European flags fly in front of the European Parliament on June 9, 2016 in Strasbourg, eastern France. / AFP PHOTO / FREDERICK FLORINFREDERICK FLORIN/AFP/Getty Images
The report by the European Parliament suggests giving institutions little scope for deviation in the event of a crisis © AFP

The European telecoms industry has reacted with fury after the European Parliament watered down proposals designed to encourage investment in 5G and full fibre networks and pushed to introduce regulation of international calling rates on the continent.

Its vote undermines proposals put in place by the European Commission last year to encourage companies to invest in faster telecoms networks with confidence, in exchange for deregulatory measures. In mobile, the European Commission has estimated it could cost €500bn to push the continent to the forefront in the race for 5G networks, but that a funding shortfall of €155bn from the industry imperils that goal.

Yet the European Parliament has amended the proposals to include language aimed at tackling “oligopolies”, where a small number of large telecoms companies have too much power. It also failed to guarantee that companies investing jointly in fibre infrastructure would benefit from deregulatory measures. In addition, it proposed handing more power to national regulators, despite the push for a digital single market.

Barclays analysts said that its vote had replaced “carrots” with “sticks”, compared with the original positive proposals by the European Commission. “Worryingly, a number of the pro-investment measures appear to be watered down, which we see as a potential negative and barrier to investment,” the bank said in a research note.

Lise Fuhr, director-general of ETNO, the trade body that represents Europe’s largest telecoms companies, said: “Today’s strategic challenge is network investment, but this parliamentary vote misses the point and risks to slow down broadband deployment.”

Vodafone, which has invested in fibre in Spain and Portugal and is in talks with Openreach in the UK over co-investment plans, said the revised proposals increased the “regulatory burden” on companies. “Those amendments if adopted would erode investor confidence in European telecommunications, reducing further the prospect that EU businesses and households will benefit from the competitive gigabit-speed networks that will be critical to all aspects of daily life and work in the near future,” a spokesman said.

The bill will be negotiated with the member states into early 2018 and could change further during the talks. There is the prospect of a further watering down of measures, including the European Commission’s plea to introduce spectrum harmonisation across the continent, something opposed by member states. Andrus Ansip, the Commissioner for the Digital Single Market, said last week at the FT ETNO conference that Europe faced an “emergency situation” due to a lack of progress.

The vote by the European Parliament also opened up a new frontier in retail price regulation for the telecoms sector as it proposed capping the cost of “abusive” international calls between countries within the European Union. The move comes after the lengthy push to abolish roaming fees.

Telecoms companies believe it may be hard to resist the political pressure to introduce caps on international calls now it has been worked into legislation.

Mr Ansip argued that the European Commission’s plan to introduce such legislation was rejected by the parliament in 2013, which he said was a “wise” move given consumers increasingly use apps including WhatsApp, FaceTime and Skype for video calls and messages. “If members of the European Parliament feel we have to deal with this rapidly declining market then we have to, but I don’t think it is more reasonable to deal with it today than in 2013,” he said.

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