Telecoms and Internet regulation review[fr][de] 

For decades, the telecommunications sector was in the hands of national monopolies. 

In 1987, the Commission published a Green Paper on the development of the common market for telecommunications services and equipment as a first step towards the introduction of more competition in the telecommunications market combined with a higher degree of harmonisation. 

In 1998, telecommunications were in principle liberalised in all countries of the EU. 

As a consequence of technological developments and increasing convergence of access and communication possibilities, EU legislators agreed upon a new regulatory package in 2002 (see related EurActiv story).

However, far from being definitive, this framework was born to be modified. The 8-9 June 2006 Telecommunications Council defined the "Future challenges for the electronic communications regulatory framework", and pushed for more competition, better allocation and use of the spectrum and swift implementation of the regulatory framework.

Following the Council's indications, the European Commission opened a consultation on 29 June 2006 which ended with the review proposed in November 2007.

• European Regulator  

The Commission plans to establish a European regulator, based in Brussels, to serve as its main advisor on all European regulatory affairs. It is not supposed to replace national regulators, but work in coordination with them and the European Commission. 

Nevertheless, the proposal has been strongly criticised. In particular, the plan to give the authority power to veto decisions taken by national regulatory authorities has irked the European Regulators Group, whose members are unwilling to give up the right to have the last say in telecoms decisions. 

In two letters sent to Commissioner Reding, the ERG states that regulators neither see the necessity of a new regulator nor an EU veto right on regulatory decisions. In its latest message to the Commission on 6 November 2007, ERG confirmed that it is "not in favour of the creation of either a new Commission veto on remedies or new layers of unnecessary centralism" (see Euractiv 18/12/07).

Member states also raised concerns over the new proposal. "Delegations agreed with the objectives of the Commission's proposals. However, several member states expressed doubts related in particular to the need to create a new European Agency and the extension of the Commission's competence in terms of regulatory conditions or frequency administration", said the conclusions of the Telecommunications Council of 29-30 November, the first to take place after the Commission proposal. 

The large member states are generally against the establishment of the new body. Britain takes its usual critical approach to new public authorities, considering them to be expensive and unnecessary. France and Spain tend to defend the line of their national incumbents, France Telecom and Telefonica respectively, who do not see the need for a new body able to interfere with their activities. 

Germany has developed fierce opposition to Commissioner Reding, particularly after the infringement procedure  ([FR ]; [DE ]) opened in February 2007 against Berlin for the so-called 'regulatory holidays' granted to Deutsche Telekom in the German broadband market. Italy takes a softer position, but insists upon the new authority being independent from Brussels. 

• Functional Separation  

The Commission proposes giving regulatory authorities the power to split telecommunication operators that own important parts of the network infrastructure into two companies, in charge of operational business and network management respectively. 

The proposal is modelled on the British example of splitting British Telecom into BT and Open Reach. It stops short of ownership unbundling as it is known in the energy sector. 

Neverthless, it has encountered fierce resistance from many incumbent telecoms operators (see EurActiv 17/10/07, EurActiv 25/10/07 and EurActiv 7/11/07). Reportedly, Viviane Reding also had to overcome substantial internal resistance from fellow commissioners to get the proposal through (see  EurActiv 26/10/07). 

Apart from Britain and a few northern European countries, member states tend to treat the new proposal with caution. Studies published recently have raised numerous concerns about the overall EU policy on access to incumbent's networks (see EurActiv 18/12/07).

• Spectrum management 

As digital broadcasting is capable of handling spectrum bands much more economically than traditional analogue broadcasting, large proportions of the spectrum hitherto used for television and radio can be re-attributed. 

Radio and television operators point out interference problems that might occur if the services that they are providing need to operate on frequencies neighbouring public senders, but Reding wants to attribute large chunks of the UHF band to new services, such as mobile internet. 

The Commission also proposes introducing a system for trading radio spectrum. Critics say that this may contradict EU rules on universal service obligations. 

• Markets subject to regulation  

The Commission has revised its recommendation on the relevant markets. Eleven of the former eighteen regulated markets are no longer subject to ex-ante regulation and are thus made subject to ex-post regulation. In practice, this means that general competition law will apply to those markets. 

The revised list is a Commission decision which becomes effective immediately. 

The European Competitive Telecoms Association  (ECTA), which brings together new, market-entrant telecoms operators, was positive about the review. 

ECTA Chairman Innocenzo Genna said: "We believe this to be a strong package overall and one that will result in tangible growth in investment and competition in high-speed broadband across Europe. The proposed framework provides the tools, including functional separation and the extension of access markets to include fibre, to ensure the smooth roll-out of Next Generation Networks, and the sharing of the substantial costs required to deliver them."

Genna added: "The Commission's decision regarding functional separation is a particularly critical one. Seventeen countries in Europe are lagging in broadband provision because they have little or no unbundling of the incumbent network. Europe could today have been a worldwide broadband leader if regulators had had the opportunity to use functional separation to support open markets. And equally Europe could tomorrow fall below its more competitive global rivals if it fails to address firmly bottlenecks preventing competition in high speed broadband services. The future of the European telecoms industry is now in the hands of the Council and the Parliament, and we hope they will take note."  

ETNO, the federation of incumbent telecoms operators, is positive about the significant reduction in the number of markets subject to ex-ante regulation: "The suppression of most retail markets (except retail access markets) and some wholesale markets, which are already highly competitive, is a positive step. ETNO strongly regrets, however, that at the same time the Commission recommendation proposes the extension of wholesale regulation to any new network, including new high-speed access networks, thereby increasing the scope of regulation. Moreover, continued regulation of the retail access market, which has not been removed from the list of markets, is a missed opportunity to strengthen innovation on consumer markets."

ETNO also praised Reding's move to allocate radio spectrum for new services: "The proposals to open up spectrum have the potential to boost the deployment of innovative services and stimulate wireless broadband access technologies, thereby leading to more infrastructure-based competition", said ETNO Director Michael Bartholomew. 

However, he added: "Mandatory functional separation risks, on the contrary, resulting in increased costs for access and less investment in new and alternative networks, thereby reducing long-term network competition and limiting consumer choice".

BEUC, the European consumers' association, saw pros as well as cons in the Commission proposal. BEUC regretted the reduction in the number of significant markets, stating its fear that "consumers will not be adequately protected in countries which do not have strong regulators". 

In addition, the consumer association criticised the fact that text messaging was not included in the new proposal and that the Commission did not propose a more rigid 'opt -in' regime to fight spam. 

BEUC Director Jim Murray said: "BEUC welcomes the proposals to bring forward consumer rights in the telecoms sector. However, the ultimate goal of this package should be to ensure, for all consumers, safe, affordable and fair access to all telecoms services. We call on the member states and the European Parliament to put in place additional measures to fight spam and to guarantee the wider scope of universal service provision."

German EPP-ED MEP Angelika Niebler, Chair of the European Parliament's Industry Committee, warned the Commission to keep any extension of its powers "proportional": "The Commission wants to exert a considerably stronger influence on the interplay with member states and national regulators. In order to institutionalise the co-operation of regulators, the Commission wants to set up a European Regulator for Telecommunications. However, many details still need clarification, especially as far as the Commission's plans to gradually extend its own competences are concerned." 

Niebler added: "Telecoms companies and consumers have made good experiences with the existing legal framework. The old legislative package of 2002 completely fulfilled the expectations. Only few adjustments are therefore needed."  

UK Conservative MEP Malcolm Harbour said: "European communications rules have been a big success for the internal market and have encouraged high levels of investment and a big range of new services for consumers and business. This package builds on that success and tackles a number of areas where we have demanded action. But the Commission has got carried away with big ideas of building a new power base, instead of leaving local regulators to get on with the job. We shall be demanding answers about the costs and benefits of this new authority. But we must press ahead with those changes that benefit customers and competition."  

German Green MEP Helga Trüpel, Vice-Chair of Parliament's Culture Committee, said: "The Commission's proposals are too market-oriented and risk undermining the current balance between public and private broadcasters. We are undergoing a fundamental transformation in how we communicate and what media we use. In adapting the EU's telecommunications rules, we must ensure that the current cultural and media diversity is not undermined. It is in this regard crucial to ensure that all citizens have access to affordable broadband. In addition, it is important to ensure that public broadcasters and non-subscriber broadcasters continue to thrive in the new environment." 

Roberto Viola, Chairman in 2007 of the European Regulators Group, said: "The Commission has made some steps towards our position, but we want the independence of the new authority to be clearly reflected in a European system, which is not yet the case".