EC president Jose Manuel Barroso said telecoms is a field where a single market could benefit every citizen in terms of more choice and lower prices, whether for mobile phones or for broadband internet connections. He said that at the same time a single market would open new opportunities for telecoms operators.
A more European regulatory approach is particularly justified in telecoms. After all airwaves know no borders. And the internet protocol has no nationality, he said.
EU telecoms commissioner Viviane Reding said Europe has already made substantial progress by opening telecoms markets to new players and by progressively ensuring more competition. However, dominant telecoms operators, often still protected by government authorities, remain in control of critical market segments, especially of the broadband market. This restricts consumers’ freedom of choice. Ten per cent of EU citizens still have no broadband access at all, she said. This is why new consumer rights, a new dose of competition, an effective system of independent telecoms regulators, new investment into competitive infrastructures and more space for new wireless services are needed to put Europe’s digital economy on track.
Deutsche Telekom, France Telecom, and Telefonica could be hard hit by the new rules, and even BT, which has ring-fenced its core network operations with its openreach operation, could be affected as it has yet to reveal if its all-IP 21CN will be open to rivals.
BT said it strongly welcomed the proposals. It said the commission has recognized that regulation is still needed in key areas to ensure that those three essentials, competition, investment and innovation, could really take hold.
But regulation must be removed as soon as real competition allows and the commission has also recognized this with a big reduction in the number of market segments subject to regulation, which we applaud, although in the case of the mobile wholesale market we believe this to be significantly premature, it said. There are some areas where the Commission’s proposals identify a problem but do not yet have the complete answer, how best to get a level regulatory playing field across the fast moving and changing European market, for example. We look forward to examining these in more detail and contributing to the debate about them as they pass through the European Parliamentary process during the coming year, it said.
The Telecoms Reform Package, which was presented to the European Parliament yesterday, is expected to become law by the end of 2009. Under the plans, consumers will have the right to switch telecoms operators within a day; the right to transparent and comparable price information; the possibility to call freephone numbers from abroad; and a more effective single European emergency number 112.
National telecoms regulators will be given the right to demand functional separation for dominant telecom operators. It also aims at more security in using communication networks, especially through new instruments to fight against spam, viruses, and other attacks.
The EC said that too often, telecoms regulators are still close to the dominant operator that continues to be partly owned by the national government in many countries. It wants to strengthen the independence of national telecoms watchdogs from operators and governments alike.
Those planning WiMAX networks will be heartened by plans for a New Deal for radio spectrum to spur investment into new infrastructures and to ensure broadband access for everyone. The EC said that in rural areas of the EU, only 72% of the population on average have broadband access. It wants to overcome this digital divide by better managing radio spectrum and by making spectrum available for wireless broadband services in regions where building a new fiber infrastructure is too costly. It said the switchover from analog to digital TV will free a substantial amount of radio spectrum that can be used for this purpose.
The Commission also proposed the creation of a European Telecom Market Authority that it said will help ensure that important communication services are regulated more consistently across the 27 EU Member States.
Reding said that with the reforms, the Commission identifies the heart of the problem: the fragmentation of Europe’s telecoms market is depriving European consumers of the benefits of cross-border competition.
Our view:
Telecoms is an international business and national regulators are an increasing anachronism. Incredibly, national governments still have substantial holding in companies such as Deutsche Telekom and France Telecom and therefore have a vested interest in promoting their interests, even though this may be costly to consumers. A market of 500 million consumers is a massive battleground and only the most efficient will succeed. A more open and competitive telecoms market is in the interests of consumers, carriers, and their suppliers.
