Q&A with Fatima Barros

Q: WHAT IS YOUR BACKGROUND?

A: I’m a professor of economics and have been in academia for most of my career until now. But for ten years I was the dean of the Católica-Lisbon School of Business and Economics, which gave me different responsibilities from just being an academic. Competition among international business schools is very fierce and my school reached number 25 in the Financial Times ranking, which was a great achievement.

Q: WHAT HAS BEEN YOUR RESEARCH WORK?

A: Much of my research has been in competition regulation, working across different industrial sectors, on areas such as where private companies compete with public ones, say when some firms are privatised but others remain in state hands, and how a state-owned company can change outcomes in the market. I also worked a lot on contracts. The main challenge for an academic economist in moving to telecoms regulation is understanding the various technologies involved.

Q: HOW DID YOU COME TO JOIN ANACOM?

A: In 2012 I was invited by the government to do the job as a usual replacement after the previous chair had served a five year term. The invitation came from the minister for the economy – and it was made clear that we are an independent regulator. I put as a condition that I could choose my own board, which was accepted, and I am probably the only regulator that has been able to do so, which I think is very useful and important. We do not have any interference from government. There is no ministry of communications, and Anacom is responsible for spectrum, all telecoms, and the postal service, but not broadcasting, which is in a separate agency.

Q: WHAT IS THE MARKET IN PORTUGAL LIKE?

A: The Portuguese market is very sophisticated in terms of next generation networks, which I am very proud of. We have an extensive coverage of NGNs – among the best in Europe, about 85%, and we have competing networks of cable and fibre, which is unlike most of Europe where one tends to dominate. These are private companies, although we do have public-private partnerships in rural areas. In some respects our regulatory job has become easier recently because competition has increased with a big change in market structure. One move in 2013 was the merger of the cable operator with the third mobile player to provide quadruple play services to compete with the incumbent, Portugal Telecom, and at the same time this forced Vodafone to realise it could not compete without a fixed network and it invested in fibre. This has created a dynamic, low cost market.

Q: WHERE HAVE YOU INTERVENED?

A: One of our most important decisions was to support the government in a public tender for the universal service provider and this has been awarded to NOS, as the cable company is called after its mobile merger, so universal service is now in the hands of a private firm. We have also supported the privatisation of postal services. But the most exciting decision has been in opening up the fibre network of Portugal Telecom to other operators. This took a long time because when we started the European Commission came out with its non-discrimination recommendation, and we adjusted our position to this, but in 2014 Portugal Telecom agreed to share its fibre network with Vodafone.

This is the first such infrastructure sharing arrangement in Europe, and it’s an innovative agreement that regulation encouraged to take place. Vodafone has some fibre as well and now the two firms provide access to each other’s networks. We have 24,000 kilometres of ducts and the cost of passing a house is only e200 euro, much cheaper than other countries, where it can reach as high as e3,000. We are also working on a central database of infrastructure so that operators can deploy networks more efficiently.

Q: YOUR 4G AUCTION WAS IN 2012…

A: Yes, we had to sell spectrum quickly thanks to our economic situation, and we were expecting four operators to bid but only three came forward because of the creation of NOS. It’s very important to have a challenger mobile operator and I think we still have that with three, but generally I think the question of consolidation of markets in Europe needs to studied carefully. I can say that in a big market such as Germany it is more difficult to understand the cut in the number of operators from four to three than it is in a smaller market such as Ireland. We’ve just been looking at this in BEREC (the body of European regulators), where we held a workshop on oligopoly analysis and regulation.

Q: ARE THERE DOWNSIDES TO COMPETITION?

A: When you have fierce competition it’s good for consumers that prices go down, but companies can be too aggressive in trying to get new clients, and sometimes they are not very transparent and consumers buy packages under conditions that they do not understand clearly. We are working on implementing a requirement for operators to provide consumers with clear information in a standard format, such as the duration of the contract, the benefits of having a fixed term, and the penalties for early termination. Like other countries we have lots of complaints about complex contracts and it’s hard to understand the small print. We are also making it clear that operators can’t announce unlimited data offers that are then throttled, and we are also tackling problems with people being switched to another operator but still getting two bills, and contracts that start again from zero for changes in conditions.

Q: IN YOUR ROLE AS CHAIR OF BEREC, THE EUROPEAN TELECOMS REGULATORS BODY, YOU HAVE BEEN TALKING ABOUT ‘FUTURE PROOF’ REGULATION…

A: The industry and other stakeholders blame regulators for being too conservative and not looking far enough ahead. Part of that is because we need to minimise risks of court challenges – I would like my people at Anacom to take more risks, but we try to make decisions that are robust and can stand up in court. But we certainly want to change the reputation of regulators and be forward looking. It was much more simple in the past when Europe had defined borders and basic telephone, text and some data services. Now those comfortable borders have vanished and there are constantly changing business models with the convergence of telecoms, IT and media, and a new digital ecosystem. As a group of 28 European regulators and nine observers, BEREC works on regulatory best practice for the European framework and single market, and we have been advising on areas such as roaming and net neutrality in the context of the Connected Continent package, but we also take part in debates on the whole electronic communications field with the European Commission, Parliament and Council, and I feel we must take the lead and pave the way for required regulation for the next five years.

Q: WHAT ARE THE PRIORITY ISSUES FOR EUROPE AND BEREC FOR THE NEXT FEW YEARS?

A: A priority is to ensure connectivity and widespread coverage of next generations networks. Net neutrality and the over-the-top players come to mind of course – although at BEREC we are calling them content and application providers (CAPs), which is a more accurate description – but there is also the ‘internet of everything’, increasing numbers of services in bundles, network convergence, quality of service and all-IP networks. And how will we deal with privacy, data protection, network security and cloud services, given the huge rise in data volumes and connections? But the demand side is also limited for those who have less money, poor access and low digital literacy – network deployment is worthless if there is low take-up, which is an issue we have in parts of Portugal. We need to balance coverage and take-up as without this balance we won’t solve the problem of incentives to invest. Demand for high-speed broadband is ultimately the driver for investment, and at BEREC one of our priorities is promoting competition for such investment. We are also spending a lot of time on issues such as mobile termination rates, international roaming and regulatory accounting.

Q: HOW DO YOU SUMMARISE THE REGULATORY SITUATION?

A: With the new Commission and Parliament now in place we know that policies like Europe 2020 and the Digital Agenda will soon be reviewed, and the radio spectrum policy programme and the European data protection framework will also be revised. All will have an impact on our sector but the most significant is definitely the review of the European regulatory framework for electronic communications. You cannot just talk about the old electronic communications market when you have new and different types of content and service providers, and devices talking to devices, so we must understand what we are talking about. Some things are working well without regulation but the way we analyse things must take into account the new environment. We are prepared to support the Commission and we expect it will be an ambitious and disruptive review. Minor changes for the framework will not work because the world will be very different from 2002, when the directive was written, and from 2009, when it was revised. We must consider what the role of regulators will be in the new digital ecosystem and the new framework will need to be ready to regulate, deregulate and coregulate. It is a challenge for regulators to be less conservative and see what is needed, and not just adapt current regulation. But we are at a turning point now and we must act.