Economic subjects | Investments, Stock exchange » FCC Commissioner Proposes to Remove Investment Barriers

Source: http://www.doksinet Regulatory Observer, Issue 41, 14 August 2012 Contents FCC Commissioner Proposes to Remove Investment Barriers Australian Regulatory Round-up 1 International Regulatory Round-up 2 7 FCC COMMISSIONER PROPOSES TO REMOVE INVESTMENT BARRIERS Commissioner Ajit Pai of the US Federal Communications Commission (FCC) has called for the modernisation of the FCC’s approach to regulation, in a recent speech at the Carnegie Mellon University in Pittsburgh, Pennsylvania. This includes removing regulatory barriers to technological innovation and infrastructure investment in the information and communications technology sector. Commissioner Pai identified three principles that he said should guide the FCC and promote investment, innovation and employment in the sector. First, the FCC should ‘be as nimble as the industry that [it] oversee[s]’. That is, the FCC should become more agile, to match the acceleration in the pace of private sector innovation.

Regulatory decisions should be made in a timely manner Proposals include: introducing a six-month deadline to act on requests for a waiver of the FCC’s rules; a nine-month deadline to respond to requests for a review of earlier decisions; and a one-year deadline to review proposals for the introduction of new technologies and services. A centralised webpage should be established to more easily provide information on the status of all petitions, and list the FCC’s deadline to respond to each petition. The second principle is the removal of regulatory barriers to invest in modern communications infrastructure. Estimates suggest that between 15,000 and 20,000 new jobs are created for every $1 billion spent on fibre deployment. It is suggested that capital expenditure is lagging because of regulatory uncertainty in IP networks. It is proposed that an IP Transition Task Force be established that develops recommendations to regulate IP networks. The third principle proposed by

Commissioner Pai to promote innovation, investment and employment in the sector is to accelerate FCC efforts to allocate additional spectrum for mobile broadband. This includes finalising rules for incentive auctions by November 2012, and conducting auctions by June 30, 2014. The FCC is directed by five commissioners. Commissioner Ajit Pai was sworn in on 14 May 2012 after being nominated by President Barack Obama and unanimously confirmed by the US Senate. 1 Source: http://www.doksinet Communications application store operator block Verizon’s customers from accessing tethering applications. ‘Tethering’ is using a wireless handset as a modem to obtain Internet access for another device, such as a laptop computer or tablet. Americas Europe US: Rural Communities in 37 US States to Access High-Speed Internet within Three Years EU: The BEREC Releases Consultation on Wholesale Roaming Provisions INTERNATIONAL ROUND-UP REGULATORY The BEREC has launched a public consultation

on a draft document into wholesale roaming access provisions. Article 3 of the new Roaming Regulations provides that mobile network operators (MNOs) must meet all reasonable requests for wholesale roaming access. This includes direct wholesale roaming access and wholesale roaming resale access. The consultation discusses the guidance which the BEREC is required to publish under the regulation relating to the operation of Article 3. The consultation closes on 10 August 2012. The FCC has announced that nearly 400,000 residents and small business owners in 37 states will gain access to high-speed Internet within three years, as a result of the first phase of the ‘Connect America Fund.’ About $115 million of public funding will be coupled with tens of millions of dollars of private investment to expand broadband infrastructure to rural communities. Many projects will begin immediately. All projects will be completed within three years. The ‘Connect America Fund’ aims to connect

seven million unserved rural Americans to broadband in six years, and connect 19 million residents by 2020. Germany: The Bundesnetzagentur Assists at the London 2012 Olympic Games In a recent press release, the Bundesnetzagentur has announced that it assisted the UK’s Ofcom with the Opening Ceremony of the London 2012 Olympic Games. A large number of frequencies require coordination in order to cover major sporting events. This includes the use of wireless cameras and microphones and frequencies to facilitate communication between employees and also between the judges. Frequencies also need to be coordinated for global transmission via satellite. Work will also ensure interference does not occur with radio services used by the emergency services and security authorities. US: Verizon Wireless to Pay $1.25 Million to Settle Investigation into Blocking Of Consumers’ Access to Certain Mobile Broadband The FCC’s Enforcement Bureau has released a $1.25 million consent decree with

Verizon Wireless that resolves an investigation into whether Verizon Wireless had complied with the FCC’s ‘C Block rules’ (the Rules). The Rules require licensees of C Block spectrum to allow customers to freely use devices and applications to obtain Internet access. Verizon Wireless offers customers 4G LTE services on C Block spectrum. The FCC launched an investigation after reports suggested that Verizon Wireless had successfully requested that a major UK: The Ofcom Unveils Plans for 4G Auction 2 Source: http://www.doksinet The Ofcom has released a consultation on the auction of spectrum for mobile services in the UK. The auction will offer the equivalent of three quarters of the mobile spectrum in use today. This is 80 per cent more spectrum than was released in the 3G auction which took place in 2000. This is expected to ensure that mobile broadband is available to at least 98 per cent of people in villages, towns and cities across the UK. The Ofcom will reserve some

spectrum for a fourth national wholesaler, in addition to the three current large mobile operators. The Ofcom has released a consultation on the draft of the legal instrument which implements the auction rules. The consultation closes on 11 September 2012. per cent for text messages. During this time, a new supplier entered the market. NZ: Statement of Preliminary Issues Available for Vodafone/TelstraClear Clearance Application The NZCC has published a statement of preliminary issues relating to an application from Vodafone New Zealand Limited seeking clearance to acquire 100 per cent of TelstraClear New Zealand Limited. The statement of preliminary issues outlines the key competition issues that the NZCC considers will be important in deciding whether to grant clearance. Submissions close on 13 August 2012. Oceania Energy NZ: Telecom’s $12 million Penalty Upheld Americas In a recent decision, the New Zealand Court of Appeal has upheld a $12 million penalty imposed against

Telecom for breaching the Commerce Act. The Court of Appeal found that from February 1999 to late 2004 Telecom took advantage of its market power to charge downstream competitors disproportionately high prices for wholesale access to its network. This prevented competitors from offering retail endto-end high-speed data transmission services at a competitive price. Telecom may seek leave to appeal to the Supreme Court against the Court of Appeal’s findings. US: The BOEM and the FERC Revise Guidelines for Development of Wave Energy and Ocean Current Technologies in US Waters The Bureau of Ocean Energy Management (BOEM) and the Federal Energy Regulatory Commission (FERC) have released revised guidelines for marine hydrokinetic energy developers pursuing technology testing and commercial development activities on the US’s Outer Continental Shelf (OCS). The guidelines provide information about how best to obtain a marine hydrokinetic lease and licence on the OCS. The guidelines include

topics such as: provisions for obtaining leases and licences; fee structures; and considerations relevant to hybrid (wind and marine hydrokinetic) projects. The guidelines were developed as part of a Memorandum of Understanding between the Department of the Interior and the FERC. NZ: Monitoring Report Released The New Zealand Commerce Commission’s (NZCC’s) fourth mobile monitoring report shows a decrease in the difference between the price of calling and texting on the same telecommunications network compared to calling and texting between networks. Between February and April 2012, cross-network traffic increased 1.4 per cent for mobile calls and 16 3 Source: http://www.doksinet countries are not always based on defined and published criteria. US: The FERC Proposes Policy Reforms on Capacity Allocation for Merchant Transmission Projects Finland: Road Map 2020 Project Report Released The FERC has released a proposal to amend policies governing capacity allocation for new

merchant transmission projects. The proposal also applies to new non-incumbent, cost-based transmission projects that are participantfunded. Proposed amendments include allowing developers to negotiate with customers on key terms and conditions for obtaining transmission capacity. Currently, the FERC reviews requests from merchant transmission developers before interest can be solicited from customers. Only a portion of a project’s capacity may be subject to negotiations. The remainder must be offered through an open season. Under the proposals, a developer of a new merchant transmission project or a new non-incumbent, cost-based, participant-funded transmission project may allocate up to 100 per cent of the project’s capacity through bilateral negotiations. Comments are due 60 days after publication in the Federal Register. The Finnish Energy Market Authority has released the Final Report of the Roadmap 2020 project (the Project). The Project examined the operating environment of

electricity network operations in Finland. It also examined future challenges of network regulation. The objective of the project was to draw up a development strategy for the regulation of the reasonableness of pricing in electricity distribution network operations until 2020. France: CRE Publishes Report on Monitoring of Good Practices Programs and Independence for Electricity and Natural Gas System Operators The French Energy Regulatory Commission (CRE) has published a Final Report into the monitoring of good practices programs and independence for electricity and natural gas transmission system operators (TSO) and distribution system operators (DSO). French law requires that TSOs and DSOs are independent from suppliers or producers that belong to the same integrated group. They also have non-discriminatory obligations. For example, they must develop a good practices program which includes a range of measures to prevent the risk of discriminatory practices in network access.

Europe EU: The CEER Releases Monitoring Report Gas Storage Access Regimes The CEER has released a Report into the status of different gas storage access regimes throughout the EU, as provided by Article 33 of Directive 2009/73/EC. Access to gas storage is necessary for suppliers in the gas market. The report identifies different criteria throughout the EU that are used to determine the access regimes. The report can be used on a national level to compare approaches in Europe. The report notes that the regimes in different Germany: Study into Reliability of German Gas Network The Bundesnetzagentur has released a study into the reliability of gas supplies in Germany in 2011. The study suggests that the average interruption in gas supplies per final customer (the System Average Interruption Duration Index 4 Source: http://www.doksinet (SAIDI)) was 1.993 minutes That is, on average, each consumer experienced interrupted supply for about two minutes in total last year. The study

suggests that incentive regulation, which was introduced in 2009, has not impaired the quality of supply in the gas network. The SAIDI only reflects unplanned interruptions which are due to action taken by third parties, which are caused by other networks or which are due to other faults for which network operators are responsible. the transmission and distribution business of Northern Ireland Electricity Limited (NIE T&D) to determine whether outperformance had resulted from a change in capitalisation practice. A consultant auditor’s interim report suggests that a change in capitalisation practice has resulted in a material ‘double payment’ by consumers. However, NIE T&D has not yet confirmed the factual accuracy of the interim report, and the issue has not yet been formally discussed with NIE T&D. The auditor’s final report will be published together with a draft determination on the matter. Responses to the draft determination will be invited. Italy: Energy

Authority’s Strategic Three Year Plan Focuses on Selective Investment The Italian Regulatory Authority for Electricity and Gas (the Regulator) has released a Three Year Plan that focuses on selective development of infrastructure and implementing reforms needed for the transition to a new type of electrical power wholesale market. As well as identifying the main objectives that will guide the Regulator in electric power, gas, and now water, the guidelines also aim to be a starting point towards defining a national energy strategy. UK: The Reports DEEC Releases Electricity The UK Department of Energy and Climate Change (the DEEC) has published two reports that examine the UK’s electricity system. The first report is a response to a consultation on transmission licences. It found that changes to the regulatory regime on constraints could save up to £300 million between 2012 and 2017. The second report examined electricity demand in the UK. It identified potential for greater

efficiency in the use of electricity. Northern Ireland: Utility Regulator Comments on the Competition Commission’s Provisional Determination UK: The Ofgem Consults on £22 Billion Investment Plans to Upgrade Britain’s Gas and High Voltage Electricity Networks The Utility Regulator has announced that it welcomes the UK Competition Commission’s (the Commission’s) provisional determination of the price control on Phoenix Natural Gas Limited. The Utility Regulator noted that the Commission broadly endorsed its position on deferred capex for pipes that were not built. This decision will result in almost £14 million being returned to current and future natural gas consumers. The Ofgem has published a consultation on proposals to upgrade Britain’s electricity and gas networks. This includes funding £17 billion of investment with around a further £5 billion potentially available over the course of the pricecontrol period. The proposed investment includes an upgrade and renewal

of the high voltage electricity network in England and Wales and the high pressure gas networks across Britain. Proposed infrastructure projects include installing new sub-sea electricity cables that will Northern Ireland: Update on Investigation of Changes to Capitalisation Practice The Utility Regulator has released an interim report into an investigation into the accounts of 5 Source: http://www.doksinet link England and Wales with Scotland. The consultation closes on 21 September 2012. Post Europe Rail UK: The Ofcom Extends Royal Mail Safeguard Cap to Protect Vulnerable Consumers Europe UK: Regulator Sets Out Network Rail’s Finance and Output Frameworks for 20142019 The Ofcom has announced that it has introduced a cap on the prices that Royal Mail can charge for Second Class stamps for large letters and small parcels. The cap applies to Second Class stamps for letters, large letters and small parcels up to 2kg. The measures are designed to protect small businesses and

vulnerable consumers. The announcement follows the Ofcom’s March 2012 decision on the new regulatory framework for postal services that otherwise allows Royal Mail greater commercial freedom in the way it sets prices. The Office of Rail Regulation (ORR) has launched consultations in relation to Network Rail’s financial and output frameworks between 2014 and 2019. The consultations seek views on issues that include the level of Network Rail’s debt, and its exposure to changes in inflation. Other issues include levels of punctuality and safety, and the efficient management of the rail network’s assets. UK: The Ofcom Consults on Royal Mail’s ‘Delivery to Neighbour’ Scheme UK: Joint Regulators Group Statement on Cost Benefit Analysis Methodology The Ofcom has published a consultation in relation to a proposal to allow Royal Mail to implement its ‘delivery to neighbour’ scheme (the Scheme) across the UK. This follows limited trials of the Scheme in late 2011. Under the

Scheme, Royal Mail could leave mail items with a neighbour in the event that consumers are not in to receive them. That is, the proposal is designed to offer consumers greater choice for receiving mail when they are not at home. At present, Royal Mail is the only major UK postal operator currently not permitted to deliver to a neighbour. The consultation closes on 24 August 2012. The Joint Regulators Group (JRG) has published a statement on the methodology used for discounting for cost-benefit analyses (CBAs). CBAs may be used by regulators when considering how to compare measurements of consumer or wider public benefits with costs incurred by firms, including regulated firms. That is, CBAs enable regulators to estimate the value of the overall net benefits of a proposed regulatory intervention. The members of the JRB are: the Office of Rail Regulation (ORR); the Civil Aviation Authority (CAA); the Office of Gas and Electricity Markets (Ofgem); the Utility Regulator, Northern Ireland;

the Office of Water Services (Ofwat); the NHS Monitor; the Office of Fair Trading (OFT); the Office of Communications (Ofcom); the Water 6 Source: http://www.doksinet Final Determination Made on Cost PassThrough Arrangements for Network Service Providers Commission; the Department for Business, Innovation and Skills; and the Tenant Services Authority. AUSTRALIAN ROUND-UP The Australian Energy Market Commission (AEMC) has published a final rule and associated final rule determination on proposed amendments to the operation of the cost passthrough provisions for electricity network service providers. The final rule will provide network service providers with the opportunity to recover efficient costs should a pass-through event occur at any time during a regulatory control period. The addition of pass-through event considerations to the National Electricity Rules (NER) ensures that a cost pass through event is only available when event avoidance, mitigation, commercial insurance

and selfinsurance are less appropriate. REGULATORY Communications ACCC Invites Comment on List of Points of Interconnection to the National Broadband Network The Australian Competition and Consumer Commission (ACCC) has issued a consultation paper on the draft section 151DB list of points of interconnection (POI) to the National Broadband Network (NBN). The ACCC and NBN Co have previously agreed on the locations to be used as the 121 points of interconnection to the NBN. In the consultation paper, the ACCC proposes to set out the general location of each point of interconnection on the list but keep the actual street address confidential for security reasons. Submissions close on 31 August 2012. Consultation on Rule Change Request Regarding Market Schedule Variation Transactions The AEMC has commenced a consultation on a rule change request proposed by the Australian Energy Market Operator (AEMO). The rule change request relates to an operational aspect of the Short Term Trading

Market (STTM) for natural gas. The request seeks to allow an additional category of participants in the STTM to submit ‘market schedule variations’ to AEMO. The AEMC has published a consultation paper on the request to facilitate stakeholder submissions. The deadline for submissions to the consultation paper is 16 August 2012. TPG Undertakes to Release Misled Customers from ADSL2+ Contracts The ACCC has announced that TPG customers that relied upon representations about TPG’s $29.99 Unlimited ADSL2+ campaign, may now leave their contracts without penalty after the Federal Court accepted an undertaking from TPG. The Federal Court found that TPG’s campaign conveyed false or misleading representations. The Federal Court’s orders included TPG to pay $2 million in civil pecuniary penalties. TPG has appealed the Federal Court decision. Cost Thresholds Review the Regulatory Investment Test for Transmission The AER has initiated a review of cost thresholds associated with the

Regulatory Investment Test for Transmission (RIT-T). The RIT-T is a cost-benefit test that transmission companies apply before building electricity Energy 7 Source: http://www.doksinet Access Undertaking accepted by the ACCC in September 2011, Viterra must replace its first in, first served capacity allocation system with an auction system. Further information on Viterra’s revised auction proposal, the Consultation Paper and how to make written submissions is available on the ACCC’s website at www.acccgovau/viterra transmission infrastructure. The RIT-T applies to transmission investment above certain cost thresholds. The NER requires the AER to undertake a review of cost thresholds to ascertain whether changes need to be made. Submissions close on 21 August 2012. Ports ACCC Consults Further on Viterra Auction System for Bulk Wheat Exports The ACCC has issued a Consultation Paper seeking submissions on Viterra’s revised proposed auction system for the use of its port

services for bulk wheat export. Under the Regulatory Observer is a regular publication of the Australian Competition and Consumer Commission. For editorial enquiries please contact Jason King (Jason.King@acccgovau), and for mailing list enquiries please contact Genevieve Pound (genevieve.pound@acccgovau) 8