Reding buys time to tout super-regulator

Viviane Reding, the commissioner for information society and media, has postponed this month’s unveiling of updated telecoms rules in a bid to gather support for regulatory measures aimed at Brussels taking power away from member states.

The overhaul of 2002’s regulatory framework for electronic communications, now to be issued in October, is largely an attempt to make rules relevant to fast-moving telecoms technologies and to encourage ‘federalisation’ of EU markets. Centralised regulatory control that would force national incumbents to ease market access for new entrants is an integral element of new measures.

The prospect of centralised control in the form of a ‘super-regulator’ or, at the very least, a European Commission veto over national regulatory decisions has already sparked EU-wide outrage. Despite attempts earlier this year by the Commission and umbrella association the European Regulators Group to work together on strengthening the EU regulatory landscape, the idea of a powerful ‘super-regulator’ that would overrule national bodies still appeals to the Commission.

"They [the Commission] were hoping for positive noises from industry and regulators," said an industry expert tracking the dossier. "They want time to build support, twist a few arms and cajole, so that when they do come out with proposals, they know they have support. All member states will be against it because it would mean feeding power to Brussels. They will find it difficult to convince Council they will need a single regulator."

Another controversial element of Reding’s proposals will be ‘functional separation’ of telecoms companies compelling incumbents to split their networks and services firms into different units so as to make easier market access for new entrants.

A coalition comprised of business users of telecommunications networks, urged Reding this week (5 June) to strengthen Brussels’s control of markets. Presenting a report ahead of a meeting of telecoms ministers today (7 June), they lamented the still fragmented nature of the pan-EU telecoms market.

Martin Cave, of Warwick Business School, who authored the report, said: "EU regulation of ICT (information and telecommunications technologies) needs to be rebalanced to provide good services. In order to do this, there has to be competition at pan-EU level. So, we have to ensure that incumbents are obliged to make their infrastructure available. This could be done by an EU regulator or by giving the Commission a power of veto."

Referring to a recent clash between Reding and the German government over a new telecoms law allegedly planned by the latter to protect incumbent Deutsche Telekom from competition, the industry expert said that power of veto would not be sufficient to prevent regulators ‘pulling tricks’. Any power of veto over regulatory remedies enshrined in the new update, he said, would not be sufficient to tackle the law. A super-regulator would be required in such cases.

The Commission will refer its complaint against the German government to the European Court of Justice towards the end of this month. The offending law sets preferential antitrust conditions for companies investing in new technologies. A German diplomat maintained his government’s denial that the law was created to protect Deutsche Telekom while it invested in costly broadband infrastructure.

"We are certain that our law is in conformity with EU law," he said. "It doesn’t decide on a particular case. It simply provides that the regulator can decide to take a certain market out of regulation in cases where the market is new. Deutsche Telekom will have to present its case why VDSL [high-speed broadband] is a new market."

Thierry Dieu, communications manager for the European Telecommunications Network Operators’ Association (ETNO), called for less regulatory intervention from the Commission. "ETNO wishes that this delay is used to ensure that the proposals fully reflect the changing market realities and are adapted to tomorrow’s challenges. So far the debate has focused on new regulatory initiatives, such as a functional separation or an EU regulator, while today’s strong competition in the markets should rather lead to less regulatory intervention and more reliance on competition law.

Viviane Reding, the commissioner for information society and media, has postponed this month’s unveiling of updated telecoms rules in a bid to gather support for regulatory measures aimed at Brussels taking power away from member states.