Unapologetic Berec chief wants better, not more, regulation

11 May 2017. By Magnus Franklin.

The role of Berec, the umbrella group of European telecom regulators, is to provide fearless advice to EU institutions — it's why the organization was established six years ago.

So it comes as no surprise that Berec should be offering its views on draft law affecting the industry — today's release of policy papers is part of its mandate to throw the concerns of national regulators into the mix.

But what happens when the law in question concerns the operations of Berec itself? Can the organization be true to its brief of offering impartial, technical advice when it is advocating for its own self-preservation?

And — more importantly for Berec's critics — when does providing advice to the institutions become lobbying? After all, power struggles in the EU are nothing new, with the European Commission, European Parliament and governments in a permanent tug of war over their respective roles in the laws they draft.

Though self-interested, Berec's intervention could be seen as part of the normal legislative cut and thrust.

The organization's head, French regulator Sébastien Soriano, simply isn't buying in to the controversy. In an exclusive interview with MLex, the chairman says that Berec's papers are a path toward "not less regulation, but better regulation" — self-preservation has nothing to do with it.

Even so, Soriano says he's aware of the criticism and that he finds it upsetting: Berec can't be accused of lobbying if it's simply carrying out its duties.

"We are part of the institutional landscape," he says. "By definition, we can't lobby. The Berec regulation recognizes the role of expert and adviser to the co-legislator, so we are just working in this framework."

As for the argument that Berec is advocating policy that protects its members' regulatory turf — again, Soriano rejects the criticism. The very act of getting 28 regulators together on common positions implies compromise, which suggests that Berec is smoothing out divisions, not lobbying on behalf of vested interests.

Yet Berec's proposals land in the midst of a raging feud on a number of fronts, in which warring factions of the sector are seeking to persuade lawmakers to take on their proposals as amendments. In such a battle, having an entity with Berec's clout enter the fray has led to claims of an unfair advantage.

The papers set out Berec's position in areas like wireless frequency auctions, oligopolistic telecom markets, market analysis and decision-making consistency across EU countries.

Yet they also include a call for providing national regulators with more powerful tools to tackle market problems, while granting them more flexibility in how they apply the rules and a broader remit to advise.

The papers also contain a firm answer to suggestions that Berec's own role should evolve into that of a full-blown EU agency — and that answer is "no."

Given the group's remit to provide technical advice, it is difficult to dismiss the concerns of Berec's critics, who see these policy positions as part of a power-grab by regulators.

Growing role

Whichever way Berec's role is framed in the context of the big policy fights of the day, the organization could hardly be expected to behave as a neutral party in discussions that go to the very heart of the group's existence.

Nevertheless, Soriano rejects the suggestion that Berec is overstepping its advisory role. "I was really a little bit upset by comments from industry saying that Berec was lobbying" the EU institutions, Soriano told MLex on the eve of the publication of Berec's papers.

Founded as part of the 2009 overhaul of EU telecom rules to represent the views of national telecommunications regulators, the group has slowly developed a reputation for producing sound technical analysis of often complex laws — as it did, for example, ahead of the 2015 net-neutrality bill.

Over the years, Berec has also proven it's not afraid to rein in its members when they take rogue positions that go against the grain of regulatory interventions that are increasingly aligned across the EU.

Even large, powerful countries such as Germany, Poland and France — where Soriano also presides over national watchdog Arcep — have found themselves on the receiving end of Berec's advice.

If anything, Soriano says, Berec's opinions on the new telecom law, which was unveiled last September and is subject to negotiation between EU lawmaking bodies, responded for calls for greater transparency in the legislative process.

Berec's interventions in the debate helped overcome the "impression of an opaque way of working between national regulators and governments" that sometimes prompt questions about just how independent EU regulators are, Soriano says.

Today's reports into the revamp of EU telecom rules — the European Electronic Communications Code — is not the first time Berec has had something to say about the proposed legislation.

In December, the group issued a high-level opinion that exposed apparent flaws in the logic of the proposal — an opinion that began to sow the seeds of resentment among industry lobbyists.

The legislation has since moved to the European Parliament, where lawmakers have had a chance to start drafting amendments. Soriano says it is the "flavor and climate" of proposed amendments that led Berec to determine it "could be useful to give technical input" to the process.

Reading between the lines, it appears that Berec lacks confidence in lawmakers' ability to keep the bill heading in the right direction.

Mixed reviews

The reaction to Berec's decision to get involved as the bill weaves its way through the parliament has been mixed, Soriano admits.

But the group's decision to come "on board on spectrum was very welcome," he says — referring to proposals to give telecom regulators a formal role in wireless licensing, which up to now has been entirely in the hands of national governments.

Another policy area where Soriano believes that consensus is building is on the structure of Berec itself, where "the proposal from the commission to turn Berec into an [EU] agency doesn't seem to be supported."

But there is less agreement on whether the new law should lead to more, or less, regulation in telecommunications.

Politicians disagree on "whether regulation is something positive or not to achieve the new objectives about connectivity, 5G, fiber networks and high-capacity networks, et cetera," Soriano says.

"We still have to convince them that the subject is not less regulation, but better regulation," he says. Better regulation might mean having new ways of tackling oligopolies, where operators aren't dominant in their own right, but still behave in an anticompetitive way, he says.

There are two ways of dealing with oligopolies, Berec suggests.

One is to tackle "unilateral market power" — a concept borrowed from merger regulations to identify companies that are in a position to act independently of competitors to the detriment of consumers, even when the operators don't technically have market dominance.

"For the moment, we consider that UMP is the most clear approach, and with this option we are dealing with our usual factors and way of thinking," Soriano says.

Another option, he says, is the "symmetric approach" — the notion that all operators in the market share the burden of letting new entrants in.

"At the end of the day, maybe we don't need to have both," he says, suggesting that the decision of what will work best should be left lawmakers.

Whatever the outcome, Soriano says Berec will "always promote regulatory predictability," noting that the "burden of proof to regulate oligopolies is very high."

"I mean, to regulate everything is not our intention," he says. "The idea is more to have the possibility, in problematic situations, to mandate access" to networks so powerful established players are forced to open their networks to newcomers.

Summing up the sentiment, Soriano alluded to a catchphrase he used at a lunch in Brussels last week: "Regulatory holidays lead to investment holidays."

"What we experience every day as regulators is that we can promote investment," he says.