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European Commission could increase power to regulate telecoms

The European Commission could increase the powers it has over national telecommunications regulators in a bid to deal with powerful former monopoly telcos. A new report outlines how greater Commission powers could aid European telecoms integration.28 Aug 2006

The Commission has published three studies which it commissioned into the state of the European telecoms business, one of which examined the prospect of increasing Commission powers over those companies deemed to have "significant market power".

The study was conducted by Brussels-based Hogan & Hartson and London's Analysys and was called 'Preparing the Next Steps in Regulation of Electronic Communications'. It was conducted to help the Commission in its ongoing review of 2002's EU telecoms regulations.

"The study looks at the issue, currently under discussion, to give the Commission enhanced powers over remedies to be adopted by national telecom regulators in case of a position of significant market power on a specific electronic communications market," said a Commission statement. The term 'significant market power' refers to companies which control a certain proportion of a specific market.

Generally a market share of 25% or more is enough to have a company designated as having 'significant market power'. The designation brings with it tighter regulatory control and almost always applies to a country's former monopoly telecom supplier.

"Several respondents suggested that an enhanced Community control over remedies would facilitate greater harmonisation and availability of consistent wholesale products across the EU," said the statement.

The study recognised that in some cases, national regulators may have more difficulty in imposing themselves on incumbents than a European institution would. It even canvassed the views of those in the telecoms industry on the establishment of a European Regulatory Authority (ERA).

"One argument presented in support of an ERA is that it may be able to apply regulation in a more consistent manner and to 'stand up to incumbents' when the current NRA may not," says the report.

The report continues,

"Some respondents alleged that their NRA was either lax or ineffective in imposing regulation. There appears to be an expectation that an ERA could alleviate the negative effects of tensions between the NRA and the government in certain countries.

"In support of this notion, an alternative fixed operator stated that an ERA 'would prevent or at least reduce the possibility of political interference.' An alternative mobile operator lamented that the 'competition protection authority is not performing its duties,' which implies that there may be scope for correction of a national regulatory failing."

The report concluded that more participants were against the establishment of an ERA than in favour of it.

Another of the studies found that regulation was essential if investment was to be attracted into the telecoms business. The third study found that retail market regulation could largely be done away with, and that regulation of the wholesale supply of telecoms services is now sufficient to keep the market in line with EU policy.