There are no surprises in the EC’s telecoms framework reform

James Robinson, Analyst, Policy and Regulation

After some leaked documentation and countless news stories, the EC has adopted its proposals for a reform of the EU telecoms regulations. The new rules, therefore, offer no surprises. However, they should still be viewed as the most ambitious plans that the sector has seen since liberalization occurred.

The centerpiece of the EC’s plans is reducing, and subsequently eliminating, mobile roaming charges, but measures such as consistency in wholesale access will also play a role in (hopefully) forging a “connected continent.”

Meanwhile, proposals to establish a single EU telecoms regulator have been scrapped. While such a body could be a logical step, national differences in both spectrum and infrastructure pose problems. Unsurprisingly, there are still pro-consumer elements in the proposals, and these could prove vote winners in the upcoming elections.

The proposals will now be passed to the European Parliament and Council of Ministers to vote on, and could be subject to change after the inevitable lobbying from stakeholders.

The recommendation on costing methodologies deserves more attention

A key element of the telecoms reform package is the recommendation on costing methodologies and non-discrimination, which has been in the shadow of the roaming measures. This is an area that is less likely to generate headlines, but it will be of significant interest to operators and investors alike.

The recommendation proposes greater synchronization of the pricing of copper and equivalent wholesale products. This would benefit access seekers and those operators looking to engage in cross-border operations.

Operators and investors claim that they are ready to finance the rollout of new infrastructure, but that inconsistency in regulation and pricing across the region and confusion in understanding the current regulations discourage them from going ahead.

The new measures should improve stability, reduce divergence, and incentivize investment. Freedom on next-generation access pricing will be a “carrot” to owners of next-generation networks, but is unlikely to sit well with alternative providers, which will no doubt protest against these plans.

Spectrum harmonization may not be a cornerstone of the single market

Harmonizing spectrum policy could provide mobile operators with more predictable assignment conditions and timeframes. However, coordinating spectrum licensing and awards at the EU level has always been problematic, and will be a challenge for the EC.

Auctions of 4G spectrum have occurred at different times, and some member states are yet to conduct such auctions. Harmonization would require those countries that are currently leading the way to align themselves with those at the back, which could be counterproductive and slow growth, so it is unlikely to be a pillar of establishing a single telecoms market.

Even agreeing a date by which all countries must have auctioned a certain spectrum band presents a number of challenges. For example, operators in countries in which spectrum has just been auctioned will not have cash to spend, and will be focusing on network investment.

A single EU telecoms regulator was never really on the cards

In August 2013 a leaked letter from DG Competition stated that a single regulatory body for telecoms is needed in order to effectively remove national divergences.

While there is a logical argument for one authority to oversee the sector, such a body would face significant issues caused by the inherent differences between the national markets and the fact that spectrum auctions are devised and conducted on a country-by-country basis. Despite DG Competition’s apparent views, proposals for one supranational body have been shelved, at least for now.

In fact, if we look back to the last telecoms framework review a similar institution was initially suggested as a way to deliver on the ambition for “a single market for telecoms services.” Back then, the proposed body went through various name changes and became stripped of most of its initial responsibilities.

It ended up as the Body of European Regulators of Electronic Communications (BEREC), which is little more than a strengthened version of the old European Regulators Group (ERG) that it replaced.

Pro-consumer measures may prove vote winners in upcoming elections

It is not surprising to see the more pro-consumer elements of the reforms still in place. Proposals to improve transparency and facilitate switching between providers are laudable, although they are likely to have been designed with the upcoming elections in mind. The same goes for the net-neutrality provisions, which aim to guarantee a free and open Internet for end users. Self-regulatory measures are already present across the EU (and further afield), but the EC’s new measures were always going to favor the consumer rather than the operator.

The proposals still need to be voted on, and will not be passed in their entirety. We are likely to see them evolve as the lobbying process begins.

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