New European Union (EU) directives on the regulation of broadcast and telecoms networks could make planned UK watchdog Ofcom a more powerful opponent of "recalcitrant incumbents" than current regulators, experts have warned.
The four EU directives are intended to create a general framework covering access and interconnection, universal service, data protection and authorisation of broadcasting and telecoms networks.
The UK government has until 25 July 2003 to introduce national laws based on the directives, either through the Ofcom Bill, which may struggle to hit that deadline, or as statutes under the 1972 European Communities Act.
"This is a general framework that will make the regulator stronger," said Roger Runswick, director at telecoms analyst Schema.
Henning Dransfeld, senior analyst at Ovum, agreed. "It will make Ofcom stronger, particularly in broadcasting, cable and the convergence of broadcasting over DSL," he explained.
Runswick added that this would bring the UK further into line with the rest of Europe. "It's typical EU politicking, though, moving regulation towards Europe," he said.
Elaine Axby, Oftel's director of mobile policy, indicated that the measures would style the UK regulator along the lines of the European Commission's competition department.
Oftel director general David Edmonds said in a statement that he supported the increased emphasis on competition in drawing up new directives.
"Oftel already carries out regular market reviews with the aim of rolling back regulation where markets are competitive. Eventually, these directives will be enforced in the UK by Ofcom," he stated.
Runswick had some questions over the effect of the new rules. "What the regulations will call for is incumbents granting reasonable access at reasonable prices. The definition of reasonable is an interesting one. It will come down to money," he said.
He predicted that the changes may not greatly affect BT, but could hit Sky. "It strengthens the position of the regulator and gives it greater armoury to deal with recalcitrant incumbents," he explained.
Dransfeld echoed that view. "It will allow Ofcom to more comprehensively regulate any co-operation between BT and Sky, and watch over how any video services BT runs over its DSL network affects video competition," said the analyst.
From July 2003, instead of awarding licences, the regulator will lay down criteria, both general and specific, which operators must meet. Failure to do so will incur penalties.
Instead of taking six months to resolve disputes, it will take four. "There will also be a new enforcement procedure, with new penalties including financial ones," said Vanessa Oakley, senior legal advisor at Oftel.
Importantly, all reviews will be technologically neutral. For example, DSL broadcasting could cover cable companies, content providers and network operators.
In preparation for the July 2003 deadline, Oftel will review the fixed line voice/data wholesale, retail, broadcasting, mobile, leased lines, narrowband internet and broadband internet markets, although market definition is subject to scrutiny from the European Commission.
Where a firm is found to have significant market power, it will be regulated.
But users should not expect any hard-hitting review of the broadband sector any time soon. "With broadband, we'll probably leave it until the end of the cycle," said Axby.
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