the concept of technology neutrality... Peter Alexiadis and Miranda Cole The concept of “technology neutrality” is one of the key concepts which underpins the new regulatory framework for electronic communications networks and services (“ECNS”) which came into effect on 24 July 2003 across the European Union." In essence, technology neutrality seeks to ensure regulatory even-handedness for relatively homogeneous products provided in a single market using alternative technologies for delivery. Under the new regulatory framework, regulators are obliged to examine markets, not services, to determine whether or not it is appropriate to subject them to ex ante regulation. ‘Adoption in the EU ‘though the expression was used adhacin he past fo denote the fact tat new Comunity polly wouks, 56 a general pipe, not be esgned towards the plein of “winners and losers” among compaing patos of technologies, It only became ntitutoraied it Correnuity la with the execute decision to move away fom the old ONP approach, ia favour ofthe approach underpinning the ECNS regime, The ONP framework was imbued with ‘2 number of working presumptions regarting errr Peter Alesads Is Parner resident inthe Brussels ofce of ‘Gibson, Duna & Crutcher LLP Miranda Cole is Senor Associate resident inthe Brussel ofce of Gibson, Dunn &the nature and functionality of particular series (ther than “markets justiying ex ante requation ‘The technology neutrality concept has cauieKy been adopted across a wide spectrum cof regulatory measures impacting onthe ECNS sect, oven finding its way nto the appiation of State aid policies. For example, selection cited for investments in communications infrastructure must adhere to the principe of technology neutrality. When a project involves the fnancing of a specific technology, it shoud only do 60 on the bass of 4 cost-benefit analysis which has taken due sccount of the range of possible ateratives for the provision ofthe service in question. International Adoption The concept has also quick'y caught the Imagination of regulatory bodies ouside ofthe neutral paradign”, Of course, the cfffering histories and regulations surounding each type of platform make absolute requstory party In the United States dificut to achieve, “but [important to try o regulate comparable sorvices In a manner that does not interforo with ‘marketplace outcomes.“* Recently, Singapore has adopted sila ‘approach in the blending ofits ex ante and ox ppost approaches, and Japan is currently ‘evaluating the adoption of a market-based ‘approach at whose heart Ses the principle of technology neutaity. Analytical Justification The relative importance of the concept of technology neutaity under the new regulatory ‘ramework is threefold, insofar as: ‘it goeks to bridge the gap between competion rues (which are based on the ‘types of dynamic changes that wil result rom future daivery of services over ungraded or increasing penotration of platforms based on ferent tectnologes. This technologically neutral approach to all transmission Infrastructure is eld to have the added policy benefit of encouraging companies to engage in both senfoes-based and infastucture- ‘based competion, as well as encouraging investment in aifrent broadband technologies.” In elation to remedy selection, the concept provides a litmus test that ensures that no particu technological solution Is atiicialy ‘stimulated (or penalised) through unjustiably inconsistent regulation. To the extent that itis considered appropriate for remedies to ‘iferetiate between diferent technologies, such diferntiation must be justified on the ..and the New ECNS regulatory framework European Union. For example, the OECD has ‘endorsed the concept as @ means of spurring intermodal competion (ie. between cable, wiles, fie ines, satalte platforms) and asa ‘means of resolving some of the present problems with particular platforms, lcludlog unbunding f local oops ® ‘The technologically neutral approach has slso found favour inthe United Stats, where it Is seen a a vehicle for deregulation. Thus, the position of the Federal Communications Commission has been to support the growth of broadband services wherever possible trough the promotion of competition via a“technology- analysis of markets) and sector-spect legistation, given ts import for National Feguatory Autores seeking to understand the substtutabilty of secvoes when defining markets under Article 15 of the Framework Directive. As Commissioner Llkanen has made clear, @ determination that sector- specific regulation is necessary, sppropriate and proportionate under the new regulatory framework must ret onan assescment ot the ccompattivanaes ofthe rlovant market. * Any “orward-ooking” analysis® technological neutay, Hits oantepate the rust be ‘grounds that tis proportionate inlight ofthe ‘seciflc market fare thatthe remedy socks toadcress, In order to adopt a consistent approach to the application of the technology neutalty concept to achive these policy goals, however, 1 number of working principles should be applied in practice, namely: ‘At te most fundamental lve, the concept should be applied consistently with the concepts of substitvabity and functional Interchangeabiliy, a8 those concepts ae understood in Community caserlaw. AS such, ‘ecta review section one: regulation [zg ‘i‘The technology neutrality concept has quickly been adopted across a wide spectrum of regulatory measures Impacting on the ECNS sector, ‘even finding Its way Into the application of State ald pollote: ‘octa review section one: regulation the inl presumption shou! be thatthe net outcome of apiyng the concept wil be the broadening of the elavant arena of competion, thereby porta reducing the Iiketnood hat the relevant market in question wil be found tobe characterised bya ack of effective competion fanless, of course, a single entity supplies multiple sxbstiutable that are based on difering technologies)? ‘The concent requies the neutral regulatory treatment of the same or equivalent services provided over atferent platforms, but not the treatment ofa services on one platform inthe same way, Thus, the ofter-used expression “plattorm neutrality” shouldbe interpreted as identtying the types of services which are being provided over foent plates with a View to determining whether those services {al within the same relevant product market. ‘The adoption of a technologically neutral approach to addressing perceived market {ales or anti-competitive mischets need not necessary yield identical regulatory rests. The application of @ consistent analytical approach to requatlon of services provided ‘on diferent platforms does not necessary require an ‘identical’ regulation for such services." fright be the case that iferent measures achive the same end on diferent platforms, In ation, the imposition of ther remedies in lata markets in which nota of the relevant platforms are used to celver services might impact on the appropriate and proportionate frm of regulation “Te application of the principle needs to take into account the fac thatthe new fremework dees not encourage the regulation of new or Inrovatve markets whieh have potas yet had the opportunity © develop (Le, embryonic markets. tie Important, when conducting tochnology-neutral market analyss to ensure that the diiron between new ‘markets on the one hand and new ‘services which might {all within existing, even mature, markets) Is not biarea."* “The final fesue to bear in mind when applying the principle hinges on ensuring that substitutability analyses are based on comparisons of ‘ko with Ike’ n particular there are various ‘ors’ that are involved in the delivery of electronic communications services, from the network layer atthe bottom (e433 copper or bre natwork up othe to-end caniage sarvice (e.., SDSL}, crossing ‘number of other layers between the wo (@.9, SDH of POM and ATM or Marti). Not all network structures have the same layers oF ne the same number of layers. Any such iferences are particularly important in the context of designing access remedies. Application of Doctrine in Particular Context Beyond the level of general principle, market Getntion analyses across the Member States have raised a number of practical issues where the spplicaton of the principle of technology neutrality is anything but coarcut, We discuss bry three of those asues belo, ‘Access points ‘The braadth ofthe range of access obligations contemplated by Article 12 of the Access Directive, togethar with the scope of the LUnbundied Local Loops and Wholesale Broadband Access (as dined In the Commission's Recommendation), bring tothe fore the Issues raised above fowing from the eistence of services, and the potential forthe forant of access, at ctfrent layers in the network Werarchy. ‘while unbundled loops effectively provide access at the bottom of the (copper) network: stack to ‘raw’ copper wth which the access seeker can do as it pleases, the provision of or requests for access te) saricesfurthor up the stack is inneroty crven and constrained by application functionalty. The nature and structure of the particular platforms. oF applications men that diferent physical access points are appropriate for dferant applications (ea. ATM or IP}. In action, dfeent logical access points on an application platform must be careuly assessed in relation to tho sions they send and they provide, depending on the terms on which access i provided incentives Limits to neutrality Ineddtion to balarcing the constraints imposes by the difrences between access and services on diferent appleation platform and at ferent logical points on a. single platform, sector specie regulators must also make cross platform assessments that tke account ofthe technological neutrality. More particulary, these tints are moasured in tem ofthe undarying structural fences that exist fall the way up the network stack, fom fundamental structural differences atthe basi network ayer (29, Between PSTN and co-axial cable networks) to the trafic management differences at the transmission layer, when ‘comparing the substtutaitty of both wholesale and retall sarees and designing approciat and effective remedies. In adattion, there may not be functional equivalent wholesale services on diferent limits of