Mr. Kevin O'Brien:

Thank you, Chairman, for providing ComReg with the opportunity to present our views on the changes proposed by the European Commission to the regulatory framework for electronic communications. I am accompanied today by my colleague Mr. Bobby Hannon, international manager at ComReg.

European and Irish consumers and end-users have benefited greatly from the advances in electronic communications services and the networks on which they and other services depend. Innovative services have been developed and prices reduced due, among other elements, to a practical, evidence-based approach to regulation. Regulation of the sector has been defined at European level through a series of related directives, the practical implementation of which has been entrusted to decisions at national level - that is, giving effect to the principles of subsidiarity. The Commission is now proposing a radical departure from that approach. ComReg, in our own right, and as a member of BEREC, has concerns about the potential impact of the set of proposals on the future effectiveness of regulation, particularly at national level. In proposing a regulation instead of a directive, the Commission is removing the possibility of national governments or NRAs tailoring the rules to meet the unique needs of local markets. Our specific concerns relate to the practicality of what is being proposed and whether changes will bring about the desired outcome. More particularly, will the needs of the Irish marketplace be met by a one-size-fits-all approach, as advocated by the Commission?

I reiterate the concerns which BEREC identified in its initial statement following publication of the proposals. I have provided copies of the BEREC statement to members. The proposals would represent a fundamental shift of decision-making away from national level and centralise competencies at Community level with increased powers for the European Commission. In doing so there is a risk to the ability of national regulators, whether acting individually or collectively through BEREC, to take appropriate and proportionate regulatory action in all the relevant markets. Finally, by proposing such a radical departure from the current framework, the Commission risks undermining legal certainty, in contrast to its own stated objectives of creating a predictable regulatory environment, which is essential to the promotion of efficient investment and effective competition.

I do not wish to portray all of what is proposed by the European Commission as negative. There are aspects which we consider to be progressive and, with further development, would be of benefit to Irish consumers. Commissioner Kroes in recent days described the proposals as “sweet and sour” and as a package that cannot be taken apart. Staying with the Commissioner's analogy, there are features of what is proposed that, while we could not give them an unqualified endorsement, are certainly more sweet than sour. I include in this category the measures proposed on end-users' rights. For the most part, these amount to an upgrading of existing provisions in the directive from enabling measures to mandatory provisions. In Ireland we have chosen to have such rules in place, but other countries have not done so or have not done so to the same extent. There are some aspects that we think are disproportionate, but we would expect them to be addressed when the Council of Ministers and the European Parliament consider the proposals.

There are also new provisions - for instance, on switching service providers and on the treatment of bundles - which, again, subject to some further work, we think would benefit consumers, particularly as services are being increasingly subscribed to through bundles. The provisions on net neutrality are also generally positive but we are not convinced that this can represent the final word on the issue. We are acutely aware that the debate surrounding assured service quality and traffic management can raise issues about discriminatory preference being given to certain applications or, indeed, to certain categories of user. We would expect this aspect of the proposals to generate a lot of debate.

Overall, we have our doubts that the end-user provision, including net neutrality, should be addressed by way of full harmonisation - that is, by way of a regulation rather than an amending directive. While this should result in end-users having the same experience anywhere in the EU, we are concerned at the prospect, over time, of our being unable to react at national level to consumer protection issues which may be unique to Ireland. In fact, we have specific concerns that consumer protection measures which ComReg has introduced, such as requirements on the format of bills and on advance notice by operators exiting the market, would no longer be permitted. Our preference would be for the EU legislation to specify a minimum, not a maximum, set of harmonised consumer rules and for member states to supplement these where necessary and where proportionate.

The proposal also amends the roaming regulation, the most important aspect being a mechanism for operators to offer a roam-like-at-home facility as an alternative to the requirement due to come into effect next July of a facility to allow customers take roaming services from a different operator. We will support any mechanism that drives down the cost of roaming for Irish users but the practicality of the particular mechanism needs to be carefully considered, along with the implications for mobile providers who are not part of a pan-European alliance.

There is a proposal that would place a cap on the cost of a call from Ireland to anywhere in the Union. Again we support reductions in unjustified costs incurred by end users but the mechanism proposed by the Commission proposes very different approaches for mobile and fixed networks.

Let me turn to the aspects of the proposals that we would definitely consider sour. The first is the single EU authorisation. This is stated to reduce barriers to entry and simplify matters for operators that are active in more than one member state. The proposal introduces the concept of a home member state, which is where the operator is headquartered, and a host member state, where the operator, subsidiaries and affiliates provide services. There is no simplification of procedures for operators. One would still be required to notify details of each operating entity in each of the official languages in each of the territories in which one operates. The only difference is that a single notification would be made to the regulator in the home member state, who would then have to forward the information to each regulator in each other member state where the operator is active. Far from being a simplification, it would create unnecessary bureaucracy for operators and also for regulators while making the procedures more cumbersome and regulatory responses subject to delay.

By creating the concept of a European provider, the proposal would create a two-tier regulatory regime with the capacity for national regulators to regulate European providers in their national markets subject to veto by the EU Commission. Furthermore, it would make regulation of national markets subject to the views of the home regulator, thereby creating quite a different regulatory regime. Eircom and Vodafone, for instance, would be under a very different type of regulatory framework. Since 2011, there has been a procedure in place for the consistent application of remedies – the Article 7 procedure. This has worked well over the past 2.5 years since its introduction, yet the Commission is proposing to discard this and introduce an unproven and unjustified alternative procedure for European providers only.

The final and perhaps most important issue I want to address is that of spectrum. Essentially, decision-making in respect of assignment of spectrum would be vested in the Commission, and member states would have far less control. This is a fundamental shift in responsibility and I am confident in stating that we in ComReg would not have been able to conduct our recent spectrum auction, which has provided 4G services to the Irish public and has raised in excess of €850 million for the State, within the timescale in which we operated, nor would we have realised such a financial benefit for the Exchequer had these proposed measures been in place. There is a fundamental issue of subsidiarity and proportionality involved. Ireland’s national objectives and our intentions regarding spectrum use will inevitably be a low priority for the Commission, and a country of our size and population would probably be marginalised in any pan-European award process. The implications for future revenues of the allocation of what is a national resource cannot be overlooked. In ComReg’s view, the Commission should concentrate on implementing existing arrangements for co-ordination among member states which have more balance between national interests and Europe-wide concerns.

There are other aspects of the proposal - European virtual access products and institutional changes to BEREC - that I will not address now. They are covered in the background notes I have provided.

I referred earlier to BEREC's concerns, which are set out in the BEREC statements I have provided. The statement identifies alternatives to each of the broad themes contained in the Commission’s proposals. ComReg and BEREC are also mindful of the views of the European Parliament, as contained in the report by Catherine Trautmann MEP, which will be voted on during plenary session tomorrow. That report essentially calls for the Commission to conduct a proper integrated review of the framework instead of a having a disjointed piecemeal approach. Above all, appropriate time must be afforded to the legislator to properly consider and examine all aspects of what has been proposed and, perhaps, aspects of the regulatory framework that have not been addressed in the Commission’s proposals.

ComReg is available should the committee want a more detailed briefing on any aspect of the proposals as they have been presented or as they evolve. We will be happy to take any questions that arise today.