Electronic Communications Submission February 2000

9 March 2000 – A SUBMISSION BY AER TO THE EUROPEAN COMMISSION REGARDING THE COMMUNICATION “TOWARDS A NEW FRAMEWORK FOR ELECTRONIC COMMUNICATIONS INFRASTRUCTURE AND ASSOCIATED SERVICES

EXECUTIVE SUMMARY

The “Communication on a new framework for electronic communications infrastructure and associated services – The 1999 Communications review” is important because it addresses the future regulatory framework for the communications sector.

It concentrates on the infrastructures of telecom operators and does not concern itself with content.

AER agrees with the Commission’s proposal (result of the Green Paper on Convergence) to separate the regulation of content and infrastructures, although in the case of broadcasting there is a direct link. Radio content providers should have guaranteed access to networks.

AER members generally agree with the liberal and open scope of the review, although we have certain concerns and comments that are as follows:

1. Licensing and authorisations

  • A system of individual licences (or specific authorisations as they are called now by the Commission) should be maintained in the radio sector.
  • The right to provide digital radio services should be automatically available to existing broadcasters as the first step in the introduction of DAB transmissions to ensure a smooth transition to digital and guarantee investment. After the introductory phase, access to multiplexes should be guaranteed to all broadcasters holding a current content licence.

2. Access and Interconnection

  • Dominant infrastructure owners will have to meet reasonable requests for access and National Regulation Authorities should be able to intervene to resolve disputes.

3. Management of radio spectrum

  • AER is against the principle of auctioning frequencies that are currently occupied by stations because this will reduce investment in content and lead to inefficient use of spectrum.
  • Spectrum assignment should be based on content as well as (rather than only on) financial issues.
  • Private radios should have at least equal access to spectrum/multiplexes to that accorded to public radio broadcasters.

4. Specific competition issues

  • The Commission should ensure effective co-operation between sector-specific regulators and national competition authorities to avoid conflicts between them. We recommend, first, that decisions on dominant positions in communications and broadcasting should be based on a clear, published framework of cross-media ownership measurement and, second, that any such framework should include in its valuation all publicly, part publicly and privately funded communication and broadcasting ventures or companies.

5. Institutional issues

  • The European Commission should guarantee that the technical decisions taken in the CEPT are properly implemented in the different Member States without causing distortion in terms of competition or single market issues.
  • AER, as representative of an important community of radio spectrum users, offers itself for membership of the SPEG.

INTRODUCTION

The Association of European Radios (AER) is a Europe-wide trade body representing the interests of private commercial radio operators in France, Germany, Greece, Italy, Portugal, The Netherlands, Spain, Sweden and the UK.

This paper sets out the views of AER on the implications of the “1999 Communications Review” for the radio sector in general and in particular for private radios in their transition from analogue to digital technologies.

AER has a number of concerns regarding the Review. The scope of application of the new framework is not entirely clear to us. Associated services and communication infrastructure are regulated under the new framework, but services provided over networks are outside its scope. For example, “the broadcasting services or information society services provided over networks” are excluded.

AER has read with particular interest Chapter 4 where specific proposals for change are detailed. We will focus our attention on the following points: Licensing and authorisations (4.1); Access and Interconnection (4.2); Management of radio spectrum (4.3); Specific Competition issues (4.7); and Institutional issues (4.8).

1. Licensing and authorisations (4.1.)

1.1. Individual licences and general authorisations (4.1.1.)

The Commission wishes to promote the use of general authorisations as the basis for licensing communications networks and services, with specific authorisations only being reserved for specific parts of the radio spectrum (i.e. broadcast radio services).

AER believes that the system of individual licences (or specific authorisations as they are called now by the Commission) for the radio broadcasting sector should be maintained since radio broadcasting services are directly linked to an assigned part of spectrum.

1.2. Authorisation of broadcasting transmission networks (4.1.2)

The Commission states that the new framework will include all broadcast networks (terrestrial, satellite, and cable) as well as telecommunications networks in its scope. The licensing of broadcasters, insofar as those licensing provisions regulate the content of transmissions, is not the subject of this Communication and is not covered by the new regulatory framework. Therefore, the Commission believes that this implies two separate authorisations, one relating to operation of the network infrastructure and the transmission of broadcast signals, and the other concerned with the content of broadcast transmissions.

It is interesting to note that in footnote 33, there is a reference to digital radio (DAB) concerning potential problems linked to contractual access and the discrimination that may arise, from the point of view of the Commission, in cases where broadcasters would own or exploit their own multiplexes.

In its submission to the Commission’s Working Paper on Convergence, AER stated that the right to provide digital radio services should be automatically available to existing broadcasters as the first step in DAB’s introduction to ensure a smooth transition to digital and guarantee investments. Established broadcasters are best placed to introduce digital broadcasting to the public, because they have proven market skills and the necessary industry experience.

As AER stated in its submission to the Green Paper on Spectrum Policy, a service-based criterion should be applied to the awarding of radio spectrum (that is the granting of authorisations to transmit broadcast signals). Historically, AER has not been in favour of separating the awarding of radio spectrum and the granting of service authorisations or licences. Because of the great importance of content, frequencies should not become goods open to trade without some assurance regarding content.

In general, AER believes that mixed consortia can operate multiplexes (broadcasters, data providers, telecom operators, etc.) provided that, irrespective of who manages or owns a multiplex, all broadcasters holding a content licence relevant to the area covered will be able to broadcast their programmes via its facilities. The objective is to preserve pluralism and the variety of services offered to the audience, without discrimination against any broadcaster.

Decisions about management of multiplexes and content licences are currently the responsibility of Member States and, in AER’s view, the principle of subsidiarity should prevail in this matter. These decisions should ensure transparency, nondiscrimination, listener choice and equality of access.

2. Access and Interconnection (4.2.)

The Commission states that the positions set out in this section do not apply to “private” networks (not accessible to third parties) such as terrestrial analogue broadcast networks. However, we assume that digital radio broadcasting would be covered by the Commission’s proposals as far as access to multiplexes is concerned.

Current Community legislation contains a general requirement for telecommunications operators with “significant market power” to grant all reasonable requests for access to their networks. AER welcomes the Commission’s initiative to foresee the extension of these requirements to cover access to other communications infrastructures.

AER agrees with the Commission’s view that, in the case of access to network infrastructures, the responsibility should fall to the National Regulatory Authorities (NRAs) in Member States to deal with specific access issues according to a set of conditions and criteria laid down in Community legislation. Therefore, dominant infrastructure owners will have to meet reasonable requests for access and the NRAs will be able to intervene to resolve disputes. In principle, operators are deemed to have significant market power when they have more than 25% of a particular telecoms market. In practice, up to now this has meant the incumbent operators.

3. Management of radio spectrum (4.3)

3.1. Valuation of radio spectrum (4.3.1)

The Commission states that “there seems to be a general recognition that spectrum valuation is a necessary step”. This is surprising to AER since, by and large, operators during the debate over the Green Paper on Spectrum Policy were not in favour of auctioning spectrum.

AER stresses what it said in its contribution to the Green Paper: “AER is against the principle of auctioning frequencies because this will lead to unrealistically high prices and will not guarantee an efficient use of spectrum”. High auction prices tend to reduce investment in content.

AER believes strongly that “all radios, public and private, participate in the same way in the objectives of pluralism, ethics of information, respect of moral and democratic values, protection of the individual, as well as promotion of consumer interests. Therefore, both private and public radios should have equal access to frequencies”.

3.2. Charges and efficiency of radio spectrum use (4.3.2)

The Commission considers that is desirable to define more precisely the concept of “spectrum efficiency”.

AER suggests that the definition of the term “efficiency” responds to several subjective factors. It is therefore difficult to use it as a criterion to assign spectrum.

For AER, spectrum assignment should be based not only on financial issues but also on the type of service provided or proposed.

3.3. Secondary trading of radio spectrum (4.3.3)

The Commission suggests exploring the potential of secondary trading.

AER does not agree with the Commission’s suggestion of amending the existing Licensing Directive to allow Member States to make provision for radio spectrum secondary trading without constraints regarding content. Again, allocation of spectrum should be directly linked to the services offered and general competition regulation should, of course, apply.

4. Specific Competition issues (4.7)

The Commission proposes the use of the concept of “dominant position” (article 82 of the Treaty) in certain specific sectors. At the same time it proposes maintaining the threshold (commonly 25% of a defined market) for other aspects of the same sector or related sectors.

By and large, the concept of dominant position is considered on a case by case basis. This leads to anomalous positions in different Member States, either between sectors or between media, and creates conflict and opacity. This is likely to be particularly true where the general competition law applied to non-broadcasting or noncommunications commerce by the National Competition Authority conflicts with the rulings of a National Regulatory Authority in charge of a medium or media.

AER proposes two things.

  • First, that decisions on dominant positions in communications and broadcasting should be based on a clear, published framework of cross-media ownership measurement and,
  • second, that any such framework should include in its valuation all publicly, part publicly and privately funded communication and broadcasting ventures or companies.

5. Institutional issues (4.8)

As AER stated in its submission to the Green Paper on Spectrum Policy, the CEPT provides a satisfactory framework for meeting technical requirements via a process of evolution and co-operation among countries.

AER believes that the European Commission has a role to play in co-ordinating the 15 Member States’ positions in order to strengthen the defence of European interests at international level. On one hand to protect European technologies from being overtaken by those of foreign competitors and, on the other, to defend those public interest objectives that are important to European citizens.

The Commission should use the necessary information (from the CEPT) to discuss both current and future radio spectrum availability for the Community as a whole. This does not mean that the Commission will be responsible for the allocation of frequencies but that the Commission should be well informed regarding the needs of European operators in order to be able to co-ordinate all EU positions at CEPT or ITU negotiations.

The Commission should take an active interest in CEPT and ITU discussions, and participate as much as possible in their meetings.

The European Commission should guarantee that the technical decisions taken in the CEPT are properly implemented in the different Member States without causing distortion in terms of competition or single market issues.

Therefore, AER agrees in principle with the new institutional arrangements proposed by the Commission, provided that these arrangements consider and take into account the needs of all operators, including the private radio sector.

5.1. Proposed new Institutional arrangements (4.8.1)

AER welcomes the initiative to create a High Level Communication Group (HLCG) composed of the Commission and National Regulatory Authorities (NRA) of Member States. It seems the HLCG will lead to close co-operation at European level. AER is disappointed that the Commission does not mention among these bodies the radio Community and the platforms for digital radio DAB.

In the context of radio spectrum, AER has taken particular interest in the Communication “Next steps in radio spectrum policy – Results of the public consultation on the Green Paper”. AER welcomes the creation of a radio Spectrum Policy Expert Group (SPEG) at European level to make sure that Community policy in this field is guided by political considerations and not only by technical ones. This group will be composed of representatives of the Member States responsible for the different sectors requiring radio spectrum availability, as well as sector representatives (trade organisations, market players, technology developers).

AER believes it merits membership of the SPEG as the only association representing European private radios. It already takes an active part in the technical deliberations of the WorldDAB Forum.

5.2. National Regulatory Authorities (NRA) (4.8.2)

AER agrees that legal provisions should be strengthened to ensure that NRAs are independent from governments in order to undertake better their supervisory role. NRA responsibilities should be clear ensuring speedy, transparent decision making without any duplication by other Government or non-Government bodies.

Concerning the co-operation between sector-specific regulators and national competition authorities, AER stresses (as mentioned in point 4.7.) that the Commission should ensure effective co-operation to avoid conflicts between them. We have recommended, first, that decisions on dominant positions in communications and broadcasting should be based on a clear, published framework of cross-media ownership measurement and, second, that any such framework should include in its valuation all publicly, part publicly and privately funded communication and broadcasting ventures or companies.

AER 09.02.00

AER (Association of European Radios)
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