The Prague Post Online: Business: Plans call for EU telecom monitor

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November 22nd, 2008

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Plans call for EU telecom monitor

Commissioner says regulators 'cozying up' to providers

By Michael Heitmann
Staff Writer, The Prague Post
December 5th, 2007 issue

Consumers need a new champion if they are to get fair prices on Europe’s monopolistic phone markets, says European Union Commissioner Viviane Redding.

Redding is calling for a new European Telecom Market Authority to monitor future telecom deals. She says government telecom regulators in many countries are currently “cozying up” to dominant phone providers, many of which continue to be partly owned by governments.

In the Czech Republic, mobile phone giants such as Vodafone, T-Mobile and Telefónica O2 would be forced to allow their competitors equal access to networks if Redding’s plans are approved.

“I am for consumers, and I’m going to be the one to question this intimate relationship,” Redding said in Brussels Nov. 13.

Europe’s phone companies, however, have greeted the new telecom authority plan with a general outcry.

The Czech Telecommunications Office says it welcomes the commission’s efforts to re-evaluate the existing system, but says the new plan is the wrong way to do it, according to spokeswoman Dana Makrlíková.

The commission’s blueprint “does not fulfill our basic expectations, because it does not go in the direction of reduced regulation,” Makrlíková said.

“It’s a very inappropriate measure given that it requires a fundamental intervention into the company structure, financing, management and overall functioning of the affected operators,” Makrlíková said. “It’s a financially tasking process, and the mere threat such a measure represents would hinder investment into electronic communications.”

Under new rules, so-called functional separation into network and service businesses would undermine previous efforts to reduce regulation, said Telefónica O2 spokesman Martin Žabka. Private phone companies will postpone further investments in next-generation networks because of the uncertainty, he says.

In addition, Telefónica O2 opposes the idea of a super regulator like the one Redding suggests on the grounds that market conditions vary in different countries, Žabka said. Telefónica O2 of Spain bought Český Telecom and its mobile arm, Eurotel, from the Czech government in 2005.

Vodafone, the country’s third-largest mobile phone operator, is not as worried about accepting a new regulatory body onto the European market, said spokesman Filip Hrubý. But Vodafone also does not see a regulator playing a decisive role in the company’s competitiveness, he said.

“Competition between market players is key for a healthy market environment,” Hrubý said.

Over-regulation is definitely a worry, however, for those at the Center for Economics and Politics, a conservative think tank in Prague.

“In effect, this proposal means nationalization,” said Petr Mach, executive director of the center. “The EU exceeds its competence. It should leave the dynamic telecommunications market to the free economy instead of imposing over-regulation under the banner of consumer protection.”

Creating a new regulatory office is a dangerous idea, Mach said, pointing out that the EU has already started to regulate mobile phone roaming prices without having a clear mandate by member states to do so.

The new authority could also oversee wireless Internet access and could assign existing analog TV frequencies to Internet companies, as many stations move to digital TV frequencies, Redding said. Up to 600,000 new jobs could be created across Europe if existing analog TV signals are re-assigned to be used for broadband Internet services, according to a recent T-Mobile study.

That could also help save consumers money, said T-Mobile spokeswoman Jitka Pacolová, because building a new mobile network or Internet service with existing infrastructure would be less expensive, and the savings would get passed on to consumers.

The radio spectrum should be controlled by individual countries rather than by the EU, Mach said. In contrast, radio frequencies in the United States are controlled by the Federal Communications Commission, which regulates all 50 states.

“The radio spectrum is not owned by the EU; it should therefore leave it up to the member states how they want to use it,” Mach argued. “Wanting to guarantee broadband access for everyone is basically a socialist plan. The state does not guarantee everyone the privilege of owning a mobile phone, a nice flat or a car, either,” he added.

The proposed super-regulator agency would also defend member states against cyber attacks. Such attacks have been reported recently by Estonia’s government as well as UK, French and German networks in the past, according to the EU.

The plan is to get a hearing from 27 EU telecommunications ministers and the European Parliament in 2008.

Michael Heitmann can be reached at mheitmann@praguepost.com

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