The European Commission this week, has adopted proposals to reform telecommunications across its 27 member states, with the creation of a single regulator that will control policy on almost double the number of telecommunications homes and business that the US FCC looks out for.
It will now try to drive these reforms through the European Parliament so that by 2010 a single European Telecom Market Authority will be in place as an independent body accountable directly to the European Parliament.
The aim is to turn 27 markets into one market, so that at least some European wide operators could emerge, and where service levels, regulations, pricing and expectations would be unified across what is already 500 million people, but which may soon stretch, with further members, to around 650 million.
Effectively it will be a merging of the European Market Regulators Group, which step by step has been coming together slowly with a unified approach to spectrum and a unified way of conducting auctions and controlling operators.
Right now the digital switch off will be spread throughout these countries over a period of five years, and the allocation of spectrum for broadcasters is haphazard and different from country to country, with broadcasters taking the upper hand in some countries having HD spectrum grandfathered, and in other countries telcos being primed to bid on the same spectrum for wireless communications services. The result of these decisions will be a further fragmented communications environment, where one business model in one country will not transfer to its neighbor.
Within Europe most people are either suspicious of too centralized control of Europe wide services, or take the other extreme and see local fiefdoms emerging due to local knowledge of arcane rules and the only way to cure this through a single centralized Czar of telecommunications. Regulators have become somewhat more harmonized over the past five years, but the European press is constantly uncovering complaints from the European Commission over local operator behavior, where they are bundling services too much, or making a change of supplier too difficult, or incumbent operators are selectively refusing supply or co-operation with key competitors.
The Commission says that aims are three fold, to improve quality and consistency of regulation in the EU; to reinforce cooperation between national regulators and the Commission; and to provide expertise for regulatory issues linked to cross-Community telecoms services.
On important issues of cross-border interest ‘ such as Voice over IP, mobile termination charges, or mobile roaming charges, which eventually had to be tackled by the Commission itself, ‘ differences among regulators often prevented them from identifying solutions which were in the interests of stimulating competition, the Commission says.
The mandate to investigate the creation of a single regulator came from the European Parliament back in 1997 but the Commission has only now felt it was ready to follow it up.
The European Telecom Market Authority will not replace the existing regulators, but will ensure they work efficiently under common principles. It will be solely responsible for preparing single market measures where the Commission feels that a pan-European edict is the right step, for instance the single European emergency phone number 112, and it will facilitate cross-border EU services in relation to scarce resources such as spectrum and telephone numbers.
The new Authority will gather the 27 national regulators in its Board of Regulators and be managed by an Executive Director, appointed for five years. It will use majority voting to take decision with activities carried out transparently.
Since the last reform of the EU telecom rules in 2002, 12 new Member States have joined the EU, and most newer Member States have a telecoms sector where incumbent operators are still very dominant.
One of the effects of all this will be that operators, and their suppliers will, benefit not only from economies of scale, but also similarity of business models across larger territories. That means larger contracts, better economies of scale and probably thinner margins on larger contracts. As long as a single European Telecom Market Authority can be kept from local bias, corruption and backward self protection, it could create a far more competitive set of operators and suppliers. However it may also make what were once the haphazard markets of Europe, easier targets for overseas giants from the US, Japan and China.