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MEMO/07/410

Brussels, 16 October 2007

Commissioner Reding meets the Italian Telecoms Regulator AGCOM

Today, EU Telecoms Commissioner Viviane Reding met 4 high-level representatives of the Italian Telecoms Regulator AGCOM (l’Autorità per le garanzie nelle comunicazioni): Mr Corrado Calabrò, President; Mr Giancarlo Innocenzi Botti and Mr Michele Lauria, both Members of the Board of AGCOM; and Mr Roberto Viola, Secretary-General of AGCOM and at the same time Chairman of the European Regulators Group (ERG). On the agenda of their exchange of views was the current status of competition and regulation on the Italian telecoms and media market as well as the reform of the EU telecom rules, which the Commission will propose on 13 November.

"I value the very constructive relationship with AGCOM, and appreciated today's open exchange of views with its President and members of its Board, which underlined once again AGCOM's commitment to Europe", said EU Telecoms Commissioner Reding after the meeting. "The important work that AGCOM is doing in Italy, on the basis of our common EU rules, is good for competition, good for investment into new networks and, most important, good for the consumer. I encourage AGCOM to continue with this work and to apply remedies swiftly and effectively where the competitive situation so requires."

Corrado Calabrò, President of AGCOM, said: "Italy is one of the largest and most competitive market of Europe. It enjoys the largest numbers of 3G and mobile TV users. Important innovations such as quadruple play offers are about to be launched on the market. I am very pleased that Commissioner Reding acknowledges the efforts done by AGCOM to apply effectively the EU rules in the interest of consumers and economic growth. Our next challenge is represented by Next Generation Networks. Our strategy is to make sure to promote competition and investments through a favourable regulatory environment."

1. Towards a European Approach on Termination Rates

Mobile Termination Rates

As regards the asymmetry of the regulated mobile termination rates of the incumbent operator and alterative operators in Italy, Commissioner Reding showed her sympathy for the approach temporarily taken by AGCOM with regard to the 4th operator on the Italian market (see IP/07/1203): "Asymmetric mobile termination rates can be temporarily an effective instrument to promote competition and encourage investments by new market entrants, especially where there are objective cost-differences." She also suggested that such asymmetries need to follow a consistent methodology throughout the EU, should be regularly reviewed, and be ultimately phased out. "I know that many regulators in Europe, including AGCOM, are working with a lot of efforts on a common approach for lowering Mobile Termination Rates. I will support such an approach with the instruments at my disposal to ensure that competition in the single market is not distorted. In the first half of 2008, finding a common approach on Mobile Termination Rates will be a priority for me."

President Calabrò said: "Italy has been on the forefront of introducing innovation in the mobile market. It is by penetration the largest market in Europe and it has been the first EU country to introduce commercial DVB-H services. Italian mobile communication retail prices have dropped by 14% in the last year. Overall, it is a market functioning very well. The market is becoming even more competitive with the recent entry of a number of Mobile Virtual Network Operators. AGCOM will continue to exert pressure on mobile termination rates. We support a common European approach on termination rates and agree with the Commission that asymmetric rates are for a limited period of time an instrument to maintain competition. AGCOM will strive to maintain the present level of competition and investment on the market using with flexibility the instruments of regulatory framework"

Fixed Termination Rates

The regulation of fixed termination rates in the past led to some differences of opinion between the European Commission and AGCOM following the notification of measures by AGCOM and the Commission's letter with comments (see IP/06/685).

With the objective of overcoming these differences, President Calabrò said after the meeting: "Asymmetric rates as a temporary measure might prove an effective incentive to build alternative fixed broadband infrastructures. The new analytical cost model that has been developed for the first time in Europe by AGCOM was already presented to the European Regulators Group and will be notified to the Commission before the end of November at the latest. On the basis of upcoming results of the model, I have reassured Commissioner Reding that we are taking utmost consideration of the comments of the Commission, especially for what concerns the time span for the asymmetry by 2010".

“I support AGCOM's balanced and pro-competitive approach that has been presented today and should ensure that termination rates go further down", said Commissioner Reding. .”I hope that further progress on fixed termination rates will also be made in the European Regulators Group in the near future."

2. The Last-Resort Remedy of Functional Separation

Functional separation is a remedy that national regulators may use to address the stubborn cases where other remedies have been tried, but have failed to deliver the desired regulatory outcome. To introduce this new remedy is currently under discussion both in Italy and in the context of the reform of the EU Telecom Rules.

"I believe that national telecom regulators should be given this tool that can promote both competition and investment," said Commissioner Reding. "It is the responsibility of legislators both at European and at national level to ensure that, in the interest of legal certainty, there is a sound legal basis for applying functional separation. To enable regulators to do their job properly, legislators will need in particular to define clearly the required elements of this remedy and the conditions under which it may be used by an independent telecom regulator. The process leading to functional separation should be a transparent one for all market participants and closely coordinated with the Commission. I acknowledge the positive stance of AGCOM in dealing with non-discrimination in wholesale markets and its strong contribution to the debate on functional separation that led to the recent common position of the ERG”.

President Calabrò added: "We are convinced that functional separation, given the peculiarities of the Italian market, could be a win-win solution as it has been the case in the UK market. We have started an intense discussion with Telecom Italia and initiated a public consultation on the subject. We are ready to go further on this route and I’m confident that the Italian Parliament will approve soon the legislation that gives AGCOM the powers to apply functional separation. In the meantime we will continue with our work and we remain confident that the negotiations with Telecom Italian will lead to a fruitful end".

3. The forthcoming reform of the EU Telecom Rules

As regards the forthcoming reform of the EU Telecom Rules and on the proposal to create a European Telecom Market Authority, on the Commission agenda for 13 November, Commissioner Reding said: "I am grateful to President Calabrò for his substantial contributions to the important institutional questions discussed so intensively over the past months. The new regulatory system should strengthen the independence of national regulators, enable regulators and the Commission to arrive faster at more ambitious common positions and thereby level the regulatory playing field in Europe, in the interests of consumers and pan-European operators."

President Calabrò said: "I am a true and convinced European. The electronic communications sector does not know borders. My vision has always been that the goal of a consistent internal market can be achieved in a federal cooperative model that would link strong and independent national regulators. I am glad to see that Commissioner Reding and I share this vision."

AGCOM chairs in 2007 the European Regulators Group (ERG), a group comprising the 27 national telecom regulators set up to advise the Commission in applying the EU Telecom Rules. In 2007, the ERG took a proactive part in the European discussion on achieving a better, more efficient a more consistent regulatory system in telecoms (see MEMO/07/87).

"We are very satisfied with the success of the European Regulators Group in 2007", said President Calabrò. "We have committed our best resources in making sure that ERG would be a trusted advisor of the Commission delivering consistent application of the EU regulatory framework.

Commissioner Reding stated: "I would like to thank AGCOM for the important task to chair the European Regulators Group in 2007, and thus in the crucial year for the reform of the EU Telecom Rules and of the institutional set-up of the ERG. I am sure that the important efforts made by AGCOM as ERG chair will be reflected in the future regulatory system that will take effect in 2010."

4. Regulatory Issues with regard to Audiovisual Media

Commissioner Reding and President Calabrò both welcomed the political agreement achieved in May on the new Audiovisual Media Services without Frontiers Directive (see IP/07/706). "To ensure that Europe's audiovisual model remains credible, independent regulators and the Commission jointly need to enforce the common European rules, especially as regards advertising and the protection of minors", was the joint view of Commissioner Reding and President Calabrò.

President Calabrò said “The forthcoming European rules on audiovisual media services confirm that a convergent model of Authority, of which Italy has been one of the earlier adopters across EU, is the best one to tackle the regulatory challenges posed by the new convergent technology and market environment.”

Background:

In the past weeks, Commissioner Reding already met Paul Champsaur, President of the French regulatory authority ARCEP (see MEMO 07/378) and Nikitas Alexandridis, President of the Greek regulatory authority EETT (see MEMO 07/367). She also assisted at the plenary meeting of the European Regulators Group in Athens on 11 October (see SPEECH/07/624). Commissioner Reding's meeting with AGCOM is part of a series of meetings with national regulators before the reform of the EU Telecoms Rules on 13 November.


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