Wednesday, September 11, 2013

European Commission Adopts its Most Ambitious Telecom Market Reforms

The European Commission adopted its most ambitious plan in 26 years of telecoms market reform with the goal to "reduce consumer charges, simplify red tape faced by companies, and bring a range of new rights for both users and service providers, so that Europe can once again be a global digital leader."


The “Connected Continent” legislative package, which was outlined by Commission President Jose Manuel Barroso in his 2013 State of the Union speech, will lead to the EU-wide and roaming-free mobile plans; make it easier for companies to operate across national borders; establish the first-ever EU-wide protection of net neutrality; and abolish premiums for international phone calls within Europe.

Key elements of the "Connected Continent" legislation include:

Simplifying EU rules for telecoms operators

A single authorization for operating in all 28 member states (instead of 28 authorisations), a demanding legal threshold for regulating telecoms sub-markets (which should lead to a reduction in number of regulated markets), and further harmonizing the way operators can rent access to networks owned by other companies in order to provide a competing service.

Pushing roaming premiums out of the market

Incoming call charges while travelling in the EU would be banned from 1 July 2014. Companies would have the choice to either 1) offer phone plans that apply everywhere in the European Union ("roam like at home"), the price of which will be driven by domestic competition, or 2) allow their customers to “decouple”, that is: opt for a separate roaming provider who offers cheaper rates (without having to buy a new SIM card). 

No more international call premiums within Europe

Today companies tend to charge a premium for both fixed and mobile calls made from a consumer's home country to other EU countries. Today's proposal would mean companies cannot charge more for a fixed intra-EU call than they do for a long-distance domestic call. For mobile intra-EU calls, the price could not be more than €0.19 per minute (plus VAT). In setting prices, companies could recover objectively justified costs, but arbitrary profits from intra-EU calls would disappear.

Legal protection for open internet (net neutrality)

Blocking and throttling of internet content would be banned, giving users access to the full and open internet regardless of the cost or speed of their internet subscription. Companies still able to provide “specialized services” with assured quality (such as IPTV, video on demand, apps including high-resolution medical imaging, virtual operating theatres, and business-critical data-intensive cloud applications) so long as this did not interfere with the internet speeds promised to other customers. Consumers would have the right to check if they are receiving the internet speeds they pay for, and to walk away from their contract if those commitments are not met.

New consumer rights, with all rights harmonized across Europe

New rights such as the right to plain language contracts with more comparable information, greater rights to switch provider or contract, the right to a 12-month contract if you do not wish a longer contract, the right to walk away from your contract if promised internet speeds are not delivered, and the right to have emails forwarded to a new email address after switching internet provider.

Coordinated spectrum assignment

This will ensure Europeans get more 4G mobile access and Wi-Fi. Mobile operators will be able to develop more efficient and cross-border investment plans, thanks to stronger coordination of timing, duration and other conditions of assignment of spectrum. Member States would remain in charge, and continue to benefit from related fees from mobile operators, while operating within a more coherent framework. Such a framework will also expand the market for advanced telecoms equipment.

More certainty for investors

The Recommendation on Costing Methodologies and Non-Discrimination is the second element of this package, complementing the proposed regulation and intrinsically linked with it. It aims to increase certainty for investors, to increase their investment levels, and reduce divergences between regulators. This means 1) further harmonising and stablising costs that incumbent operators may charge for giving others access to their existing copper networks; and 2) ensuring that "access seekers" have truly equivalent access to networks. Where such competitive constraints and non-discrimination are ensured, the prices for wholesale access to "next generation" broadband would be determined by the market rather than regulators, meaning less red tape for operators.

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