Proposals for Reform

The European Commission’s proposals for the review of the telecoms framework are the result of two years of consultations with stakeholders, with national regulators and with users of telecoms services. Once adopted at EU level, the revised rules have to be incorporated into national law before taking effect. The Commission expects the new framework to be in place from 2010 onwards.

The Commission’s proposals for the review of the telecoms regulatory framework, adopted on 13 November 2007, focus on four key areas.

More competition

Competition in the telecoms sector has brought more choice to the markets. However the glass is only half full, we need more competition for Europe’s telecoms sector to achieve more investment, greater innovation and lower prices.

The Commission will maintain ex-ante regulation in those markets where competition is not yet effective, and keep a close eye on those markets which are crucial for Europe’s competitiveness (such as broadband).

The reform will also give national regulators the possibility to introduce functional separation when necessary. That means that an operator would have to split up its services division from the division managing the infrastructure, although both would stay under the same ownership. This will ensure that competing operators have access to infrastructure without discrimination.

From country to country there are major differences in how the current rules are implemented. That is why the proposed new rules give the Commission the power to oversee remedies proposed by national regulators, to help ensure a more consistent, efficient and speedy application of these across the EU.

Better regulation

At the heart of all Commission action, the ‘better regulation’ initiative means that regulatory action should only be taken when justified, and should be proportionate. In the telecoms sector, the Commission proposes to remove ex-ante regulation from 11 of the 18 markets within the telecoms sector, including both retail (from operators to consumers) and wholesale (between telecoms operators) markets. In particular, retail regulation is not necessary where there is already effective wholesale regulation, allowing new entrants to find acceptable terms for access. Regulation of certain wholesale markets is no longer necessary because sufficient competition has now been established.

In future, regulators will focus their resources on the market sectors in which the dominance of incumbents has been least challenged. In those markets, regulators need to continue their efforts to create conditions in which new entrants can more effectively stimulate competition, and therefore improve services and lower costs for consumers.

The Commission’s proposals also seek to enable the telecoms sector to make better use of radio spectrum. Management of radio spectrum will be made more flexible and market oriented, to make sure those industries dependent on spectrum can reap the maximum economic benefits of this vital and scarce resource. Furthermore, the ‘digital dividend’ – the valuable part of the spectrum released through the introduction of digital television broadcasting and resultant analogue switch-off – will be available for new uses. We need to take full advantage of this opportunity, and the Commission is proposing that these frequencies are used more flexibly, so that service providers themselves decide on the value to be placed on the different services that could use it.

Strengthening the internal market

The telecoms sector in Europe today is still largely fragmented on national lines. Few operators are active throughout the internal market, and even fewer offer pan-European services. Regulatory inconsistency – through different interpretations and applications of EU rules – is a major reason why the internal market in telecoms has not developed more strongly. Operators seek certainty in the regulatory approach throughout the Union, and so the lack of consistency has been a major barrier to their investment outside their home Member States. National markets are all distinct, and the Commission underlines the necessity of independent national regulators – who each know their own market – taking responsibility in each Member State, but coordination and consistency across the Union needs to be improved.

The European Regulators Group (ERG) created under the current regulatory framework has encouraged national regulators to work increasingly together, and with the Commission, to seek EU-level solutions to common problems. Indeed, the ERG has been central to initiatives such as reducing the costs of roaming to mobile phone users. But achieving consensus in a body with representatives of 27 Member States is no easy task, and the ERG has no power to implement its agreements across the Union. The Commission is therefore proposing to create a European Telecom Market Authority, building on the coordination efforts already established amongst regulators. The national regulators will be at the heart of the new body’s work, but it will have the power to act across the EU.

Protecting consumers better

The fast developing telecoms market has brought major benefits to consumers, and the EU has already legislated to ensure all citizens have a basic set of rights, including access to a telephone/internet connection and protection of personal data, as well as specific rights for people with disabilities to be able to gain access to telecoms services. The Commission proposes to build on these existing rights, to ensure that consumers benefit from the development of competition in the telecoms market. In particular, operators will be obliged to publish information on prices so that consumers can more easily compare the different offers on the market.

Operators will also be obliged to facilitate transfer of customers from one service provider to another, so that they can effectively take advantage of better prices and conditions. Member States must further improve access to telecoms services for people with a disability, including access to the single European emergency number, 112.

Security and privacy have become critical in the development of the Information Society, and therefore of the telecoms services which provide its backbone. Consumers are becoming more and more concerned about possible misuse of their data, including information which could be used to track their movements. In particular, consumers worry about criminal misuse of their financial information, and so the Commission proposes that telecoms operators must inform customers in the event that their personal data becomes compromised. Spam, spyware and related malicious uses of the telecoms system threaten to stunt the growth of the Information Society, and the proposals would step up EU efforts to combat them, in particular through the creation of a Chief Network Security Officer within the European Telecom Market Authority. This person would work with telecoms regulators to identify and lead the response to all threats to European telecoms networks.

Source: European Commission