Telecoms at risk from ‘arbitrary’ regulation

Date: 01/02/01

By Peter Chapman

Europe's old telecom monopolies are fighting Union efforts to boost the power of national regulators, claiming they could scupper the single market for their services.

The firms are sounding the alarm as MEPs and member states prepare to agree a key change to the EU's telecoms rule book put forward last year by Enterprise Commissioner Erkki Liikanen.

The Finn's plan would cut down on the EU-level red tape imposed on the sector when telecom markets were opened in 1998 by leaving national regulatory authorities (NRAs) to apply the new rules and police errant companies.

Under the proposal, the European Commission would be able to veto NRAs' decisions if they were blatantly unfair or threatened to fragment markets by veering away from an EU-wide approach.

But industry groups argue that efforts by member states to erase this veto from the legislation will have potentially chilling effects on the sector.

"It's a power struggle - and a fundamental one," said Michael Bartholomew, director of the European Telecommunications Network Operators' Association, whose members include the old state-owned telecom firms. "We already have a terribly segmented market."

He says many of the old monopolies, though powerful in their home markets, are often new entrants in other member states and vulnerable to national regulators who could apply rules inconsistently.

"Firms need safeguards against arbitrary NRA decisions," Bartholomew said. "Without such safeguards, the future framework will result in a more uncertain environment for new investment."

The wide variations among national regimes were highlighted by the "chaotic" way member states had chosen to parcel out licences for the next generation of mobile phone services, known as UMTS or '3G', added the ETNO director.

The European Parliament's rapporteur on the issue, Finnish socialist Reino Passilinna, will argue in favour of keeping the Commission's veto at next week's plenary session of the assembly in Brussels. But he wants a greater role for a consultative committee of regulators before binding decisions are made.

Swedish presidency officials predict a fierce debate over the issue leading up to and during this month's informal meeting of telecoms ministers in Luleå (15-17 February).

Many member states, including Germany, Austria and Spain, have made it clear that they will not tolerate a Commission veto on national decisions.

The issue is one of several potential deal-breakers threatening the telecoms package. These include Liikanen's plans to reserve the toughest regulations for firms enjoying 'significant market power', the obligations on firms to ensure a 'universal service' and measures to protect customers' personal data.

Europe's old telecom monopolies are fighting Union efforts to boost the power of national regulators, claiming they could scupper the single market for their services.