Written by Ezra Steinhardt and Colin Warriner

On 12 September, 2013, the European Commission formally adopted a proposal for a new Telecommunications Regulation (the “Regulation”).  The Regulation would, if enacted, reform the European Union’s telecommunication rules, including in areas such as net neutrality, spectrum allocation, roaming charges, and consumer rights in mobile and telecoms contracts.  The proposal is now being considered by the European Parliament and Council. 

This post, on reforms publicized as encouraging growth and reducing red-tape for companies, is the final part of a series on key aspects of the proposed Regulation.

As discussed in our previous post, the Regulation introduces a range of new consumer rights that, together with a phase-out of roaming charges (see our previous post), may harm industry’s short-term revenues.  However, to balance that outcome, and to make the Regulation more politically feasible, the Commission has also designed other sections of the Regulation to win over industry.  Some of the most important of these sections are outlined below.

Harmonisation of European Telecoms Laws and Single Authorisation to Provide Telecoms Networks

Likely the most significant advance for industry is the Regulation’s creation of a single-authorisation pathway for telecommunications companies that want to operate across different EU Member States.

Current telecommunication rules in Europe are national, and vary between each Member State – as a result, the Commission notes that revenues per call minute vary by up to 774% between different Member States, while electronic communication providers must register under different rule sets to obtain an operating licence in each Member State in which they operate, at varying fee costs of between €0 to €3,000 per licence.  The Regulation would remove the need for providers to navigate these different licensing rules by establishing a single authorisation that would enable providers authorised in just one Member State to operate in all Member States, lightening the burden on cross-European telecommunications companies.  (Interestingly, this marks a step back from news leaked over the summer that the Commission was planning to create a single EU-wide regulator.)

The Regulation would also require all EU national regulators to treat providers equally, enabling all providers to rely on the same interpretation of the rules applying in each Member States in which they operate.  The Commission would also gain new powers to inhibit or block attempts by national regulators to introduce Member State-specific regulations under certain circumstances, to prevent fragmentation of the newly unified regulatory regime.

However, the Regulation will not eliminate all barriers to trans-European telecoms network providers.  Under the Regulation, if a provider has an annual turnover of more than 0.5% of the total local turnover of all providers operating in a Member State, then that Member State may levy a charge against the large provider.  Likewise, further contributions may be imposed on a provider once their turnover exceeds 3% of the total national local turnover figure.  This means that many cross-European providers may face varying charge levels in each Member State, potentially inhibiting the growth of such networks.  In the long run, the proposal could mean that Member States with the most competitive markets end up with the lowest fees.

Spectrum Allocation

The Regulation also proposes new rules to synchronise spectrum allocation across the EU.  Currently, the price of spectrum rights varies across each of the Member States by up to a factor of up to 50, and only five of the 28 EU Member States have actually so far assigned all of the 1025 MHz of EU-harmonised spectrum for mobile broadband due to be assigned by end of 2012.  The consequence is that, as of now, only 26% of Europeans have access to 4G.

The Regulation aims to fix this by harmonising the way in which Member States release spectrum and by harmonising the duration of the spectrum rights available at auction, and also plans to develop “an EU wireless space.”  A number of measures are proposed to accomplish this goal.  For example, Article 9 of the Regulation, if enacted, would prohibit national authorities from imposing any conditions on the use of spectrum which “may unduly impede” providers from integrating cross-border networks.  Under Article 11, however, national authorities will gain the power to revoke an operator’s spectrum licence if the spectrum is not being used.