International and Australian regulatory
developments and decisions
Issue 53
REGULATORY
OBSERVER
International and Australian regulatory
developments and decisions
31 October 2013
02
European Commission
receives advice on
Telecommunications
‘relevant markets’
03
International
Regulatory Round-up
05
Australian Regulatory
Round-up
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REGULATORY OBSERVER
European Commission receives advice on
Telecommunications ‘relevant markets’
The European Commission (EC) has published a detailed study completed by external experts, Ecorys,
concerning which parts of telecommunications markets could be regulated ex ante in the future by national
telecommunications regulators to address structural competition problems. The study advises that fewer
markets should be included on the EC's list than under current European Union (EU) rules, and also finds that
no new markets should be added.
The Future Electronic Communications Markets subject to ex-ante Regulation study was commissioned by the
EC with the objective of gaining inputs for its upcoming review of the Recommendation on Relevant Markets.
The first recommendation on relevant markets was adopted in 2003. The Commission identified eighteen
telecommunications markets susceptible for ex ante regulation. The current Recommendation was adopted in
2007. There are seven markets on the list that are recommended for National Regulatory Authorities (NRAs) to
analyse.
The upcoming review is to take place in 2014 and should define an updated list of relevant markets subject to ex
ante regulation for the period up to 2020.
Decisions on relevant telecommunications markets are subject to the EC's Article 7 consultation procedure
under EU telecommunications rules. Having a list of relevant markets helps NRAs to determine in a coordinated
manner whether or not to regulate their markets.
The Recommendation identifies the markets which are in principle susceptible to ex ante regulation on the
grounds of a ‘three criteria test’:

presence of high and non-transitory structural, legal or regulatory barriers to entry;

market structure does not tend towards effective competition within the relevant time horizon, having
regard to the state of competition behind the barriers to entry; and

competition law alone is insufficient to adequately address market failure(s) concerned.
The Ecorys study suggests:

The retail market for access to fixed telephony (market 1 in the 2007 Recommendation) and the
wholesale market for call origination on the fixed public telephone network (market 2) do not meet the
three criteria test and should be removed from the list in a revised Recommendation.

Fixed and mobile termination markets (markets 3 and 7) should be maintained on the list.

The boundaries of the local-loop unbundling market (market 4) should be refined and clarified.

Two separate wholesale markets for bitstream access (currently market 5) should be defined to better
respond to the different needs observed at the retail level of mass and business markets.

It should be up to individual NRAs to consider whether the wholesale business bitstream market should
form a single market with the terminating segments of leased lines (market 6 in the 2007
Recommendation).
A public consultation on the revision of the Recommendation took place between 16 October 2012 and
8 January 2013. The EC will, as a next step, present a revised list of markets recommended for ex ante
regulation to the Body of European Regulators for Electronic Communications to seek its opinion.
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REGULATORY OBSERVER
International
Regulatory
Round-up
COMMUNICATIONS
Americas
US: FCC proposes to
remove barriers to entry to
wireless infrastructure
The Federal Communications
Commission (FCC) has issued a
Notice of Proposed Rulemaking
identifying potential measures to
expedite the environmental and
historic preservation review of new
wireless facilities, as well as rules
to implement statutory provisions
governing state and local review of
wireless siting proposals.
US: Wireless network
reliability during disasters
The FCC has proposed action to
improve wireless network reliability
during disasters by requiring
wireless service providers to
publicly disclose the percentage of
cell sites within their networks that
are operational during and
immediately after disasters. The
FCC considers that by providing
consumers with a yardstick for
comparing wireless performance in
emergencies, the proposal could in
turn encourage competition in the
wireless industry to improve
network reliability.
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REGULATORY OBSERVER
Europe
EU: Process to monitor
implementation of broadband
best practices
The Body of European Regulators
for Electronic Communications has
agreed on a methodology to
monitor the compliance by its
members with its broadband
common positions on wholesale
local access, wholesale broadband
access and wholesale leased lines
(adopted in December 2012). The
regulators will launch the
monitoring exercise in early 2014.
UK: Proposed licence fees
for mobile spectrum
The Ofcom has published a
consultation on revising annual
licence fees for the 900 MHz and
1800 MHz spectrum bands,
currently used by mobile network
operators for voice calls, 3G and
some 4G services. In December
2010, the UK Government directed
the Ofcom to revise these fees so
that they reflect full market value.
Subject to this consultation, new
annual licence fees are likely to
come into effect in 2014. The
consultation closes on 19
December 2013.
UK: The Ofcom seeks
interest in former Ministry of
Defence spectrum
The Ofcom has invited
stakeholders to express their
interest in acquiring spectrum that
is being released for civil use by
the Ministry of Defence (MOD).
The MOD is releasing 190 MHz of
radio spectrum for the Ofcom to
award for new commercial uses.
This is equivalent to around
three-quarters of the 4G spectrum
auctioned by the Ofcom to
operators in February 2013. The
Ofcom expects the spectrum to be
awarded in the financial year
2015-16. Stakeholders with a
potential interest in the spectrum
have been asked to respond by 27
November 2013.
UK: The Ofcom invites views
on its priorities for 2014-15
The Ofcom has invited members
of the public, as well as those
working in the industries it
regulates, to contribute to its work
plan and priorities for the next
financial year. The Invitation to
Comment encourages anyone with
an interest in the Ofcom’s activities
to offer their views on which areas
of the telecommunications, media,
postal and spectrum industries
should be addressed in the
Ofcom’s Annual Plan for 2014-15.
Responses from the public and
stakeholders will help inform the
draft plan, which the Ofcom will
consult on in December. The
Ofcom expects to publish its final
plan in March 2014.
Oceania
NZ: Statement of preliminary
issues for applications from
Telecom and Vodafone to
acquire 700 MHz spectrum
The New Zealand Commerce
Commission (CCNZ) has
published a statement of
preliminary issues relating to the
applications from Telecom and
Vodafone seeking clearance to
acquire the management rights to
700 MHz radio spectrum. The NZ
Government is auctioning the
spectrum freed up by the
switchover to digital television. The
auction comprises nine blocks of
5 MHz paired spectrum in the
700 MHz band. The statement of
preliminary issues outlines the key
competition issues that the CCNZ
currently considers will be
important in deciding whether or
not to grant clearance to the
parties. Submissions from
interested parties are due by
5 November 2013.
NZ: CCNZ issues warning to
Sky
The CCNZ has issued Sky
Network Television Ltd (Sky) with
a warning that it believes certain
provisions in Sky’s contracts with
telecommunications retail service
providers are likely to have
previously breached the
Commerce Act. The CCNZ issued
Sky with a warning after its
investigation found that currently
those provisions are unlikely to
have the effect of substantially
lessening competition and are
unlikely to cause harm in the
future. As part of the investigation,
the CCNZ also concluded that
Sky’s contracts with content
providers were not likely to have
breached the Commerce Act.
ENERGY
Europe
GERMANY: The
Bundesnetzagentur
approves scenario
framework for gas plan
The Bundesnetzagentur has
approved the scenario framework
for the Gas Network Development
Plan 2014. The scenario
framework is drawn up by
transmission system operators,
describing the likely developments
in the production, supply and
consumption of gas over the next
ten years. The scenario framework
includes assumptions about
existing and planned investments
in network infrastructure such as
gas power plants and storage
facilities. It also takes into account
the development in capacity
requirements at the border points.
FRANCE: ElecLink requests
exemption for interconnector
between French and British
electricity grids
ElecLink, a joint venture between
STAR Capital and Groupe
Eurotunnel, has submitted a
request to the French Energy
Regulatory Commission (CRE) for
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REGULATORY OBSERVER
an exemption from regulation for a
new direct current interconnector
between France and Great Britain.
The projected interconnector is
planned to be installed inside the
Channel Tunnel and to have a
capacity of 1000 MW. It is planned
to be operational from Q4 2016.
The CRE expects to make a
decision on the request by March
2014.
TRANSPORT
Europe
EU: New transport
infrastructure policy
The new trans-European
infrastructure policy triples EU
financing to €26 billion for
transport for the period 20142020. It refocuses transport
financing on a tightly defined new
core network. The policy’s aim is
to remove bottlenecks, upgrade
infrastructure and streamline
cross-border transport operations
for passengers and businesses
throughout the EU. The aim is to
ensure that progressively, and by
2050, the great majority of
Europe's citizens and businesses
will be no more than 30 minutes'
travel time from the core network.
AIRPORTS
Oceania
NZ: CCNZ issues draft report
on Christchurch International
Airport
The CCNZ has released a draft of
its report to the Ministers of
Commerce and Transport on the
effectiveness of information
disclosure regulation in relation to
Christchurch International Airport.
Christchurch Airport’s proposed
prices over the next 20 years
target a return of 8.9 per cent,
which is significantly higher than
the CCNZ’s view of an acceptable
return of between 6.6 and 7.6 per
cent. The review does not make
any recommendations about
whether regulation other than
information disclosure should
apply to Christchurch. This is
outside of the scope of the review
required by the legislation.
WATER
Europe
UK: The Ofwat publishes
price review model
The Ofwat has developed a
financial model to help assess
companies' business plans as part
of its 2014 price review. The 2014
price review is a process for
setting the price and service
package (the ‘price controls’) that
each regulated company must
deliver in each of the five years
between 2015 and 2020. The
three main purposes of the
financial model are to: determine
the wholesale price controls;
calculate the revenues arising from
the retail price controls; and help
assess financeability of individual
companies.
UK: The Ofwat consulting on
service-incentive mechanism
The Ofwat introduced the serviceincentive mechanism in 2010 to
provide companies in the water
sector in England and Wales with
a common outputs-based measure
of customer-service quality,
against which the companies have
been financially incentivised. The
Ofwat is now consulting on
changes it considers it needs to
make to the detail of the
mechanism’s application during
2015-20. The Ofwat is accepting
submissions until 31 January
2014.
POST
Europe
Netherlands: Stamp rate
increase within statutory
boundaries
Dutch postal company PostNL will
be increasing the rates of stamps
from 60 to 64 Euro cents from
1 January, 2014. The Dutch
Ministry of Economic Affairs sets
the statutory boundaries within
which PostNL is allowed to
increase its rates. The Netherlands
Authority for Consumers and
Markets has assessed that the
proposed rate change is within
these boundaries.
Australian
Regulatory
Round-up
COMMUNICATIONS
ACCC seeks variation of
NBN Co Special Access
Undertaking
The Australian Competition and
Consumer Commission (ACCC)
has released a Notice to Vary
formally seeking changes to the
Special Access Undertaking (SAU)
offered by NBN Co in December
2012. The SAU will form a key part
of the framework that governs the
price and other terms upon which
NBN Co will supply services over
its fibre, wireless and satellite
networks to telecommunications
companies, up until 2040. NBN Co
has until 19 November 2013 to
respond to the variation notice. If
NBN Co does not respond by this
time, the ACCC will make its final
decision on the SAU that was
lodged in December 2012.
ACCC approves Telstra’s
measures developed under
the migration plan
The ACCC has approved three
Telstra measures that will support
the migration of customers on to
the National Broadband Network
(NBN) in regions where NBN Co
has deployed its fibre to the
premises network. These
measures relate to the
disconnection of services (from
copper or hybrid fibre coaxial
networks) that have not migrated
to the NBN within the applicable
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REGULATORY OBSERVER
switchover period, and the building
of copper lines in NBN regions to
supply services that cannot yet be
provided over the NBN.
NBN Co issues consultancy
RFP for Strategic Review
NBN Co has issued a request for
proposal for consultancy services
to support its Strategic Review
process. The Strategic Review’s
primary objective is to evaluate
both the current NBN operational
and financial performance and the
timing, financials and product
offers under alternative models of
delivering very fast broadband
across Australia. The Strategic
Review is due to be submitted to
the company’s shareholder
ministers, Communications
Minister Malcolm Turnbull and
Finance Minister Mathias
Cormann, in early December. The
document will form a key input into
the company’s 2014-17 Corporate
Plan, which is due to be delivered
to the Government in the first half
of next year.
consultation for developing the
rate of return guideline. The
guideline is part of the Better
Regulation program. The issues
paper sets out the AER’s proposed
approach to estimating the equity
beta. Applying this approach, the
AER proposes to adopt an equity
beta of 0.7, chosen from within a
range of 0.4 to 0.7. In previous
decisions, since the 2009 weighted
average cost of capital review, the
AER has adopted an equity beta of
0.8. The consultation closed on 28
October 2013.
SP Ausnet submits revised
revenue proposal to the AER
On 11 October 2013, SP AusNet
submitted a revised revenue
proposal responding to the AER’s
draft decision on SP AusNet’s
electricity transmission
determination for the regulatory
control period 1 April 2014 to
31 March 2017. Submissions on
the revised revenue proposal, draft
decision and consultants’ reports
close on 1 November 2013.
ENERGY
AER releases quarterly
compliance report
AEMC Strategic Priorities
published
The AER has published its latest
Quarterly compliance report:
National Electricity and Gas Laws.
The report summarises the AER's
compliance monitoring and
enforcement activities in the
wholesale electricity and gas
markets during the JulySeptember 2013 period. It
provides an overview of the results
of investigations (including special
reports into significant market or
power system events), compliance
audits, targeted compliance
reviews and rebidding inquiries
undertaken during the quarter.
The Australian Energy Market
Commission (AEMC) has
published its Strategic Priorities for
Energy Market Development.
These priorities will: underpin the
AEMC’s work; guide its advice to
the Council of Australian
Governments’ Standing Council of
Energy and Resources; and guide
its approach to rule making. The
strategic priorities have been
developed in consultation with
industry and consumers. This is
the AEMC’s second review to
develop strategic priorities for
energy market development, with
the previous review being
conducted in 2011.
AER releases equity beta
issues paper
The Australian Energy Regulator
(AER) has released an issues
paper on equity beta as part of its
AER issues paper on
Alternative Energy Supplies
The AER has published an issues
paper which sets out its proposed
approach to regulating alternative
energy-selling models under the
National Energy Retail Law. The
paper discusses several emerging
business models, including solar
power purchase agreements,
which differ from the traditional
energy retailing model. The issues
paper identifies high-level
principles for the regulation of
these businesses and proposes an
approach to determining whether
alternative energy sellers need a
retailer authorisation or a retail
exemption. The consultation will
close on 22 November 2013.
AER consulting on AEMO
transmission determination
The AER is required to make a
transmission determination for the
Australian Energy Market Operator
(AEMO) in relation to the Victorian
electricity transmission network. In
August 2013, the AEMO submitted
its proposed negotiating
framework and pricing
methodology to the AER. The
AEMO is not required to submit a
revenue proposal. The AER has
published an issues paper on the
AEMO transmission determination.
The AER is accepting submissions
on the pricing methodology and
negotiating framework the AEMO
has proposed by 25 November
2013.
ACCC allows electricity
generators to jointly
negotiate
The ACCC has granted
authorisation to allow Queensland
power generators; CS Energy,
Callide Energy, InterGen and
Callide Power Management; to
jointly renegotiate existing coalsupply arrangements with Anglo
Coal. The arrangements relate to
coal supplied to the Callide B and
Callide C power stations in central
Queensland by the nearby coal
mine owned by Anglo Coal. The
ACCC previously granted
authorisation to the applicants in
2006 to jointly negotiate with Anglo
Coal for the purposes of a price
review.
IPART issues draft report on
early termination fees
The Independent Pricing and
Regulatory Tribunal (IPART) has
released a draft report on the
maximum amounts for early
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REGULATORY OBSERVER
termination fees to commence on
1 March 2014 in New South
Wales. This will limit the fees that
retailers can charge customers for
breaking their electricity supply
contracts early. Under the draft
decision, the maximum fee that
retailers can charge electricity
customers who terminate their
market contract early will be $130
within 12 months of the date of first
supply, and $45 thereafter (until
the end of the contract), plus the
payback of any upfront
inducement costs. Submissions
are due on 18 November 2013.
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