Regulatory Case Law, April 2016: Polish NRA right to regulate calls from Polkomtel

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According to the latest ECJ judgement involving a dispute between Orange Poska and Polkomtel, Case C‑397/14, resolved by the Polish NRA UKE, an EU Member State may provide, in line with the Universal Service Directive, that an operator of a public electronic communications network must ensure that all end-users are able to access non-geographic numbers on its network in that State and not only those of other Member States.

In addition, the Access Directive must be interpreted as allowing a national regulatory authority, in resolving a dispute between two operators, to impose on one of them the obligation to ensure that end-users are able to access services using non-geographic numbers provided on the other’s network and to set pricing procedures for that access between those operators such as those at issue in the main proceedings, provided that those obligations are objective, transparent, proportionate, non-discriminatory, based on the nature of the problem identified and justified in the light of the objectives laid down in the EU regulatory Framework for electronic communications. and in line with the procedures for public consultation and notification of measures with the European Commission.

As Polkomtel and Orange Polska did not reach an agreement laying down the conditions for cooperation and rules on payments for services providing users of the network of Polkomtel with access to intelligent network services supplied via the network of Orange Polska on non-geographic numbers, the matter was brought before the President of the UKE for resolution.

By decision of 6 May 2009, the President of the UKE settled the dispute inter alia by ordering Polkomtel to ensure that its subscribers would have access to services using non-geographic numbers provided on the Orange Polska network in return for payment of compensation for that service by the latter.

In that decision, the President of the UKE also laid down the pricing procedures to be employed between the two undertakings for that access. Taking the view that the same network resources are employed in call origination on Polkomtel’s network as in call termination on that same network, he inter alia fixed the charge for originating a call directed to the Orange Polska’s network at a level determined by reference to the applicable rate for terminating a call on Polkomtel’s network.

Although the decision of the ECJ provides a plausible answer as to what the NRAs are allowed to do under the EU regulatory framework within the limit of the preliminary ruling, it in itself offers little comfort to those concerned about the proportionality of regulatory action. To be sure, the obligations concern an operator without significant market power in the relevant market.

First, in a competitive market, mandating access to ‘all numbers’, including value added services (VAS) of another operator, is clearly disproportionate. Whereas there is public interest involved when it comes to emergency calls and access to end-users of other operators, this cannot be said for access to VAS whose providers can commercially establish themselves on multiple networks.

Second, using termination costs as a proxy for origination price shows the lack of market understanding on the part of UK because, unlike call termination, call origination involves collection and, especially in case of VAS, bad debt! Originating operator might potentially have to collect huge commercially set amounts from its subscribers whilst only being allowed to keep a small regulated amount.

The ECJ Polkomtel Case C‑397/14 decision can hardly be seen as a triumph for UKE, the Polish NRA. It simply shows that the EU regulatory Framework might not always provide for a remedy against poorly exercised regulatory discretion.

Bostjan Makarovic

Bostjan Makarovic

Bostjan Makarovic is Aphaia's Founder. In addition to 14 years of industry experience, he holds Queen Mary, University of London PhD in legal regulation of NGN, London School of Economics and Political Science MSc in Environmental Policy and Regulation, and is IAPP-certified international privacy professional (CIPP/E).
Bostjan Makarovic

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