Position papers

• Position papers

  ETNO Statement on the BEREC WACC-Parameters Report 2021

  On June 15, 2021, BEREC published its second Report on WACC parameter calculations according to the European Commission’s WACC Notice of 6th November 2019 (‘WACC Report 2021’).

  ETNO had taken a critical stance on the Commissions WACC Notice and the first BEREC Report in January 2021 and provided suggestions for rectifications to achieve the goal of a more harmonized WACC which would indeed provide the opportunity for a fair and simplified WACC setting throughout Europe.

  The WACC Notice so far has not been changed and the BEREC Report2 now reveals the pitfalls of methodological shortcomings of the Notice: based on the current BEREC calculations national WACCs in a number of member states would fall below 5% (pre-tax, nominal), a threshold which has never been passed by NRAs before the Notice and which would be in contradiction to usual market WACC estimates for the regulated companies. The latter currently stand usually at least at high single-digit levels.

  Such wrongly set WACC poses serious threats for electronic communications markets in Europe. It sends negative signals to investors and reduces trust in regulation as it shows that Regulators do not consider investors expected return on investments and furthermore, they would allow for disruptive decreases.

  Although the WACC notice is formally limited to a WACC for legacy network regulation, such legacy WACC decisions could spill over to VHC where the legacy WACC is perceived as benchmark or basis for VHC WACC. Contrary to the Commission’s intention to promote the internal market the Notice may create distortions to EU internal market as countries with bigger differences with the current WACC figures for the telecommunication sector would be penalized.

  The second BEREC report follows calculation methods of the first report but changes the peer group which is used for assessing major parameters such as the beta, gearing or debt premium for the analysis of the equity risk premium. The net effect of these changes are even lower WACCs in comparison with an unchanged peer group.

  The main flaws of the Commission Notice remain. The Notice systematically underestimates the cost of equity in times of artificially depressed low interest rates for governments bonds (the “risk free rate”) by forcing NRAs to combine national low or negative bond yields of the past 5 years with a uniform EU average market risk premium which is derived from historic data on bond yields and equity market return over a very long time period without aligning the outcome with forward looking risk estimates and ignoring the effects of the quantitative easing policy on interest rates. Indeed, while low or decreasing interest rates have allowed companies to raise debt at better terms, the cost of equity did not follow this trend, resulting in an overall WACC estimates at company level significantly above the BEREC estimates following the EC’s notice.

  The recent Ofcom estimate for the WACC of BT provides an interesting case study on the outcome of an alternative WACC estimate. Ofcom did not apply the WACC Notice methodology or the BEREC numbers but undertook its own investigation. As a result, Ofcom established a WACC of 7,8% for BT. Based on the first BEREC Report, however, the WACC should not have exceeded appr. 5,3%. Such a large gap is a strong indicator that the WACC

  Notice might lead to a severe underestimation of correctly estimated WACCs. Wrongly set WACCs could cause significant harm on investments in European telecommunications. As the Commission has undertaken the review of the Next Generation Access recommendation, the current situation, while limited to legacy assets, might trigger wider damage to very high capacity network (VHCN) investments, at the opposite to the ambitious targets the Commission itself sets on VHCN.

  ETNO hence reiterates its concerns and urges the Commission and BEREC to consider appropriate estimates of the WACCs to enable National Regulators to allow for a regulatory environment which supports and values investments.

  14 July, 2021 Read more
• Position papers

  ETNO comments on the Inception Impact Assessment on the Data Act

  ETNO welcomes the possibility to provide its comments below in response to the public consultation on the Inception Impact Assessment on the future Data Act. 

  25 June, 2021 Read more
• Position papers

  ETNO’s position on the draft delegated regulation on the obligation for certain companies to publish non-financial information

  ETNO (European Telecommunications Network Operators' Association) represents Europe’s telecommunications network operators and is the principal policy group for European e-communications network operators. ETNO’s primary purpose is to promote a positive policy environment allowing the EU telecommunications sector to deliver best quality services to consumers and businesses.

  ETNO fully supports the EU taxonomy role as an essential facilitator of the EU Green Deal, with the purpose of channelling long-term, sustainable finance into sustainable activities.

  4 June, 2021 Read more
• Position papers

  ETNO policy position on Data Governance Act

  With the ever-growing number of data generated today, the EU needs the right governance model to unleash the potential of the data economy that could benefit to the society, citizens and companies. A key pillar of the EU Data Strategy (February 2020) welcomed by ETNO, the proposed Data Governance Act aims at boosting data sharing across sectors and member states while increasing citizens’ and companies’ trust and control over their data.

  As the telecom industry can provide data market places and data broker services [1], ETNO welcomes the opportunity to provide feedback to the DGA and share its views to achieve a successful, competitive, and innovative single data market.

  10 May, 2021 Read more
• Position papers

  A TELECOMS INDUSTRY VIEW ON THE DIGITAL MARKETS ACT JOINT POSITION PAPER BY ETNO AND GSMA

  ETNO and GSMA welcome the Commission’s initiative to create a harmonised ex-ante instrument targeted at the providers of core platforms services designated as gatekeepers via the Digital Markets Act (DMA). Current legislative instruments are not sufficient to ensure contestable and fair markets in the digital economy. This would also support the DMA’s objective to strengthen the internal market by setting out harmonised rules across the EU.

  6 May, 2021 Read more
• Position papers

  ETNO POSITION PAPER on the EC proposal on the review of roaming regulation

  The main objective pursued by the EC when reviewing current Roaming regulation is to assess whether the retail roaming market within the EU (RLAH) is working properly and whether since 2014 the market has experienced any material changes that are not properly reflected or tackled through current framework and accordingly the need for an update of such framework.

  According to diverse reports from the EC and BEREC, it seems that the RLAH regulation in force is working well. The EC proposal  is based on a cost modelling not taking into account the ongoing 5G transformation, the traffic patterns and investment needs. Moreover, the  ‘quality of service (QoS)’ obligations beyond existing transparency rules are not fit for purpose. In addition, the impact of the COVID crisis is not adequately considered across a number of dimensions, such as the impact on supply chains or deployment planning, volumes, …

  Read the full document at the link below.

  5 May, 2021 Read more
• Position papers

  Digital Services Act Joint Position by the GSMA and ETNO

  Since the adoption of the eCommerce Directive (eCD) in 2000, the use of digital services has increased considerably. Last year, almost 85 percent of all individuals in the EU-28, aged between 16 and 74 years, were using the internet regularly1. At the same time, the variety of online services has also grown exponentially, and new business and value creation models have emerged. In particular, the importance of online platforms that allow the wide dissemination of user-uploaded content to society has drastically increased.

  27 April, 2021 Read more
• Position papers

  ETNO – GSMA joint response to the European Commission’s Digital Levy public consultation

  ETNO and the GSMA welcome the possibility to provide their comments below in response to the European Commission’s (‘EC’) Digital Levy public consultation.

  14 April, 2021 Read more
• Position papers

  ETNO responses to RSPG Consultations on draft opinions on RSPP, Spectrum sharing, and Additional spectrum needs

  As ETNO appreciates the opportunity to provide comments to the consultations on the RSPG draft opinions on RSPP, Spectrum sharing, and Additional spectrum needs and guidance on the fast rollout of future wireless broadband networks.

  30 March, 2021 Read more
• Position papers

  ETNO position paper on the Revised Directive on Security of Network and Information Systems (NIS2)

  Introduction

  ETNO welcomes the Cybersecurity Package proposed by the European Commission on 16^th December 2020, which is an important part of the EU's digital transformation and recovery efforts. The package consists of the EU Cybersecurity Strategy for the Digital Decade (Cybersecurity Strategy), a proposal for a Directive on the Resilience of Critical Entities, repealing the Critical Infrastructure Directive (EC) 2008/114, and notably, a proposal for a Directive on measures for a high common level of cybersecurity across the Union (‘NIS 2'), repealing Directive (EU) 2016/1148 (NIS).

  30 March, 2021 Read more
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