The return of the super-regulator

The worst fears of national telecoms watchdogs were confirmed in June when the European Commission mooted the prospect of an EU super regulator in its review of sectoral legislation. The snail-like progress being made by some countries on market liberalisation had prompted Information Society Commissioner Viviane Reding to suggest the radical solution.

Since then, her resolve would appear to have been strengthened by developments in Germany, where legislation shielding national champion Deutsche Telekom from competition is planned.

The problem, as the Commission sees it, is that regulators are too often in thrall to national governments. National regulators still feel, however, that a super-regulator would be a step too far. "What’s happening in Germany raises questions about the current regime. It raises questions, but there are different ways of addressing those questions," says Kip Meek, chairman of the European Regulators Group. Setting up a super-regulator, he argues, would also be premature, given that current legislation has only been in force since 2003.

The view of many national regulators is that while harmonisation is a very good thing, it has to be targeted. Imposing an overly rigid legislative model across the board could stifle some markets. National regulators, they say, are best placed to understand the idiosyncrasies of their home markets. "In some parts of Europe, there is genuine competition…You can imagine that a single regulatory regime in parts where there is that type of competition could have damaging effects," says Meek. "One-size-fits-all regulation is something that has to be viewed intelligently. That said, what we’re looking for is targeted harmonisation."

Much of the problem, however, appears to stem from different takes on the purpose of EU telecoms legislation. Andreas Middel, spokesperson for Deutsche Telekom, which is to be shielded by the German government while it invests in new broadband infrastructure, believes that EU regulation has achieved its aims in acting to break the stranglehold of monopoly players. "Sector-specific price and access legislation was created for a transitional period in order to break up former state network monopolies," he says. "It is not intended to ensure equal opportunities in new markets that can already be adequately controlled through general antitrust and competition law.

"For new markets, legislators must therefore make sure that there is generally no intervention in new markets. The investor must not be disadvantaged compared to his competitors due to excessive government control," he says.

Most telecoms operators would generally share this view. Investing in infrastructure, according to one industry insider, has become an extremely risky business. Operators therefore need protection to offset risks. At stake, he believes, is the competitiveness of the EU market. "Investment in new access networks is still lagging behind. The new access technologies are still less developed than in the US and Asia," he says. "In any case, any institutional set- up should be limited in time. No permanent layer of bureaucracy should be created."

The Commission has attempted to reassure national regulators by painting a picture of a light, efficient body that would be similar in structure to the European Central Bank. National regulators and telecoms operators, however, are unlikely to be convinced. The Commission has long been pushing for more power over telecoms markets. Establishing a super-regulator, it believes, is the only way of ensuring efficient markets.

The worst fears of national telecoms watchdogs were confirmed in June when the European Commission mooted the prospect of an EU super regulator in its review of sectoral legislation. The snail-like progress being made by some countries on market liberalisation had prompted Information Society Commissioner Viviane Reding to suggest the radical solution.