Proposed EU telecom framework unveiled

Plans for a light regulatory framework for the European Union telecommunications sector were unveiled by the European Commission yesterday, with the aim of increasing competition, improving services and reducing prices.

Information Society Commissioner Erkki Liikanen announced the framework, which consists of eight legislative proposals, at a news conference.

"We are far from a competitive (telecom) market," he said, pointing to the many barriers that still undermine the EU's potential in this area, citing in particular the continued dominance of former national telecom monopolies, which still control 91 per cent of most markets. The monopolies continue to have a stranglehold on the local loop, which is the last segment of a communications network that brings a voice, data or video transmission from the central switch to the individual home or office.

In addition, new telecom operators in the EU also must contend with burdensome licensing requirements that are different for new entrants, and with bottlenecks, notably in the mobile telephony market due in part to limited radio spectrum, he said.

Faced with this situation, the Commission has put forward the framework proposal, which it hopes will be approved by the 15 member states and put into place by January 2002. Meeting in Lisbon and Feira, Portugal, earlier this year, EU heads of state and government committed themselves to that timetable, so the Commission believes that EU telecom ministers will rapidly process the proposals.

The framework sets common rules for licensing, interconnection, data privacy for telecom networks and universal services. The rules are viewed as the minimum requirements for creating a single market for telecommunications. Central to the framework is a proposal that would require operators to unbundle the local loop by January 1, 2001. Unbundling refers to the process by which the former telecom monopolies that control the local loop lease lines to competitors so that the competition can offer services to consumers.

Once in place, the new framework could have a dramatic impact on prices, especially after incumbents have unbundled the local loop, Liikanen said.

The framework will replace an existing list of 23 directives introduced at various times over the last 10 years. The new framework's ultimate goal is to create the conditions for full competition. After that, a built-in sunset clause provides for the framework's phasing out with antitrust policy then regulating the market. Neither Commissioner Liikanen nor other officials would provide estimates of when the framework would give way to antitrust regulations.

In the meantime, the framework does permit a relaxing of the rules when full competition hits a specific product, service or geographic market, Robert Verrue, director general of the European Commission's Information Society Division, told IDG News Service in response to questions.

The legislation will require member states and the Commission to monitor closely the competitive situations in their markets, and on an annual basis, the Commission will issue decisions identifying markets where these sector-specific rules could be relaxed.

The wholesale market to consumers and long-distance communications are already competitive, according to officials who asked not to be identified. Similarly, a major city such as London might in time see the sector-specific rules relaxed while remaining in force in rural areas, they added.

"This is the whole point -- the framework gives national regulators a tool box to adjust the level of regulation to the level of competition," one official said in response to questions.

Although incumbents are expected to resist the proposals, some new entrants appeared thrilled with the new policy direction.

GlobalTeleSystems (GTS) welcomed the package and urged the European Parliament and Council of Ministers "to adopt swiftly these strong measures to ensure regulation keeps up with the industry as it consolidates across national borders", Iain Osborne, Director of Regulatory Policy at GTS, said in a statement. GTS provides borderless broadband services across Europe.

The new proposals are available at

http://europa.eu.int/comm/information_society/policy/framework/index_en.htm/.

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