EU Telecom Reform Proposals Said to Have Parliamentary Support

Trautmann’s report addresses changes to Europe’s e- communications regulatory framework, access, interconnection and authorization rules. Her industry committee colleague, Pilar del Castillo of the European People’s Party/European Democrats (EPP/ED, Spain), drafted the response to the EC proposal for a European Electronic Communications Market Authority (EECMA). Internal market committee member Malcolm Harbour (EPP/ED, U.K.) responded to proposed amendments to universal service and consumer protection regulations.

Spectrum reform figures prominently in Trautmann’s report. The EC proposed making service and technology neutrality the rule for allocating spectrum and for allowing spectrum trading in certain bands, she wrote. At the same time, it wants to harmonize some uses to obtain economies of scale and interoperability in services such as mobile roaming, she said.

But development of an “absolute ‘harmonization agenda (full command and control approach) is not compatible with an ‘idealistic’ neutrality regime,” Trautmann wrote. Mixed spectrum management based on “balanced combinations within a vast array of options” such as harmonization vs. service neutrality, or usage rights, is preferable, she said. Her approach calls for a “gradual rather than a revolutionary spectrum reform.”

Allowing broadcasters to enhance services while getting some return on their investment in switchover, and letting telecom operators offer new services such as mobile TV, is desirable and possible, Trautmann said. But the main principle for allocating spectrum freed by switchover should be social, economic and cultural, not simply filling public coffers, she said.

To make Continental telecom regulation more consistent, Trautmann proposed a co-regulatory system involving the EC and national authorities. The EC should focus on being an arbitrator and facilitator, not a judge or sanction-taker, she said. Rather than the EC having veto power over competition conditions set by national regulators, an arbitration process should be created in which the EC, individual regulators, interested parties and the newly proposed Body of European Regulators in Telecommunications (BERT) thrash out conflicts, she said.

The goal of telecom regulation is robust competition, so the EC should have to scrutinize regulated markets’ competitiveness, and regulators should be able to deregulate regional markets when appropriate, Trautmann wrote. On the issue of regulation of next-generation networks, she backed giving regulators “an effective toolbox” for pursuing competition, such as being able to mandate sharing of in- building wiring or access to passive infrastructure such as ducts and poles, or requiring shared investment or risk- bearing.

The EC “regrets the lack of ambition as regards the reform of spectrum management,” a spokesman for Information Society and Media Commissioner Viviane Reding said. He wouldn’t elaborate, but said more efficient spectrum management is needed to give Europe’s wireless industry better access to frequencies for new services and to ensure all citizens are covered by broadband.

Alternate providers took heart from Trautmann’s call for operators to share infrastructure to justify the expense of rolling out fiber access lines, and giving consumers services at reasonable prices. Trautmann also accepted that regulators should be able to order functional separation (splitting a company’s network from its services arm) in intractable monopoly cases, said Ilsa Godlovitch, European Competitive Telecommunications Association (ECTA) regulatory director.

But the report seems to suggest that duplicating lines rather than sharing them be the preferred approach, said Godlovitch. A report last week by the Organization for Economic Cooperation and Development on fiber technologies and investment made clear that line duplication would be “unlikely… to guarantee a competitive market,” she said. Communities, especially those outside metropolitan areas, should require that empty ducts and pipes be installed in any street-digging projects for future fiber lines, telecom attorney Axel Spies said on behalf of the German Competitive Carriers Association VATM.

Placing next-generation networks and the accompanying risky investment at the top of the review agenda represents a “significant shift” from the EC proposals even if more could be done to encourage such investment, said Michael Bartholomew, European Telecommunications Network Operators’ Association director. But, he said, functional separation is not appropriate for today’s market and could quash investment.

New Telecom Agency Proposed

The EC proposal for EECMA is “full of good will” but has fundamental problems, del Castillo said at the briefing. It easily could spawn a large new bureaucracy, hampering regulatory improvements, a key EC priority, she said. It’s also “too much of a threat” to national governments’ and regulators’ jurisdiction, and sends contradictory signals to the telecom sector about the eventual move from preemptive regulation to general competition law, she said.

In its place, del Castillo proposed BERT, which aims to create a clearer definition of regulators’ jurisdiction, expand openness and accountability, and give the European Parliament more of a say in regulation, she said. BERT would consist of national regulators who decide issues by a two- thirds majority vote, financed one-third by EU funds and the rest by national governments, she said. Governments would have to budget contributions to BERT, she said.

BERT would be an expert adviser to the EC, independent from it, governments and industry, del Castillo wrote. It would advise national regulators, and have the power to issue opinions on its own, she said. The new body would report annually on its activities, its accounts vetted by parliament’s budgetary control committee, she said.

BERT wouldn’t incorporate the European Network and Information Security Agency. The proposed merger of ENISA with the EECMA “is very difficult to understand” and would only hurt ENISA’s functioning, del Castillo wrote.

The intended upgrade of the European Regulators Group to a more efficient Community body, whatever its name, is a “very welcome positive development,” though further work is needed to ensure its legal framework and financing comply with EU law, Reding’s spokesman told us.

The report proposes cutting back the extensive veto power the EC sought for itself but may have stripped down the EC’s role too far, said Godlovitch. ECTA is concerned that BERT’s veto of a proposed decision by a national authority could serve the interests of its members -- individual regulators -- rather than those of consumers, she said. The VATM supports an EC veto right, Spies said. “A new EU regulatory body for telecommunications matters is not necessary,” he said.

Universal Service Proposals ‘Unwieldy’

Harbour agreed with most of the EC recommendations on universal service and consumer protection but found its proposed mechanisms “unwieldy and not properly focused,” he said at the briefing. It’s important to improve disabled users’ access to e-communications services, and to require service providers to be more open about contract terms and consumers’ legal rights, he said.

The EC has responded to the net neutrality debate by saying national regulators should be able to impose quality of service obligations if they see providers abusing their position to restrict access, Harbour said. His report seeks to clarify the quality of service obligations. He said regulators should be able to require providers to give consumers information on their legal obligations with regard to copyright and security safeguards.

Asked if cross-party agreement is lacking anywhere, Trautmann said budget issues are likely to arise, as could debates over BERT and consumer protection. But the reports successfully bridge the committees’ and political groups’ work, she said. Accord on the main concepts is there, del Castillo said.

The panels start debate on the draft reports May 6, an industry committee spokeswoman said. Amendments will be discussed in the internal market committee May 28 and in the industry committee June 3, she said. Committee votes on proposed amendments occur June 16, with a plenary vote on the reports in July, she said.