Europe’s big telecommunications groups on Tuesday attacked a plan that would toughen regulators’ power over the industry and could force the companies to change their business models.
Viviane Reding, European Union media commissioner, proposed a shake-up of the telecoms’ rulebook in a drive to boost broadband competition and spur more pan-European services.
But big operators claimed that her plan would fail to bring long-term benefits to consumers, underlining an intense debate about the future of the Union’s €289bn-a-year electronic communications industry. In particular, the companies were alarmed by her call to give national authorities the power to split the businesses’ network and services arms, if all other measures to bolster competition failed.
Michael Bartholomew of Etno, a lobby group representing operators such as Deutsche Telekom and Telefónica, said: “This is an extraordinary costly and intrusive measure. It would hinder the building of new high-speed broadband networks by major operators because separating the companies would reduce incentives for risky investment in new access networks.”
However, Ms Reding argues that some former state monopolies maintain a grip on their networks, hitting competition.
She told Bloomberg: “There are still bottlenecks where the markets aren’t open to competition. It’s very important to get methods that can quickly open markets so that the advantage of the internal market can be taken by our European industry.’’
Ms Reding has criticised what she views as the economic protectionism of some former state-run operators. She is embroiled in a court clash with Germany, claiming that it shields Deutsche Telekom from broadband competition.
At the heart of Tuesday’s announcement are several proposals, including the creation of a pan-European authority, that would open the telecoms market to full competition and ensure regulatory consistency across the 27 member countries.
The European Commission would be empowered to intervene if a national telecoms authority failed to address problems. The management of prized radio spectrum would be overhauled and regulation on some telecoms markets removed.
Newer operators, competing with former state-run monopolies, hailed most of the plan. Ecta, a lobby group for companies such as Colt, Tiscali and Virgin Media, said the proposal would speed broadband development by giving national authorities the tools to break down monopolies.
However, Ms Reding’s plan, unveiled at the European parliament, is far from a fait accompli. She has faced Commission criticism, most notably from Neelie Kroes, EU competition chief. Industry members say Ms Reding and Ms Kroes made concessions to reach a compromise before Tuesday’s announcement.
Still, member states and the European parliament must back the proposal, and it may well be watered down. Some countries are alarmed at giving more power to Brussels, the suggested agency, and the measure to break up companies.
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