EU Council Compromise Said Good Progress Toward Telecom Rule Changes

Officials debated changes to the e-communications regulatory framework, authorization, access, privacy and universal service directives. They supported many EC proposals but disagreed at first on a compromise package floated by the French Presidency Thursday morning. A revised text was later approved.

Most of the debate centered on how to strengthen the independence of national regulators, what power the EC should have in vetting competition decisions made by regulators, and whether to coordinate some spectrum management at the EU level, the council said. Governments don’t consider it necessary to introduce either new measures for harmonizing certain aspects of spectrum use or a common selection process for allocating rights, they said.

Another area where ministers split with the EC concerned the EC proposal for a European Electronic Communications Marketing Authority, controlled by the EC, to advise it on national regulatory proposals in order to ensure more consistency across borders. Many governments supported formalizing the existing European Regulators Group of national authorities, and opposed the idea of an entirely new entity, the council said. Ministers approved a plan to establish the now informal ERG under Community law under the name “Group of European Regulators in Telecoms,” it said.

Officials largely agreed with the EC that regulators should have the power as a last resort to require providers with significant market power to split their infrastructure and services divisions (functional separation). However, they underlined the “exceptional character” of the measure.

Council members welcomed an EC proposal to extend price caps to text messages and Internet downloads made on mobile phones during roaming in the EU, it said. The plan sets SMS retail costs at no more than 0.11 euros ($0.14) per message, and data download fees at 1 euro per MB. The new rule should take effect in July, the council said.

The EC praised the council’s swift decision on SMS and data roaming rates, and said the overall compromise was an improvement over the earlier version. Nevertheless, said Information Society and Media Commissioner Viviane Reding, “I continue to believe that Europe’s telecoms sector requires better rules than those now on the table here.” The compromise is a starting point for further negotiations among the EC, parliament and council, she said, but all three “must sit down together without delay” and find a common approach. She asked the presidency to call a meeting as soon as possible, saying it’s the only way lawmakers can hold a second reading in the spring. Parliamentary elections take place in June.

Parliamentary reporters welcomed the council accord which, they said, will allow talks to begin immediately. French Socialist MEP Catherine Trautmann, who authored the report on the e-communications framework directive, said the compromise “sends a positive signal” to the whole sector and lets EU bodies start discussing “the few controversial points” between parliament and governments. The EC’s role is to facilitate negotiations, she said, “and I'd like to insist on this point because unfortunately it is not always so clear.”

Industry Reaction Mixed

The council’s stance on functional separation pleased the European Competitive Telecommunications Association, said Regulatory Affairs Director Ilsa Godlovitch. She applauded ministers’ rejection of incumbents’ demand for risk-sharing of investment in fiber access networks.

Incumbents expressed disappointment with the council outcome, saying it failed to address investment challenges in deployment of next-generation networks. The European Telecommunications Network Operators’ Association is also unhappy about governments’ endorsement of weaker conditions for imposing functional separation, said Executive Director Michael Bartholomew.

The council appears to have joined lawmakers in recognizing the important role countries play in spectrum allocation and management, said Ross Biggam, director general of the Association of Commercial Television in Europe. But commercial broadcasters remain worried about the status of discussions on when frequency licenses should be reviewed, he said. The current text recommends reviews after five years, but although the provision isn’t mandatory, it could still jeopardize broadcasters’ business model, which is based on long-term investment and legal certainty, he said.

The European Satellite Operators Association praised a provision saying spectrum management should be consistent with the work of international and regional organizations such as the ITU. The vote may finally bring “adequate recognition of the role and nature of the ITU to avoid any fundamental threat to the future of satellite services” whose business plans depend on securing coverage of a certain geographic area through a specific orbital slot, and the ability to serve that area long-term with spectrum associated with the slot, said Secretary General Aarti Holla-Maini.

“Crucial modifications” to the text doom French President Nicholas Sarkozy’s attempt to impose a graduated response, or “three-strikes” approach against online copyright across Europe, said French civil liberties group Squaring the Net. On the other hand, it said, council members struck out key safeguards to citizens’ fundamental rights and freedoms, lowering privacy protections in the name of “security, it said.

One unacceptable change to the e-privacy directive allows private operators to collect and process traffic data, Squaring the Net said. The “exoneration” from privacy rules is so broad that any Web company can process anyone’s data for “broad, undefined purposes” and potentially for an undefined length of time, it said.

The Business Software Alliance fought for the provision allowing online service providers to process traffic data, including Internet Protocol addresses, for network security reasons. The council “ticked the box” from its perspective, said Francisco Mingorance, director of public policy, Europe.