A first look at the EU telecoms review

The Telecoms Reform Package presented by the Commission to the European Parliament in Strasbourg on Tuesday will change the EU Telecoms Rules of 2002. It is expected to become law by the end of 2009.

The proposals are far reaching and court plenty of controversy, not least with plans to create a European Telecom Market Authority, or “super regulator”, from the existing European Network Information Security Agency (ENISA) and the European Regulators Group (ERG). ETMA would be designed to support the Commission and national telecoms regulators in ensuring that market rules and consumer regulation are applied consistently, independently and without protectionism in all 27 EU Member States.

Regulators themselves would also be given new powers in a bid to free them from pressures imposed by local governments. The watchdogs would be encouraged to impose functional separation on incumbent operators in dominant positions, splitting their network and retail units in a similar way to the break up of BT in the UK.

New consumer rights proposed in the package include:

* The right to switch operators within one day; the right to transparent and comparable price information; the possibility to call freephone numbers from abroad; and a single European emergency number – 112.

* More consumer choice through competition, by giving national telecoms regulators the power to impose functional separation for dominant telecom operators.

* More security in communication networks, with new instruments to fight against spam, viruses and other cyber attacks.

* A “New Deal” for radio spectrum, to spur investment into new infrastructures and to ensure “broadband access for everyone”. The switchover from analogue to digital TV will free a substantial amount of radio spectrum to close this digital divide.

* Better regulation in telecoms by deregulating those markets competition is strong. This will allow the Commission and national regulators to focus on the main bottlenecks, such as the broadband market.

* More independent watchdogs to guarantee fair regulation in the interest of consumers. Too often, telecoms regulators are still close to the dominant operator that continues to be partly owned by the national government in many countries. The EU Telecoms Reform plans to strengthen the independence of national telecoms watchdogs from operators and governments alike.

We’ve got plenty of analysis up here and here, but here’s some key comments:

Viviane Reding, European Commissioner for Information Society and Media:
“Dominant telecoms operators, often still protected by government authorities, remain in control of critical market segments, especially of the broadband market. 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.”

Jose Manuel Barroso, president of the European Commission:
“Telecoms is a field where our single market can bring about very concrete results for every citizen in terms of more choice and lower prices, whether for mobile phones or for broadband internet connections. At the same time, a single market with 500 million consumers opens new opportunities for telecoms operators – if Europe helps to ensure effective competition and consistent rules of the game.”

Roberto Viola, Chairman of the ERG:
“In the short term the ERG urges the Commission to amend the Decision that set up the ERG in order formally reflect the ERG’s current and potential role in promoting the single market. The ERG is ready to act on the agenda being proposed today by the Commission. There is no need to wait until 2010. The ERG must get on with this essential work right away.”

Matthew Howett, Ovum analyst:
“Will the reforms proposed realise the full potential of the internal market? Only time will tell. Will all of the proposals make it through unchanged? If we consider the style that we have become used to from the Commissioner with first-class negotiation skills, Reding will initially take the most ambitious stance, knowing that after compromising she will get the deal she really wants. This time will be no exception.”

James Allen, principal consultant, Analysys:
“This is a complex set of proposed changes to the Directives which is not straightforward to interpret. The big prize on offer is a better functioning market in each Member State, as well as effective pan-national markets. But it is too early to tell how the game will play out, and whether that prize will ever be unwrapped.”

Alex Brown, telecoms partner and Jenny Block, EU Competition and Regulatory partner, Simmons & Simmons:
“Creating an appropriate mechanism for licensing of pan-European services is long overdue, but the devil will be in the detail and successful implementation may be rather a long time coming. In principle, this should address market fragmentation, lack of consistency and relieve an administrative burden on cross-border service providers.”