The European Commission unveiled its long-awaited review of the legal landscape for the telecommunications industry.
The Commission proposed a shake-up in the inefficient way radio spectrum is used in the 27 European Union countries, a new telecom authority for the whole EU and greater powers to punish former monopolies that don't compete fairly.
The latest proposed changes come after a decade during which Europe's telecom markets have switched from being dominated by national monopolies to becoming more competitive. This process of liberalisation that began in 1998 aimed to forge one giant market from all the national markets in the EU.
However, the former monopolies still exert too much control, especially in vital market sectors such as access to broadband Internet services, said telecom Commissioner Viviane Reding at a news conference in Strasbourg.
"Dominant telecoms operators, often still protected by government authorities, remain in control of critical market segments, especially of the broadband market," Reding said. She wants to grant the 27 national regulators the right to order incumbent operators to separate services operations from running of their infrastructures, so-called functional separation.
Separating the two is seen as a way to ensure rivals fair access to infrastructure, but in response to disapproval of this proposed legal tool from the incumbents, Reding stressed that the aim is not to break up the companies.
"It's not the same thing as ownership unbundling," she said. Functional separation could only be used by the national regulators with the approval of the newly created European Telecom Market Authority (ETMA) she is planning to set up. "It's not a panacea, but a flexible measure which has worked in the UK and is already being considered in Sweden and Italy".
She plans a "New Deal" for radio spectrum to spur investment into new infrastructures and to ensure broadband access for everyone, she said.
In rural areas of the EU, 72% of the population on average have broadband access. The Commission wants to overcome this "digital divide" by better managing radio spectrum and by making spectrum available for wireless broadband services in regions where building a new fibre infrastructure is too costly.
Existing rules for spectrum allocation date back to the 1950s and have to be changed, she said. "Too many countries are sitting on unused radio spectrum," she said, adding that the switch from analogue to digital TV will free up a lot more spectrum.
Broadcasters fear that all the available spectrum will be devoted to broadband Internet access, leaving too little for HDTV (high definition TV).
However, Reding said it will be for national regulators to decide who gets the free spectrum. "Radio waves are the property of the member states; this won't change," she said. Some spectrum will need to be reserved specifically for cross-border services within the E.U., but for the most part it will be up to national regulators to distribute spectrum.
The ETMA will play an important role in making sure the new rules take effect across the E.U., Reding said. The idea of a supra-national authority modeled on the US Federal Communications Commission has been attacked by some national regulators, as well as by some officials in the European Commission, for adding another layer of bureaucracy. But Reding insisted it is vital if the E.U. is ever to get a single, Union-wide telecom market.
"I'm not looking to create a one-size-fits-all answer; however, there are similar problems in the different countries and they should be dealt with in similar ways," she said.
The ETMA will combine the responsibilities of the European Regulators Group (ERG), a body comprising the heads of all 27 national regulators, with the role of ENISA, the European Network and Information Security Agency. "Unlike the ERG, this new group will be able to take decisions itself and act independently of national governments," she said.
While obstacles to an efficient single market for telecom require further regulatory measures, many markets that have been under the spotlight during the past decade are now functioning properly and no longer need such close regulatory scrutiny, the Commission said.
Monitoring of 10 sectors out of 17 initially under observation can now be stopped. The 10 are: national/local residential landline telephone services; international residential landline services; national/local business landline services; international business services from a landline; the minimum set of leased lines; transit services in the fixed telephone network; wholesale trunk segments of leased lines; access and call origination on mobile networks; international roaming on mobile networks; broadcasting transmission.
The Commission and national regulators will refocus efforts on the remaining markets where competition is not yet effective and where consumer benefits are still largely lacking. These sectors are access to the fixed telephone network; call origination on the fixed telephone network; call termination on individual fixed telephone networks; wholesale access to the local loop; wholesale broadband access; wholesale terminating segments of leased lines; and voice call termination on individual mobile networks.
The Commission proposal will now be debated in the European Parliament and among the telecoms ministers of the 27 national governments. Reding said she is confident her reforms will be supported by the two lawmaking institutions and will become law in 2009.