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3. Third Case Study - The Commission Recommendation on Regulated Access to NextGeneration Access Networks (NGA)In the last case study analyzed, the news is that the legislative initiative undertaken by Commissionis not supported by any IA.In the course of this work I have showed how the economic tool of RIA has become anindispensable instrument in order to adopt decisions able to satisfy the efficiency and effectivecriteria; this is true especially with regard the telecommunications sector, where, in the last years,the Commission has implemented very important measures for the development of the market,always with the support of a related IA. Why the Commission has abandoned this fundamental toolin the issue of the Recommendation of Next Generation Access (NGA)?According to the Impact Assessment Guidelines an IA is necessary for all “all legislative proposalsof the Commission's Legislative and Work Program (CLWP) and for all non-CLWP legislativeproposals which have clearly identifiable economic, social and environmental impacts”. 79The recommendation of NGA, despite has not binding effects, represents a legislative proposal with“identifiable economic impacts”: it will represent the European guidelines according to which theNRAs will address the access problem in the Next Generation Network environment. Moreover, itwill affect a market not yet developed; this makes the lack of a related IA very interesting toanalyze, especially because the Recommendation foresees the application to NGA market of theremedies designed in the regulatory framework for electronic communication, without comparingthe potential impacts of alternative options.3.1 The Object of Recommendation: What is NGA?Before to analyze in depth the Recommendation we had to explain what is NGA.Next Generation Access is a different issue with respect the Next Generation Core Network: thesecond refers to the replacement of the old multiple legacy core networks with a single IP-based79 European Commission, Impact Assessment Guidelines, 15 January 200986
network through which it possible to provide all type of services. The NGA refers instead to thedeployment of next generation infrastructure in the access network. The problem of access wasalready a crucial issue in the 2002 regulatory framework for European communications,constituting a bottleneck able to distort the competition: it represents in fact an “essential facility”owned by the incumbent and without that the alternative operators are unable to provide services.For this reason, the Access directive gives the NRAs the power to impose on Significant MarketPower operators the obligation to provide access at cost-oriented-price to the alternative operators 80 .The directive, as showed the data of the 14 thImplementation report, has worked very well,especially with regard to the Fixed broadband penetration: in 2008 the average fixed broadbandpenetration was 22.9%, confirming the world leadership of EU countries in the world. According tothe Report the main tool used to reach this high degree of penetration was the unbundling of localloop (ULL) that represents 69.3% of all DSL lines used by alternative operators 81 . This datademonstrate that the alternative operators have made many investment in ULL and that theregulation of access was a key tool to address the bottleneck problem arising from the presence of afacility owned by the incumbent and not replicable by the alternative operators. The development oftechnology has led to the born of a new facility with the potential rise of the same bottleneckproblem. How does regulate them?80 Directive 2002/19/EC of the European Parliament and of the Council, 7 March 2002, Official Journal of the EuropeanCommunities. In particular, the art 12, paragraph 1 of the directive stated that “A national regulatory authority may, inaccordance with the provisions of Article 8, impose obligations on operators to meet reasonable requests for access to,and use of, specific network elements and associated facilities, inter alia in situations where the national regulatoryauthority considers that denial of access or unreasonable terms and conditions having a similar effect would hinder theemergence of a sustainable competitive market at the retail level, or would not be in the end-user's interest”. Moreover,the art 18 paragraph 1 specified that: “A national regulatory authority may, in accordance with the provisions of Article8, impose obligations relating to cost recovery and price controls, including obligations for cost orientation of pricesand obligations concerning cost accounting systems, for the provision of specific types of interconnection and/oraccess, in situations where a market analysis indicates that a lack of effective competition means that the operatorconcerned might sustain prices at an excessively high level, or apply a price squeeze, to the detriment of end-users.National regulatory authorities shall take into account the investment made by the operator and allow him a reasonablerate of return on adequate capital employed, taking into account the risks involved”.81 EUROPEAN COMMISSION, Communication from the commission to the European parliament, the council, theEuropean economic and social committee and the committee of the regions. Progress report on the single Europeanelectronic communications market 2008 (14th Report)87
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