some thoughts on risk premium vs. risk sharing rethoric in the draft EU framework.

It is widely known that the remaining bone of contention between the Council (essentially France which has recently adopted its so-called "ADOPI" law) and the Parliament for the adoption of the regulatory package is the so-called amendment 138 relating to striking the right balance between respecting internet privacy v. fighting internet piracy.

However, I do not agree with the other widely published view that the Council and the Parliament favor risk sharing over risk premium for regulating next generation networks ("NGN"). While both risk sharing and risk premium are addressed in the draft directives, risk premium is, in my view, a much more precise and compelling obligation.

Indeed, risk sharing is set out as a general regulatory principle to be followed by national regulatory authorities ("NRAs") and the terms of this obligation are rather loose: NRAs must "[permit] various cooperative arrangements between investors and parties seeking access to diversify the risk of investment". Furthermore, it is noteworthy that this statement is immediately followed by the statement that such arrangements must also guarantee that "competition in the market and the principle of non-discrimination are preserved".
On the other hand, risk premium is a very precise obligation that is mandated when a NRA imposes a cost-orientation obligations ("To encourage investments by the operator, including in next generation networks, national regulatory authorities shall take into account the investment made by the operator, and allow him a reasonable rate of return on adequate capital employed, taking into account any risks specific to a particular new investment network project"). Therefore, I believe that the new draft EU framework imposes a less stringent obligation for NRAs to apply risk sharing than to apply risk premium.