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Determining the Scope of the Regulatory Framework

Tony Shortall

A major consideration in the review of the Regulatory Framework is whether its scope should be extended from traditional ECS (“Electronic Communication Services”; telecom) services to include OTT (“Over-The-Top”) service providers. The telecom operator community proclaims ‘Same service, Same Rules’ as a mantra and present policy-makers have been reviewing the options with two binary outcomes: either existing ECS regulation would be extended to OTT services (levelling up) or existing regulations on ECS services would be gradually removed to be more like OTT (levelling down). This paper considers the two current categories of services, ECS and OTT, in the context of voice services and finds that although the technical form of traffic exchange for ECS voices might be evolving in the transition to all-IP interconnect, the changed economic dynamics caused by these technical changes are not significant and that ECS voice services remain distinct from OTT voice services in both technical and economic terms. The paper reviews the competitive landscapes for both ECS voices and OTT voices, and concludes that the historical distinction was justified. The paper concludes that it would not be appropriate to remove regulations from ECS service providers since market power could still be exercised by the ECS network operators. The paper also concludes that the extension of ECS obligations to OTT service operators would also not be appropriate as it would erect a significant entry barrier and undermine the competitive dynamics in those services. It also concludes that for many obligations OTT service providers cannot meet those obligations without very significant additional costs. The paper considers the responses to the Public consultation and finds that the somewhat inconsistent stakeholder responses support the continuation of the current regulatory distinctions.

Tony Shortall is Director at Telage, Brussels, Belgium. He is grateful to Peter Alexiadis and Charles Clarke at Gibson, Dunn & Crutcher LLP in Brussels and to Emily O’Reilly at EFTA for comments, the text remains the sole responsibility of the author.


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