Agreement on New EU Telecom Rules Expected Next Week

The EC, European Parliament and Council of Ministers “trialogue” on the revamp package ran until late Tuesday night, Reding said. She said the discussion left her confident of an agreement by Monday. Asked what’s needed to clinch the deal, she said only that 95 percent of the “huge package” has been settled, and a tentative compromise on the “last 5 miles” now needs the support of national governments and parliamentary political groups. Negotiations have been slow, leading to concern among some that the regulatory proposal wouldn’t be finished before parliamentary elections in June (CD March 9 p3).

Participants in the discussions on the European rules had hoped for agreement Tuesday, but too many issues remained open, said a spokeswoman for the parliament’s industry committee. The EU’s Czech presidency lacks a negotiating mandate and, without full support from other governments, won’t win a majority of votes, she said. The divisions remain so wide that the parliament probably will vote on the package in May instead of April as planned, a parliamentary source told us.

It’s “an extremely difficult piece of legislation,” said an EU diplomat. A major question is whether the EC should have the right to veto competition decisions by national regulators, the diplomat said. The presidency agreed to draft text for Monday’s meeting, but states are unlikely to create the veto right, he said. There’s no way to predict the outcome of the meeting, because without agreement on the whole package the talks will fail, he said.

Some major issues were settled, the committee spokeswoman said. There’s now agreement on a new authority, the Body of European Regulators in Electronic Communications, formerly BERT and EECMA, to serve as an adviser to the EC and national authorities, she said. But lawmakers wants the body to play a strong role in reviewing national regulators’ competition decisions, and governments aren’t as enthusiastic, she said.

Questions on spectrum harmonization at the EU level remain unsettled, the spokeswoman told us. Parliament members want a voice in those decisions, but governments are less enthusiastic, she said. Also to be resolved are several e-privacy and consumer-related issues, said a spokesman for the internal market and consumer protection committee.

Legal and technical approaches to dealing with spam are proving sticky, the spokesman told us. All sides agree that the principle of prior consent by consumers to marketing materials must be respected -- but users aren’t usually aware, for example, of Microsoft or virus software updates and there are no technical devices to control the traffic of these programs, he said. The legal question is how to apply solutions globally, he said.

A problem on consumer matters in general is disagreement over what power the EC should have, the spokesman said. The EC and parliament want the EC allowed to decide matters such as the creation and coordination of pan-EU emergency phone numbers, but governments prefer voluntary guidelines, he said.

Telecom Said Vibrant

The progress report provides an overview of Europe’s telecommunications industry and regulatory developments in the 27 countries, Reding said. It estimated 2008 revenue at 300 billion euros, with 1.3 percent growth exceeding the overall economy’s, she said. The industry accounts for about 3 percent of the EU’s gross domestic product, she said.

The industry isn’t immune to the economic slowdown, but operators say they're holding up better than other industries, Reding said. The reason is simple, she said: Consumers might think twice now about buying many things, but they won’t reduce their use of communications and they may even increase it.

Europe’s mobile business increased penetration to 119 percent from 112 percent in 2007, Reding said. The industry is a success story, way ahead of the U.S.’s 87 percent penetration and Japan’s 84 percent, she said. More than 15 percent of European subscribers use 3G, she said. Consumers pay nearly 35 percent less for mobile services than they did five years ago, the EC said.

Broadband connections are also on the upswing, Reding said. Denmark and the Netherlands continue to lead the world, with about 40 percent of their populations on high- speed Internet, she said. The gap between the best- and worst-performing countries is narrowing, she said. The report for the first time charts mobile broadband use. It’s “taking off,” Reding said, though the use of dongles and data cards for laptop access to mobile broadband remains low.

The single European market still has problems, Reding said. Diverging regulatory approaches to new fiber networks could hamper competition and create investment uncertainty, she said. “Serious discrepancies” between wholesale call termination rates remain, she said. Some member countries have failed to ensure the independence of their national telecommunications authorities, she said.

The report includes snapshots of each country. Asked why mobile service prices in Germany had plummeted, Reding pointed to competition. But, she added, the situation with broadband prices in Europe’s largest economy “is not a brilliant one,” because competition isn’t working as it should.

There are concerns over members of the German regulator’s presidential chamber being political appointees, the report said. That body plays a decisive role in pivotal political questions such as market definition and analysis of next-generation access networks, it said. The EC also faulted the authority for creating regulatory uncertainty about deployment of the advanced networks and switch-over to them.

The U.K., by contrast, won praise for lowering monthly mobile bills and expanding broadband quickly. The country was the first to deregulate the wholesale broadband access market in many regions, the report said. Competition in mobile and fixed markets, and opportunities for new entrants, have improved, it said.

Still, the EC chided Britain for allowing trials of Phorm behavioral advertising technology with little or no information given to consumers. It also criticized the country’s number portability system and said the U.K. is one of a very few EU nations where domestic mobile phone subscribers still can’t call emergency numbers over other available networks when away from their home networks.

Despite the “relatively positive outlook,” telecom had its lowest growth since 2003, said the European Telecommunications Network Operators’ Association. This sends a “worrying signal” to investors that shouldn’t be ignored, it said. Europe continues to lag behind the U.S. and Asia in rolling out high-speed broadband networks, and lower revenue means riskier investments in next-generation access networks, it said.

In the next two months, the EC will approve recommendations on next-generation network access and call termination rates, Reding said. Agreement on changes to the GSM directive will free spectrum for use in 3G, 4G and LTE services, she said. And in July, new mobile voice and data roaming price caps will take effect, she said.