Despite improvement in EU-U.S. trade, roadblocks remain to trans-Atlantic business related to telecom and intellectual property (IP) rights, the European Commission (EC) said Wed. in its latest annual report on U.S. barriers to trade and investment. The U.S. has made “significant commitments” on European service provider market access, but the EU “remains concerned” about steep hurdles European and foreign-owned firms still face, the Commission said. The report emerged as the sides agreed to lift longstanding public procurement sanctions, some involving European telecom.
Europe could have 20 million more broadband subscribers if every country’s market were as competitive as Sweden’s, said U.K. Strategy & Policy Consultants Network. In a paper on EU broadband competition and market growth, the firm’s analysts tied rates of change in broadband use to market concentration. In 21 of 25 EU member nations, there’s a “clear 41% correlation between the level of broadband take-up and competition between access modes, identified as incumbents’ own ISP, resellers of incumbent’s bitstream, LLU, cable and other modes,” the report said. For every 1% drop in market concentration broadband uptake rises 1.66% hike, analysts said. If all EU states studied had the Swedes’ competitive intensity, 20 million subscribers would be added. Analysts urged policy-makers to spur competition by: (1) Removing barriers to market entry by, for instance, mandating wholesale DSL and promoting LLU. (2) Encouraging efficient entry of new infrastructure to cut domination by cable and DSL. (3) Lowering barriers keeping consumers from switching to alternate suppliers. (4) Scrutinizing markets for static market shares that could signal collusion between competitors. The report confirms European Competitive Telecom Assn. (ECTA) findings that broadband adoption rises when markets open up, ECTA said. Procompetitive policies some EU countries enforce are “directly responsible” for higher broadband takeup among consumers and small-to-midsized businesses, ECTA Managing Dir. Steen Clausen said. But another analyst finds fault with the EU strategy for increasing broadband competition. Forrester Research analyst Lars Godell accused Information Society & Media Comr. Viviane Reding of “barking up the wrong tree” by focusing on competition complaints between service providers in already regulated markets to the exclusion of considering how to generate benefits for end-users, Telecoms.com reported. Godell cited recent EC criticism of Telefonica for alleged margin squeezing and antitrust activities in the broadband market -- and of efforts by Deutsche Telekom to secure a regulatory holiday while it builds a new fiber network -- as examples of a mistaken Commission focus on negligible issues. “This appears a classic case of regulators being blinded by looking after producer, not consumer, interests,” Godell is quoted as saying.
German Economics Minister Michael Glos voiced surprise this week over EC criticism of Germany’s proposal not to regulate DT’s next-generation network, MarketWatch reported. On Feb. 17, Information Society & Media Comr. Viviane Reding wrote Glos she’s paying special attention to the proposed revision of Germany’s telecom act -- particularly new section 9a, which provides for nonregulation of new markets. The Commission is concerned about a “regulatory moratorium” because it raises serious questions about the relationship of competition, new markets and investment that should be addressed by the EU, not nations, Reding said. The legislative proposal suggests new markets be regulated only if development of sustained competition would be obstructed long run otherwise. That runs counter to the EU’s package of e-communications directives, Reding wrote: The law shouldn’t allow a monopoly to be revived, even for a limited time. She said also said Art. 9a: (1) Fails to make clear that consultation must take place before the German telecom regulator decides a new market exists. (2) Doesn’t clarify that “new market” and the duration of any regulatory moratorium must be defined by the regulator in close cooperation with the Commission. (3) Uses “sustained competition-oriented market,” an expression unknown in the EU regulatory framework that should be replaced with “effective competition.” Finally, Reding wrote, the Commission has already launched 2 EU Treaty violation procedures against Germany for infringing EU law by restricting the telecom regulator’s discretion. It’s the regulator -- not the legislature -- that must determine if and how regulation should be imposed, she said, and Art. 9a must be drafted to ensure that principle applies to new markets. Germany lags significantly behind other EU countries in broadband partly because it lacks essential regulatory measures such as bitstream access, she added. Glos said Tues. his office is surprised because the revised telecom bill was based on preliminary working-level talks between his department and the Commission, MarketWatch said. But the official said he would look into Reding’s concerns. The Head of the Federal Network Agency, Matthias Kurth, said “more transparency and sincerity” is needed in the debate to counter the impression that his agency favors “one single company and risk[s] the balance between competition and innovation.” The public consultation is aimed at defining “new market” and embracing the discussion started by the EC. The consultation should help clarify the issue for fixed net and broadband providers in Germany and across the EU, said Kurth. The Federal Network Agency will accept statements until April 19 from interested parties on 9 questions, on the agency’s website, about the definition and treatment of “new markets.” -- www.bundesnetzagentur.de/media/archive/5120.pdf.
European telecom regulation boosts competition and consumer benefits but has execution problems, the European Commission (EC) said in its 11th report on e-communications regulation and markets. In 2005 the e-communications sector added 273 billion ($325 billion) to the 614 billion ($730.7 billion) information and communication technology sector, as broadband and mobile revenue kept growing, the EC said. Traditional voice services kept declining but remained the largest revenue source for companies in the fixed market. Investment levels were up 6% over 2004. Merger and acquisition activity rose due to more regulatory certainty. There are nearly 53 million fixed broadband lines, with penetration hitting 11.5% in Oct. compared with 7.3% a year earlier. New entrants’ broadband market share continued to rise, nearing 50% for the 25 EU nations. New players increasingly shifted from resale and bitstream access to local loop unbundling (LLU) as demand for triple-play services rose, the Commission said, and the number of shared access lines tripled last year. In mobile, EU penetration was 93% in Oct. Mobile termination rates began dropping and mobile number portability doubled. But international roaming rates remain a central concern, with more progress needed from industry and regulators, according to the EC. Revenue from traditional telephony services are falling an estimated 1.6% annually. The regulatory picture improved, with most countries almost finished adopting the regulatory framework into national law. The EC noted several concerns, however. Some national regulators aren’t fully independent from govts., and a particularly serious problem remains a lack of effective ways to appeal regulatory rulings. And while national regulators generally have issued rules needed to open markets lacking competition, LLU “does not appear to be working in practice” in several countries, and interconnection and cost accounting problems remain, it said. Despite these and other shortcomings, the Commission said, “most of the necessary work has been done.” Alternative operators said the report paints “a perhaps overly positive picture of the state of implementation in Europe.” Even so, European Competitive Telecom Assn. Dir.-EU Affairs Sandro Bazzanella said e-communications spending has risen since the regulatory framework became law in 2003. The report endorses spurring broadband penetration through infrastructure such as cable and LLU/bitstream. And it pegs appeals as a major issue. Bazzanella said: “The summary emphasizes a light touch role for VoIP regulation, whereas it would have been more helpful for them to have identified the threat of leverage.” Incumbents hail the report for recognizing markets to be more competitive and open, but pan the regulatory framework as not delivering “sustainable infrastructure-based competition” and failing to achieve deregulation. “Despite increased competition, the regulatory framework has led to an increase of ex-ante [pre-emptive] regulatory intervention,” said the European Telecom Network Operators’ Assn. It urged the EC to “seize the opportunity” of an ongoing review of the framework to “engage in a progressive but clear deregulation.”
U.K. mobile operators O2 and Orange denied a report they're eyeing services aimed at children in violation of an industry conduct code. The London Times said Mon. members of the All-Party Parliamentary Mobile Communications Group and consumer groups had called for legislation to stop the providers from introducing such services. Both firms said emphatically Tues. they don’t market to under-16s.
European justice ministers gave final approval Tues. to mandatory retention of communications traffic data. Member states have 18 months to adopt the telecom storage rules into national law -- 36 months for Internet traffic data -- Austrian Federal Justice Minister Karin Gastinger said at a Justice & Home Affairs Council news briefing. Gastinger doesn’t expect technical difficulties with the directive, she said, but questions about the controversial measure’s impact on communications services providers leave them jittery.
Europe’s telecom market analysis process is spurring competition but “much remains to be done,” the European Commission (EC) said Tues. Since an EU e-communications regulatory framework (NRF) linking sector-specific oversight with competition law debuted in 2006, oversight is more open and consistent, and internal markets more competitive, the EC said. But monopolistic bottlenecks remain, especially in wholesale markets, it said in a communique to the Council of Ministers, European Parliament, European Economic & Social Committee and the Committee of the Regions.
The European Commission will propose Wed. to require mobile operators to cut international roaming rates. The plan, to be announced by Information Society & Media Comr. Vivian Reding, would require telcos to charge similar prices for international and national calls, her spokesman said. The Commission intends to send a formal regulatory proposal to the European Parliament and the Council of Ministers before their summer break, he said.
The EU’s current telecom rules need reworking if they're to drive competition and innovation in the sector, key players said this week. While the goals of the new regulatory framework (NRF) for e-communications are generally sound, its practical application over the last 2- years has laid bare problems and stresses that must be resolved if the industry is to achieve a single European market, most said. However, incumbents and new entrants continued to disagree over whether what’s needed is revolution or evolution. Their comments came in response to a European Commission inquiry on review of the NRF.
The German govt. could be facing a trade battle if it amends its telecom law to lift regulation on new investments such as Deutsche Telekom’s (DT’s) fiber network, competitive telcos said Tues. The Ministry of Economic Affairs unveiled language saying the inclusion of new markets in the market regulation called for by the telecom act “shall, as a rule, only apply if facts justify the assumption that otherwise the development of a sustained competitive market in the areas of telecoms services and networks would be impeded in the long run,” said Axel Spies, a German lawyer at Swidler Berlin who represents the German Common Carriers Assn. The provision said that, before it imposes antitrust remedies under the section, telecom regulator BNetzA must consider their proportionality and, in particular, whether they're in line with the goal of promoting efficient infrastructure investment and supporting innovation. The govt.’s use of “long run” indicates that regulation of the incumbent could be lifted for the “short term,” whatever the ministry believes that is, Spies said. That would let DT roll out its fiber VDSL network using empty ducts and pipes taxpayers have already paid for while avoiding price controls and other preventive measures. The negative consequences of remonopolization for consumers are huge, particularly in the broadband sector, he said. If the law is enacted and DT is exempted from regulation, the ministry “also risks a lawsuit in Geneva at the WTO because what it proposes is obviously not in line with Germany’s WTO commitments” to provide equal network access, Spies said. The possibility of a regulatory holiday for DT has sparked concern and intense discussion in Europe’s telecom sector. No one appears to favor the proposal except DT; Information Society & Media Comr. Viviane Reding has made it clear on several occasions that she doesn’t like the idea and BNetzA said it wouldn’t approve it (CD Dec 27 p6). But the amendment got legs after the recent federal election. One plank of new coalition govt.’s agreement was to “create incentives for the creation and the build-out of modern broadband telecommunications networks to safeguard the future of Germany as a place for industry and research. For this purpose, the new markets that will arise due to the investments must be kept free of regulatory intervention for a certain time period to provide planning certainty for the investor. A legislate guarantee to this end must be introduced into the new bill of the Telecommunications Act.”