The European Commission unveiled its long-awaited review of the legal landscape for the telecom industry this week, proposing a shakeup in the inefficient way radio spectrum is used in the 27 European Union countries, a new telecom authority for the whole EU and greater powers to punish former monopolies that don't compete fairly.
The latest proposed changes come after a decade during which Europe's telecom markets have switched from being dominated by national monopolies to becoming more competitive. This process of liberalization that began in 1998 aimed to forge one giant market from all the national markets in the EU.
However, the former monopolies still exert too much control, especially in vital market sectors such as access to broadband Internet services, said telecom Commissioner Viviane Reding at a news conference in Strasbourg.
"Dominant telecoms operators, often still protected by government authorities, remain in control of critical market segments, especially of the broadband market," Reding said. She wants to grant the 27 national regulators the right to order incumbent operators to separate services operations from running of their infrastructures -- so-called functional separation.
Separating the two is seen as a way to ensure rivals fair access to infrastructure, but in response to disapproval of this proposed legal tool from the incumbents, Reding stressed that the aim isn't to break up the companies.
"It's not the same thing as ownership unbundling," she said. Functional separation could only be used by the national regulators with the approval of the newly created European Telecom Market Authority (ETMA) she is planning to set up. "It's not a panacea, but a flexible measure which has worked in the UK and is already being considered in Sweden and Italy," she said.
She plans a "New Deal" for radio spectrum to spur investment into new infrastructures and to ensure broadband access for everyone, she said.
In rural areas of the EU, 72 percent of the population on average have broadband access. The Commission wants to overcome this "digital divide" by better managing radio spectrum and by making spectrum available for wireless broadband services in regions where building a new fiber infrastructure is too costly.
Existing rules for spectrum allocation date back to the 1950s and have to be changed, she said. "Too many countries are sitting on unused radio spectrum," she said, adding that the switch from analog to digital TV will free up a lot more spectrum.
Broadcasters fear that all the available spectrum will be devoted to broadband Internet access, leaving too little for HDTV (high definition TV).
However, Reding said it will be for national regulators to decide who gets the free spectrum. "Radio waves are the property of the member states; this won't change," she said. Some spectrum will need to be reserved specifically for cross-border services within the EU, but for the most part it will be up to national regulators to distribute spectrum.
The ETMA will play an important role in making sure the new rules take effect across the EU, Reding said. The idea of a supra-national authority modeled on the US Federal Communications Commission has been attacked by some national regulators, as well as by some officials in the European Commission, for adding another layer of bureaucracy. But Reding insisted it is vital if the EU is ever to get a single, Union-wide telecom market.
"I'm not looking to create a one-size-fits-all answer; however, there are similar problems in the different countries and they should be dealt with in similar ways," she said.