Dugie Standeford

Citing the tension between retaining Internet and telephone data for national security vs. other purposes, a U.K. select panel of advisers has urged the govt. to rethink part of its antiterrorism legislation. In a report issued Dec. 18, the Privy Counsellor Review Committee -- whose mandate is to review the Anti-Terrorism, Crime & Security Act 2001 (ATCS) -- said the communications data retention portion of the law should be replaced with a “mainstream” regime that limited retention to no more than one year. Access to the data, moreover, must “be subject to strict regulation, and that regulation must be properly enforced,” said the all- party committee appointed in April by Home Secretary David Blunkett.

Candidates for European Union (EU) membership are starting the required process of integrating with the European internal market, a report released Tues. by the European Commission (EC) found. The survey by IBM Business Consulting Services is the 4th in a series tracking development of the telecom services markets in the 13 candidate countries -- Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia and Turkey. Findings include: (1) Retail price data show substantial differences between countries in the degree of rebalancing that has happened so far. (2) Wholesale prices, as reflected in interconnection charges, vary from close alignment with the EU market to a complete absence of published figures. In some countries, retail and wholesale prices are close enough together to hamper market entry. (3) In 7 countries the state continues to hold a controlling stake in the incumbent telco. (4) Most candidate countries have little or no competition in the area of local access. (5) Mobile services continue to represent a rising share of the whole market, with revenue topping the share of fixed voice services in 8 candidate nations. The major growth drivers are the Internet and the mobile sector. (6) The slow pace of price rebalancing is shown by the relatively low monthly rental fees. Costs for national fixed calls are lower than, but comparable with, prices in EU member states, but prices for international calls vary widely and in some countries are much higher than in member states. (7) All candidate countries have established national regulatory authorities. (8) Fixed-to-fixed interconnection is operational in 10 countries and the charges for terminating fixed and mobile calls are equal. The price for fixed-to- mobile interconnection is less variable and slightly below that in the EU. (9) The share of broadband access via ADSL or CaTV networks is rising rapidly but narrowband access predominates. Assessed prices for dial-up Internet connections vary greatly between individual countries. The report aims to help regulators, policymakers, consumers, service providers, investors and others interested in the state of the telecom markets in EU accession countries, the EC said.

Saying its role as a newly converged regulator marked a good time to gauge the state of the nation’s telecom industry, the U.K. Office of Communications (OFCOM) said it would begin a 3-part review in Jan. The sector-wide assessment is the first in 13 years, OFCOM said, and it could lead to regulation rollbacks. British Telecom (BT), which holds the lion’s share of the markets for residential and business access and wholesale call origination, said it welcomed the review. A users’ group urged OFCOM to enforce existing initiatives before establishing out new ones.

Following a Nov. 21 agreement on a joint approach to antimonopoly remedies under the new regulatory framework for e-communications, European telecom regulators and the European Commission (EC) late last week unveiled a consultation paper for public comment. The 130-page document from the EC and the European Regulators Group (ERG) -- composed of national regulatory authorities (NRAs) -- aims to ensure that remedies are applied consistently across the European Union, guiding NRAs and reducing uncertainty for market players, ERG said. Under the new directives, NRAs can’t impose remedies until they conduct a market analysis and identify a significant market power (SMP) operator in a defined market. Markets eligible for prospective (ex ante) regulation must be characterized by high and nontransitory entry barriers, the paper said. It said the emergence of effective competition couldn’t be foreseeable and the application of retroactive controls must be insufficient to address specific market failures. Before imposing a remedy, the paper said, NRAs must: (1) Choose one based on the nature of the problem as identified via a market analysis approach. (2) Ensure sufficient access to wholesale inputs to provide maximum benefits to consumers in situations where infrastructure competition isn’t likely to be feasible. (3) Assist in the transition process to sustainable competition where replication of the infrastructure of the SMP entity is possible. (4) Produce reasoned, proportionate decisions in a transparent manner. (5) Design remedies to be “incentive compatible,” making it easier for regulated entities to comply than to evade. “Special considerations have to be given to regulation in emerging markets,” the ERG and EC said. As a general rule, they said, such markets shouldn’t be subject to prospective rules but should be allowed to develop according to the normal dynamics of market forces. The consultation paper also guides NRAs in matching remedies to competition problems. The ERG and EC also published an interim paper setting out a common position on bitstream access services (defined in the paper as the “provision of transmission capacity (upward/downward channels may be asymmetric) between an end-user connected to a telephone connection and the point of interconnection available to” a new market entrant. There’s a ‘clear role for direct intervention” by NRAs in bitstream access, they said, but NRAs must take account of varying national circumstances resulting from different network architectures as well as the different market situations around Europe. Because bitstream access is critical for the development of competition in the wholesale broadband access market, the paper said, “NRAs should mandate a bitstream access product according to national needs.” Comments on the regulatory remedies consultation are due Jan. 19 and the ERG has set a public hearing for Jan. 26 -- erg-secretariat@cec.eu.int.

Apparently influenced by a Nov. 7 letter from the CEOs of Alcatel, Ericsson, Nokia, Philips and Siemens expressing grave concerns about the proposal, European officials late last week decided against sending draft European Commission (EC) legislation on patenting computer-implemented inventions to Competitiveness Council Ministers. The proposal sparked strong criticism from those who said it would permit American-style business method patents (BMPs) by allowing the patenting of pure software.

Europe’s electronic communications markets are on the upswing but the failure of many countries to transpose applicable directives into national law is worrisome, the European Commission (EC) said Thurs. in its latest report on member states’ implementation of the e-communications regulatory package. The new legal framework was to have been transposed by July 24, the EC said, but as of Nov. 1 many countries had yet to adopt the directives, which cover the regulatory framework, authorization, access, universal service, e-privacy and competition. On the bright side, it said: (1) The rate of revenue growth in the electronic communications market is expected to reach 3.7-4.7% in 2003. (2) The number of mobile subscribers will rise at a higher rate than in 2002 despite nearly 90% saturation in some countries. Moreover, the EC said, 3rd-generation (3G) services are available now in 4 countries. (3) The number of fixed broadband access lines doubled between July 2002 and July 2003, although new entrants’ market share still is limited. (4) New unbundled lines grew by 828,000 in the same span, but the EC said that still was low as a proportion of total subscriber lines, and development of local loop unbundling is uneven across the European Union (EU). (5) The recent economic downturn has discouraged new fixed operators from entering the voice telephony market. (6) Existing fixed operators appear to be focused on maintaining their positions in the market of international and long distance traffic, with competitive pressure increasingly on the local call segment, where incumbents’ fixed market share has dropped 6% on average since last Dec. (7) Subscribers are turning increasingly to alternative operators for local calls, due in part to the greater availability of carrier preselection. (8) Alternative fixed operators actually competing in the market are concentrating on their core markets. (9) The EU weighted average charge for call termination on fixed networks dropped slightly at local and single transit levels but remained stable for double transit levels. (10) The EU weighted average charge for call termination on mobile networks decreased more than 15% for SMP mobile operators, but still is more than 9 times higher than the average fixed- to-fixed interconnection charge. Lagging legislative action in member states has prompted concerns that, among other things, national regulatory authorities (NRAs) don’t yet have the powers and responsibilities to monitor and deal with competition issues in the e-communications markets, the EC said. The EC began infringement proceedings in Oct. against several countries that failed to adopt the regulatory package on time. The report’s findings were presented to the Telecom Council at its Thurs. meeting.

European and Asian nations lead the list of economies with high access to information and communication technology (ICT), the ITU said Wed. Canada ranked 10th and the U.S. 11th, it said. The findings are part of the ITU’s first digital access index (DAI), which ranks ICT access in 178 countries. Economies are classed in one of 4 digital access categories -- high, upper, medium and low -- by examining 5 areas: availability of infrastructure, affordability of access, educational level, quality of ICT services and Internet usage. The DAI differs from other indexes, the ITU said, by including new variables such as education and affordability and by focusing on factors with an immediate impact on determining people’s potential access to ICTs rather than on qualitative variables such as the market structure and degree of competition. The DAI is part of the ITU’s upcoming 2003 edition of the World Telecommunications Development Report, scheduled for release in early Dec., before the World Summit on the Information Society (WSIS). Other “surprising” findings were that Slovenia and France are tied in the high category and that S. Korea, “usually not among the top 10 in international ICT rankings,” came in 4th in that category. The leading nations were Sweden, Denmark, Iceland, Korea, Norway, Netherlands, Hong Kong, China, Finland and Taiwan. Ireland topped the list of nations with upper access to ICTs. The top 5 gains in ranking between 1998 and 2002 were S. Korea, Taiwan, Singapore, Hong Kong and Denmark. Countries whose rankings fell in that time included New Zealand, Australia, S. Africa, France and the U.S., which dropped from 5th to 11th place, the ITU said. The U.S. was 2nd in infrastructure (by fixed telephone subscribers per 100 inhabitants); 2nd in affordability (by Internet tariff as percentage of per capita income); and 4th in usage, measured by Internet users per 100 inhabitants. The DAI results suggest that ICT access potential must be redefined, the ITU said. “Until now, limited infrastructure has often been regarded as the main barrier to bridging the Digital Divide,” said Michael Minges of the ITU’s Market, Economics & Finance Unit. However, he said, the research suggests that affordability and education are equally important. Asked whether the DAI findings were likely to prompt changes in the WSIS draft declaration of principles and action plan still under negotiation -- to focus, for example, more on education and less on infrastructure issues -- an ITU spokesman said: “I don’t think it’s a matter of more emphasis but a matter of having the best possible and transparent indicator… to measure the results of the action plan, or ICT development generally.”

The European Parliament (EP) approved a series of compromise amendments aimed at speeding the creation of a European Network & Information Security Agency (ENISA). The amendments, agreed to Wed. by the EP, the European Commission (EC) and the European Council, focus on the agency’s tasks, its operational structure, the initial evaluation of its work and where its hq will be, the EP said. The adoption of the amendments will allow the regulation to be adopted at first reading. The amendments provide that: (1) ENISA have a management board composed of one representative from each member state, as opposed to the EC’s original plan to have 6 representatives appointed by the Council, 3 named by the EC and 3 proposed by the EC and appointed by the Council, with no voting rights. (2) The executive director’s term run 5 years, rather than the 2 years proposed by the EC. (3) ENISA have a Permanent Stakeholders Group, instead of the advisory board called for by the EC. The group should consist of experts from relevant stakeholders such as the information & communications technology industry, academic experts in network and information security, and consumer groups. Procedures governing the number, composition and appointment of members by the exec. dir., as well as operation of the group, should be set out in the agency’s internal rules or operation and should be made public. (4) ENISA be headquartered in Brussels. (5) The agency’s objectives and tasks not prejudice member states’ actions such as network and information security, public security, defense, state security and criminal law. (6) ENISA be evaluated to determine whether its work should continue beyond 2008. The new agency is on the agenda for the Telecom Council meeting in Brussels today (Nov. 20). The council is expected to reach political agreement on the compromise and issue a declaration stating that ENISA should be sited in Brussels until its permanent hq has been decided by heads of states, the EC said.

In advance of its end-of-year introduction as the U.K.’s new communications regulator, the Office of Communications (OFCOM) unveiled a proposal to delegate regulation of TV and radio advertising to a new industry co-regulatory entity. In a consultation paper, OFCOM suggested that existing differences between regulation of broadcast and nonbroadcast media no longer might make sense in the digital world. Currently, the Independent TV Commission enforces ad rules for TV and the Radio Authority for commercial radio. However, all other media -- including Internet advertisements and text messaging -- are governed by a code of practice set up by advertisers, agencies and the media and managed by the Advertising Standards Authority (ASA), an industry self- regulatory body. OFCOM proposes that viewers’ and listeners’ complaints about TV or radio advertising also be handled by a self-regulating industry body under the aegis of the ASA, with OFCOM continuing to control such issues as the amount on advertising that can be shown on TV. The change would benefit consumers, OFCOM said, because many of them already think the ASA regulates TV and radio advertising and because allowing the ASA to handle all gripes would create a “one- stop shop” for complaints about all U.K. advertising. OFCOM is seeking input on several questions, including: (1) The pros and cons for consumers of using the same approach to regulating all advertisements in all media. (2) The advantages and disadvantages to the advertising and broadcasting industries. (3) ASA’s independence from the ad industry. (4) What enforcement authority ASA would have. (5) What appeals process there should be for viewers, listeners, advertisers and broadcasters. Comments are due Jan. 9, 2004 -- ian.blair@ofcom.org.uk.

British telcos are keeping a wary eye on possible legislation the U.K. govt. says is needed to clear congestion on the country’s roads, but which the industry contends will severely hamper broadband deployment. The proposed Traffic Management Bill, which telcos say would make it harder for utilities to carry out street works, is being drafted by the Dept. for Transport (DfT). A DfT spokeswoman Tues. couldn’t confirm the measure would be part of a legislative package to be announced during the Queen’s Nov. 26 speech opening a new session of Parliament, but said it probably would be. DfT is looking for a legislative slot for the bill this year, the spokeswoman said.