Slim-line telecoms rulebook for new era

Date: 16/03/2000

By Peter Chapman

It would be rather grudging not to give former Telecoms Commissioner Martin Bangemann a pat on the back for his achievements.

When he took office in 1995, EU phone markets were still dominated by a handful of monopoly operators, with a record in customer service to match.

As Bangemann was fond of pointing out, the time it took to get a new phone connected was measured in days and weeks, not hours. Worse still, the technology in place had more in common with Alexander Graham Bell's epoch than the eve of the 21st century.

But by 1 January 1998, the Union had finalised the first round of a radical regulatory shake-up of the industry which opened up the entire market to competition for the first time.

Member states' progress was not always as fast as Bangemann and his competition counterpart Karel van Miert would have liked. But by the time Bangemann handed over the reigns to his Finnish successor Erkki Liikanen last year, and fled to cash in on his expertise with at Spanish operator Telefónica, the telecoms market had been totally transformed.

The growth of the Internet in the US had started to change everyone's view of what telecoms could do, and what we should expect of them. The business world was taking advantage of 'alternative carriers' such as WorldCom, while tens of new mobile operators were offering customers a genuine alternative to traditional fixed lines owned by local monopolies.

It is true that the old incumbents are still in place, and many of them own mobile firms in their home market. But their grip is loosening. The world has changed, and the message has been well understood in the boardrooms of British Telecom, Belgacom and Deutsche Telekom.

Liikannen's first job after taking charge of the telecoms dossier was to oversee an overhaul of the 1998 package to reflect the way the industry has changed and will continue to change in the early years of the new millennium. "The EU liberalisation has been successful, but much remains to be done," said Liikanen in a speech at last autumn's Telecom '99 conference in Geneva.

One key task is to whittle down the detailed rule book which has sought to keep the old monopolies in check to reflect the fact that competition has begun to take hold in numerous sectors and many of the regulations are simply no longer needed. The result is a new 'slim-line' package set to be unveiled before the summer which will see the current list of legal measures targeting the sector slashed from 20 to six.

The linchpin of Liikanen's plans is a 'technology neutral' framework directive laying general ground rules covering all forms of communication networks from fixed and mobile to cable television. This will be accompanied by four specific directives on universal service, privacy and data protection, licensing, access and interconnection.

Liikanen will insist governments end the common practice of forcing operators to seek special licenses for their activities, except in cases where resources (such as space in the airwaves) are limited. He will also argue that operators with 'significant market power' of 25% or more must be prepared to negotiate with rival companies seeking access to their infrastructure.

Generally, the Commission will rely increasingly on the EU's competition rules to make sure that firms with 'dominant positions' in their respective markets do not abuse their power.

Dissent from the new approach has been relatively muted during the Commission's consultations on the '99 review. Predictably, new entrants argue that it will not do enough to open up the sector to competition. In contrast, EU mobile phone firms claim rules forcing operators with 'significant market power' to open up their networks to rivals would penalise companies which have invested heavily in network infrastructure.

Incumbents also argue that the slimming-down process has not gone far enough. However, most realise that competition rules alone are inadequate to ensure firms behave. They also recognise that they could actually benefit from regulations aimed at keeping local monopolies in check when they do business abroad.

The deadline for final adoption of the 1999 review package is 2003 - an age away in the fast-moving telecoms world - and Liikanen is well aware that the market will not stand still. To plug the gaps before then, he has promised to publish a steady stream of recommendations and bench-marking exercises or 'soft laws' covering areas such as interconnection charges, and access to local networks.

Article forms part of a survey on the Information Society.