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Viviane Reding

Member of the European Commission responsible for Information Society and Media

Europe's evolving single market for telecoms: the future challenges of cooperation between the European Commission and National Regulatory Authorities

Dinner at the Conference "Is it the right TIME?"- The future regulation of the Telecom, Informatics, Media and Entertainment sector in the EU
Budapest, 26 November 2007

Dear Dániel Pataki,

Ladies and Gentlemen,

I am glad to have this opportunity to address you here tonight to discuss the future challenges of cooperation between the Commission and the National Regulatory Authorities. The organisation of this conference demonstrates how committed Dániel Pataki and his team from the Hungarian Authority are to the future of regulation of the Telecom, Informatics, Media and Entertainment Sector in the EU, and to finding the best approach for dealing with the future regulatory challenges.

I believe that in order to give appropriate responses to regulatory challenges ahead, which will help us achieve a single market for electronic communications in the European Union, it is essential that the Commission and the National Regulatory Authorities (NRAs) cooperate fully. This is not just my firmly held view; it is actually a requirement of the existing Regulatory Framework. It is also based on common sense. Cooperation is the way we can avoid fragmentation of the single market.

Effective and consistent regulation targeted on problem markets with bottleneck infrastructure will deliver the best results for consumers and for industry. However, reaching a consensus view on the best way to proceed even when everyone agrees on the identified problem has proven difficult.

The problem of regulatory consistency appears evident in the case of termination markets. Even if the competition problems identified in the termination markets are substantially similar across NRAs, I am concerned about the important differences as to the level of the termination rates and the methodologies used to determine those rates across the EU.

If we look at mobile termination rates: the cost of mobile termination ranges from 16.49 to 2.25. More worryingly is the fact that rates are not even moving in the same direction in all Member States, falling in some but rising in others such as the UK. In Hungary, the level of mobile termination rates will be set to a level equivalent to 6 eurocents reaching symmetry at the beginning of 2009.

However, I am pleased to say that there is now a will amongst National Regulators and with the Commission to resolve these consistency issues and to arrive at a common approach for regulating termination rates across the EU. To that end I have instructed my services to work closely with the European Regulators Group (ERG) on this issue. The Commission will prepare a Commission Recommendation on Termination Rates before summer next year, which should bring down the prices of mobile and fixed services for consumers.

Similarly, the treatment of Next Generation Networks is one of the most important regulatory issues facing us over the coming years. I want regulation to encourage investment in future networks. Regulatory holidays are not the solution, what we need is "appropriate" regulation that safeguards competition whilst creating new incentives for investment. But what do we mean by appropriate regulation?

If we can cooperate and arrive at a consistent answer, we will have done our businesses, consumers and the wider EU economy a great service because consistency will level the playing field across the Community, consistency will reduce uncertainty. I don't need to tell you that increased certainty is a necessary precondition if you are contemplating large-scale investments, especially if you are venturing into a new market. It means reduced risk and that means reduced capital costs.

That is why, again drawing upon the work done by the national regulators in the ERG, I will bring forward by mid 2008 a Commission Recommendation concerning the appropriate treatment of NGNs.

Another important aspect where I believe we have to establish a consistent approach is the issue of geographical segmentation of markets. Today, when NRAs are carrying out the second round of market reviews, the regulation of relevant wholesale inputs (LLU and bitstream) is showing certain developments: competitors have invested in their networks and have been able to build out their networks to connect to the incumbent's local loop in certain regions, in particular in the densely populated areas. The issue is being raised whether or not the different degree of infrastructure competition achieved could support regulatory measures differentiated between regions.

If national regulators tackle this issue in different ways, we shall be faced with a further important fragmentation of the internal market. This is why I have called on the ERG to work on a joint approach on the issue of geographic segmentation to ensure that such measures, if they are taken, follow the same principles and are applied in the same fashion by national regulators. This is not an academic exercise, because we now have received - as long expected - a notification by the British regulator OFCOM on precisely this issue.

Finally, I would like to address the issue of roaming. As you all know, the principal aims of the EU Roaming Regulation recently adopted were to bring down standard prices for international roaming in the EU, to protect and maintain customer choice and to ensure greater transparency. While the Commission will report on the overall functioning of the Regulation at the end of next year, it is already possible to say that its implementation has, with only a few exceptions, gone very smoothly. Roaming charges have been substantially reduced - by more than 60% on average - and consumers can now move around Europe without being afraid to turn on their mobile phones.

One of the key questions to be addressed in the Commission's review of the EU Roaming Regulation at the end of next year will be whether roaming data services such as SMS or MMS should be regulated, and I am convinced that the issue of data roaming will be an important regulatory challenge that will require a coherent response in all the Member States. I call on national regulators to solve this problem swiftly in the same way as I have done on voice roaming.

So there are many important challenges, which can only mean one thing: Dániel Pataki, as the 2008 Chair of the ERG, will be a busy man. But I also know that we can relay on him to make the cooperation among the national regulators and with the Commission a reality and a success. I welcome that with Dániel Pataki, for the first time a new member of the enlarged EU, will take over the presidency of an important EU body. This is bound to bring a new spirit and a new dynamism to telecoms regulation in Europe.

Ladies and Gentlemen, let me therefore propose a toast to Dániel Pataki, and thank him and his colleagues in the Hungarian Regulatory Authority for bringing us together this evening in Budapest.

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