Second consultation on Convergence Green Paper (SEC (98) 1284)

We are pleased to note that the Summary of the first consultation round supports a number of views expressed in our previous comments, i.e. on

- The global aspects of convergence,

- The horizontal approach to regulation,

- Access to networks,

- The need for open standards and on

- Spectrum allocation.

The Telecom Review of 1999 is expected to codify and modernize the numerous ONP directives. It is inevitable that this process be interrelated with the debate on regulatory actions on convergence.

The Commission has asked for further comments on access to networks and digital gateways, on investments and European content production and on a balanced approach to regulation.

Opening of access to telecommunication networks required consistent Art 90 interpretation of EU competition law and directives on Open Network Procedures. The same approach is required to secure open access to broadcasting networks. In some Member States the funding schemes for public broadcasting may require re-configuration from access to the networks to access to the broadcasting service.

Member States with separate ministries and regulatory authorities for telecommunications, TV and radio broadcasting will inevitably encounter clashes of competence in addressing new services like electronic program guides. Member States should be made aware of the risk legal uncertainty and double bureaucracy presents to the introduction of new services.

The EU has yet to achieve competition in local telecommunications and TV cable networks. As services converge and as new digital services emerge, the access to end-users becomes vital. Joint ventures in the media sector demonstrate that the combined ownership of local networks and prime content together with an embedded proprietary standard in the set-top box can and will preclude competition.

Nokia has constantly advocated open standards in telecommunications, - GSM being the closest example. The future third generation of mobile telephony – the UMTS, and its air interface UTRA, will be based on an open standard platform. An open standard for conditional access to the digital gateway is one of the keys to competition.

As a manufacturer of satellite and cable receivers Nokia also favors the open standard approach for a common interface for Digital Video Broadcasting instead of embedded proprietary standards. If users were forced to buy or lease separate set-top boxes for each services provider, the convergence process will most certainly slow down.

As in our previous comments, Nokia does not address this question.

As we see it, the "balanced approach" to regulation has at least two dimensions: the relation between (tele) communication regulation and competition law and the relation between (over) regulation of new services and public interest requirements. On both accounts we refer to our previous comments:

The distinction between vertical (sector-specific) and horizontal governmental regulation and intervention is a key one in the context of the issues and challenges described in the Green Paper. In terms of vertical, sectoral regulation, the trend for deregulation and reduction of governmental intervention has been the correct one. This holds true for the converged environment, as well. Regulation should address critical issues like scarce resources, interoperability and make sure that the deregulatory steps and open competition are implemented in practice.

In the new environment, regulation based on content or information category is not possible. There is no distinction between voice, data and video -all is digital bits. There is no distinction possible between interactive and multi-point broadcasting. Therefore, regulation as a sectoral matter should be limited to network and access issues and be separated from the services and content issues.

Telecommunications regulation should not attempt to cover everything. By the same token, it is clear that the Network industry is a stakeholder in all aspects of the Digital Revolution. Therefore, all legislative activity that has a network dimension must be assessed and prepared taking into account the impact to the various actors making up the networked community and thus the impacts to the development of the total communications infrastructure.

Consequently, in the converged environment the scope of sectoral, telecommunications specific regulation should be kept to a minimum. At the same time there is a requirement to involve network-related aspects in a broad range of horizontal activity - and to force a horizontal approach to issues previously addressed in a narrow sectoral manner, without regard to network issues.

To the extent possible, the Internet should stay unregulated, including the provision of voice services over the IP architecture. Regulation should concentrate on aspects of open access and interconnection as well as to certain aspects of universal service, to ensure maximum availability of the facility of the connected world.

Currently topical examples of new horizontal issues with a significant network dimension include copyright legislation and regulation of encryption: The recent draft for a Copyright Directive does not take network aspects sufficiently into account and may significantly impede the development. The existing export restrictions and proposed use restrictions of encryption technologies would, if not checked, deny users the means of protecting their traffic and content from theft, fraud and surveillance and discourage users from using the network as a primary business medium.

There will, further, be a need to adopt new legislation and to consider harmonization of disparate national rules in matters such as consumer protection, taxation of business carried out over the Net; which actors should be responsible for harmful or infringing content accessible through the Net, electronic payments and recognition of digital signatures etc. The choices made in these matters may foster or impede the development of the connected environment.

On the other hand, because of the convergence phenomenon, there is a broad scope of matters that traditionally were outside the scope of telecommunications but which increasingly have a significant networks dimension. These include very general horizontal issues (e.g. citizen's rights, formation of contracts etc) as well as matters which in the analog off-line paradigm were considered to be sectoral issues in other fields and therefore vertically regulated entirely separately from telecommunications issues. In short, in the connected digital environment, a huge amount of issues will have a network dimension in that legislative and regulatory choices may significantly impact the actors (content providers, service providers, network operators, business and private users) taking advantage of the opportunities offered by the converged infrastructure.

Otto Björklund
Head of Nokia Representative Office