The European Parliament has adopted a “coherent” and “firm” position on the revision of EU rules in the telecommunications sector (telecoms package) ahead of the Council’s debate. As expected, the two reports adopted by the Industry Committee, on 7 July, in the wings of the plenary in Strasbourg, water down the European Commission’s initial ambitions for this market worth some €300 billion, or one quarter of European growth. The French EU Presidency will try to broker a political agreement at the Telecoms Council, on 27 November.

The objectives are still higher quality service and lower prices through “fair competition” (infrastructures and services), both for existing technologies and for the future very high-speed optical fibre networks. “We are happy to have been able to bring together the groups’ positions and to have proposed with these votes a revision that is more coherent than the Commission’s proposal, but at the same time an alternative proposal that works to the advantage of consumers and investments,” declared Catherine Trautmann (PES, France), rapporteur for the revision of the framework directive (and for access to networks and authorisation). For her report, 33 amendments representing compromises between the political groups were adopted by a wide majority. This made it possible to reject most of the thousand or so amendments aimed at modifying the proposals defended by Telecoms Commissioner Viviane Reding.

NO SUPER REGULATOR

As anticipated, there will not be a telecoms super-regulator, but a Body of European Regulators in Telecoms (BERT), an enhanced version of the existing European Regulators Group, a body that brings together the 27 national authorities to advise the Commission. The vote on the report by Pilar del Castillo (EPP-ED, Spain) on the draft regulation establishing a European telecoms authority was nonetheless contradictory on a major point, namely the financing of the BERT. MEPs passed an amendment by the rapporteur recommending mixed financing – two-thirds from the national regulators and the remainder from the EU - but at the same time they rejected a compromise amendment by EPP-ED and ALDE MEPs saying more or less the same thing. The Socialists defended a 100% Community budget. Pilar del Castillo took this confusion into account and will work on a new compromise with a view to the September plenary. She nonetheless wishes to maintain the “concept of mixed financing”. In her view, it is a question of “coherence”: “mixed financing is more faithful to the model of European regulator as adopted by the Industry Committee,” she explained, whereas 100% EU financing would be tantamount to “giving the Commission full participation in regulation”. “We tried to limit its participation.” Only two amendments were contradictory, she said. This financing will have to be provided in large measure by the member states, she added.

NO VETO

The Commission will not be able to veto remedies imposed by national regulators in cases of competition problems on their market. Instead, “we give the national regulators tools” to be used in “cooperation” with the Commission and the BERT, explained Trautmann. Before imposing a remedy, the national regulators will therefore have to consult the Commission and BERT. The latter will act by absolute majority (50% of votes plus one). If the Commission disagrees with a national regulator’s proposal for boosting competition, it will have to have BERT’s backing to alter it. Otherwise, the national regulator may apply its measure while taking into account the comments of theCommission and BERT.

MEPs also put the brake on the Commission’s ambitions in terms of spectrum management. This will remain in the hands of the member states, which are nonetheless urged to coordinate their actions more closely and to explore the possibility of further harmonisation at a future large-scale conference on the spectrum.

In contrast, MEPs decided to leave functional separation in the hands of regulators. This remedy is considered very intrusive by the dominant operators on the market: it would oblige them to separate their network activities from their commercial activities as a means of guaranteeing non-discriminatory access to networks for their competitors. Up until now, only British Telecom has taken the leap, creating Open Reach to manage its network. “This is an optional means, a strong threat against any excessive dominant positions by groups. But it is not dissuasive for investments in new networks,” said Trautmann. In fact, the national regulator wishing to impose functional separation will have a complex route, since both the Commission and the BERT will have to give their go-ahead. “If one of the two disagrees, functional separation may not be used,” insisted Trautmann. In addition, the regulator will have to carry out impact studies on the investment and employment. “The Socialists wanted workers to be taken into account in investment decisions and remedies because the telecoms sector represents one fourth of EU growth, but also thousands and thousands of workers,” she added. The telecoms unions had expressed concerns over the social impact of functional separation in the EU.

The big operators, represented by ETNO, are still opposed to the inclusion of functional separation in the package, saying it will act as a deterrent to investments in new networks and competition between various infrastructures (telecoms, cable, satellite, wireless, etc). Parliament wishes to encourage such developments, notably through geographical segmentation, ie with the rules applying where competition is lacking.

For opposite reasons, ECTA, which represents challengers, is also critical of the EP’s approach: “There are now additional obstacles that could prevent functional separation from being an interesting option,” declared Ilsa Godlovitch of ECTA. She went on to explain that the double review by the Commission and the BERT would delay the introduction of the remedy by around three months.

The French EU Presidency will try to broker a political agreement at the Telecoms Council on 27 November