Europe - Parliamentary opinion on proposed legislation

EU Lawmakers Approve Diluted New Telecoms Rules

European Union (EU) lawmakers have given the nod to the region's new telecoms rules, although their approved version differs markedly from the original plan.

Significance - EU lawmakers have kick-started the approval process for the region’s latest telecoms rules.

Implications - By using compromises and consensus to agree on their proposals, the lawmakers have taken a major step to ensure the proposal gets the nod from member states and the entire EU Parliament.

Outlook - Although several parties will feel let down, the "win some, loose some" approach of the lawmakers lays the best foundation for a more harmonious regulatory environment in the region.

EU lawmakers have given the nod to a watered-down version of the new EU telecoms rules, diluting major segments of the proposals but keeping enough proposals to upset the incumbent telcos. The EU Parliament's industry and internal market committees voted on the package on Monday (7 July) in Strasbourg, paving the way for member states and the EU Parliament to have their say later in the year. Viviane Reding, the EU's information society commissioner, has called for sweeping changes to the way telecoms is regulated in the region, seeking more powers for the EU and arguing for a more centralised and harmonised regulatory environment. However, Reuters reports that cross-party deals last week in the EU industry committee boiled down a hunge number of amendments to the initial package into 33 compromises which were adopted by large majorities.

What is In?

Functional Separation: Despite opposition from the main incumbents such as France Telecom, Deutsche Telekom, and Telefónica, the lawmakers voted to uphold Reding's plan for functional separation. The new proposal empowers national regulators to demand that a former incumbent runs its network and retail arms separately so as to give equal access to all players in the market. However, the national regulator's decision would have to be reviewed by the EU Commission and the region's regulators’ association.

Monopolies from Next-Gen Networks: Although Reding's initial proposal warned of allowing new monopolies to emerge in the race to build next-generation networks, the parliamentarians agreed to insert an explicit proviso in the new rules which will prevent such monopolies from arising.

New Entrants to Share Costs/Risks: Much to the chagrin of European Competitive Telecommunications Association (ECTA), the lawmakers called on new entrants to bear some of the cost and risk of using next-generation networks built by other operators. ECTA argues that it may put off some new entrants from entering the market but the action is bound to appease the big telcos who are worried about bearing the costs and risks of the new networks alone.

What is Out?

No Super Regulator: Expectedly, the lawmakers threw out Reding's call for a super regulator with the power to overrule national regulators. Instead, they agreed to upgrade the European Regulators’ Group (ERG), the umbrella body for the 27 national telecoms regulators, into a Body of European Regulators in Telecoms (BERT).

No EU Veto: Apart from rejecting calls for the super regulator, the lawmakers also scrapped plans for the EU Commission to have a veto over decisions taken by national regulators. Instead, the lawmakers gave the only veto power to overrule national regulators to BERT.

No Centralised Spectrum Rules: Perhaps in a bid to avoid tension between the EU and its member governments, the lawmakers voted to keep control of spectrum rules in the hands of national governments. However, they agreed to move towards pan-EU coordination of spectrum management.

Outlook and Implications

Although the approved proposal differs markedly from Reding's original plan, the lawmakers have tried to accommodate all interested parties in order to arrive at a more equitable proposal. In the end, it was a case of "win some, loose some" for the big telcos, the new entrants, national regulators and Reding's EU colleagues. The proposals would be voted on by EU member states and the entire EU Parliament later in the year; in the hope of satisfying France's president Nicolas Sarkozy's plan to get the business done before the end of France's presidency of the EU.