
strand of the debate focused on the analysis of the main 
trends that have recently emerged at the EU level. 

importance  of  properly 
Participants  stressed 
the 
justify  access 
that  can 
identifying  circumstances 
regulation,  and  they  discussed  how  this  regulation 
should  look.  They  also  remarked  that  two  main  views 
can  be  distinguished  when  analysing  the  results  of  the 
consultation. One is that of the incumbents arguing that 
lighter  access  regulation  would  increase  returns,  and 
therefore  the  incentives  to  invest.  According  to  them, 
the ultimate result would be more dynamic competition, 
and,  eventually,  a  better  deal  for  users.  On  the  other 
side,  parties  relying  on  regulated  access  claim  that 
regulation is necessary in order to create competition, as 
long as it allows a sufficient level of investment. As both 
positions offer perspectives that are definitely interesting, 
everybody agreed that they would need to be balanced. 
Furthermore, as these two opposite views agree, at least 
on  the  necessity  to  ensure  sufficient  investments,  this 
strand of the debate was followed by a discussion on the 
determination  of  the  optimal  level  of  competition  that 
is  needed  to  encourage  a  sufficient  level  of  investment, 
as  well  as  other  challenges  that  are  posed  by  standard 
access  regulation.  In  particular,  participants  discussed 
the challenges posed by standard access regulation, such 
as:  (i)  the  conflict  among  the  various  objectives  of  the 
regulatory  framework,  and  investment  as  one  of  them; 
(ii) support of inefficient market structures by regulation, 

13.  The  above-mentioned  consultation  took  place  from  11th  September, 
2015, to 7th December, 2015. The Commission launched it in order to 
gather input from Member States, its regional and local administrations, 
NRAs, technology providers and broadcasters, among others, with the 
objective  of  (i)  aligning  the  general  framework  with  the  market  and 
technological developments; and (ii) contributing to the Digital Single 
Market Strategy. 

and  (iii)  the  lack  of  an  adequate  approach  to  collective 
dominance. 

First, concerning the impact of regulation on investment, 
conference  attendees  noted  that  while  access  regulation 
normally  facilitates  competition  based  on  existing 
infrastructure,  it  deters  private  investment  in  NGANs, 
which  should  replace  old  networks.  It  was  argued  that 
under the standard access regulation regime, investment 
benefits  are  shared  with  competitors  and,  consequently, 
there  is  no  incentive  to  invest,  especially  when  private 
investors  have  to  bear  all  the  financial  and  policy  risks 
themselves.  Notably,  the  argument  is  supported  by  an 
extensive  economic  literature  analysing  the  impact  of 
competition  on  firm-level  investment,  as  well  as  the 
strategic  effects  underlying  infrastructure  investment 
decisions. Bourreau et al. (2012), for instance, use game 
theory  to  analyse  the  incentives  for  incumbents  and 
entrants to migrate from ‘old’ to ‘new’ technology, i.e., the 
NGA network.14 They find that NGA-related investment 
incentives  are  negatively  impacted  upon  by  access 
regulation charges in the ‘old’ copper networks.

Second, participants focused on the claim that standard 
access regulation supports inefficient market structures. 
It was recalled that the aim of the regulatory framework 
was  to  convert  monopolistic  into  competitive  markets, 
and  that,  accordingly,  the  framework  was  designed  to 
unconditionally support entry. This view has been further 
reinforced by the EU case law on margin squeeze. 

Some participants, moreover, voiced concerns that with 
the  ongoing  convergence  between  fixed  and  mobile 
communications,  there  is  a  risk  that  the  regulatory 
framework  could  result  in  duopolies.  Given  that  the 
current framework does not secure fixed access for pure 
Mobile Network Operators (MNOs), there is a risk that 
they could be driven out of the market when, for example, 
two  fixed  network  owners  also  have  a  mobile  network 
and compete on the provision of convergent fixed-mobile 
offers. In such a case, a pure MNO could not survive in 
the market by serving mobile customers only. 

As  for  the  wholesale  price,  it  has  been  shown  that  the 
relevant  cost  standard  for  the  Economic  Replicability 
Test (ERT) is incompatible with the economics of NGA 
networks  when  including  both  fully  fixed  and  variable 

14.  Bourreau, M., Cambini, C. and P. Doğan (2012), ‘Access Pricing, compe-
tition and incentives to migrate from “old” to “new” technology’, Inter-
national Journal of Industrial Organisation, vol. 30, pp. 713-723.

6 ■  FSRC&M | November 2016

costs’ recovery for the access seeker. This entails that only 
the variable part of the wholesale price should be subject 
to the ERT, as otherwise the price will conflict with the 
risk sharing principle.
Finally, participants also reflected on issues raised by the 
coverage  of  non-profitable  areas.  In  this  context,  it  was 
pointed out that it is investment that is unprofitable, not 
the  operations.  This,  in  turn,  implies  that  the  need  for 
public intervention should be limited to investment only. 

Finally,  the  Conference  attendees  raised  the  issue  of 
how to solve the competitive bottleneck problem and to 
ensure  consumers’  protection  at  the  same  time.  In  the 
Netherlands, for instance, the Authority for Consumers 
and  Markets  (ACM),  which  combines  sector-specific 
regulation  with  competition  powers,  has  a  particular 
in  consumer 
focus  on  generating 
welfare.  Within  this  framework,  the  ACM  plays  a  key 
role by applying a problem-oriented approach to all the 
sectors  that  fall  under  the  umbrella  of  its  action-based 
including  electronic  communications. 
competences, 
Finally, attendees  pointed out  that  consistent  efforts are 
also  required  on  the  NRAs’  side  in  order  to  implement 
consumer protection.

improvements 

Europe and Digital Technology

The  final  session  of  the  Conference  was  preceded  by 
a  keynote  speech  that  focused  on  the  reassessment  of 
regulation and the Internet of Things (IoT). 

The IoT is not a new concept, since the term had already 
been coined in 1999 by Kevin Ashton. It essentially refers 
to  the  system  of  interconnected  devices  that  provide 
a  whole  spectrum  of  new  and  innovative  services  by 
transferring  data  over  a  network.  While  it  is  difficult 
to  predict  exactly  how  the  IoT  will  evolve,  it  will  most 
certainly  affect  numerous  sectors  of  the  economy  to 
different  extents  and  at  different  speeds.  What  is  also 
certain is that the IoT is likely to create new regulatory 
challenges in various policy areas. 

The  keynote  speech  focused  on  three  main  areas 
concerning  privacy:  (i)  the  collection  and  control  of 
information; (ii) the effectiveness of privacy policies, and 
(iii) the need for a multi-level regulatory response. 

The  first  part  of  the  debate  dealt  with  privacy  issues. 
Privacy policies are meant to ensure that users know what 

kind of information about them is being collected; who 
controls the information collected and how it will be used. 
It is therefore essential that users are able to make a choice, 
which is to be understood as the ability to express the lack 
of consent to data collection. According to the EU’s new 
legal framework, which is contained in the General Data 
Protection Regulation (GDPR), consent must be (i) freely 
given, specific, informed and unambiguous; (ii) it must be 
expressed in a statement or by a clear affirmative action; 
and, last but not least, (iii) it should be easy to withdraw 
at any time without having to stop the use of the service 
provided.15  ‘Silence,  pre-ticked  boxes  or  inactivity’  are 
also deemed inadequate to express consent, and so would 
an informed consent given by an individual in a position 
of subordination, e.g., an employee, since it is presumed 
not to have been ‘freely’ given.

A declaration to obtain consent must be presented 

“in an intelligible and easily accessible form, using clear 
and  plain  language  and  it  should  not  contain  unfair 
terms.  For  consent  to  be  informed,  the  data  subject 
should be aware at least of the identity of the controller 
and the purpose of the processing”.16 

However, as participants noted, with the proliferation of 
connected devices, the effectiveness of privacy policies is 
being  seriously  challenged.  According  to  some  research 
(McDonald  and  Crano,  2008),  end-users  would  have 
to  spend  an  average  of  76  working  days  to  read  all  the 
privacy policies that are encountered in one year.17 With 
intermittent attention, users are unlikely to fully appreciate 
privacy risks. The problem is further compounded by the 
fact  that  these  complex  and  long  privacy  policies  may 
become very ineffective when users access them on small 
screen devices. This is because the small size of a screen 
can make these privacy policies more difficult to read and 
understand. 

To  fully  understand  the  problem  of  privacy  in  the 
context of the IoT, one should think of these connected 
devices  as  a  source  of  a  great  wealth  of  interconnected 

15.  Article 29 Data Protection Working Party (2014), Opinion 8/2014 on the 

Recent Developments on the Internet of Things.

16.  Regulation 2016/679 of the European Parliament and of the Council of 
27th April, 2016, on the protection of natural persons with regard to the 
processing of personal data and of the free movement of such data, and 
repealing Directive 95/46/EC (General Data Protection Regulation), O.J. 
[2016] L119. 

17.  McDonald, A. and L.F. Crano (2008), ‘The Cost of Reading Privacy Poli-

cies’, A Journal of Law and policy for the Information Society.

7 ■ Rethinking Electronic Communications: Europe and the Others

information - both non-personal and personal - that can 
be  tracked  and  used.  Moreover,  personal  information 
can be analysed to identify patterns in people’s behavior, 
with the risk of being exploited. Participants agreed that 
adopting effective privacy policies and conveying to users 
meaningful  information  about  potential  privacy  risks, 
will remain a formidable challenge tofor policy makers. 
Another  serious  concern  that  was  discussed  by  the 
conference  attendees  was  the  impact  that  the  IoT  has 
on  ‘intimacy’,  given  that  connected  devices  allow  for 
enhanced  monitoring,  tracking  in  public  spaces  and 
unconsented  capture.  Participants  seemed  to  agree  that 
as  more  data  is  now  collected,  regulation  should  give 
greater  power  and  control  to  users.  At  the  same  time, 
producers  should  enrich  their  products  with  “privacy-
by-design” features to overcome the difficulties that users 
have in reading and enacting stricter privacy settings on 
their devices.

Given the qualitative and quantitative changes in the use 
of devices that has been brought by the IoT, participants 
agreed  that  policy  makers  should  continue  to  take 
privacy  very  seriously.  Moreover,  in  the  light  of  the 
global character of the IoT, discussions about solutions to 
privacy issues should take place, not only at the national 
and regional levels, but also at the international level. 

After  the  keynote  speech,  the  final  session  of  the 
Conference  ‘Europe  and  Digital  Technology’  focused 
mainly  on  (i)  online  platforms  and  the  Digital  Single 
Market (DSM); (ii) the regulatory challenges of the IoT 
in the UK; and (iii) the importance of 5G for the delivery 
of new levels of on-device intelligence and integration.  

Online Platforms and the Digital Single Market 
As part of its DSM Strategy, the European Commission 
made several different announcements on the 25th May, 
2016. In particular, it adopted a new legislative proposal 
amending  the  Audiovisual  Media  Services  Directive 
(AMSD);18  which  outlined  a  targeted,  principles-based 
approach  to  online  platforms;19  and  proposed  new 

18.  “Proposal for a Directive of the European Parliament and of the Council 
amending  Directive 2010/13/EU on the coordination of certain provi-
sions laid down by law, regulation or administrative action in Member 
States concerning the provision of audiovisual media services in view of 
changing market realities”, COM/2016/0287 final. 

19.  “Communication  from  the  Commission  to  the  European  Parliament, 
the  Council,  the  European  Economic  and  Social  Committee  and  the 
Committee of the Regions, Online Platforms and the Digital Single Mar-
ket Opportunities and Challenges for Europe”, COM/2016/0288 final.

e-commerce rules to help consumers and firms reap the 
full benefits that are offered by the Single Market.20

Online platforms feature prominently in the Commission’s 
agenda as they play an essential role in the DSM Strategy. 
They are strong drivers of innovation, increased consumer 
choice,  the  improved  efficiency  and  competitiveness  of 
the industry, and they can enhance civil participation in 
society.  Online  platforms,  which  can  operate  in  two  or 
multi-sided markets and across geographic borders, often 
provide  free  services  to  consumers.  They  are  already 
subject to existing EU rules in areas such as competition, 
consumer protection and Single Market freedoms.

Given the diversity of online platforms in terms of size, 
type  of  services  offered,  business  model  or  the  sector 
in  which  they  operate,  it  is  not  surprising  that  there  is 
still no single all-encompassing definition. One possible 
set  of  definitions,  proposed  by  Godlovitch  et  al.,21 
distinguishes between managed and online (unmanaged) 
services.  While  for  managed  services  the  network 
operators  typically  have  some  control  over  the  quality 
of the service (QoS) delivered, the main characteristic of 
online  (unmanaged)  services  is  that  network  operators 
usually have a very limited influence over the QoS. OTT 
services, which compete to some degree with traditional 
telecommunications or broadcasting services, fall under 
the latter.

Conference  attendees  reviewed  the  approach  that  has 
been adopted by the European Commission concerning 
online platforms in order to discuss the overall principles 
governing the matter. They agreed that future regulatory 
measures proposed at the EU level must address clearly 
identified problems relating to a specific type or activity 
of  online  platforms,  pointing  out  that  principles-based 

20.  On  25th  May,  2016,  the  European  Commission  tabled  a  package  of 
measures to allow consumers and companies to buy and sell products 
and services online across the EU more easily and confidently. This so-
called “e-commerce package” is composed of: (i) a legislative proposal to 
address unjustified geoblocking and other forms of  discrimination on 
the grounds of nationality, residence or establishment; (ii) a legislative 
proposal on cross-border parcel delivery services to increase the trans-
parency of prices and to improve regulatory oversight; (iii) a legislative 
proposal to strengthen the enforcement of consumers’ rights and guid-
ance to clarify, among other things, what qualifies as an unfair commer-
cial practice in the digital world. It is worth mentioning that the package 
complements two legislative proposals on the supply of digital content 
and on online and other distance sales of goods, which the Commission 
proposed in December 2015, and the upcoming VAT simplification pro-
posal that is planned for autumn 2016.

21.  Godlovitch I., Kotterink B., Marcus J.S., et al (2016), ‘Over the Top Play-
ers: Market dynamics and policy challenges”, study for the IMCO Com-
mittee of the European Parliament.

8 ■  FSRC&M | November 2016

self-regulatory and co-regulatory measures can also play 
a role. 

Attendees  concluded  that,  as  a  matter  of  principle, 
similar services that compete with one another should be 
subject  to  similar  obligations.  However,  this  seemingly 
straightforward principle is difficult to apply in practice. 
In  order  to  put  in  place  adequate  regulatory  measures, 
therefore,  it  is  necessary  to  understand,  firstly,  how 
online  platforms  differ  from  other  online  services, 
and  whether  regulatory  obligations  governing  online 
platforms  and  other  online  services  should  differ.  The 
second step is to ponder whether there are inappropriate 
asymmetries between OTT services and other Electronic 
Communications  Services  (ECS)  today,  and,  should 
the  answer  be  ‘yes’,  whether  they  can  be  reduced  by  (i) 
selective regulation; and/or (ii) a shift away from sector-
specific  regulation  to  horizontal  regulation;  and/or  (iii) 
an effective revision of horizontal regulation (e.g., making 
current  sector-specific  end-users’  rules  protecting  not 
only  the  consumers,  but  also  other  end-users,  such  as 
Small and Medium Enterprises (SMEs). 

Finally, participants noted that the great majority of large 
online service providers are US-based. Although Europe 
is  not  inherently  weak,  the  continent  still  faces  a  few 
challenges in the online services markets. The weakness 
of  European  entrepreneurial  culture,  the  complex  and 
inconsistent  taxation  and  the  resistance  to  process 
changes, among other things, certainly represent some of 
the main issues with which players need to deal. 

Certainly, there are signs of recovery, but, overall, results 
are  mixed.  In  fact,  while,  in  terms  of  online  services, 
start-ups in Europe are almost closing the gap with the 
United  States,  scale-ups,  i.e.,  start-ups  seeking  to  grow 
their  business  to  the  next  level,  have  so  far  not  been 
equally successful.

The Internet of Things:  Regulatory issues in the UK
Next, participants discussed regulatory challenges raised 
by the IoT from the UK’s perspective. The IoT services, 
which  affect  many  industries,  ranging  from  healthcare, 
agriculture  to  energy,  communications,  and  many 
others,  have  the  potential  to  bring  significant  benefits 
to  consumers.  To  ensure  that  these  benefits  are  fully 
delivered, in 2014, Ofcom published a call for input, with 
a view to identifying the potential barriers to investment 
and innovation in the IoT and the role that Ofcom could 

play  in  helping  to  overcome  these  barriers.  Following 
the feedback received from various stakeholders, Ofcom 
identified  four  priority  themes:  (i)  data  privacy  and 
consumer  literacy,  (ii)  network  security  and  resilience, 
(iii) the availability of spectrum for IoT networks, as well 
as (iv) telephone number and address management.22 

In  terms  of  data  privacy  and  consumer  literacy,  Ofcom 
concluded  that  future  developments  in  the  IoT  sector 
require  a  framework  under  which  consumers  would 
be  able  to  authorise  the  conditions  under  which  data 
collected by their devices is used and shared by others.23 
With  respect  to  network  security  and  resilience,  an 
increasing  use  of  IoT  services  will  require  further 
improvements, not only in respect of the resilience of the 
networks, but also of secure storage and the processing of 
collected data. 

In  terms  of  spectrum,  although  Ofcom  does  not 
currently  consider  spectrum  availability  to  be  a  barrier 
to  the  development  of  the  IoT,  it  acknowledges  that  it 
is  necessary  to  monitor  its  evolution,  as  the  spectrum 
requirements  for  the  IoT  services,  in  the  longer  term, 
are still uncertain. In the short to medium term, existing 
initiatives should be sufficient to meet spectrum demand 
for  IoT  services.  These  initiatives  include,  for  now, 
making  available  spectrum  in  the  870/915MHz  bands 
and  liberalising  licence  conditions  for  existing  mobile 
bands. The general consensus was that, as the IoT sector 
develops, in the longer term there may be a need to make 
new bands available. Finally, in respect of addressing the 
network,  Ofcom  concluded  that  instead  of  telephone 
numbers,  IoT  services  “will  likely  either  use  bespoke 
addressing systems or the IPv6 standard”.24 

Participants  then  made  some  concluding  observations 
about the challenges faced by the IoT. First, they stressed 
that  while  regulation  is  unlikely  to  drive  the  further 
evolution  of  the  IoT,  competent  regulatory  authorities 
should ensure that they do not hamper it. Second, given 
that  heterogeneity  is  one  of  the  most  striking  features 
of the IoT, “any steps taken to promote investment and 
innovation  in  the  IoT  will  need  to  acknowledge  this 
diversity”.25  In  particular,  the  success  of  the  IoT  will 

22.  See, for example, Ofcom (2015), Promoting investment and innovation 

in the Internet of Things: Summary of responses and next steps. 

23.   Ofcom (2015). 

24.   Ofcom (2015). 

25.   Ofcom (2015).  

9 ■ Rethinking Electronic Communications: Europe and the Others

depend  on  open  and  interoperable  standards,  since 
the  IoT  encompasses  a  heterogeneous  collection  of 
technologies. Some of these technologies are licence-free, 
whereas others are not. The international harmonisation 
of  spectrum  and  standards  is  also  expected  to  bring 
significant benefits as it will help to achieve international 
economies  of  scale  and  lower  costs  for  consumer 
equipment. Finally, in terms of institutional interactions, 
there is scope to bring different parties together.

5G and the delivery of new levels of on-device 
intelligence and integration

Last, but not least, participants discussed the role of 5G 
in  the  context  of  the  EU  Digital  Single  Market.  It  was 
recalled  that  5G  is  expected  to  constitute  the  backbone 
of the EU Digital Single Market as it is a kind of network 
that offers a huge potential that has yet to be unleashed. 
It  enables  new  services  and  an  empowering  new  user 
experience. However, the key challenge is to put in place 
predictable policies, both at the EU and at national levels, 
which will lead to an actual deployment of 5G. Various 
participants  agreed  that  the  success  of  5G  depends  on 
secure and reliable standards that are essential to ensure 
the interoperability of systems. Standards, in fact, are seen 
as  the  foundation  of  an  effective  Digital  Single  Market, 
which is reflected by the fact that 5G standards are one of 
the five priority areas under the EU’s “Digitising European 
Industry”  initiative.26    However,  the  main  challenge  is 
that the landscape for 5G and IoT standards is currently 
rather fragmented.

26.   For more information on the initiative please visit Digitising European 

Industry website.

10 ■  FSRC&M | November 2016

Florence School of Regulation,  
Communications and Media Area
Robert Schuman Centre  
for Advanced Studies

European University Institute
Via Boccaccio, 121
50133 Florence
Italy 

Contact:
email: alessandra.caldini@eui.eu   website http://fsr.eui.eu

11 ■  FSRC&M - Policy Brief ■ Issue 2016/01 ■ November 2016

Florence School of Regulation, Communications and Media Area The Florence School of Regulation – Communications and Media aims to provide state-of-the-art training for practitioners, to carry out analytical and empirical research, and to promote informed discussions on key policy issues in the electronic communications, Internet and media sector.Content © Authors, 2016© European University Institute, 2016QM-06-16-336-EN-Ndoi:10.2870/085117ISBN:978-92-9084-446-4