It is sometimes said that the most tangible benefit from the EU is the reduction in mobile phone roaming charges. If Europe could create a truly single market in telecoms, Europeans would reap more rewards, not just as consumers, but through the growth that state-of-the-art telecoms services – such as high-speed broadband – enables.

Hard-pressed European telecoms groups, unable to monetise scale like US or Asian rivals, find it hard to attract investors. For their own profitability and, they say, to afford building new infrastructure, they have begged the European Commission to assess merger proposals within member states more leniently. The commission has told them instead to look at how to make a single cross-border market work.

That is a wise approach. Giving Europeans top-quality telecoms infrastructure at a reasonable price is surely most easily achievable by exploiting the full scale of the region’s combined markets. But that requires work by the commission and national regulators as well as by the industry.

Within national markets, further concentration will benefit industry only by hurting consumers, who pay much more in markets that lack challengers to the dominant groups. But Europe as a whole has too many providers; more than 100 mobile operators, for example, against a few in the US or Japan. Overcoming this fragmentation while keeping national markets competitive must be the goal.

The industry says the cost savings from cross-border consolidation are negligible. If so, regulatory diversity is what makes cross-border groups operate like national units. If the benefit of a less fragmented market cannot be harnessed, regulatory reform must make it achievable. Brussels and national bodies must work towards a more common rule book.

They must also get the common rules right. Operators muse about pooling network infrastructure in a single joint company. This is an alluring prospect – several countries have such models nationally – but it needs to be matched with a sabre-toothed regulator with the same jurisdictional reach. Replacing fragmented but contested existing markets with unchecked, vertically integrated, cross-border oligopolists would be a move from bad to worse. With proper cross-border regulation, though – including access to the network by independent providers – private groups can be encouraged to invest for the broader public benefit by smartly designed pricing or subsidies. The commission has a big job to do.

Get alerts on The FT View when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article