The three-criteria test and SMP: how to get it right

The New Regulatory Framework (NRF), which guides the telecommunications regulation in the European Union (EU) countries, has established a two-step approach for regulating the telecommunications sector. To this end, the so-called Three-Criteria Test (TCT) has been developed to identify those markets that, in principle, might be subject to regulatory intervention. In the proposed paper, we will show that: the current two-step approach shows a strong bias towards excessive regulation; the TCT, as such, can be a useful tool for regulation (and deregulation), if adopted properly. The paper starts from the thesis that the current practice fails to make use of the advantages that could be derived from using the test. Based on an analysis of the regulatory practice in Europe, the paper will show that a different approach would make it possible to considerably reduce the regulatory intervention in the European telecommunications markets.