EP Begins Telecoms Rules Reform Debate on Important Issues
September 3, 2008 // Published as a news service by IHS
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The European Parliament (EP) began debate on "telecoms reform" legislation for the European Union (EU) in a plenary session on Sept. 2.
The debate followed momentum started last fall, when the European Commission (EC) proposed to the EP and the Council of Telecoms Ministers to reform the EU telecom rules, which have been in place since 2003.
The aim of the EC's proposal was to reinforce competition and investment and to create a Single Telecoms Market in the EU, with innovative cross-border services and wireless high-speed broadband for all.
Following an intense debate and many hearings, the EP's Industry, Research and Energy Committee (ITRE) and the Internal Market and Consumer Protection Committee (IMCO) voted on amendments on July 7.
The debate in the EP's 785-member plenary is expected to pave the way for a vote on the EC's entire EU telecoms reform proposals in first reading on Sept. 23.
Depending on the outcome of the vote and the upcoming discussions in the Council of Telecoms Ministers on Nov. 27, a political agreement on the final legislative texts could be achieved between the three institutions by the end of the year.
The new regulatory framework would then become the law in all 27 EU member states by 2010.
An overview of the six most important reform proposals still under discussion between the EP and the council is presented below.
1. Independence of national telecoms regulators
What has the EC proposed?
For the EC, independent national regulators are the indispensable backbone of an efficient, fair and competition-oriented system for telecoms regulation in Europe. To improve the application of telecoms rules, the EC wants to strengthen the independence of national telecoms regulators (such as CMT in Spain, Bundesnetzagentur in Germany, AGCOM in Italy, Ofcom in the U.K. and ARCEP in France).
In the EC's view, national telecoms regulators should not take instructions from any other body in relation to the day-to-day performance of their tasks, and should enjoy financial and operational independence, both from governments and from operators.
Moreover, to strengthen the independence of the regulator, dismissal of the head of the national regulator should only be possible if certain criteria, such as serious misconduct, are met.
What is the position in the EP and the council?
The proposal for stronger independence of national telecoms is supported by the EP while the council is more hesitant. The council, especially, indicated that it could only accept a stronger independence of national regulators in the context of market-related regulation, but not in politically sensitive areas, such as spectrum management or security.
2. Functional separation
What has the EC proposed?
The EC wants to give national telecoms regulators the additional tool of imposing functional separation when it can be demonstrated that other remedies have failed or are likely to fail to achieve effective competition. This should increase the effectiveness of national regulators, allowing them to tackle remaining competition bottlenecks more effectively.
The implementation of functional separation aims to give all market players, including the incumbent operator's service division and new market entrants, the same network access under equivalent conditions.
Functional separation, unlike the ownership unbundling proposed in the debate on energy markets (IP/07/1361), does not require divestiture of assets. Such separation has already been implemented with success in the U.K., and several other member states have taken steps in that direction, most recently Sweden.
Common EU rules on functional separation will ensure better regulatory convergence in a single market and avoid distortions of competition that could result from a divergent understanding and application of this regulatory tool.
What is the position in the EP and the council?
The EC's proposal has received a lot of support in the EP's lead committees, and is supported by a majority of ministers in the council. Furthermore, national telecoms regulators have unanimously welcomed this proposal.
However, in view of the strong opposition of several incumbent operators to the introduction of the tool of functional separation, the final outcome of this debate is still uncertain.
3. Spectrum: The digital dividend and "broadband for all"
What has the EC proposed?
The EC's proposal for radio spectrum reform aims to achieve a more efficient and consistent management of spectrum to promote innovation and achieve high-speed, "broadband for all" Internet access in Europe.
The EC also proposes a coordination of approaches in the EU to optimize the overall benefits of the digital dividend (the radio spectrum freed as a result of the switchover from analogue to digital TV), particularly by encouraging new wireless services and also new TV channels in high-definition quality.
A more efficient use of this scarce public resource of a high economic and societal value, while ensuring protection against harmful interference, would be a major boost to competitiveness and innovation in Europe.
The EC expects additional economic benefits from better spectrum management in the EU to be in the region of €10 billion per year.
What is the position in the EP and the council?
The EP and the council support several of the main EC proposals, such as a more flexible use and harmonized spectrum tradability.
The EP's lead committee also has shown a legitimate interest in a stronger European coordination, inter alia, by advocating the creation of a new expert committee to advise the EU institutions on spectrum-related matters.
However, the council continues to be rather reluctant to accept any coordination of spectrum management across borders or a stronger EP voice.
In this context, the EP will debate a specific motion for a resolution on the digital dividend. The decisive issue here is whether the EP will support the EC's proposal for a common roadmap on the digital dividend to coordinate member states' approaches.
A positive vote would allow the EC to launch the required preparatory work - including the launch of a socio-economic study to quantify the benefits of various options for coordination at EU level - by the end of this year.
4. Investment into new networks
What has the EC proposed?
The EC believes that legal certainty and effective, fair regulation of network bottlenecks are the best recipe for competition and investment in the telecoms markets.
In addition, the EC's proposal for a better management of radio spectrum aims at freeing this very valuable source for new wireless services, thereby triggering more competition and attracting significant investment into these services.
Furthermore, measures have been proposed by the EC to improve the rules for facility sharing, by introducing in the EU's regulatory framework provisions that allow national regulators to impose entries to buildings, ducts, manholes and street cabinets.
The EC is also working on providing further guidance to national regulators (by means of a recommendation under the existing EU telecoms rules) with regard to the conditions under which access to so-called "next-generation networks" should be granted.
The need for a fair return on investment is already written into current telecoms rules, but a more coordinated approach of national regulators on this important matter could enhance legal certainty and the necessary level playing field for operators.
What is the position in the EP and the council?
There is a broad consensus in the EP and the council about the need to maintain and strengthen competition - in particular, to continue access regulation.
Both the EP and council also support the promotion of investment into new networks as long as competition is effective. The EP's lead committee is favoring, in particular, clear regulatory guidance on the return on investment for new networks to which access needs to be given to ensure effective competition.
In the area of spectrum, the EP and the council support several of the main EC proposals, such as a more flexible use and harmonized spectrum tradability, but there is a certain reluctance, especially in the council, to accept any coordination of spectrum management across borders.
5. Number portability for European consumers
What has the EC proposed?
Consumers should be able to change their fixed or mobile operator while keeping their phone number ("number portability") within one working day. For the EC, this is a key facilitator of consumer choice and effective competition.
At the moment, it takes eight days, on average, to switch a fixed or mobile operator in the EU while keeping one's number. Europe's best performers are France for the fixed market, and Ireland and Malta for the mobile market.
It still can take up to 30 days to switch fixed operators in Estonia and up to 20 days to switch mobile operators in Italy and Slovakia.
What is the position in the EP and the council?
The EP is generally favorable to the EC's proposal, even though amendments have been tabled to allow a maximum of three days for number portability. The council is so far hesitant to follow the EC's proposal, in view of the additional cost it could entail for operators.
On the issue of number portability, Viviane Reding, EU telecoms commissioner, said, "In Australia, it is possible to switch operator within two hours - we should really be able to get this done in one day in Europe."
6. European telecoms regulator
What has the EC proposed?
To deliver more coherent and consistent rules across the EU, the EC proposes to create a European telecoms authority, called the European Telecoms Market Authority.
The idea behind this new authority is to create a level playing field for both telecoms operators and consumers in the EU's emerging Single Telecoms Market.
This new body would not replace national regulators, but would allow them to play a stronger and more effective role at the European level, vis-à-vis both the EC and individual regulators. It would, therefore, build on the experience of national regulators, and thus be close to the market.
Tools proposed by the EC to make the new body more efficient than today's loose cooperation among national regulators in the European Regulators Group include the following:
- The move to majority voting.
- A small, but efficient permanent and independent staff enabling the body to swiftly and efficiently analyze and give opinions on proposals of national regulators for market analyses and remedies from 27 EU member states.
- A stronger accountability of national regulators to the EP.
- A permanent and independent director appointed, after a hearing by the competent EP's committee, for a term of five years.
In order not to create a new administration at the EU level, the EC proposed to merge the new European Telecoms Market Authority with the existing European Network and Information Security Agency (ENISA), which already has a staff of 50.
What is the position in the EP and the council?
The EP's lead committee is keen to strengthen cooperation between national telecoms regulators and make it more effective. For this purpose, the Industry Committee has proposed creating a Body of European Regulators in Telecoms, a European Community body that would replace the European Regulators Group and advise the EC, national telecoms regulators and the EP.
The body would take decisions by majority rule and have a small, permanent staff at its disposal. If the body were to vote against a national regulators' proposal, the EC would request the proposal's withdrawal.
However, in contrast to the EC's proposal, the new body would not be dealing with network security issues and would, therefore, not be merged with ENISA, the mandate for which the EP wants to prolong for three years.
The EP's lead committee also appears to favor having two-thirds of the new body's budget financed by the EU member states. Instead, the EC advocates financing it from the EU budget to bolster the independence of the body and to ensure equality among the 27 national regulators within the body.
In the council, a number of member states agree with the need to strengthen the Single Telecoms Market and cooperation among national regulators. However, many in the council have serious reservations about the creation of a new European Community body.
The council is also against combining telecoms regulation and network security responsibilities and would like to prolong ENISA's mandate for three years.
With regard to ENISA, Reding said, "I have to accept that Parliament and Council at this moment in time do not want to reform ENISA. However, I seriously believe that network security challenges will require soon a strong, coordinated European response. Recent cyber attacks in Estonia and now again in Georgia have shown that one country alone can be very vulnerable."
"I call, therefore, on the European Parliament and the Council to start, early in 2009, an intense debate on Europe's approach to network security and on how to deal with cyber attacks and also to include the future of ENISA into these reflections."
"Also the new tools made available by the Lisbon Treaty should be seriously taken into account in this debate. Europe cannot afford to lose time when it comes to the security of our networks. Network security is identical to the security of our public administrations, our economy and our citizens."
Background
The EC tabled its proposals for the reform of EU telecoms rules on Nov. 13, 2007 (see IP/07/1677 and MEMO/07/458).
Since then, the Council of Telecoms Ministers has debated the EC proposals on two occasions at the ministerial level (see MEMO/07/522 and MEMO/08/384).
After its committees voted this July, it is now time for the EP, in full plenary session, to give its view.
Next steps
Sept. 23, 2008 - Vote on the EU telecoms reform proposals in EP plenary session
Nov. 27, 2008 - Council of Telecoms Ministers could pave the way for a political agreement under the French presidency
More information
Source: European Commission.