Joe Smithies, spokesperson for the UK telecoms regulator, defends the recent reform of Openreach, illustrates UK priorities for the review of the EU telecoms framework, suggests caution on bringing in more harmonisation in radio-spectrum policies.
The Digital Post: BT competitors lamented that in its long awaited Strategic Review of Digital Communications, Ofcom did not go far enough in regulating Openreach. How do you respond to this criticism?
Joe Smithies: We made a clear decision to reform Openreach’s governance and strengthen its independence from BT. We want Openreach to a more independent say on its budgets, investment and strategy. We also want Openreach to consult with all its customers, not just BT, about how it develops and invests in its network.
These decisions are important not only for BT, but for the wider industry. Now we are working on the best way to bring that about, and we will set out detailed plans later this year.
The Digital Post: How does the review ensure that Openreach improves its record in repairs and invests more in infrastructures, i.e. two of the main criticisms it has been collecting over the years?
JS: Currently BT Openreach is obliged to deliver a range of minimum standards. The majority of people encountering a fault must see it repaired within two working days, and the vast majority of those requiring a new line must receive an appointment within 12 working days.
We plan to set out detailed proposals about more demanding minimum standards for Openreach in the autumn.
On investment, we want Openreach to consult with all its customers, not just BT, about how it invests in the network. But more widely, we will encourage investment from other operators by requiring BT to open up its physical network, allowing rivals to lay their own fibre connections. That can create more rivals networks to Openreach, and in turn incentivise BT to invest.
The Digital Post: What should be the main priorities to be addressed under the upcoming review of the EU Telecom Framework?
JS: Concerns have been raised that the framework may not be sufficiently flexible to allow for the regulation of markets where there is a limited or shrinking number of players – in other words, an emerging ‘oligopoly’.
The framework allows regulators to take action to address damaging market features that could harm consumers, before that harm materialises. So it offers greater flexibility than, for example, remedies imposed during a merger.
But we feel the framework sets too high a bar for regulating cases where no one company has market power, but the market is still highly concentrated. To address any concerns, the framework requires regulators to show that the market structure is likely to result in a degree of coordination between operators. This may require demonstrating ‘tacit collusion’, which by definition is hard to prove.
BEREC, the European body of telecoms regulators, raised this issue in detail last year. We’re pleased that the European Commission is also considering the issue as part of the framework review. We hope to see changes that mean regulators have the full range of tools to respond to a changing market.
Any new powers would need to be applied proportionately, and with care. Checks and balances should be built into the system to ensure that happens. But with a change in the framework we could do more to encourage new operators into the market, and keep prices low.
The Digital Post: The framework review will also put forward proposals to promote better coordination in spectrum at EU level. What is your view?
JS: Spectrum is a finite resource, so coordination is important for using it effectively. Generally speaking, any form of harmonisation should be justifiable, proportionate and deliver tangible benefits. It should equally respect national sovereignty.
The UK works productively with the EU on spectrum matters, and we believe that the current system works well.
Picture credits: Kainet
The European Commission has signalled that it will be going after those barriers currently limiting investments in broadband networks. This is the right level of ambition, argues ETNO chairman Steven Tas.
One of the new European Commission’s priorities is “giving more ambition to the ongoing reform of telecoms rules”. What are ETNO expectations?
I think that it’s very important to look at the programmatic milestones of the new Commission, especially at the mission letter of Commissioner Oettinger and at the Investment Plan presented last December.
Both documents indicate that the Commission will be going after those barriers currently limiting investments in broadband networks. This is the right level of ambition, and we think the first, urgent step is to look into the Review of the 2009 Telecoms Framework.
The coming “digital single market” package will focus on copyright, e-commerce or online services. What do you think?
We agree that reforming copyright, as well as looking at demand-sensitive aspects like e-commerce and stimulus to online services is pivotal. Investments without real digitalization of society are not enough to create prosperity.
In our view, any policy plan to create a Digital single market needs to prioritize items like spectrum harmonization measures and the review of the current access regulation.
Do you think the Juncker’s investment plan live up to its ambitions? Will it manage to leverage funding from the sector?
We agree with Juncker and Oettinger that the objective should be to maximize private investments. For this reason, ETNO looks with huge interest at one of the main pillars of this plan: removing regulation that hampers investment and that is outdated. We really need to reduce the complexity of our European regulatory framework. That comes at no cost for public budgets, and it can be a really smart way to stimulate broadband deployment. Let’s remember that having the best networks is not a stand-alone objective: it is the pre-requisite to building a competitive Europe”.
Some Member States, such as Germany and France, are now echoing your longstanding pleas for more equal treatment with Internet giants, both on regulatory and competition terms. How the European Commission should respond?
The European Commission has announced a study on the impact of new online services on digital markets. At the same time, there is a push from Member States to consider a public consultation on basically the same topics.
[Tweet “ETNO believes in less and simpler regulation for all”]
Changes in markets reality and consumers’ behaviour need to be at the core of the upcoming digital policies. This will unleash the innovation and investment potential of our Continent”.
How do you see the on-going debate on Net Neutrality and on the end of roaming charges, especially in light of the Council agreement on the Connected Continent package?
Developing Net Neutrality rules means regulating the internet. This is a serious matter. If we believe that the internet should be regulated, I think we are better off with a light touch approach, based on simple principles that do not interfere with innovation and do not depress investments.
On roaming, I think we need first of all to admit that the industry was in the past not fast enough to respond to concerns. But today we have a variety of offers matching consumers’ increasing quest for mobility. So the market is responding well now. It is also important to have regulatory certainly and consistency with the previous roaming regulation that was introduced only recently.
By the way, given that most Connected Continent landmark proposals have been dropped by the Council, do you believe that it should be envisaged to withdraw the proposal and start the work from the scratch?
The power of initiating or withdrawing a legislative proposal lies with the Commission. From an industry perspective, as the debate on the Regulation approaches its final stage, ETNO believes there is an even stronger sense of urgency to reforming the current set of digital policies and regulation. We need to do more, and faster, to remove barriers to investment. We must not miss the momentum of achieving a stronger digital Europe.