Opening Sessionhttps://www.anacom.pt/render.jsp?contentId=55129
Conclusionhttps://www.anacom.pt/render.jsp?contentId=55130
On 30 September 2009, at Culturgest in Lisbon, ANACOM hosted its 3rd International Conference, on the theme ''20 Years Later: Why Regulate?'' The Conference brought together participants from various quarters, including policy makers and members other regulatory authorities.
The initiative sought to promote joint reflection on the major issues currently facing regulation of the communications sector, in view of the challenges envisaged for the future, in an environment marked by the pace of technological development and its implications for markets.
Opening Session
Proceedings were opened by the Chairman of the Management Board of ANACOM, José Amado da Silva, who considered the conference a sign of openness and transparency, more than a nostalgic celebration of this Authority's two decades of service to communications in Portugal. The opening session followed, with presentations made by the Bernd Langeheine of the European Commission's (EC) Electronic Communications Policy Directorate of the Information Society and Media Directorate-General (DG INFSO) and by Mário Lino, Minister for Public Works, Transports and Communications.
Bernd Langeheine, who congratulated ANACOM, on behalf of the European Commission, on its twentieth anniversary, considered that the theme of the conference was quite appropriately chosen since ''after twenty years of (de)regulating telecoms markets, we have to ask ourselves where we stand today and what needs to be done over the coming years''. The head of DG INFSO recalled that the liberalisation and deregulation of the former telecom monopolies was above all based on EU directives, noting that although the ground work was laid at the European level, success would not have been possible without the hard and unrelenting work of the national regulatory authorities (NRAs) of the Member States of the European Union (EU).
For Bernd Langeheine, ''the work of ANACOM has been very successful'', as shown by some data from the latest EC implementation Report: the "penetration rates for mobile phones and, more importantly, mobile broadband usage are well above the European average; Prices for the unbundling of local loops or shared access, which are key drivers of competition, are amongst the lowest in Europe. And what is most important: investment in 2008 was almost 1.2 billion Euros which is a 52% increase compared to the previous year and represents about 16% over revenues".
Regarding the question ''Why Regulate?'' Bernd Langeheine said that ''the trend of extending regulation has already been reversed with the new Recommendation on Relevant Markets of 2007. There are now only seven markets left (out of the original 18) which could in principle be subject to regulation''. He concluded that ''even though regulation has been cut back considerably, we will still be faced for some time with issues that may need regulatory intervention in one way or another. But the emphasis of regulation may shift with technological developments, and we need to be creative and innovative also in our regulatory approaches. The Recommendation on Next Generation Access Networks (NGA) which we are presently preparing will be the first test case''.
Mário Lino, in turn, set out the national perspective of the developments seen in the communications sector, noting, among other things, coverage of the entire country with infrastructure providing access to broadband Internet, the connection of 100 percent of public schools to Internet broadband, the increase in competition and in the number of operators in the market, the exceptional provision of the mobile telephone service in Portugal and the strong drive towards next generation networks (NGA), including through the publication of legislation aimed at their promotion and through public tenders for the deployment and operation of NGA throughout the country. The minister also highlighted the role of ANACOM in the achieving these results, highlighting the features of independence (organic and functional) enjoyed by this Authority. Addressing everyone who is making or has made a contribution to ANACOM, Mário Lino thanked "the effort and commitment that has made the Regulator one of the most prestigious among its counterparts".
20 Years of regulation: building the future with the present and past
Recalling the past is only a means to better understand the present and consider the future - the first panel of the Conference brought together all the former chairmen of ANACOM: Fernando Mendes, chairman of the first Management Board (MB) of Instituto das Comunicações de Portugal (ICP), Luís Nazaré, chairman of the second MB of ICP and the first MB of ANACOM, Álvaro Dâmaso, the chairman of the second MB of ANACOM, and Pedro Duarte Neves, chairman of the third MB of ANACOM.
The session was moderated by ANACOM's Vice Chairman, Alberto Souto de Miranda, who made a brief outline of the last 20 years of communications in Portugal, recalling that in 1989 there were only 5 state-owned telecommunications companies, while today there are dozens of operators and services available. ANACOM has made a decisive contribution, with persistence, consistency and common sense, and has made this contribution in the company of Governments which understood that telecommunications are strategic for the country and alongside dynamic operators with capacity for innovation, making the Portuguese telecommunications sector one of the most competitive.
Fernando Mendes, whose presentation was recorded in advance due to his absence from Portugal, presented the socio-economic framework of regulation at global and national levels, and considered that the answer to ''20 years later - Why regulate?'' seemed evident: ''regulate to continue to correct market failures and regulate to build a stronger framework of fair and transparent governance''. He recalled that in the last 20 years, while remaining accountable to the legislature and executive, regulation has been transferred to independent agencies and he questions whether regulators, in their third level of power, can contribute to combating the phenomenon of disbelief and gradual disengagement of citizens in relation to the powers that be - Parliament, Government and the Justice system - by getting closer to the consumer citizen and detaching themselves from the web of established economic business interests.
Luis Nazaré, meanwhile, stressed the fact that ANACOM has a very broad remit, which from the outset included telecommunications and postal services - not always the case in Europe. The former chairman supports the current model because it allows a high degree of efficiency in the use of resources, while results are achieved much more easily and with far greater functional integration between the different competencies involved. He also claimed that ''as far as communications is concerned, ANACOM should be responsible for the application of competition law'', whereas the competition regulator should be charged with intervening only as an auxiliary body or in sectors that are not subject to vertical regulation.
On the question ''Why Regulate?'', Álvaro Dâmaso cites a speech by American President, Barack Obama, with regard to the recent crisis in the financial sector (''without a watchful eye, the market can spin out of control'') and referred to the strategic plan of ANACOM for the next three years, emphasising that in both cases, there is ''great faith in the market as a generator of development for a greater number of citizens and a concern for its supervision, in the interests of consumer citizens and taxpayers''. According to the former chairman, the work of the Authority ensures that ''the citizen, who is also a taxpayer, can buy the best quality of services and goods at the best price, satisfying different preferences - this is the ultimate reason for regulation - the consumer citizen''.
Also presenting a historical summary of sectoral regulation, Pedro Duarte Neves then highlighted what he saw as the 5 future challenges of regulation, ''which are not necessarily challenges for the national regulator, but are challenges for regulators in this phase of European markets''. The first is embodied by the greater emphasis which will have to be given, as is occurring, to supervision and enforcement, as opposed to regulation. The second challenge will be to properly monitor, evaluate and enforce the levels of quality and accessibility actually provided to consumers. The third results from changes in the final tariff systems, given the evolution of combined offers (bundling) and flat rates - solutions which have brought significant benefits to consumers but which confront the regulator with relevant issues where combined offers are comprised of regulated services and unregulated services.
According to Pedro Duarte Neves, a fourth challenge will arise in the mobile service, where he sees a need for more information, given its weight in the sector. As such he suggests that a set of new indicators should be developed ''so that we can have a better idea of the real trends in the prices of mobile [services]''. The last challenge stems from the development of an appropriate regulatory framework for the establishment and development of next generation access networks, in order to foster innovation in the provision of services to citizens and the promotion of competition, according to conditions of non-discrimination.
Regulate for investment? Competition as a driver to invest
This panel agreed on the common idea that regulation should ensure competition, and that this will encourage investment, given that, more than ever, next generation networks will require new rules which drive investment and healthy competition. To this end, regulators must communicate stability and certainty to the market over the longer term.
According to Iris Henseler-Unger, Vice-President of BNetzA, the German regulatory authority, effective regulation forces competition and this, in turn, leads to investment. In the specific case of next generation networks, everything depends on the cooperation between market participants, since these new networks involve different infrastructure and different technologies. In this scenario, cooperation between sectoral regulators and competition authorities appears as a driving force, neither of them able to enter the market prematurely, lest they hamper the solutions which may emerge voluntarily.
Meanwhile, Alex Blowers, International Director at Ofcom, the regulator of the United Kingdom, argued that the most important input of regulators is to confer the freedom to set prices on operators seeking to launch new products. Indeed, in the context of next generation networks, little is known about levels of use, and any intervention in terms of price control can lead to constraints that will be difficult to control.
He also highlighted the need for regulators to establish longer periods of regulatory certainty, since it has been demonstrated that this is vital for investment in next generation networks.
With regard to access and use of infrastructure, both speakers agreed that at this stage it is too early to speak of symmetric regulation, whereas, for now, it is more important to let investment flow. However, this investment must be accompanied by a degree of regulation which promotes competition in access and between platforms.
David Gomes, the Chairman of ARCTEL-CPLP and the Management Board of ANAC, the Cape Verdean regulator, highlighted the importance of vertical functional separation, not only to avoid duplication of infrastructure but also to avoid incumbents who combine the functions of network manager and operator in parallel with other competitors from assuming positions of dominance.
Common to all actors there is the need for cooperation between the sectoral regulators and competition authorities and the need for these bodies to cooperate with market participants, particularly in terms of competition in infrastructure, avoiding unnecessary duplication.
And, correlated with investment in infrastructure, the challenge of risk sharing arises - a new issue which regulators are still debating in view of its implications for access and prices.
The moderator of this panel - Bernd Langeheine, DG INFSO - ended by concluding that ''regulatory holidays'' such as ''no same size fits all'' should be rejected out of hand, taking into account the characteristics of each national market, in addition to unanimous agreement that market participants require more and longer term regulatory certainty.
Spectrum and competition: regulating the next 20 years
In the introduction to this panel, Ferrari Director, a member of ANACOM's Management Board, emphasized the growing importance of the spectrum, which constitutes the most important raw material for current electronic communications, assuming, therefore, key relevance to economic activity in general. And, despite being a raw material that is distributed evenly across different countries (depending on their size), it is liable to be wasted as a result of sub-optimal uses.
Ferrari Careto also referenced the changes taking place in terms of spectrum management, based currently on fee models aimed at promoting efficient use, the use of auction in spectrum allocation procedures and the implementation of neutrality of technology and services.
This neutrality of technology and services was also highlighted by Marianne Treschow, Director General of the NPTA, the regulatory body of Sweden, which has a model that is similar to Portugal's, insofar as it is also responsible for spectrum management. She considers neutrality as the key element in the evolution of the liberalization of the spectrum management regime, which, however, requires new basic technical rules to be set by the regulator preventing, specifically, interference between bands.
For Marianne Treschow, the main drivers for the future management of the spectrum are liberalization and harmonization. In first place, relevance is given to increased flexibility, removing technical and market constraints, and secondary spectrum trading which ensures its optimal use; this may lead to the total or partial sale of licenses or even leasing. Harmonization opens the way to the initiative of the industry with positive results which will be felt, for example, in the implementation of international roaming.
Meanwhile Remko Bos, Director of Markets at OPTA, the regulator of the Netherlands, whose remit encompasses spectrum management, talked about the importance of the spectrum and its allocation with respect to market analysis, noting its influence on various (retail) markets and pointing out that the allocation of spectrum and convergence hinders market analysis. According to this speaker, convergence also plays an increasingly important role in the allocation of spectrum and makes the analysis of the mobile communications markets a real challenge.
Economic, technical and content interdependence will grow, driven by convergence of services and neutrality. This will require fully integrated regulation, with regulators, policy makers and even the operators cooperating among themselves in a totally transparent way. In this sense, analysis of markets loses relevance compared to the stable and long-term definition of objectives and policy instruments.
From Spain came the experience of Antonio Diaz-Flores, Subdirector General for Planning and Radio Spectrum Management, Secretaría de Estado de Telecomunicaciones y para la Sociedad de la Información, which only has powers in relation to spectrum management (regulation falls to the CMT). The speaker highlighted the preponderance that competition has benefited in the processes of spectrum allocation, with the introduction of clauses which inhibit the accumulation of bands or of ''use-it-or-lose-it'' clauses). He also referenced the importance of secondary trading of spectrum in the future of spectrum management, as the most effective way of ensuring competition and efficient use.
All the speakers were unanimous in emphasising the advantages of the auction as an appropriate, efficient and economic method of spectrum allocation, with the Spanish representative also noting that allocation by tender has the advantage of safeguarding wider social objectives.
Governance of regulation: scope, legitimacy and accountability
In the roundtable that discussed the basic issues of sector regulation, the Chairman of ANACOM, José Amado da Silva, challenged the speakers to elaborate on the scope of regulation, questioning whether this should involve ex post regulation - competition - and content.
The chairman of ANACOM also introduced the problematic issue of appointment of regulators and their financing.
Reinaldo Rodriguez Illera, Chairman of CMT, the Spanish regulatory authority, gave a brief overview of the European scene, showing that there is a varied range of solutions with regard to areas which may be subject to regulatory intervention (electronic communications services and networks, content / audiovisual and competition law), whereas practice does not lead to any definite conclusion as to the method that best ensures the independence and impartiality of these regulators. Convergence itself is likely to affect the regulation model, whereby it can be argued that separate perspectives lead to reduced agility and efficiency at a time when there is an increasing need to coordinate ex-ante and ex-post regulation.
With respect to independence, Reinaldo Illera argued that while this is essential with respect to operators, it is difficult to achieve in relation to governments, in which context several criteria are noted which should be considered, such as the degree of government intervention, public participation in operator share capital, the duration of mandates and reasons for their termination, favouring the existence of collective bodies and single mandates.
In terms of the decision-making, he argued that this should be subject to the obligations of transparency, which is the best way to reduce room for discretion, based on extensive hearings (consultations) and creating conditions to obtain a clear vision of the ultimate beneficiary (the user / citizen).
António Jorge Vasconcelos, consultant and former chairman of ERSE, addressed the dichotomy ''regulation of the government / governance of regulation'', considering that the first case, while corresponding to a classic question is uncontentious, set out in the separation of powers enshrined in the Constitution itself. However, he emphasized the growing ''Europeanization'' of the regulated sectors, which leads to co-existence with a growing number of rules and a greater number of institutions, combined with ongoing technological change.
Regarding the second case - ''governance of regulation'' - he considered that without independence effective regulation cannot be accomplished and, as such, regulators should see their independence safeguarded, from the outset, in their statutes and by a truly transparent relationship with the regulated entities and markets.
He further noted that, in Portugal, the inclusion of the budgets of regulators in the State Budget had harmful results, since the limitations associated with this instrument is also impacting the regulators, making them subject to a set of rules, including those related to contracting, which are closely related to the rules of the State. Moreover, contrary to expectations, this solution does not lead to the greater accountability of regulators, particularly regarding the management of the budgets at their disposal. This responsibility, which is an essential one, should result in an unequivocal way from their statutes.
José Amado da Silva, then raised a number of issues which still needed to be addressed: funding of regulatory authorities and costs of regulation (which cannot be exaggerated); assessment of what is most relevant, among ''those making appointments'' to the governing and decision-making bodies of the regulator and the conditions given for the exercise of this office; and implications of the principle of ''impartiality''.
Conclusion
Summing up, the chairman of ANACOM, José Amado da Silva, noted that the ideas put forward, the ensuing debate and the knowledge of the participants demonstrated that the theme of ANACOM's 3rd international conference - ''20 Years Later: Why Regulate?''- still raises serious questions, in addition to incalculable challenges, in the short and long term for policy makers, regulators and all market participants.
Nevertheless, perhaps the question ''Why Regulate?'' can be answered, affirming that regulation remains necessary to ensure competition, to attract investment and to guarantee access to the market that is fair and non-discriminatory. Meanwhile, the answer to the question ''Regulate for whom?'' is unequivocal, regulation must be for all citizens, taxpayers and non-taxpayers alike.
