First UK Application of New European Union Regime for Electronic Communications Networks and Services

Article by Stan Gorinson, Connie Robinson, Emmanuelle Rouchel

Oftel, the national competition authority for UK telecommunications matters, has reviewed the first mobile case under the new EU regulatory framework for electronic communications and services. That review has resulted in the ending of certain sector-specific regulations.

New EU framework

The new UK regime is based on five recent EU Communications Directives, intended to:

create harmonized regulation across Europe for electronic communications networks and services;

reduce entry barriers; and

foster prospects for effective competition to the benefit of consumers.

The new Directives require National Regulatory Authorities to evaluate the state of competition in the electronic communications sector and to repeal any unnecessary regulations, in order to ensure that the legal framework remains adequate in the context of rapidly evolving markets.

Four of the five new Directives were implemented in the UK on July 25, 2003. The fifth Directive on Privacy establishes users' rights with regard to the privacy of their communications and has an implementation date of October 31, 2003.

Oftel's review

Pursuant to the new regime's requirements, the Office of Telecommunications (Oftel) carried out a review of the market for wholesale mobile network access and call/short message (SMS) origination in the UK.

The agency published two consultation documents in April and August 2003, which set out a proposal for defining the relevant wholesale mobile services market and assessing the state of competition in that market, as well as the regulatory implications of that proposal. The proposed market definition was the market for wholesale mobile network access and call/short message (SMS) origination is the UK.

The assessment of competitive conditions among the main market participants (O2, Orange, T-Mobile and Vodafone) was conducted on the basis of the Commission's guidelines for determining whether a supplier has, individually or collectively, significant market power ("SMP"). Criteria used include significant historical fluctuations in relative market shares, significant asymmetries of relative profitability, continuing entry onto the retail market by service providers, fluctuating relative prices, and retailers' countervailing buyer power.

Oftel concluded that no supplier had SMP on the market for wholesale access and call origination on public mobile telephone networks in the UK, either...