EC moves forward to adapt regulation to new Digital ecosystem dynamics by reducing number of regulated markets

Neelie Kroes, Vicepresident of the European Commission, has announced the adoption of the revised recommendation on Relevant Markets reducing the number of relevant markets from 7 to 4.

This is a meaningful change as it implies ex ante regulation will just be enforced in the remaining four relevant markets once effective competition has deemed unnecessary to keep imposing obligations on the other three markets.

This has been a long demanded change by telecommunication providers as the globalization and the convergence of markets brought by the Internet has resulted in an increased competition between entities and services that previously operated in separate markets. And it is also reflected on the eighth Recommendation of Telefonica’s Digital Manifesto: policy makers and regulators should review existing regulation applicable to the new Digital Economy, taking into account:

i. The convergence of markets
ii. The need to have same rules governing same services
iii. The need to foster an investment-friendly environment to secure the economic sustainability of the underlying Internet infrastructure and new broadband investments needed for consumers to fully enjoy the Internet of the future.

Markets which will still be subject to ex-ante regulation are fixed and mobile voice call termination –markets 1 and 2– and wholesale accesses provided at a local location, market 4 for high quality products for businesses and market 3 for standard quality local and central access products . Ex-ante regulation has been removed from retail fixed-line access and fixed voice call origination markets.

Industry associations have not waited long to welcome the changes: ETNO, the European Telecommunications Network Operators’ Association considers that these changes are positive. Still, ETNO states more ambition is needed to embrace Europe’s demanding investment agenda, believing that business markets which are fiercely competitive in the EU should not be distorted by additional regulation. According to ETNO, the Recommendation sends an important signal that next generation broadband networks no longer need to be subject to ‘physical unbundling’ regulation, using Instead active products to offer open access to such networks.