Telecoms: Unions and operators team up against EU regulation

Three weeks prior to the planned review of EU telecom rules, phone network operators and the UNI-Europa trade union have jointly criticised the Commission’s regulatory approach, with phone companies increasingly divided over the issue.

In a joint statement on 24 October, ETNO (the incumbent telecom operators’ industry federation) and UNI-Europa wrote: “If the current approach in the review debate is to favour short-term competition between service providers, it will discourage risky investment in large-scale private investment in advanced broadband networks and services crucial to Europe.” They go on to say that “the level of investment in the sector has a particularly marked effect on employees, now and in the future”. 

ETNO brings together all of Europe’s formerly state-owned phone operators and is the only employers’ association in the sectoral social dialogue for telecommunications. Its member companies of are at the same time the biggest investors in telecommunications infrastructure and the biggest employers in the sector. ETNO claims that imposing a high regulatory burden on its members discourages important investment, for example in Next-Generation Networks (NGNs), which have a high potential for job creation, even beyond the telecoms sector itself. 

But rival federation ECTA, which gathers new market entrants, claims that ETNO members use unfair pricing and other practices to defend their dominant market power. ECTA has therefore asked for regulation obliging incumbents to lease lines at favourable prices to be upheld. 

As incumbents like BT, Telefónica and Telekom Austria have acquired phone operations in other EU countries and thereby effectively became new market entrants, borders between the two camps are becoming increasingly blurred. 

One sign of the traditional camps breaking up is that ETNO itself has found it hard to get all its members to agree to oppose the disputed functional separation remedy, by which regulators would gain powers to split up telecoms operators. BT, which had to split from its network operations, and Telecom Italia, which is under pressure to split from the national regulator, opted out of a number of common positions. 

Consequently, the joint declaration between ETNO and UNI-Europa does not touch on the more controversial issues in the planned telecoms regulation review, such as functional separation, telecoms operators’ universal service obligation or the Commission’s plans to take a number of telecoms markets from ex-ante regulation to general competition law.

They could agree, however, on criticism of ECTA’s regulatory scorecard, which the Commission uses when assessing the impact of regulation. “The regulatory indices used by the Commission to demonstrate a positive relation between investment and regulation are not suited to measuring the effects of the New Regulatory Framework,” ETNO and UNI-Europa state. 

They highlight two studies that they have commissioned. A study commisisoned by UNI-Europa indicates a lack of “a positive correlation between the framework and investment in the sector”, and another prepared for ETNO finds that “intensive access regulation of existing networks significantly reduces investments in alternative, infrastructure-based competition”.

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