Tuesday November 13, 07:56 PM
EU in telecoms industry shake-up despite opposition
STRASBOURG (AFP) - The European Commission embarked Tuesday on a collision course with Europe's biggest telecoms groups and national regulators with plans to infuse more competition into the fast-growing industry.
Fresh from recent success imposing price caps on mobile operator roaming rates, EU Communications Commissioner Viviane Reding now wants to launch a radical overhaul of the rules governing the industry.
Reding placed high hopes on the shake-up which she said was "bound to revolutionise Europe's telecom's sector and help it compete better with other continents in terms of globalisation."
But even before the widely leaked package was made public on Tuesday, it was drawing considerable fire from big operators and national telecom regulatory authorities alike.
The Commission hopes the reform, which includes plans for a European telecoms watchdog, would encourage a Europe-wide communications market and do away with the patchwork of rules that currently complicates cross-border business.
The most radical proposal could see dominant telecommunications giants such as France Telecom (Paris: FR0000133308 - news) or Deutsche Telekom (Xetra: 555750 - news) split up, in much the same way as the Commission has proposed to do in the energy sector.
Under the plans, national telecommunications regulators would be empowered to order a telecoms operator to hive off its network activities into a separate business unit if they found competition to be wanting.
The aim is to make it easier for new telecoms operators to compete head-to-head with former state monopolies that inherited their countries' network infrastructure prior to privatisation.
"We believe that function separation can be a useful way to stimulate competition, to stimulate investment by ensuring fair and equal access to bottleneck network assets," Reding said
The Commission, European Union's executive arm, has taken much of its inspiration for the initiative from Britain where BT Group (LSE: BT-A.L - news) has pioneered splitting its network business from its other services with much success.
France Telecom chief of regulatory affairs Jacques Champeaux said last week that the Commission was heading "in the wrong direction" and was even in danger of slowing down the very competition that it was trying to promote.
The European Telecommunications Network Operators' Association (ETNO) has also warned that so-called "functional separation" could discourage investment.
"Although its aim is to promote competition, the remedy of mandatory functional separation may result in recreating a de-facto monopoly and discourage risky investments in new access networks," ETNO said last week.
The Commission has also taken flack for its plans to create a pan-European telecoms authority, which it says is necessary to ensure a level playing field in Europe for the industry.
Ed Richards, the head of British regulator Ofcom, has criticised the idea as creating a "new super-regulator" and said that existing structures are already capable of doing the job.
The Commission also hopes to encourage new pan-European services to be rolled out by removing some restrictions on radio spectrum use while widening the scope for trading spectrum rights across Europe.
Currently, some countries require certain frequencies to be used by specific technologies such as radio or television, which the Commission believes holds back innovative new technologies.
"Too many (countries) are sitting radio spectrum without using it efficiently," Reding lamented. "In the future we would like the market to decide more on who can use spectrum and for what."
The Commission aims for the package to take effect in 2010 after it has been approved by EU member states and the European Parliament.
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