The idea of a pan-European telecoms regulator has once again returned to the EU Commission’s agenda as part of its review of the current telecoms framework.

What?

EU Parliamentarians and the EU Commission are, once again, questioning whether to appoint a single EU telecoms regulator. This pan-European regulator would replace the current system of national regulatory authorities in each Member State, with the Body of European Regulations for Electronic Communications (“BEREC”) acting as an umbrella oversight organisation.

One of the major criticisms of the current system of national telecoms markets, overseen by national regulators, is the market fragmentation that it creates, with inconsistent national approaches impacting negatively on EU competition. The debate over a telecoms single market and whether to put in place a single telecoms regulator has a contentious history, and consequently, any debates will face rigorous cross-EU scrutiny.

Telecoms single market

The current telecoms framework was originally put in place in 2002 (transposed into UK law via the Communications Act 2003) and introduced changes that represented a liberalisation of the telecommunications sector and promoted a more harmonised regulatory approach across the EU. This framework was subsequently updated in 2009, by the Better Regulation Directive, and again in 2013 with the “Connected Continent” reforms. These successive changes can be seen as building towards the idea of a telecoms single market, aiming to simplify EU rules for telecoms operators, boosting competition and investment, and encouraging coherent regulation across all Member States of the EU.

The progression towards a telecoms single market was further progressed in May 2015 with the introduction of the “EU Digital Single Market” strategy. One of the priorities of the Digital Single Market strategy is an ambitious overhaul of current telecoms rules, attempting to ensure a more level playing field for all telecoms market players (traditional and new), and creating a more effective institutional framework with the legislative proposal for such an approach to be released later in 2016. These ideals fit neatly with legislative changes that have been made to date and have repeatedly sought to create a single telecoms market, instead of a fragmented industry running along national lines, such as the introduction of the single authorisation regime as part of the Connected Continent reforms. In September 2015, the European Commission launched two public consultations as part of their review of the current telecoms framework, and on 19 January 2016 the EU Parliament voted to adopt its report entitled “Towards a Digital Single Market” which discusses further telecoms reforms and regulation.

Single telecoms regulator

Running parallel to the idea of creating a single telecoms market has always been the idea of whether to appoint a single EU telecoms regulator. Currently, all Member States appoint a national regulatory authority, and these authorities are then overseen by BEREC (established in 2010, following the 2009 update to the 2003 framework). In 2009, as now, the initial proposal was to appoint a pan-European regulator. This approach proved to be extremely problematic and was subsequently dropped in favour of the creation of BEREC, a Board comprised of the heads of all Member States’ national regulatory authorities and a non-voting observer representing the Commission. Instead of a regulator, BEREC is an independent advisory body, which develops guidelines for implementing telecoms law at a national level, draws up formal opinions on draft Commission decisions about national regulations and aims to promote consistent application of requirements across the EU.

However, since 2009 support for the idea of a pan-European regulator appears to have gathered momentum, at least within the EU Parliament. In 2013 a document produced by the Directorate General for Competition, which preceded the official Connected Continent proposals, claimed that “a true pan-European regulator would be the most effective solution to remove national divergences”. Later, in 2014, Joaquín Almunia (European Commissioner for Competition, 2009-2014) stated in a speech to an International Competition Law Forum in St Gallen, Switzerland, that the Connected Continent reforms were not sufficient and that “the only way to ensure a truly single European telecoms market is to have a fully-fledged EU telecoms regulator, EU-wide spectrum allocation and no roaming charges”, thereby reopening the debate. These sentiments have since been echoed by Jean-Claude Juncker (President of the European Commission) in his 2014 opening statement in the European Parliament Plenary Session where he confirmed that “we will need to have the courage to break down national silos in telecoms regulation”.

Now, in 2016, successive reforms – both those that are telecoms-specific, and those introduced as part of the wider Digital Single Market strategy – have continued to promote the idea of a telecoms single market in the EU. This, combined with changes in EU-opinion on the need for pan-EU regulation, have culminated in the submission to the EU Parliament of the “Towards a Digital Single Market” report, which states that the Commission should “propose a single telecoms regulator to ensure a uniform application of the rules”.

So What?

Speaking at the European Parliament in July 2013, Neelie Kroes (then-Vice President of the European Commission) claimed that having a competitive single EU telecoms market could boost the region’s economy by €110 billion per year. It would enable operators to work freely across all Member States, and to obtain easy access to spectrums needed for mobile services, whilst also cutting roaming charges for consumers. A European Commission memorandum, produced following the adoption of the Connected Continent reforms, confirmed that in a digital economy – i.e. one that demands connectivity and scale – we cannot afford to remain trapped in national markets. Whilst much has been achieved in breaking down national barriers, problems of fragmentation remain which are preventing EU companies from competing on a European scale. Large telecommunications companies are present in each of the Member States, but no operator is present in all, and – according to a 2013 communication from the Commission to the European Parliament – often operators that are active across several Member States do not behave as truly European operators, and instead appear content to run their activities separately in each Member State. However, recent reforms in net neutrality and roaming surcharges (in the Telecoms Single Market Regulation) appear to confirm that the EU legislators are continuing to move more towards a single market for telecommunications.

The question remains, however, whether a single telecoms market requires a single telecoms regulator. In 2013, the Commission was of the view that the telecoms sector suffers from “a lack of regulatory consistency and predictability across the Union”, and that “a genuine single market … will require a single EU regulator responsible for interpreting and implementing a harmonised legal framework” and “it would also require a single system for imposing regulatory remedies”. The “Towards a Digital Single Market” report also states that the Commission should propose a single telecoms regulator to ensure a uniform application of the rules.

A majority of EU Parliamentarians appear to be of the view that a pan-European regulator would be better placed to align national approaches to market regulation, in addition to managing wireless frequencies and consumer protection, thereby increasing competition within the EU.

Notwithstanding the support seen in the EU Commission and amongst EU Parliamentarians, there are a number of difficult issues that will need to be addressed before a single EU telecoms regulator becomes a reality. Firstly, the parties involved will need to determine, and agree on, the form of any one pan-European regulator. Fatima Baros (Chairwoman of BEREC) says “we shouldn’t start by looking at what we have currently and trying to fix what is not working well”, which appears to support the notion of an entirely new EU oversight regime being created. Conversely, the 2015 “Towards a Digital Single Market” report calls on the Commission, in order to ensure a more efficient institutional framework is in place, to look at strengthening the role, capacity and decision-making ability of BEREC in order to achieve consistent application of the regulatory framework.

Secondly, whilst the idea of a pan-European regulator has gained support at an EU-level, EU Parliamentarians and the Commission will still face stern resistance from national authorities, and are already attracting criticism from domestic regulators who are unwilling to give up their authority and control over national implementation. MEPs Pilar del Castillo Vera and Miapetra Kumpula-Natri do not believe that pan-European regulation is possible, as any centralised system cannot see and respond to national conditions. Robert Viola (Deputy Director General in the Commission’s technology department) confirmed that any reforms “will focus on striking the right regulatory balance necessary to attract investors.”

Finally, there is a further school of thought that argues that mergers of telecoms companies have a more important role to play in creating a Digital Single Market than the appointment of a pan-European regulator. A market containing a number of merged telecoms operators, rather than a fragmented market of operators, would reduce the number of firms in the EU, resulting in a harmonised market containing large companies operating in a more consistent manner, even across borders. Additionally, whilst a reduction in the number of operators appears to be counter-intuitive to competition goals, more mergers in the telecommunications market could deliver benefits, such as lower prices and increased innovation, to EU citizens with consolidation improving returns on infrastructure investment, whilst creating the borderless, telecoms single market envisioned by EU Parliamentarians. However, such mergers could also lead to increases in prices for the services being offered by the remaining operators as competitive tension is reduced by having fewer operators.