Regulators, Industry Reject EC Call for New Telecom Agency

The European Regulators Group (ERG) is still analyzing the presumed EC recommendations, particularly those on institutional changes, said Antonio De Tommaso, ERG contact network chairman who handles EU and international affairs for Italian regulator AGCOM. National regulators are quite satisfied with the current regulatory framework, he said, and have noticed that other countries are looking with increased interest at the EU model.

The ERG believes more consistency is needed in competition analyses and enforcement, De Tommaso said. However, the group opposes the EC plan to create a European Electronic Communications Market Authority -- and to give itself veto power over conditions set by national regulators in uncompetitive markets, he said. The veto and the establishment of a bureaucratic body are unnecessary because they could sever the existing cooperation between the EC and national regulators, and may not be needed as real competition problems decrease, he said.

The current regulatory framework has successfully opened new markets but has failed to encourage platform competition, said Pablo Pfost, Telefonica Group director of regulatory strategy. Telefonica, the incumbent in Spain and the Czech Republic but a new player in many other EU countries, believes the framework hasn’t shaken the market share of cable operators and is mostly shifting market share from incumbents to new entrants who use their networks, he said. Current rules also don’t take into account subnational markets, making them disproportionate, he said.

Pfost dismissed the idea of an EU super-agency, saying it won’t solve sector problems. He also shunned functional separation, which, he said, hasn’t managed to lift Britain to the top of EU countries in unbundled access despite being sold by the U.K. as a great success. It may be a good idea in the U.K., Pfost said, but “I'm completely against” trying to export it to other countries.

Italian alternative provider Wind Telecomunicazioni doesn’t understand the agency proposal and worries about how it will work, said Vincenzo Farraiulo, the firm’s head of regulatory affairs and institutional relations, antitrust and market analysis. He questioned whether the EC is any more independent than national regulators, saying Wind stands by the ERG and national agencies who are best suited to deal with local competition problems. Wind supports functional separation as a good tool but not a panacea, Farraiulo said.

Politics has intruded into the EC review of the regulatory framework in a way that didn’t happen in past discussions of geeky telecommunications issues, said Richard Allan, Cisco Systems director of government affairs, Europe. The review raises three key issues, he said: the market authority, spectrum issues and security.

The proposed new agency could be a super-regulator that includes all the best characteristics of the most independent and progressive national authorities, or it could lead to least-common-denominator regulation, Allan said. Most likely, and worrying, is that it winds up somewhere in the middle, causing delays that harm regulatory certainty for industry, he said. The EC sees the agency as a “sword of Damocles” that hangs over national regulators, forcing them to act wisely, he said.

The main problem for spectrum is the time line, Allan said. The leaked EC proposal’s time line is at odds with the digital switchover schedule, he said, and the best hope is for governments to hold off temporarily on spectrum decisions and not be swayed by lobbyists for HDTV and other technologies.

Security and privacy are also key, though seldom discussed, issues, Allan said. There’s pressure to fix provisions in the current framework on spam, cookies and other problems and to better protect critical infrastructure, but the issue is muddied by the uncertainty of the EC legislation on data protection and its “evil twin” data retention, he said. Debate is also raging around copyright protection and ISPs’ “mere conduit” status, he said.

Information Society and Media Commissioner Viviane Reding is expected to propose requiring governments to divide spectrum released by switchover and set aside some at the top of the UHF band for use by wireless carriers, said Nigel Hickson, deputy director, e-commerce and telecom European policy for the U.K. Department for Business, Enterprise and Regulatory Reform. The EC has also decided not to review the e-commerce directive, perhaps to the relief of service providers, he said.