A ministerial conference opens today (17 February) in Prague to try and narrow down differences between EU member states over the contentious piece of legislation.
The Czech EU Presidency has already presented a number of draft compromise texts that are considered close to the Commission approach, but divergences between member states remain wide.
Above all, the key issue of power-sharing between Brussels and national authorities over telecoms regulation has not yet been addressed, diplomatic sources said. The Commission, in particular, is clinging to its initial proposal to grant itself the power to veto national decisions when it believes they could hamper the smooth functioning of the EU's internal market.
But the majority of member states are reluctant to relinquish regulatory oversight over a very lucrative sector. According to the Commission, telecoms companies have contributed to a quarter of the EU's GDP growth in the last ten years.
With an exclusive veto right for the Commission almost certainly ruled out, two main options remain on the table: the EU executive could exercise its veto only if backed by a body of European regulators (which in practice means no veto power), or it could merely keep a non-binding "recommendation" power.
Given the strong political impact of Commission recommendations, the last option cannot, however, be considered completely toothless. In a recent example, the EU telecoms industry was shaken by a planned EU recommendation to slash mobile termination rates. Although not binding, it will certainly have an impact, albeit an indirect one (EurActiv 25/06/08).
Standstill on radio spectrum
Another unresolved dispute regards the allocation of radio spectrum, the invisible electromagnetic waves which feed mobile phones, satellites, televisions, radios and many other electronic devices. The planned transition to transmission via cable, envisaged by almost all member states by 2012, will free much of this limited resource. However, how to use it and how to regulate radio frequencies, whether at EU or national level, remain the subject of fierce disputes.
EU Information Society Commissioner Viviane Reding's spokesperson yesterday (16 February) appeared optimistic about reaching a deal on the package, saying that 70% of the work had already been already done.
"This is ridiculous," reacted an EU diplomat, insisting that at the moment 90% of the package must still be agreed upon. "The Czechs are getting closer to the Commission, but they still have to propose any compromise to the Council and, at the moment, positions are far apart," the diplomat told EurActiv.
Agreement emerging over fibre networks
The only tangible step that lies ahead in the negotiations regards the funding of fibre networks, which will underpin the transition to high-speed Internet. Some states, such as Germany and Spain, want to protect national champions by guaranteeing them so-called 'regulatory holidays'. This means that if Telefonica invests in new infrastructure, it will not be forced to open up its cables to competitor operators, as is the case today with traditional copper-based telephone networks. The risk of this approach, however, is the creation of new powerful monopolies.
A more moderate approach would be based on risk-sharing, where every operator that wants to use new infrastructure would have to invest in it. This position is supported by big providers from France, Italy and other member states, but is strongly opposed by smaller operators, which are reluctant to take on too much risk for their limited balance sheets.
One possible solution could be based on a "premium risk": operators who want to use new fibre lines would have to pay a premium to compensate for the risk taken by investors. The Commission backs this line, which is supported by new entrants. The Council now seems ready to accept this compromise.
