Abstract
Infrastructures have mostly developed and have also been regulated in silo, especially in the liberalization phase. As economic, societal and technological patterns toward convergence of infrastructure sectors can now be observed, how to regulate such phenomena obviously raises many questions. In this context, the cross-sector regulation laid down by the Directive 2014/61/EU on measures to reduce the cost of deploying high-speed electronic communications networks constitutes an interesting legal primer in EU law, although little discussed. Six years after the adoption of the Directive, the present paper aims to draw lessons from it, from its transposition and from the related dispute-settlement practice in the Member States, with the perspective of cross-sector regulation. What type of cross-sector regulation does the Directive bring about? What are the factors having an influence on the (im)balance between the sectors and/or sectoral regulations? It seems all the more necessary that the newly appointed European Commission (“EC”) announced its willingness to revise the Directive within the next 5 years. The study of the BCR Directive may also contribute to inform how to regulate the phenomenon of increasing convergence between network industries. The paper refers to “cross-sector regulation” as, broadly, a type of regulation where several sectors, traditionally subject to specific regulations, are brought together, irrespective of the mode of interaction between them. Particularly, “cross-sector regulation” does not assume that the sectors and/or the sectoral regulations would be placed on an equal footing.
Keywords
Introduction
Infrastructures have mostly developed in silo. As economic, societal and technological patterns toward convergence of infrastructure sectors can now be observed, how to regulate such phenomena obviously raises many questions. From the legal perspective, the respective infrastructure sectors have mostly been regulated in silo especially during the liberalization phase, with operators being granted rights and obligations vis-à-vis their sectoral counterparts under the supervision of a sectoral regulatory authority. While such a regulatory regime was a driver for fast change in the liberalization process of the respective sectors, path dependency may constitute a complex burden for the regulation of converging sectors.
In this context, the cross-sector regulation laid down by the Directive 2014/61/EU on measures to reduce the cost of deploying high-speed electronic communications networks in 2014 (the “Broadband Cost Reduction Directive” or “BCR Directive”) 1 constitutes a primer in EU law. Strangely enough, the Directive has been little discussed, 2 although it exhibits interesting features. The Directive consists in regulatory mechanisms well-known to liberalized network industries, such as a right of access to infrastructure under fair and non-discriminatory conditions (including price), accompanied by the creation of a “dispute settlement body” entitled to determine such “fair conditions.” However, these regulatory mechanisms are neither aimed at preventing anti-competitive behaviors nor at accompanying the liberalization process in a specific sector. They serve the industrial policy objective to steer the deployment of high-speed broadband networks, by establishing cross-sector obligations of access to the infrastructure.
Adopted in 2014 and due to be transposed in 2016, the Directive has already produced some effects in the Member States. Six years after the adoption of the Directive, the present paper aims to draw lessons from it, from its transposition and from the related dispute-settlement practice in the Member States, with the perspective of cross-sector regulation. What type of cross-sector regulation does the Directive bring about? What are the factors having an influence on the (im)balance between the sectors and/or sectoral regulation? It seems all the more necessary that the newly appointed European Commission (“EC”) announced its willingness to revise the Directive within the next 5 years. 3 The study of the BCR Directive may also contribute to inform how to regulate the phenomenon of increasing convergence between network industries. The paper refers to “cross-sector regulation” as, broadly, a type of regulation where several sectors, traditionally subject to specific regulations, are brought together, irrespective of the mode of interaction between them. Particularly, “cross-sector regulation” does not assume that the sectors and/or the sectoral regulations would be placed on an equal footing.
The analysis mainly focuses on the flagship provisions of the Directive, namely the creation of a right of access under fair and non-discriminatory conditions to the physical infrastructure of “network operators,” to the benefit of electronic communication network providers for the deployment of high-speed broadband networks, as well as the related right of information on the physical infrastructure. The role of the Dispute-Settlement Body (“DSB”) in this respect is also discussed in the present study. The paper is structured as follows. After an outline of the relevant provisions of the Directive, the positioning of the Directive vis-à-vis sectoral regulation in liberalized network industries will be examined. The regulatory measures laid down in the Directive display obvious similarities with sectoral regulations, but the cross-sector nature of the Directive and its industrial policy objective seem to make it something different. Against this background, the two following sections assess the nature of the cross-sector regulation—whether and to what extent hierarchical or horizontal between the sectors. The assessment covers the substantive cross-sector provisions as a first step and then focusses on the institutional aspects, namely the role and relationships of the DSB and the respective sectoral regulatory authorities. This latter section particularly uses the French transposition of the Directive as a case study.
The BCR Directive: Flagship provisions
High-speed broadband networks are expected to constitute a high quality digital infrastructure underpinning virtually all sectors of a modern and innovative economy and to be of “strategic importance to social and territorial cohesion.” 4 Yet, the deployment of such networks is hindered by the high costs of roll-out. In this context, the overall objective of the BCR Directive is to facilitate—i.e. to decrease the costs of—high-speed broadband networks roll-out, by leveraging the existing physical infrastructures of the networks of other network industries. “In view of their low degree of differentiation,” 5 elements of high-speed electronic communications networks could be deployed on the physical infrastructure of other networks “without affecting the main service conveyed and with minimum adaptation costs.” Such “synergies across network operators should be encouraged in order to contribute to achieving the targets of the Digital Agenda.” 6 In contrast, the absence or lack of cross-sector markets for access to existing physical infrastructures of network operators for the purpose of deploying high-speed electronic communications networks is viewed as an obstacle to the roll-out of such networks.
A pioneering right of access to the physical infrastructure of network industries of other sectors
The main provision of the Directive consists in the right for providers of electronic communications networks to access the existing physical infrastructure of network operators, potentially of other network industries, for the purpose of rolling out high-speed broadband networks.
The definition of “network operators” (as access providers) encompasses not only electronic communications networks providers, but also operators of “‘physical infrastructure’ intended to provide a service of production, transport or distribution of gas, electricity […], heating, water […] and drainage systems, transport services, including railways roads, ports and airports.” 7 “Physical infrastructure,” in turn, is defined as “any element of a network which is intended to host other elements of a network without becoming itself an active element of the network […]” (emphasis added). 8 The fact that physical infrastructure is intended to host other elements of a network without becoming an active element is core to its ability to serve the deployment of active elements of, possibly, other networks, and particularly high-speed broadband ones. 9
The Directive starts by granting network operators a right to negotiate and to offer access to their physical infrastructure to electronic communications networks operators for the purpose of high-speed broadband networks deployment, in order to put an end to remaining prohibitions in some national legislations. 10 For example, the infrastructure intended for gas transportation was legally reserved for such a purpose in France for security and safety reasons, 11 thereby prohibiting the network operator from even entering into any negotiations. Strict regulatory control of the contractual conditions (especially the price) in national legislation was also found to deter network operators from engaging commercially into such synergies. 12
Beyond the right to negotiate, network operators mainly have an obligation to “meet all reasonable requests for access to [their] physical infrastructure under fair and reasonable terms and conditions, including price, with a view to deploying elements of high-speed electronic communications networks,” upon written request by electronic communications network operators specifying the elements to which the access is requested as well as a specific time frame. 13 By way of exception, network operators can deny access, based on “objective, transparent and proportionate criteria.” A non-exhaustive list of such criteria (therefore subject to national transposition) includes for instance “safety and public health concerns.” Under the “integrity and security” reason, specific mention is made of the qualification as “critical national infrastructure,” which may prevent to grant access. While the EC’s proposal suggested the “availability of space to host the elements of high-speed electronic communications networks” as a criterion, the final version of the Directive clarifies that such ground for exception may encompass not only present and tangible needs of the network operator (i.e. for the purpose of providing the public service it is tasked with) but also his f uture needs for space, provided they are “sufficiently demonstrated” and not merely dilatory. Such an exception obviously aims at protecting the business model of network operators but also the exercise of public service obligations they are often in charge of. The network operator may also deny access on the ground that it provided “viable alternative means of wholesale physical network infrastructure access” which are suitable for the provision of high-speed electronic communications networks, provided that “such access is offered under fair and reasonable terms and conditions.” 14
Transparency concerning physical infrastructures
Instrumental to the right for electronic communications networks providers to be granted access to the physical infrastructure of network operators for deploying high-speed networks, is the right to access a minimum bundle of information concerning the said infrastructure. Upon request related to a specific area of the infrastructure, access to information on the location, route, type and current use of the infrastructure shall be provided, as well as a contact point. A public authority who already holds such information for the purpose of its activities may be required (subject to national law) to make it available via a single information point by electronic means, under transparent and non-discriminatory terms. Where such a single information point is not available, network operators shall provide the minimum bundle of information related to their infrastructure by themselves, upon specific written request. 15
The DSB
The Directive creates a DSB, which parties—namely, the access seeker and the access provider - may respectively turn to in case of disagreement “during the commercial negotiation on technical and commercial terms and conditions.” 16 The DSB shall be “legally distinct and functionally independent of any network operator.”
When it comes to the obligation for network operators to provide access to their physical infrastructure, the DSB has the competence to issue a “binding decision to resolve the dispute […] including the setting of fair and reasonable terms and conditions, including price where appropriate” (emphasis added). 17 The price set by the DSB shall “ensure that the access provider has a fair opportunity to recover its costs and shall take into account the impact of the requested access on the business plan of the access provider, including the investment made by the network operator to whom access is requested.” 18 Recital 19 further clarifies that the costs incurred in providing the access to the physical infrastructure shall take into account “specific national conditions and any tariff structures put in place to provide a fair opportunity for cost recovery taking into account any previous imposition of remedies by a national regulatory authority.” When taking into account the impact of the requested access on the business plan of the network operator, the DSB shall also pay attention to investments of the network operator, in particular in the said physical infrastructure. The DSB shall resolve the dispute “within the shortest possible time frame and in any case within four months from the date of the receipt of the complete request except in exceptional circumstances […].” 19 To summarize, the DSB is granted ex post competence to make decisions on individual disputes. Its competences go beyond this of a judge, in that the DSB can decide upon the terms and conditions, including the price. However, they don’t go as far as these of most sectoral regulatory authorities, which often have ex ante competences, and even regulatory ones.
The DSB is also granted dispute settlement competences with respect to the transparency obligations. In the event of a dispute arising “in connection with the rights and obligations provided for in Article 4,” each party shall have the right to refer the dispute to a DSB. The DSB shall, “taking full account of the principle of proportionality, issue a binding decision to resolve the dispute […].” The DSB shall issue a binding decision to resolve the dispute “within the shortest possible time frame and in any case within two months, except in exceptional circumstances […].” 20
The BCR Directive: Between continuation and disruption of sectoral regulations
The BCR Directive has a double-edged sword relationship with the regulations of network industries. On the one hand, the Directive can be viewed as a continuation of such regulations. On the other hand, the cross-sector nature of the Directive and its clear industrial policy objective make it a special case.
Regulatory tools in the BCR Directive: A déjà vu feeling
On the one hand, the measures of the Directive share obvious regulatory similarities with access regulation at the core of ‘liberalization law’. Network industries having undergone a liberalization process are familiar with transparency obligations, access regulation to the infrastructure under ‘FRAND’ conditions, monitored by a sectoral regulatory authority granted with far-reaching competences. Similar to the liberalization polices that have been implemented in network industries, the regulatory measures laid down in the BCR Directive are aimed at creating new markets. Recital 10 therein notes that “differences in regulatory requirements sometimes prevent cooperation across utilities and may raise barriers to entry for new network operators and new business opportunities, hindering the development of an internal market for use and deployment of physical infrastructures for high-speed electronic communications networks.” The BCR Directive is based on what could be called here a “sleeping beauty” rationale. Potential for economic growth and more specifically for the more efficient roll-out of high-speed broadband networks would lies in the (yet bare or non-existing) markets for passive elements of the infrastructure of network operators, following a subdivision of infrastructures into vertical layers. In other words, the Directive intends to create new cross-sector markets, i.e. for the access to the physical infrastructure of other network industries.
It is thus only natural that bringing network industries closer together was found to raise competition issues either ways. Network operators providing or considering to provide broadband services may be faced with contradictory incentives when requested access to their physical infrastructure. 21 On the other side, electronic communications network providers may also use the BCR Directive to “gain better know-how in the utility business and in the long run become a competitor,” which is particularly acute in the electricity and gas sectors, as discussed for instance in the case of Poland (Godlovitch et al., 2018, p. 42).
Cross-sector access obligations: An illustration of symmetric regulation?
In its opinion on the French transposition of the Directive, the French national regulatory authority (“NRA”) for the electronic communications sector (Autorité de regulation des communications électroniques et des postes or “ARCEP”) considers that the Directive illustrates the relevance of “symmetric regulation,” aside “asymmetric” one (ARCEP, 2016, p. 2). Within the meaning of electronic communications law, asymmetric remedies consist in ex ante obligations, such as obligations to provide access under FRAND conditions, that NRAs can impose on companies found to have a significant market power, without the need to prove actual harm to competition (in contrast to the ex post character of competition law). Symmetric regulation, on the other hand, consists in obligations falling on all operators irrespective of their market power. For illustration, public electronic communications network providers have both a right and an obligation to negotiate with each other interconnection “for the purpose of providing publicly available electronic communications services, in order to ensure provision and interoperability of services […].” 22
The BCR Directive is obviously based on the willingness to save roll-out costs by reusing existing physical infrastructures, that would otherwise require costly duplication for the purpose of deploying high-speed broadband networks. They do not qualify as ‘asymmetric’ regulation, as the legal regime is not related to the market power of network operators. Yet, they do also not seem to qualify as ‘symmetric’ regulation either. Except in the case where the network operators of the physical infrastructure are electronic communications network providers, the Directive does not impose symmetric obligations, implying reciprocity, but rather one-sided ones to the benefit of electronic communications network providers willing to deploy high-speed broadband networks. The point of the Directive is indeed precisely to make use of existing physical infrastructure of network operators in other network industries.
Creating markets: A means to industrial policy ends
What would appear to single out the BRC Directive is indeed its political objective to foster the roll-out of high-speed broadband networks, viewed as the digital infrastructure of tomorrow’s society. 23 The consideration for technological innovation in infrastructure regulation is not new, particularly in electronic communications law. Yet in the field of electronic communications law, the innovation objective (i.e. to deploy new generation networks) would generally plead against regulatory pressure placed on the regulated entities (such as obligations to provide access), in order to incentivize them to invest in new technologies (Noam, 2010).
In contrast, the BCR Directive uses liberalization regulatory mechanisms, especially based on the right of access to the infrastructure, mainly for purposes other than “competition” itself. Politics would seem to take over competition as a main driver for regulation. While, in the liberalization process, regulation used to be justified by the need to curb inherent risks of monopolists and significant market power and to bring network industries closer to markets as a norm in economic relationships, it is hereby the characterization of high-speed broadband networks as the digital infrastructure of society that serves as a rationale. This is exemplified by the recognition by the EC, in the explanatory memorandum backing its legislative proposal, that the obligation for network operators to provide access to their physical infrastructure constitutes an interference on both their freedom to conduct a business and their property right. The Commission explicitly considers that such interference shall be considered justified and proportionate to the aim of the Directive, which is to “reduc[e] the cost of deploying high-speed electronic communications networks since it would reduce the need to perform civil engineering works, which account for almost 80% of the cost of network deployment.” 24 The BCR Directive can therefore be viewed mostly as an EU industrial policy regulation, more than a competition-driven one. Or, rather, competition and the creation of new markets are means to an end. The European Union (“EU”), and particularly the EC, have been criticized for favoring competition to the detriment of incentives to invest in new electronic communication networks. Such criticism was again expressed in the legislative process of adoption of the BCR Directive, i.e. in the respective opinions given by the European Economic and Social Committee 25 and by the European Committee of the Regions. 26 Yet, while the European Union has competences with respect to the creation of an internal market and to competition (the BCR Directive is based on Article 114 TFEU), which are core to EU primary law, it is common knowledge that its competences in the field of industrial policy as such are much more limited. The EU therefore uses the range of existing tools at its disposal to try and increase the roll-out of innovative networks, as exemplified by the establishment of State aid law as quasi-regulation for the deployment of networks in remote areas. 27 We contend that the BCR Directive should also be viewed as an EU industrial policy instrument, leveraging the regulatory instruments at its (legal and institutional) disposal for doing so.
The novelty of using such regulatory instruments for industrial policy objectives should however not be overstated. In Europe, the liberalization process in network industries has mostly been driven by the EU. The purpose has never been solely to create markets as such. The creation of new markets has also been instrumental to serving the Europeanisation of national utilities and thus the internal market and growth, or more grandly, the European project. As underlined by Finger and Laperrouza, liberalization “shall be seen as a strong instrument of public policy” rather than as a politically neutral one (Finger & Laperrouza, 2011). In other words, the objective to create, restore or maintain competition in network industries should not be considered as opposed to politics. Quite the opposite, competition and markets, as a specific institution, are created by law, in order to serve a political objective, both in the liberalization process and in the case of the BCR Directive.
Substantive provisions: Sectoral balance as a multi-level sensitive ridgeline
This section and the following one enquire about the nature of the cross-sector regulation of the Directive, whether—and to what extent—hierarchical or horizontal between the sectors. While the following section will focus on the institutional aspects and particularly on the role of the DSB, the present section analyses the substantive cross-sector provisions of the Directive and their national implementation.
The first sub-section debunks the claim that the Directive would constitute an example of “interregulation.”
The Directive mainly aims to achieve a sectoral objective, namely to facilitate the roll-out of broadband networks, which implies a hierarchy between the sectors to the benefit of (new) electronic communications networks (operators). However, both the legislative process for the adoption of the Directive, the Directive as adopted, and its transposition at national level illustrate attempts to create genuine cross-sector coordination, or at least to ensure some balance so that network operators would also reap benefits from the Directive. This illustrates the tension that lies at the core of the Directive: when regulating across network industry sectors for the first time, how should their relationships be? What are the significant factors therein? The nature of this relationship is obviously shaped by the legal substantive provisions, analyzed in this section, but also by the institutions and processes established to enforce them, studied in the following section. The second and third sub-sections discuss, respectively, the “reciprocity principle” and price setting as case studies therein.
The criteria for refusal of access (Article 3(3) BCR Directive), and their transposition in national law, constitute an important attempt to find a balance between the respective objectives of the different sectoral operators, or more precisely to preserve the objectives of network operators, but are not further analyzed here.
From cross-sector regulation to interregulation?
The BCR Directive aims to facilitate “cross-sector coordination,” 28 which would seem to imply that operators between sectors would be placed on equal footing or that the Directive would be to their respective benefit. Kitsos and Maniatis consider that the Directive would establish horizontal “solidarity duties” between citizens, rather than a straight obligation falling on the incumbent operators (Kitsos & Maniatis, 2019). They view the Directive as an illustration of “interregulation” (“interrégulation” in French), since several network industries, historically subject to sectoral regulations, are brought together, which includes cooperation mechanisms between the respective sectoral regulatory authorities. In its opinion on the bill transposing the Directive into French law, ARCEP (the French NRA) similarly refers to “interregulation” with respect to the cooperation between sectoral regulatory authorities (ARCEP, 2016, p. 8).
The term “interregulation” was coined by Frison-Roche in 2005, who defined it as the process (whether of technical, procedural or academic nature) required to connect autonomous regulations so that they consider each other while no process is in place to establish priorities between them but that a decision can eventually be made (Frison-Roche, 2005, p. 69). In our view, interpreting the Directive as an illustration of “interregulation” is somehow romantic and does not appropriately describe it. First, Frison-Roche discusses the situation where sectoral regulations get overrun by increasingly multi-sectoral reality, such as with the advent of the internet and the information society. The BCR Directive consists in the opposite situation. While the reality is yet (mainly) sectoral, the Directive precisely attempts to create cross-sector convergence. Second, the Directive gives obvious pride to high-speed broadband networks (providers), in line with the policy objective to foster the deployment of such networks. The cooperation is therefore not horizontal, but subject to sectoral priorities.
An optional principle of reciprocity: Toward cross-sector symmetric regulation?
First, the right and obligation for network operators to negotiate access to their physical infrastructure with providers of electronic communication networks is accompanied by the curious provision that “reciprocally, Member States may provide for the right of public communications network operators to offer access to their physical infrastructure for the purpose of deploying networks other than electronic communications networks” (emphasis added). 29 This provision, which has obviously no legal binding value as Member States retain such competence anyway, is the result of a political compromise, after the Committee on Industry, Research and Energy in the European Parliament proposed an amendment to state a legally binding principle of reciprocity in the Directive. 30
Although not retained in the Directive, a reciprocity principle, namely the right but also the obligation for electronic communications providers to provide access to their passive network to network operators, was interestingly implemented in many Member States when transposing the Directive, namely Bulgaria, Cyprus, Denmark, Estonia, Germany, Finland, Luxembourg, Slovenia and Spain, according to the Report from the EC on the implementation of the Directive (European Commission, 2018, p. 5). In view of the above, such a situation can truly qualify as cross-sector symmetric obligations to grant access. In such a case, electronic communication network providers and network operators seem to be put on an equal footing. Network operators could therefore make use of such right to deploy network elements for their own (sectoral) objectives.
Price setting: From “business friendly” flexibility to regulatory setting
A certain amount of ambiguity surrounds the question of the added-value of “cross-sector coordination” between operators, as enshrined in the Directive, for the network operators themselves. The BCR Directive is viewed by the EC as a means to foster synergies between network industries and electronic communications providers, in light of converging networks. The Directive would for instance benefit network operators involved in “Smart Grids” (in the electricity and gas sectors) or Intelligent Transport Systems leading to connected and automated driving and “Smart Cities.” 31
Whether network operators can indeed reap the benefits of such cross-sector coordination has crystallized with the question of the conditions for the access to the physical infrastructure and particularly price setting. In the explanatory memorandum backing its legislative proposal, the EC considers that the “adverse effect” to the freedom to conduct a business and to the property right of network operators is mitigated by the nature of the legal provisions. Their “business friendly” nature and particularly the fact that access to the physical infrastructure should be granted under “fair terms and conditions, including price” is viewed as a safeguard thereto. 32 Creating and leveraging markets (the “Option 3”, with subcategories 3a and 3b, in the impact assessment of the EC) was viewed by the EC as a middle ground between mere incentives to use existing physical infrastructures for the purpose of deploying high-speed broadband networks and an authoritarian imposition of the terms (including price) under which physical infrastructures would have to be accessed and used. This balanced regulatory option would leave room for market operators to negotiate and agree on the terms, including price, subject to the DSB in case of “failure” to negotiate.
However, the balance has proved to be difficult to find. Price setting for the access to the physical infrastructure is indeed at the crossroads between many objectives, potentially contradictory one to the other. The “fair price” should enable network operators to retain some commercial flexibility and to take advantage from the synergy with the electronic communication network provider. On the flip side, the price should not result in electronic communication network providers having no longer interest in requesting access, knowing that rolling-out their network by using the physical network of network operators also comes with specific drawbacks (delays, transaction costs, uncertainty as for the conditions of deployment and potentially operations, etc.). 33 Additionally, access seekers need some certainty on the price, in order to plan their investment. It is therefore no surprise that price setting is among the most disputed provisions of the Directive (Godlovitch et al., 2018, p. 155). Setting the conditions for a “fair” access, and particularly price setting, was found to be the most difficult challenge for DSBs, particularly as it requires knowledge of both sectors involved (BEREC, 2017, pp. 4–5).
As a result, a consensus emerged that more clarity should be brought on price setting, either by the DSB or by the legislator, instead of mere ad hoc price setting by the DSB in case of dispute (Godlovitch et al., 2018, p. 167). The study on the implementation of the Directive commissioned by the EC suggests that the NRAs “or other relevant bodies” (the DSB), “in collaboration with other sectoral authorities, should aim to provide clarity around price regulation for utilities and electronic communications providers engaging in cross-sector collaboration,” either in the form of guidelines (which seem to be favored) or of “decisions made in the context of disputes” (Godlovitch et al., 2018, pp. xxii–xxiii). The EC even called for enhanced “regulatory certainty in relation to […] prices” (European Commission, 2018, p. 13) (emphasis added), by means of methodology guidelines from DSBs. This sounds odd, as the flexibility left to price setting was a deliberate choice, according to the explanatory memorandum. Additionally, DSBs are literally not granted with regulatory powers but merely decision ones, limited to a specific dispute brought to them. As reported by the study commissioned by the EC on the implementation of the Directive, some Member States, confronted with this challenge, chose to further regulate price setting by law. Romanian law requires the DSB to “establish maximum tariffs for access to public property, based on a cost-oriented methodology,” thereby excluding value-based price. Portugal requires prices to be set based on cost-oriented methodology. Other than that and in most cases, this regulatory task has been assigned to DSBs, whether explicitly or implicitly. Many DSBs have issued ex ante guidelines clarifying which interpretation they would use in case of dispute, which may or may not prescribe a specific methodology (Godlovitch et al., 2018, pp. 156–158). To conclude, while the criteria for setting the price were deliberately kept vague in the Directive, so that network industries would retain commercial flexibility, both the transposition and the role of the DSB have often amounted to (hard or soft law) ex ante regulatory price setting or price framing, due to competing objectives embodied in this crucial topic.
The BCR Directive has been the subject of contradictory objectives with respect to cross-sector regulation, from sectoral hierarchy to cross-sector coordination. They are reflected not only in the body of the Directive, but also throughout the whole regulatory system, from the Directive to the transposition into national law and to the implementation at the level of DSBs and sectoral regulatory authorities, which appear to play a crucial role therein. For this reason, the following section is dedicated to the institutional aspects, namely the role and relationships between DSBs and sectoral regulatory authorities.
DSBs and sectoral regulatory authorities: Fit for cross-sector regulation?
The regulatory tools of the BCR Directive are inspired by sectoral regulation in network industries. Although not as far-reaching, the role of the DSB is obviously inspired by this of sectoral regulatory authorities. The appointment of an independent regulatory authority in sectoral regulation is based on the expected swiftness of its decisions (compared to the judiciary authority) and on its expertise (i.a. economic, technical, legal) of the sector, on which its legitimacy lies. Sectoral regulation implies a broad range of tools at the disposal of the regulatory body and a strict delineation of its jurisdiction (namely, limited to the sector at stake), targeted at the purpose assigned to it. For this reason, Frison-Roche considers that sectoral regulatory authorities are “powerful cyclops.” Because these characteristics may turn out to be challenging in case of “interregulation”, she wonders about who could be the “interregulator” (Frison-Roche, 2005). In this context, is the DSB fit for cross-sector regulation? How can the DSB constitute an appropriate “cross-sector regulator” (if not interregulator)?
The networked DSB
Who to appoint as an expert DSB is a challenging task, given the multi-sectoral nature of the provisions and the fact that there are already a myriad of sectoral regulatory authorities in the concerned sectors. In its legislative proposal, the European Commission proposed that the national regulatory authority in electronic communications law (“NRA”) would take the role as DSB by default, unless otherwise provided by Member States. 34 This “by default rule” was not retained in the Directive but, as a matter of fact, most Member States chose to appoint the NRA to take the role as the DSB. Despite the cross-sectoral nature of the provisions based on which the DSB shall settle disputes, the Directive does not provide for cross-sector regulatory supervision and leaves it up to the Member States. This being said, there is a broad consensus that DSBs should gather the required knowledge from the sector of the access provider (the network operator), by involving the respective sectoral regulatory authority in cross-sector coordination. Different models exist, with more or less institutionalized coordination mechanisms (Godlovitch et al., 2018, pp. 84–89). In some countries, sectoral regulatory bodies are already in charge of the supervision of several sectors, which may facilitate sectoral coordination. An overall comparative overview of the conditions of the cross-sector coordination throughout the EU and its implementation in practice is unfortunately missing to draw conclusive lessons. Ideally, it would include the legal basis (if so) for the coordination, its scope, the deadline granted to the sectoral regulatory authority to provide an opinion to the DSB, the (legally binding?) nature of that opinion, whether parties to the dispute before the DSB are entitled to comment on it, the procedure in case of appeal against the ensuing decision of the DSB before a court (e.g. whether the sectoral regulatory authority is party to the case) etc. The Directive was due to be transposed in 2016 by the Member States, which proved to be complex and led to delays in almost all Member States, precisely because of its cross-sector nature. 35 Disputes occur only after a period of (unsuccessful) negotiation between operators, so that it may be still soon to draw final conclusions. But trends can already be identified.
The effects of cross-sector coordination on the decisions of the DSB
The study on the implementation of the Directive commissioned by the EC notes that, among other factors such as price setting which also includes a cross-sector element, cross-sector coordination between regulatory authorities results in delaying the decision of the DSB. Although, the study notes, most of the Member States have set legislative deadlines for resolving disputes “in line with the deadlines specified in the Directive” and even “in some cases shorter deadlines,” in practice deadlines were exceeded “in several cases” as a result thereof. In this respect, the consensus as to the need to bring (if possible, ex ante) clarity on price setting (discussed in the above section) can also be viewed as driven by the need to save time, under legislative pressure for deadlines. Because of the cross-sector nature of the dispute, the DSB was also sometimes found to lack jurisdiction to take decisions on certain matters, namely issues that unexpectedly turned out to be connected to the dispute at stake. For instance, in Spain, the DSB (which is the NRA) “had to assess the relationship between the price for access to the physical infrastructure of a local municipality and local taxes” (Godlovitch et al., 2018, p. 212). To summarize, the information available indicates that the cross-sector nature of the Directive affects, to some extent, the availability of the expertise but also of legal substantive competence to settle disputes, as well as the swiftness of dispute-settlement practices.
French transposition as a case study
The transposition of the Directive into French law provides a concrete illustration of cross-sector coordination, although not necessarily representative of all Member States. ARCEP (the French NRA) was appointed as the DSB. In case of cross-sector dispute, ARCEP shall ask for the opinion of, respectively, “CRE” as the energy regulatory authority or the ‘Autorité de Régulation des Transports’ (or “ART”, formerly “ARAFER” at the time of the transposition) as the transport regulatory authority. The three regulatory authorities were invited to provide their comments on the transposing bill. While all sectoral regulatory authorities agree that ARCEP should gather the prior opinion of the respective sectoral regulatory authority, disagreements come to the light on the conditions for gathering such opinion. The bill provided for a 2 months deadline for sectoral regulatory authorities to provide an opinion (leaving another 2 months for ARCEP to make its decision, save in the case of “exceptional circumstances”). However, ARCEP considered that such a time frame would be too long and proposed to limit it to 6 weeks (ARCEP, 2016, p. 5), which was eventually retained in the law. 36 On the other hand, ART considered that a 2 months deadline was barely sufficient. 37 For its part, ARCEP disposes of another 2 months and a half (including for communications with and between the parties) or 4 months in total to make a decision, except in situations that it would qualify as “exceptional circumstances”, in which case ARCEP would dispose of 6 months. 38 No “exceptional circumstances” can be invoked by CRE or ART to extend the time frame to deliver their opinion. The prior opinion of sectoral regulatory authorities is mandatory, but not legally binding. 39 In case of disagreement between the authorities at stake, ARCEP would therefore have the ‘last word', legally speaking. This illustrates not only the difficulty in finding the right balance between the regulatory authorities involved so that they can all contribute with their expertise, under legislative (time) pressure, but also that finding such a balance depends on the very concrete conditions of cross-sector coordination.
On another note, the sectoral regulatory authorities (ARCEP, CRE and ART) interestingly appear to stand for the interests of their respective sector (and sectoral operators). For instance, when consulted on the transposing bill, CRE asked inter alia for a broad consultation of energy operators on the bill (CRE, 2016). For its part, ART “wondered about” the ability of a (railway) network operator to identify and document which elements of its infrastructure would fall under the scope of Article 4 BCR Directive as well as about the remuneration for providing such information. ART therefore called for further clarification in the law (ART, 2016). On the contrary, ARCEP pointed to the provisions in the bill that, in its view, would unduly restrict the scope of the legal regime, to the detriment of the possibility for electronic communications network providers to exercise their rights. 40 This pattern can be attributed to the sectoral objectives ascribed to the respective regulatory authorities.
It is still early to draw conclusions and there is yet no comprehensive information available on decisions made by DSBs and on the conditions for cross-sector coordination of sectoral regulatory authorities throughout the EU. In any event, the above shows that the role of the DSB, modeled on the role of sectoral regulatory authorities, is challenged by the cross-sector nature of the Directive and by the prior existence of sectoral regulation and sectoral regulatory authorities in the concerned sectors. The three constitutive features of a regulatory authority, namely swiftness, expertise and comprehensive competence over the scope (e.g. a given sector), are challenged. Cross-sector coordination between regulatory authorities is commonly viewed as a solution, particularly to gather the required expertise to settle a dispute. However, cross-sector coordination itself can affect swiftness of the decision-making process. Cross-sector coordination alone does not result in an “interregulator,” since every authority pursues its own (sectoral) objective. Subject to further research, the appointment of a NRA as DSB is thus likely to result in decisions favorable to the deployment of high-speed broadband networks by electronic communications network providers, in line with the overall objective of the Directive. It remains to be seen in more details and in concrete situations, whether the cross-sector measures designed to safeguard the legitimate interests and objectives of the other network operators succeed in keeping the cross-sector balance.
Conclusion
Interactions between regulatory authorities and issues about their respective competences and objectives are far from new. For instance, the role of sectoral regulatory authorities in network industries has early raised questions vis-à-vis the role of competition law authorities. Questions have also arisen regarding the coordination between multi-level regulatory authorities (especially national v EU), equally in competition law and in the sectoral regulation of network industries. Beyond sectoral regulations, the model of regulatory authorities in charge with a body of law has boom in the last decades, from competition law to data protection law, meant to ensure expert and swift supervision and enforcement. However, we can now observe, as a matter of fact, growing interfaces or even contradictions between regulations and regulatory authorities, which questions the fitness of such organized regulatory fragmentation. Just like anticipated by Frison-Roche in 2005, the challenge of interregulation lies in the lack of prioritization in the regulations, which is for instance increasingly challenging the relationships between competition law (authorities) and data protection law (authorities), e.g. on the question whether competition law remedies could consist in (personal) data sharing remedies (Kathuria & Globocnik, 2019).
The case of the BCR Directive is different, in that cross-sector regulation is conceived at the outset as an industrial policy instrument aimed at a sectoral objective, namely deploying high-speed broadband networks. This objective transpires through the overall “system” of the Directive, including not only the body of the Directive but also the transposition at national level as well as supervision and enforcement by the DSBs. Despite collateral attempts to turn the Directive into an instrument of genuine cross-sector synergies to the benefit of all sectors, this industrial policy ultimately supersedes the (possibly competing) objectives of other sectors concerned. The fact that it is the Directive that brings sectors closer together for a given purpose, rather than reality becoming more cross-sectoral and calling for “interregulation” (as discussed by Frison-Roche), is obviously an important factor. More information on the concrete conditions in which the DSB and sectoral regulatory authorities deal with dispute-settlement within the meaning of the BCR Directive would be welcome in order to draw more conclusive lessons on cross-sectoral regulation and coordination. This seems particularly necessary in light of the willingness of the EC to revise the Directive.
Footnotes
Acknowledgement
The author gratefully acknowledges the comments made by Alessandro Bruni and Juan Jose Montero on earlier versions of the paper. All mistakes and errors are these of the author.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the CONCORDA project (Connected Corridor for Driving Automation) which has received funding from the European Union’s Connecting Europe Facility (CEF) programme Transport Sector under grant agreement No INEA/CEF/TRAN/M2016/1364071.
