What is the digital internal market and where the European Union should intervene?

Abstract

This paper analyses the digital internal market and when EU intervention is needed to achieve this internal market. It sets legal and economic criteria to determine the appropriate scope of the EU intervention. It applies these criteria to several case studies and concludes that sometimes the EU intervention is not justified (choice of regulatory remedies in many national markets, regulation of mobile termination rate, price control of Next Generation Access networks), whereas in other cases EU intervention is justified (entry regulation, international roaming, spectrum). The paper calls for a more open debate of the concept and the means to achieve the digital internal market. It also submits that EU intervention should focus on the areas where its benefits are the highest (in particular given the possibilities of economies of scale provided by the technology or the cross-country externalities), and where its costs are the lowest (in particular given the heterogeneity of national preferences or the need for regulatory experimentation and competition). Therefore, EU intervention is more relevant for the content part of digital regulation (such as copyright, privacy, electronic commerce, dispute resolution) than for the infrastructure part (i.e. the electronic communications networks and services). In particular, this paper calls the Commission to use with extreme caution its new power on regulatory remedies, especially in the context of the deployment of NGA, given the uncertainty on the best form of regulation.