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FT Telecoms March 2001 / Features
On European telecoms: speak now or forever hold your peace
By Phil Evins
Published: March 19 2001 14:39GMT | Last Updated: March 19 2001 14:42GMT
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There is supposed to be a single market in telecommunications in the European Union. I say "supposed" because, as any pan-European operator will tell you, 15 separate regulators, with 15 separate sets of policy objectives, timescales and operating procedures do not make a single market.

True, there is harmonisation at the broadest level. There are minimum rules governing the powers that Member State's regulators must be given and their independence from national governments.

But in a world where many EU governments retain a substantial stake in the former national monopolies, and where the relations between government, regulator and regulated are not always as transparent as one might like, then these minimum rules are not enough.

A number of companies have put in place competitive backbone networks linking Europe's cities. They represent the European part of a global business and not a series of national markets.

Yet they are often frustrated in their attempts to offer European businesses a truly pan-European service because incumbents use their de facto monopoly power to delay interconnection, leased line or other service provision and regulators fail to take swift enough action.

Business needs confidence in the transparency, predictability and consistency of regulation, and it needs it on a pan-European basis. And telecommunications operators need a one-stop shop to resolve effectively barriers to competition across Europe.

This is why ecta has welcomed the package of measures published last year by the European Commission to modernise the regulatory framework for electronic communications.

The Commission has proposed that economic regulation regimes should have common objectives and rules across the EU. The underlying objective is that, as the market develops, regulators should increasingly rely on ex post regulation and general competition policy powers rather than telecommunications industry-specific ex ante rules.

The new measures will strengthen the powers of the National Regulatory Authorities (NRAs) and provide a common framework as to how these powers should be used, ex ante and ex post. More contentiously, they will give the Commission direct powers to intervene in NRA's decisions.

The draft Framework Directive will give the Commission key powers to deliver the harmonisation necessary for a true single market. The Commission has proposed, in article 6, that it is given the powers to require NRAs to publish decisions in draft and then to amend or withdraw these decisions if the Commission deems this necessary to comply with Community law.

Similarly, the Commission has proposed that it should have the final say over the definition of markets, as proposed in Article 14.

These measures were agreed by the European Parliament, following scrutiny and amendment by the Industry Committee, at its plenary session at the beginning of March. They are strongly supported by the overwhelming majority of new entrants to the market and also by those incumbent operators who are more concerned with winning business in the rest of Europe than protecting their own backyards.

One part of this package, the Regulation on Local Loop Unbundling, has already become law. Ecta launched a local loop unbundling scorecard at the end of January to monitor the effectiveness of implementation by member states of this regulation, which became law at the end of last year.

The scorecard compares the performance of the different EU member states in local loop unbundling by listing the percentage of exchanges which new entrants can get unbundled lines and the number of lines which have been unbundled as a percentage of the total lines and contrasted to the number of DSL lines which are provided by the incumbent operator.

Full details of the scorecard are at www.ectaportal.com, and the first update will be posted at the beginning of April at ecta's conference in Barcelona, but it is already clear that progress is both slow and uneven.

The patchy implementation of the regulation and the difficulties companies face in most member states in exercising their rights on local loop unbundling emphasises the need for a broader enforcement role for the EU Commission - and fortunately this is envisaged in the rest of the package.

Unsurprisingly, many NRAs object to these proposals. More significantly, the Member States' governments are similarly opposed and the Telecommunications Council, made up of the relevant ministers from the member states, looks set unanimously to reject these parts of the Directive when it meets at the beginning of April.

This is not the end of the matter. The Directive is being considered under the co-decision procedures of the European Union, which effectively require the Parliament and Council to reach agreement if the legislation is to pass. There is still time for telecommunications companies to seek to persuade ministers in their member states of the need to give the Commission these powers.

Business needs the greater certainty, predictability and transparency offered by the Framework Directive. But if the Commission and the Parliament are to succeed, they in turn need the support of business.

Now is the time for all European operators and business users to make their voices heard by their governments: otherwise governments may mistake silence for consent, and the Single Market in telecommunications will continue to be an aspiration and not a reality.

Phil Evins is managing director of ecta, the European Competitive Telecommunications Association