Two high-profile antecedents hint at how industry stakeholders will split in the overall review of EU telecom regulation which is reaching its climax. 

While the European Union (EU) is in the middle of one of its periodic reviews of the ICT regulatory framework, recent  individual cases have given the firmest possible indication of those involved will divide in the forthcoming debate. Indeed, ‘debate’ is too coy a phrase: this will be a war.

The two issues are, of course, pan-EU international roaming charges and Germany’s attempt to exempt Deutsche Telekom’s new €3bn VDSL network from conventional levels of regulation. Between them, they illustrate the extent of the fault-lines which block the path to consensus on the generalities and the specifics of telecom regulation.

In the first of three articles, we look at the pointers to be picked out from the bones of the roaming argument. In the second, we look at the more narrowly focussed spat in Germany. The third addresses how these may impact on the EU’s new ‘Framework for Telecommunications’, which is due to enter into force next year. It will seek to demonstrate just how nasty the run-up to that decision will be.

In particular, it shows that the European Commission is at best primus inter pares in the process – and if it is primus at all, it is so only by a very small margin. The fate of the EC and its recommendations thus rests with the degree to which the pares gang up against it.

Between a rock…
The ruckus over roaming boils down to the question of whether market forces or regulatory actions represent the best way of bringing roaming charges under control. First stumbling block.

Mobile operators and their supporters believe that this is an economic issue best decided by the market and accuse EU officials of politicising it for ideological ends. The EU, led by the redoubtable Viviane Reding, believes that this is an economic issue of wider social and political importance, which cannot be left to the market if it fails to deliver; it accuses the operators of defending the status quo out of commercial self-interest.

The interesting thing is that there is some truth in all of these points of view and in certain areas there is a consensus – albeit one arrived at from diametrically opposed directions. Yet the net result is to create two utterly opposed camps.

In the run-up to last week’s policy proposal from Brussels, amid fears that it was on the verge of being watered down, Reding went public (again!) on her position in a speech to the Enterprise Virtual Private Networks Users Association (EVUA). “We continue to watch the market closely and are examining recent developments such as the moves by some operators to reduce charges”, she said. “I of course welcome these first moves, but I believe the market generally has not gone far enough. It is clear that after many years of no response to calls from consumer and regulators, the market has now started moving only under the threat of regulation – for me, this is a strong argument for continuing in our efforts.”

On 12 July, announcing the formal proposals, Reding said: “For years, mobile roaming charges have remained at unjustifiably high levels, in spite of repeated warnings to the industry. This is why Europe needs to act now. I am convinced that reducing roaming charges will not only be beneficial for citizens travelling within the EU, but will also enhance the competitiveness of Europe’s industry. 80% of roaming customers are businesses, and in particular small and medium sized companies suffer from this substantial cost factor when doing business within the internal market.”

Whenever anyone in Europe plays the Single Market card, opponents know that they are in trouble. “The Single Market is first and foremost for consumers”, commented Commission President José Manuel Barroso. “Here is a practical application of our ‘Europe of results’ approach. With our proposal today, consumers using mobile phones within the Single Market will get a fairer deal.”

…and a hard place
The opposition of operators was swiftly given a voice by the GSM Association (GSMA). "This latest proposal appears to stem from a flawed political ideology that sees the European Commission trying to force uniform prices across Europe and dictate what are acceptable returns to business through regulation", said Rob Conway, CEO of the GSMA. "That ideal fails to recognise the huge diversity of business environments across Europe and that customers' usage of these services varies widely. One size does not fit all. Operators must remain free to offer their own innovative and distinctive pricing plans in response to customers' demands."

"Following widespread criticism from industry, national regulators and politicians, the Commission has replaced its first flawed proposal with a different, equally ill thought out scheme", added Conway. "The Commission is following a strategy of trial and error regulation. They should carry out a full impact assessment of their new proposals, which are significantly different from its original 'home pricing principle' before they push further ahead with the process and hold another public consultation."

Observation point
One senior figure in European telecoms, who is in neither camp and who asked not to be named, told TelecomRedux: “Commissioner Reding's proposal to set to zero international roaming charges has been de facto rejected by other commissioners, on the grounds that it is too "directive". Mosl likely, international and roaming tariffs will remain unreasonably high. In any case, any decreases will apply from next autumn, letting mobile players' monetise international calling's high season.”

The key lesson here is that an argument which pitted the European level ICT regulator against industry operating interests was eventually decided by the intervention of national regulators, who famously switched their views in May in favour of less regulation, along with two of Reding’s fellow Commissioners who opposed the measures at the 11th hour (for details, click here).

Arguments over the degree of compromise adopted by the European Commission, and attempts to appeal the decision will doubtless continue. Yet the ramifications of the way in which the dispute has panned out will be felt far beyond the narrow, if important, world of mobile roaming.
Jim Chalmers