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EC telecoms overhaul sparks alarm

Proposals to shake up Europe's telecommunications market haven't gone down well with UK companies or regulators
Written by Jo Best, Contributor

Brussels is threatening a complete overhaul of the way the telecoms sector is controlled.

Viviane Reding, information society commissioner for the EC, announced in a speech yesterday that the Commission would like to see aggressive changes to the market, aimed at boosting competition and investment in the sector.

Reding told a German IT trade association yesterday: “I call on member states to prove they really mean what they say in their Sunday speeches about growth and jobs.”

Among the changes Reding proposed are a single European agency to distribute spectrum to operators; increased pressure on telcos to adopt “structural separation” — splitting their services units from their wholesale units; and the creation of one regulator to govern the whole of the telecoms sector across the EU.

The regulator will resemble the European System of Central Banks in structure, with local watchdogs responsible for analysing local market conditions and reporting back to the EU’s uber-regulator.

According to the EC, the new watchdog is necessary to ensure European law is applied equally across the continent, not as strictly as each country's regulator sees fit. This lack of harmony, says Reding, gives some countries an advantage over others, which is “unacceptable” and “an obstacle to the internal market to effective competition”.

Not so, says UK telecoms watchdog Ofcom. A spokesman said: “We don’t think this is the way to deal with the problems the Commission has identified. National regulators are closer to local markets and can understand them better.” Etno (European Telecoms Network Operators Association) also criticised the plans, saying Reding has increased regulation instead of removing it as she promised. Competition, it maintains, is fine as it is without adding a new body to supervise the industry.

Although the scheme has already divided opinions, it has won its supporters. Steen Clausen, managing director of the European Competitive Telecoms Association (Ecta), gave the single regulator approach a guarded welcome - adding that much about the scheme needs to be worked out.

Clausen said: “The idea certainly merits attention and discussion and there’s a lot of good things happening. But it will be difficult to find someone in Brussels with enough understanding of the local minutiae to propose good legislation.”

Reactions from UK telecoms operators were more muted. A spokesman for O2 told ZDNet’s sister site, silicon.com: “There are different aspects to each market and we don't necessarily think this is a good thing. They’re there to protect the UK consumer and they behave in a different way to those in other countries.”

A spokesman for incumbent BT, which has already had run-ins with the UK’s telecoms watchdog over ‘structural separation’ leading to the creation of its broadband access unit BT Openreach, added the telco and the UK market had little to fear from the proposed changes. “We’re a little further down the line than some of the other European markets,” he added.

While BT has already gone through its tiffs with the regulator and come out the other side, other incumbents are likely to bristle at the suggestion of ‘structural sharing’, particularly Deutsche Telekom, owner of T-Mobile, which is spending €3bn on its next-generation network.

Lars Goddall, principal analyst at research company Forrester, said Reding’s approach to structural sharing leaves a lot to be desired in the case of high-speed fibre broadband networks, such as Deutsche Telekom’s.

He said: “I think if the Commission wants to impose these types of rules they’re up against practical restraints as well as philosophical restraints. You can’t take the approach to copper local loop unbundling and apply it to fibre. It’s completely wrong to impose network sharing on fibre.”

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