In a move that could dramatically shake up the European telecommunications industry, the European Commission (EC) is moving forward with plans to develop a new pan-European telecommunications regulatory agency that would impose tougher regulatory scrutiny on telecommunications carriers. EC Commissioner Viviane Reding, the motivating force behind the proposed agency, says that she “believes such a watchdog could force more competition in the Union’s €270 billion a year communications sector and ensure that market rules are applied consistently across national borders.”

Currently, the national regulators of the member states are in charge of enforcing telecom rules and monitoring their own telecom markets to determine whether European Union (EU) rules are working and competition increasing. The problem, say EC insiders, is that national regulators take different positions in interpreting the same rules. The solution, Commissioner Reding says, is a European version of the U.S. Federal Communications Commission (FCC).

Commissioner Reding declared that one of the most important functions of the new agency would be to move forward with spectrum harmonization; the lack of which has resulted in wireless companies being unable to operate across member countries without difficulty. “A new body could cut a lot of red tape in spectrum management by replacing 25 administrative models with one agency with EU-wide responsibility,” she said.

Spectrum in European countries has never been harmonized because the web of different national rules is so complex and member states have deeply entrenched positions. Under current rules, for example, licensees in the same spectrum band have different prices, license periods, and coverage requirements in each member state. Moreover, some countries operate on a “use it or lose it” policy, while others grant licensees property rights in their licenses.

Commissioner Reding proposes that the new agency institute uniform licensing rules, technological neutrality in many bands, and spectrum trading among member states. This will allow developers of new wireless services to enter the market without having to worry about each member state’s licensing conditions. The vast swath of spectrum that will be freed up by the shut-down of analog television in Europe in 2012 “will be a window of opportunity for change, as long as we do not foreclose any service in deciding how the freed spectrum should best be used,” she said.