Following the European Commission’s (EC) proposal to create a more unified telecoms market released on Wednesday, operators, experts and lobbyists have been weighing in on the reforms.
Neelie Kroes, the European Commissioner for the Digital Agenda,…
Following the European Commission’s (EC) proposal to create a more unified telecoms market released on Wednesday, operators, experts and lobbyists have been weighing in on the reforms.
Neelie Kroes, the European Commissioner for the Digital Agenda, dropped a previous plan to create a sole European telecoms regulator that would have superseded national regulators across the union.
Instead, she offered a “one-stop shop” be created so that operators would only be required to get authorisation from a single national regulator to do business in all member states.
The Commission expects the medium-term effects of the proposed legislation “will be increased freedom and opportunities for market participants, and a trend towards greater consolidation of the sector”.
Kroes said she believed that the creation of a single market would also change the competition analysis of telecoms mergers.
“Creating a single telecoms market would allow operators to expand more easily to other European markets and change way in which consolidation is looked at under applicable EU competition control rules,” she suggested.
The proposal also advocates harmonising spectrum auctions across Europe by agreeing regulatory principles for spectrum authorisation, common criteria for conditions of use, and best practices for timing and duration of frequency assignments. Another key proposal is the plan to fade out roaming charges by 2016 across Europe.
Lack of ambition?
“The overall summary is that the proposed regulation may be good politics, but it is not good economics,” Analysys Mason partner James Allen said.
In Allen’s view the majority of the proposals would be materially negative for operators and would not encourage investment in mobile and fixed networks.
DLA Piper partner Mike Conradi said: “The European Commission’s claim that this week’s proposed new telecoms regulation constitutes ‘the most ambitious plan in 26 years of telecoms market reform’ is preposterous.”
He felt that the reforms were actually a series of minor changes and was notable for what it did not include.
“It does not, for example, propose the creation of a pan-European telecoms regulator and neither does it allow for the creation of pan-European spectrum licences. Either of these proposals would genuinely have been a radical change (especially the latter) and it is regrettable that neither of them has been included.”
Anne Bouverot, director general of lobbying group the GSMA, noted: “A more thorough and comprehensive approach is required and the mobile industry stands ready to contribute to efforts to develop an ambitious shared agenda to underpin Europe’s digital economy.”
“Overall, the GSMA believes that the proposals have suffered as a result of the requirement to accelerate procedures to match the pace set by the legislative timetable.”
Harmonised spectrum policy praised
However Bouverot did allow the EC some praise describing the plan to harmonise spectrum as being a “positive element”.
ETNO, which lobbies for operators in Brussels, took a similar view: “While some of the proposals may deliver benefits for the sector in the long term, for example, the proposed stronger harmonisation in the field of spectrum releases and auctions, the proposals fall short in other respects.”
Deutsche Telekom also welcomed the proposal for a harmonised pan-European frequency policy, which it said was something which would help to create a framework for more investment and innovation.
However it said the Commission’s plan to do away with roaming charges was not helpful.
“At a time when we need to invest more, not less, in new network infrastructure, such market intervention is best avoided,” it said in a statement. The telco added that it was disappointed that there had not been a significant shift to decreased regulation, which it said the industry had expected.
Vodafone took a similar view and said the decision on roaming was harmful to the industry and did not tally with the regulator’s principle of regulatory predictability.
Concerns about competition preservation
Nomura equity analyst Frederic Boulan said that Neelie Kroes highlighted the need for consolidation but left the issue to competition law. He highlighted this was a somewhat less ambitious proposal than expected.
“We see some supportive statements, but the package also states that competition cannot be undermined by changing merger treatment in the absence of other single market conditions,” he said in a memo.
“So on one hand the Commission explains that telcos need more scale to become more competitive global players, but the first step is the creation of a single market, which requires lower barriers to entry.”
He said the proposals did not shed any light on how the EC may assess KPN’s planned sale of German unit E-Plus to Telefonica, which would reduce the number of players in the market from four to three.
Boulan added his name to the supporters of the spectrum harmonisation plans, and was also positive towards the EC’s proposed ability to veto a spectrum auction process which it thinks could lead to excessive prices.
Tom Ruhan, chairman of the ECTA – which represents challenger operators – said: “We can boost take-up, innovation and investments in the EU telecoms market … only by boosting competition in the sector. But it takes genuinely pro-competitive policies and hard work implementing them.”
“This is where the weakness of the single market package lies. It does not recognise that only reinforced competition will bring increased benefits to the economy and society.”
