Industry angered by French bid to change key plank of telecoms plan

Date: 23/11/00

By Peter Chapman

EU TELECOMS operators are up in arms over French presidency moves to amend the draft rules drawn up by the European Commission to govern the Union's phone market in the 21st century.

The industry claims the changes called for by Paris to the proposals could derail Enterprise Commissioner Erkki Liikanen's attempts to establish a harmonised telecoms regime and destroy the EU's fragile single market in the sector.

The furore comes as member states begin to debate the linchpin of a number of proposals drawn up by Liikanen to update the Union's existing, out-of-date rules governing the industry.

The controversy centres on a proposed framework directive setting out the general approach to be taken under the new regime, including the respective roles of governments, national regulators and the Commission in policing telecoms markets in future.

Liikanen has proposed imposing the toughest restrictions only on firms which are deemed to enjoy 'significant market power' in their relevant market. But suggested amendments to the text tabled by Paris would radically alter the way a company's markets are defined and give member states far more leeway in regulating the industry.

The Commissioner has proposed a harmonised system under which his institution would issue a legally binding 'decision' setting out a 'hit list' of markets where problems might be lurking and where regulation might be needed. If member states wanted to impose regulations in other areas, they would have to seek prior permission from the Commission.

The French paper calls for this system to be totally overturned. Firstly, it proposes that the decision on relevant markets be replaced by a 'recommendation' which would not be legally binding. Secondly, it would remove the requirement for national authorities to "seek and receive the prior agreement of the Commission" before using their own market definitions.

Iain Osborne, regulatory affairs director for pan-EU operator Global Telesystems, said the changes called for by France would lead to individual member states applying different definitions of markets where regulations would or could be imposed. "If you do not have the same market definition in all member states, then we will not have harmonisation in any sense of the word," he insisted.

Osborne claims that initial discussions on the proposals in the Council of Ministers have so far been steered by politics and the special interests of national regulators and governments anxious to "get the Commission off their backs".

"The Council is not reflecting industry lobbying or the needs of consumers in this stance," he said, adding that a coalition of fierce new entrants to the industry in Europe - including WorldCom and Level 3 - had begun to knock on EU governments' doors demanding that they reject the French proposals.

Final adoption of the draft directive, along with the other parts of Liikanen's telecoms blueprint, is not expected until late next year at the earliest. In the meantime, the industry is hoping that Finnish Social Democrat MEP Reino Paasilinna will adopt a far more supportive approach towards Liikanen's proposals, which are set to be debated by the assembly's industry committee in earnest later this month.

EU telecoms operators are up in arms over French Presidency moves to amend the draft rules drawn up by the European Commission to govern the Union's phone market in the 21st century.