REGULATORY AUTHORITIES FOR AIR TRANSPORT, RAILWAYS .

OECD REVIEWS OF REGULATORY REFORMREGULATORY REFORM IN SWITZERLANDREGULATORY AUTHORITIESFOR AIR TRANSPORT, RAILWAYS,TELECOMMUNICATIONS AND POSTAL SERVICESORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION FOR ECONOMIC CO-OPERATIONAND DEVELOPMENTPursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which cameinto force on 30th September 1961, the Organisation for Economic Co-operation and Development(OECD) shall promote policies designed: to achieve the highest sustainable economic growth and employment and a rising standard ofliving in member countries, while maintaining financial stability, and thus to contribute to thedevelopment of the world economy; to contribute to sound economic expansion in member as well as non-member countries inthe process of economic development; and to contribute to the expansion of world trade on a multilateral, non-discriminatory basis inaccordance with international obligations.The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France,Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden,Switzerland, Turkey, the United Kingdom and the United States. The following countries became memberssubsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28thJanuary 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), theCzech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea(12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the EuropeanCommunities takes part in the work of the OECD (Article 13 of the OECD Convention).Publié en français sous le titre :Les autorités de régulation dans le transport aérien, ferroviaire, les télécommunicationset les services postaux OECD 2006.Permission to reproduce a portion of this work for non-commercial purposes or classroom use should beobtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United States. In theUnited States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)7508400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com. All other applicationsfor permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue AndréPascal, 75775 Paris Cedex 16, France. OECD (2006). All rights reserved.2

FOREWORDRegulatory reform has emerged as an important policy area in OECD and non-OECD countries.For regulatory reforms to be beneficial, the regulatory regimes need to be transparent, coherent, andcomprehensive, spanning from establishing the appropriate institutional framework to liberalising networkindustries, advocating and enforcing competition policy and law and opening external and internal marketsto trade and investment.This report on Regulatory Authorities analyses the institutional set-up and use of policyinstruments in Switzerland. It also includes the country-specific policy recommendations developed by theOECD during the review process.The report was prepared for The OECD Review of Regulatory Reform in Switzerland published inMarch 2006. The Review is one of a series of country reports carried out under the OECD’s RegulatoryReform Programme, in response to the 1997 mandate by OECD Ministers.Since then, the OECD has assessed regulatory policies in 22 member countries as part of itsRegulatory Reform programme. The Programme aims at assisting governments to improve regulatoryquality — that is, to reform regulations to foster competition, innovation, economic growth and importantsocial objectives. It assesses country’s progresses relative to the principles endorsed by member countriesin the 1997 OECD Report on Regulatory Reform.The country reviews follow a multi-disciplinary approach and focus on the government's capacityto manage regulatory reform, on competition policy and enforcement, on market openness, specific sectorssuch as telecommunications, and on the domestic macro-economic context.This report was prepared by Stephane Jacobzone, with the collaboration of Fabienne Cerri in thePublic Governance and Territorial Development Directorate. Lisa Heldwein also provided very valuableresearch assistance at the start of this project. It benefited from extensive comments provided by colleaguesthroughout the OECD Secretariat, as well as close consultations with a wide range of government officials,parliamentarians, business and trade union representatives, consumer groups, and academic experts inSwitzerland. The report was peer reviewed by the 30 member countries of the OECD. It is published underthe authority of the OECD Secretary-General. OECD (2006). All rights reserved.3

TABLE OF CONTENTSSUMMARY. 7INTRODUCTION . 8Recent trends and the drivers of change. 8An evolving European context. 8The challenge of establishing independent regulatory authorities . 9The institutional framework of regulation in Switzerland . 10CURRENT TRENDS AND CHALLENGES IN THE SECTORS OF AIR AND RAIL TRANSPORTAND POSTAL AND TELECOMMUNICATIONS SERVICES . 13The air transport sector. 14The railway sector . 21The postal sector. 33The telecommunications sector. 43Implications for public policy . 53INDEPENDENCE OF REGULATORY AUTHORITIES AND ACCOUNTABILITY CAPACITY. 54Institutional context. 54Dialogue with parliamentary bodies and civil society . 61Human and financial resources guaranteeing the independence and quality of the regulatory body. 62Implications for public action . 64HORIZONTAL INSTITUTIONAL ARCHITECTURE . 65Issues relating to transversal architecture by function or by sector. 66Co-ordination with other agencies . 68Implications for public action . 73POWERS FOR HIGH-QUALITY REGULATION. 74Powers of the regulatory authorities concerned . 74The powers of Swiss regulators from an overall perspective. 82Maximising the quality of regulatory power. 83Implications for public action . 85ASSESSING THE PERFORMANCE OF REGULATORY AUTHORITIES . 85Assessing performance on the basis of achievements – a complicated task . 86The various pillars of evaluation. 86Current auditing and assessment practices in Switzerland. 87Implications for public action . 90CONCLUSIONS AND RECOMMENDATIONS . 90The general context of public service and its future. 91General evaluation. 92Policy recommendations . 94 OECD (2006). All rights reserved.4

BIBLIOGRAPHY. 104ANNEX 1. General description of regulatory authorities . 111ANNEX 2. Other authorities with a regulatory function . 112ANNEX 3. Regulatory authorities: assignment and tasks. 113ANNEX 4. Powers of regulatory authorities. 114ANNEX 5. Independence and financing of regulatory authorities . 115ANNEX 6: General presentation of aviation authorities, supervision, overall regulatory aspects . 116ANNEX 7: Organisation of air transport safety. 117ANNEX 8: Overview of air accident investigation. 118ANNEX 9. Legal status and general description of slot co-ordinators . 119ANNEX 10. Status and scope of services of air traffic providers. 120ANNEX 11. Legal status and general description of national postal regulatory authorities. 121ANNEX 12. Independence of national postal regulatory authorities. 122ANNEX 13. Regulatory power of national postal authorities. 123ANNEX 14. Scope of the monopoly and market openness in the postal sector . 124ANNEX 15. Comparative data on postal operators . 125ANNEX 16. Appointment of the Head of the Telecommunication regulators . 126ANNEX 17. Regulations of Interconnection in the telecommunication sector . 128ANNEX 18. Regulating Pricing in the telecommunication sector. 130ANNEX 19. Telecommunication Regulations of Universal Service . 132ANNEX 20. Internet access by DSL in OECD countries . 134ANNEXE 21 . Basic regulatory framework for railway services and provisions for Third Party Access135ANNEXE 22. Licensing and Safety Regulation for railway services. 136ANNEX 23. Regulatory framework and authorities for railway path allocation. 137ANNEX 24. Comparison of European railways . 138Figure 1. COST STRUCTURES OF RAILWAY SERVICES PROVIDERS. 139Figure 2. PRICES FOR POSTAL SERVICES. . 140Figure 3. TELECOMMUNICATIONS REVENUE RATIOS. 142Figure 4. OECD COMPOSITE BASKET OF TELECOMMUNICATIONS CHARGES . 143TablesTable 1.Table 2.Overview of competition in several European postal markets in 2002 . 40Appeals system before and after the current reform of the legal system . 60 OECD (2006). All rights reserved.5

BoxesBox 1. Independent regulatory authorities in the OECD’s work. 11Box 2. Decentralised federal administration in Switzerland . 12Box 3. The European market was opened to competition in three successive stages . 15Box 4. Towards regulatory co-ordination of air security and harmonised management of the EuropeanSky. 21Box 5. Overview of legislative trends in the European Union in the field of rail transport. 25Box 6. European policy in the postal sector. 36Box 7. Overview of reserved and non-reserved postal services in Switzerland and the European Union 41Box 8. The key stages of the opening up of European telecommunications markets . 44Box 9. Breakdown of competencies between OFCOM and COMCOM . 80Box 10. Powers of PostReg and breakdown of competencies and tasks in the postal sector. 81Box 11. Recent evaluations by the Swiss Federal Audit Office. 88Box 12. The "Service Public" in the field of infrastructures in Switzerland, Competition, universalservice and services of general interest . 92 OECD (2006). All rights reserved.6