Industry raises concerns about telecoms plans

Push to create a single market for telecoms

A European Commission proposal to harmonise telecoms services across the European Union is likely to meet fierce resistance from the industry, which says that plans to protect consumers are restrictive.

A ‘telecoms single market’ will be the legislative centrepiece of Commission President José Manuel Barroso’s State of the Union speech to the European Parliament in Strasbourg next week (see page 3).

At a meeting of the European Council in March, EU leaders called on the Commission to come up with a telecoms proposal by October. The current telecoms framework directive dates from 2009 and is insufficient to remove barriers that would allow the EU’s 28 national telecoms markets to become a single market, the Commission argues.

The industry is constrained by an inability to operate across borders, and is locked into a spiral of declining revenues and lack of investment in infrastructure.

Telecoms operators in Europe invested €3.5 billion less in 2012 than they did in 2008 – even though pressure on their networks grew four-fold. Incumbent telecoms companies have a net investment rate of effectively zero. European digital growth is the slowest among advanced economies, and the Commission blames the fragmented market.

Its proposal would not create a European telecoms regulator, an idea championed by the Commission’s competition department. Instead, it would create a single EU authorisation for telecoms operators that all national regulators would have to accept. It would also give the Commission the power to overrule national regulators in areas such as spectrum allocation for broadband. Any new national market regulation would be subject to a ‘three-criteria’ test ensuring that it promotes investment and gives access to all market players.

Telecoms companies have broadly welcomed moves to facilitate cross-border operations. However, the parts of the proposal dealing with consumer protection are much less popular. Under the plan, consumer protection would be fully harmonised as a regulation, rather than the minimum requirements contained in the current directive. The proposal would stop internet providers from blocking or slowing down broadband speeds at specific times or for specific applications. It would also ban misleading advertising for internet speeds.

Most controversially, the package would force operators to provide EU-wide roaming bundles from July 2014. This is a step back from previous drafts, which would have all but abolished roaming charges from that date. Instead, the proposal will only forbid charges for incoming calls. It will force companies to offer ‘roam like at home’ bundle options to all customers.

Row over roaming

The European Telecommunications Network Operators’ Association (ETNO), which represents most of the EU’s leading telecoms companies, has fiercely resisted the efforts of Neelie Kroes, the European commissioner for the digital agenda, to end roaming charges. While the operators concede that infrastructure investment is declining, they say that new regulations that would reduce revenue are not the answer.

ETNO published a study in July indicating that the shortfall in investment compared to that needed to meet the Commission’s digital-agenda targets would be between €110bn and €170bn. The study called on the Commission to allow “substantial deregulation” of fixed-line wholesale access and changes to competition rules to allow for more mergers of telecoms firms.