Regulator power trip scares telcos

CommunicationsWeek International, Feb 4, 2002 by Michelle Donegan

European incumbent operators are calling for new limits on the powers of national telecoms regulators (NRAs), which they say are getting out of control. They fear that new European Union directives could lead to over-regulation.

Their appeal comes as Germany's national regulator pushes for unprecedented new powers.

"Operators may lose their ability to steer their business if regulators take over and get into the driving seat," said Mikko Varhe, business development manager at Sonera, based in Helsinki. "The way it's going to be implemented is the most fearsome part of the package-not the package itself."

But the German telecoms regulator, the Regulierungsbehorde fur Telekommunikation und Post (RegTP), wants more power to enforce its decisions and has asked the government for the right to impose fines and to streamline the lengthy court of appeals process.

"The current [RegTP] president is getting increasingly fed up...the only way to deal with [Deutsche Telekom] is to get more teeth," said Andreas Mug, senior associate at international law firm Steptoe & Johnson, Rakisons, of London.

But the soonest these new powers could come into force is the middle of 2003, prompting fears of crisis from alternative operators.

"By then it's too late. The patient would have died by then," said a WorldCom spokeswoman in Germany. "We need [sanctions] now."

However, backing the incumbents are the mobile operators, which are especially concerned that the new EU directives will lead to further price controls.

"[The new framework] achieves over regulation if not carefully implemented," said Enrica Rocci, group regulatory governance manager for Vodafone Group Services Ltd., based in Newbury, England. "It gives wide discretion to NRAs, and we're concerned about how it will be implemented."

The European Telecommunications Network Operator's Association (ETNO) also urges caution to NRAs in using their new powers to define markets and designate significant market power (SMP) obligations under the new framework to markets that have not been regulated before-namely, the Internet and some mobile services.

"Under the new package, NRAs will gain unprecedented autonomy," said Michael Bartholomew, director of ETNO, based in Brussels. "For the first time, the package extends regulatory intrusiveness to the mobile sector and other sectors where it had not been before."

But the RegTP is pressing on regardless. "We're introducing points that would be a good idea to change in the law for effective regulation. One of them is the right to fine," said Annegret Groebel, head of the section for coordinating international bodies at the RegTP. "Otherwise, you don't have enough power in your decisions," she said, adding that fines are particularly necessary for enforcing service level agreement and delivery time decisions.

The German Ministry of Economy and Technology will be rewriting the telecommunications law (TKG) to incorporate the new European directives, and it has 15 months to introduce the legislation from the time the directives are officially adopted, which is expected to be next month. In sharing its experiences of the last four years with the Ministry, the RegTP says that it needs more force.

The move comes at a time when the RegTP is under increasing pressure over the issue of leased lines, where competitive operators are prepared to sue Deutsche Telekom for long delivery times of circuits (CWI, 21 January 2002, p.1).

The amount of the fines has not yet been determined. Currently, the regulator does have the authority to fine Deutsche Telekom, but only up to DM2,000 ([euro]1,023).

The RegTP also wants a shorter appeals process. "We want to skip at least one level of courts," said Groebel. Currently, there are two levels of courts to go through for a fast track appeal and three levels for a normal appeal.

Competitive operators are encouraged by the news of the potential for RegTP to impose fines, but they say this power may not help the problems they have now, for example, with local leased-line provisioning and pricing.

"If we had sanctions it would help, of course," said Andrea Weissenfels, a lawyer with VATM, the German service providers' association.

"But it should be soon. This could come too late for many competitors," she said.

Weissenfels believes the RegTP can be stronger in certain areas without rewriting German telecoms law. "If they would stop believing in Telekom's proposals and act faster, that would help very much," said Weissenfels.