Skip to content. | Skip to navigation

Personal tools
Sections
You are here: Home topics Telecommunications EU Telecoms Reform package 2007 - Frequently Asked Questions

EU Telecoms Reform package 2007 - Frequently Asked Questions

13 November 2007
by eub2 -- last modified 13 November 2007

The European Commission on 13 November 2007 adopted proposals for a reform of the EU telecoms rules. With the reform, the Commission wants to enable citizens, wherever they live and wherever they travel in the EU, to benefit from better and cheaper communication services, whether they use mobile phones, fast broadband internet connections or cable TV. To achieve this, the Commission proposes strengthening consumer rights; giving consumers more choice by reinforcing competition between telecoms operators; promoting investment into new communication infrastructures, in particular by freeing radio spectrum for wireless broadband services; and making communication networks more reliable and more secure, especially in case of viruses and other cyber-attacks. A new European Telecom Market Authority will support the Commission and national telecoms regulators in ensuring that market rules and consumer regulation are applied consistently, independently and without protectionism in all 27 EU Member States. To become law, the Commission proposals will now need to be approved by the European Parliament and the EU Council of Ministers.


Advertisement

How will the citizens of the European Union benefit from the proposed EU Telecoms Reform?

The European Commission believes that EU Telecoms Reform will ensure that 500 million EU citizens get easier and cheaper access to a variety of innovative telecoms services and will have, as a result of more effective competition, more freedom of choice between different operators. Citizens will also get, throughout Europe, wherever they are, better access to emergency services, freephone numbers and benefit from increased price transparency and greater security when using communications networks.

The reform are also aimed at removing barriers to the EU 's Single Market, making it easier for companies to compete on an equal footing and to offer their services across borders. Consumers should therefore be increasingly in a position to make phone calls, download pictures or emails and surf the web as if they are at home, or travelling in the 27 EU Member States.

How will the reform concretely ensure citizens get better services at lower prices?

The EU Telecoms Reform package includes several specific measures that will strengthen consumer rights and their freedom to choose.

  • Broadband internet access: The reform will tackle more efficiently the dominant telecoms operators' control of the broadband market. This will strengthen the right of consumers to choose and change their broadband provider, lead to better and faster broadband services, and to lower consumer prices. By making radio spectrum use more efficient, the reform will also ensure that those regions of Europe where it is uneconomic to build, say, a fibre optic network, can be connected via wireless broadband services.
  • Number portability: The reform will make it easier for citizens to keep their telephone number when switching providers, and set a maximum of 24 hours for operators to 'move' their number to the new provider. Today, this porting of numbers between providers, takes on average about 8 days for fixed telephone numbers and about 5 days for mobile telephone numbers; the best countries for this are Malta (1 day), Germany, Austria, and Finland (3 days), while porting a fixed telephony number can still take up to 30 days in Estonia, and up to 20 days in Slovakia for mobile numbers. In future, the Commission will also be able to extend this consumer right to the possibility of porting subscriber's personal directories and to the portability of numbers between fixed and mobile networks.
  • More transparency: Confronted with a wide range of telecoms services and products, consumers often have difficulties in deciding which one is best for them; 34% of EU consumers admit facing problems in comparing the offers of different providers, making it harder to take advantage of the best possible deals. The reform will force telecoms providers to provide all relevant information on prices and other conditions so that consumers can make informed choices before making a purchase.
  • Access to freephone numbers from abroad: At present, it is not possible to access certain freephone or business service numbers when calling from one Member State to another. Today consumers on holidays, or people travelling for work can have a problem in accessing public administration contact points (e.g. for health and pension systems), or pre-sale/after sale services. The EU Telecoms Reform will guarantee that access to these numbers is granted from everywhere in the EU. If you have to pay for this access, you should be told clearly in advance.
  • Connecting all citizens: About 15% of Europeans have a disability and by 2020 25% of the EU's population will be over 65. The reform will therefore ensure that people with disabilities, special needs and elderly people all get easier access to telecommunications services. For instance, access to emergency services via the European emergency number, 112, will be improved; and more TV channels will have subtitles, audio descriptions or sign language.
  • Independent watchdogs: The EU Telecoms Reform will ensure that competition and consumer rights in national markets are ensured by watchdogs which are fully independent from operators and government alike. Too often, telecoms regulators are today close to the dominant operator that in many countries continues to be owned by the national government; government shares in telecoms incumbents are still 100% in Cyprus, Luxembourg and Slovenia, and considerable in many other EU countries. A close relationship between regulators, incumbents and governments can lead to ineffective regulation, national protectionism and delays in enforcing consumer rights. The EU Telecoms Reform therefore wants to strengthen the independence of national telecoms watchdogs to guarantee fair regulation in the interest of consumers.

How will citizens' access to emergency services across the European Union be improved?

Member States will be obliged to ensure that the person calling emergency services can be located. Wherever you are in the EU, if you are in an emergency, calling the single European emergency call number 112, will allow the emergency services to immediately determine where you are, and dispatch for example an ambulance immediately to the right place. So far, the effectiveness of the European emergency number 112 is often reduced by the lack of its full implementation in different EU Member States. Since 2005, the European Commission therefore has started infringement proceedings against 14 Member States for failing to fully implement the legal requirements concerning 112 functioning in their territory. At the moment, infringement proceedings for failure to fully implement 112 are pending against Bulgaria, Poland, Italy, Lithuania, The Netherlands, Slovakia and Latvia.

Will citizens' rights to access websites of their choice be guaranteed?

Especially in the United States there has been recently a great amount of discussion regarding the risk that telecoms providers would block access to certain websites for purely commercial reasons. In the EU, the reform will guarantee that your internet service provider must clearly inform you in advance if they impose limitations on accessing certain sites. This information will make it easier for you to decide whether you want to switch to another provider or not. National regulators will also have powers to intervene when the quality of service for transmission (which grants access to online services such as TV, telephony, internet, etc.) could be at risk.

Are there still competition problems on Europe's telecoms markets?

Yes. In the fixed voice telephony market, infrastructure competition is still in its infancy with on average 87.8% of subscribers still using the incumbents' network for direct access. Alternative operators for direct access are used by almost no one in Malta, by only 1.5% of the population in Latvia, and by 1.7% in Slovakia. In contrast in Portugal the corresponding figure is 25.1%. For telephony, while 42% of subscribers in Sweden and 36.3% of subscribers in the UK use an alternative operator for national and international calls, only 3.2% in Slovakia and 5% in Slovenia use alternative operators. In the broadband market EU broadband penetration is currently on average only 18.2%. Although this includes market leaders Denmark (37.2%) and The Netherlands (33.1%), with Bulgaria and Romania at 5.7% and 6.6% there is obviously much room for growth through intensified competition.

What is functional separation?

Functional separation is an instrument to ensure fair competition leading to freedom of choice for consumers in a telecoms market dominated by one operator. It requires an incumbent operator to separate its network infrastructure from the units offering services using this infrastructure. Although operationally separate business entities are created, overall ownership remains unchanged; functional separation is therefore an instrument that needs to be distinguished from structural separation which is currently being introduced in the energy sector. As telecoms markets are more dynamic, functional separation allows network access to new entrants and the incumbent's own retail division on the same terms. It gives new entrants a fair chance to build services using the incumbent's existing infrastructure.

Will the Commission impose functional separation on every operator in the European Union?

No. The Commission proposes to give all national regulators the possibility of imposing functional separation, if they, on the basis of a sound market analysis, deem it necessary to tackle important competition problems, taking due account of the principle of proportionality and of the effect on investments by incumbents and new market entrants. Functional separation should only be used when all other regulatory tools have proved to be inadequate. To be imposed, functional separation requires the approval of the Commission and needs to take into account the effect on investment by the incumbent as well as by new market entrants.

Will functional separation not hold back investment in competitive infrastructures?

No. First of all, the experience from countries that have already introduced functional separation shows that this remedy enhances overall investment in services and in network infrastructures. In the UK, functional separation has spurred a new wave of investment and infrastructure-based market entry as evidenced by the explosion of local loop unbundled lines in UK which has jumped from less than 100,000 in June 2005 to 3.3 million by the end of October 2007. In addition, the EU Telecoms Reform requires a thorough cost-benefit analysis by national regulators before introducing functional separation. They thereby ensure that the incentives to invest for both the largest and smallest operators are preserved. By allowing common ownership of the network and service arms, functional separation will facilitate coordination of investment decisions between the services and network elements. Efficient investment by new market entrants will be supported by the fact that with functional separation, they can rely on non-discriminatory access to all bottlenecks.

Functional separation has been successful in the UK. Should all EU Member States now follow suit?

The Commission believes that functional separation is a useful tool, which in the long run will improve freedom of choice for users in markets where, for structural reasons, competition between different infrastructures fails to evolve. This positive view on functional separation is increasingly shared around the world, with regulators in the UK, New Zealand and Australia already having had concrete experience with it, while the instrument is currently considered by regulators in Sweden, Italy, Poland, Ireland and Spain.

However, simply because the remedy will be available does not mean it should always be applied. National regulators will always have to take into account how competitive the markets under their responsibility are. This can vary from country to country. For example, the Dutch national regulator considered that at the moment, functional separation would be inappropriate for The Netherlands, in view of evolving infrastructure competition between DSL and cable.

With the EU Telecoms Reform, the Commission wants to make sure that those regulators that see a need for choosing functional separation do so under a stable legal framework and with the backing of the Commission, using a consistent methodology and taking into account regulatory experience made in other EU markets.

What is the role of the new European Telecom Market Authority?

The new European Telecom Market Authority will help the Commission ensure that European consumers and companies can benefit from a true single market for modern communications services. The new European Telecom Market Authority will be an independent centre of excellence for regulatory issues linked to market analysis, remedies and the provision of EU-wide services and assist the Commission and national telecoms regulators in their work. It will also strengthen the independence of those national regulators which come under undue pressure from their national governments. This will level the playing field for a competitive pan-European telecoms industry, creating stronger cross-border competition and increased consumer benefits.

The new Authority will also be in charge of network and information security, helping the Commission to step up the fight against virus and cyber attacks and create synergies with the regulatory work done by national telecoms regulators. A Chief Network Security Officer will be in charge in the new Authority for this important task.

The new European Telecom Market Authority will be a small, but efficient and professional agency that will work together with national regulators like a "system of independent regulators". It will employ around 130 people, which contrasts, for example, with the 800 employees of the UK telecoms regulator OFCOM known to be one of the most efficient regulators of the EU.

Why does the Commission see a need for a European Telecom Market Authority?

In a European Union of 27 Member States, having a common approach to regulatory issues is essential for a successful telecoms economy. Today, telecoms issues of cross-border interest (such as internet access, data roaming, Voice over Internet Protocol, mobile phone usage on aeroplanes or business services) risk being dealt with in 27 different ways in Europe – and this in spite of the fact that neither technology nor the economic interests of telecoms operators nor the interests of consumers still know borders.

So far the loose form of cooperation currently tested inside the European Regulators Group (ERG) – which regroups the 27 national telecoms regulators – has failed, in spite of many efforts and good intentions, to result in concrete regulatory responses to cross-border and has been criticised by industry for its "lowest common denominator" approach.

On an important cross-border issue such as international mobile roaming charges, the intervention of the European Commission was finally needed to ensure a result in the interest of fair competition and lower consumer prices.

Instead of centralising telecoms regulation in the hands of the European Commission, the new European Telecom Market Authority will be based on the expertise of national telecoms regulators and activate regulation in the common European interest. This will combine the knowledge of national markets with the Commission's single market instruments.

Will the new European Telecom Market Authority replace national telecoms regulators?

Certainly not. The new Authority will work closely with, and build upon the existing national telecoms regulators – which have a deep understanding of their national markets – and also with the European Commission. This will contribute to the coordination and harmonisation of telecoms regulation and ensure that it is consistently applied across all EU Member States. The European Commission will be able to rely on the expert advice of the new Authority whenever it has to decide on issues related to the proper functioning of the European telecoms market. This will ensure a more effective partnership between the Commission and national telecoms regulators, and create a regulatory environment that is conducive to the delivery of high quality telecoms services. This partnership between national and European regulators will strengthen regulatory independence.

Why does the Commission want an additional say on remedies imposed by national telecoms regulators?

In telecoms regulation, time and effectiveness of measures targeted at competition problems is essential. Unfortunately, at the moment, a number of non-competitive markets are being dealt with inconsistently, and partly with substantial delay, by national telecoms regulators. This is especially the case with regard to access to broadband networks of dominant players as well as the level of mobile and fixed termination rates. Moreover, for access to the fixed public telephone network, the total number of remedies imposed varies significantly across Europe. In one Member State only one remedy has been imposed; in others, the relevant operator is subject to five remedies. Consequently this does not provide a level playing field in Europe. These inconsistencies have an adverse effect on consumers in the countries concerned. At the same time, inconsistencies risk distorting the competitive conditions between telecoms companies active in several of the EU member States or providing cross-border services.

The Commission currently has a say only on market definitions and on the assessments of market dominance by national telecoms regulators. However, regarding the most important element of telecoms regulation, the concrete measures put in place to remedy a competition problem, the Commission can only issue opinions without a legally binding effect. The Commission can neither accelerate a remedy delayed without justification by a national telecoms regulator; nor take measures to ensure that a remedy that is too weak to ensure competition is replaced by a more effective one.

The EU Telecoms Reform will ensure that the Commission can intervene in case national telecoms regulators remedy competition problems ineffectively or with substantial delay. This does not mean a "one-size-fits all" solution. But in a single market in which telecoms operators offer their services to consumers in several countries, similar competition problems need to be addressed by similar remedies. The new European Telecoms Market Authority will support the Commission in this responsibility and will allow it to draw on the expert advice of national telecoms regulators.

Today, the European Network Information Security Agency (ENISA) tackles network security. Why does the Commission believe it is useful to integrate ENISA’s functions into the new European Telecom Market Authority?

Telecoms regulation and network security are very closely linked. This is why many of today's EU telecoms rules have a security aspect. This is also why the Court of Justice, when ruling positively on the legal foundation of ENISA in 2005, said that ENISA is directly relevant to the proper functioning of the EU telecoms rules. Many synergies can therefore be found by bringing together regulatory and security expertise in one Authority responsible for telecoms regulation.

The economies of scale achieved by combining ENISA with the new Authority will allow more resources to be devoted to network and information security issues than at present. An independent evaluation of ENISA from 2007 came to the conclusion that under its current set up and mandate, and given ENISA is staffed by only 44 people, it was not in a position to make a sufficiently strong contribution to network security in the single market. It called for ENISA to reform.

Where will the new European Telecoms Market Authority have its seat?

The seat of an EU agency is decided by common agreement among the 27 Member States. For the Commission, in view of the importance of the European Telecom Market Authority for consumers, businesses and the single market as a whole, the seat for the new agency should be chosen according to criteria which allow it to fulfil its tasks most efficiently.

Why does the Commission propose to reform spectrum management?

Spectrum is a key economic resource for all wireless services. The total value of radio spectrum-dependent services in the EU is estimated to be EUR 250 billion or 2.2% of GDP. It is vital for telecoms, mobile internet and TV, but also for transport, weather forecasting, scientific applications, and defence.

Demand for spectrum is growing steadily, keeping pace with society's ever-increasing need for information on the move. However, radio spectrum is a finite resource and is not often used in the most effective way. Radio spectrum does not know borders, and therefore theoretically would allow for trans-national or even pan-European communication services; but at the same time, regulation and allocation of spectrum still takes place nationally and partly even regionally, thereby missing out on the opportunities offered by economies of scale.

To meet the increasing demand for radio spectrum, an innovative coordinated EU approach to spectrum management is therefore needed to improve the supply of spectrum. With the EU Telecoms Reform, the Commission proposes new rules to improve spectrum management and to foster greater cross-border coordination in this area, to increase innovation, competition and choice amongst wireless technologies and services, as well as to strengthen the EU single market for wireless products by fostering pan-European services.

With more effective management of radio spectrum, those Europeans that still do not have broadband access especially, could be connected by wireless broadband. Spectrum management reform is therefore a very important instrument to bridge the digital divide in Europe.

Who stands to benefit from spectrum reform?

In the long term: everybody. More efficient and flexible management of spectrum will lead to more rapid innovation. All market players will benefit directly from new commercial opportunities. For new market entrants, it will be easier to access the spectrum needed to offer new wireless services. TV broadcasters will be able to offer new TV channels. The economy as a whole will benefit from new and more efficient communications services, and this will boost productivity, competitiveness, and create growth and jobs. Most importantly, consumers will benefit from a whole new variety of wireless services – mobile broadband access and mobile television are just two examples. The fact that radio spectrum becomes freed for new services will mean more choice and lower prices for consumers.

What is the "digital dividend"? What does the Commission plan to do with it?

The digital dividend refers to those radio frequencies freed up by the transition from analogue TV to the more spectrum-efficient digital TV. The digital dividend thus comprises the radio spectrum that will be available in addition to the spectrum used by today's TV channels.

The Commission proposes to maximise the benefits of this additional spectrum by encouraging Member States to move towards common frequency bands for similar applications. The synergies, made possible via EU action on the digital dividend, should facilitate the introduction of new services in all telecoms areas, including broadcasting, by giving industry the confidence to invest in creating new Europe-wide or even global markets. It will also make it possible to deal with the digital divide by providing broadband wireless services to give remote areas internet access.

At least 10% of EU citizens (50 million people) are still excluded from the benefits of broadband access. Rural areas always face higher costs leading to lower coverage and slower speeds. Broadband is only available to 70% of the rural population, 23 points lower than in urban areas. Although broadband coverage is increasing, the gap is still significant, particularly in Italy (100% urban broadband coverage vs 50% broadband coverage outside cities), Germany (99% vs 59%), Slovakia (91% vs 30%), Greece (27% vs 10%), Poland (74% vs 55%), and Latvia (90% vs 37%). In 2006 download speeds of 512 kbps were the most common in rural areas compared with urban speeds of 1-2 MBps.

Because fast internet access is a prerequisite for an efficient information society, all EU citizens, including those living in the most remote areas, should be able to have speedy connections.

Do broadcasters risk losing out as a result of spectrum reform?

No. Instead, the reform of radio spectrum management will make sure that all users of radio spectrum will benefit from a more efficient use of this extremely valuable, but finite resource. Also broadcasters should benefit from the increased flexibility in the conditions of use of spectrum by being able to respond quickly to future demand and to benefit from the rapid development of new wireless technologies.

The reform will strengthen market forces to ensure that radio spectrum is not under-used and that spectrum is opened up for new consumer services. At the same time, the reform entrenches important public policy principles that need to be taken into account in managing radio spectrum. Radio spectrum management in particular must take account of general interest objectives, such as ensuring media pluralism or cultural diversity.

For the consumer, this will mean that in future, there will be even more TV channels to choose from, while at the same time, wireless broadband services will be accessible everywhere in the EU, including in rural or remote areas. The Commission however also wants to give a political signal with the reform: "If the choice is between the 300th TV channel and a new wireless broadband service, I want that Member States decide in the interest of the citizen," says EU Telecoms and Media Commissioner Viviane Reding.

Does the Commission intend to auction and sell the radio spectrum used by broadcasters?

Certainly not. This is a typical "Euro-myth" spread by the opponents of the EU's spectrum reform. The truth is: the Commission cannot – neither today nor tomorrow – "auction" or "sell" any spectrum. This is and will continue to be for Member States which own the radio spectrum.

The proposed spectrum reform aims at establishing EU-level rules to support "secondary spectrum trading". Secondary trading allows, but does not require those who already have acquired spectrum usage rights to sell them if they no longer need them. The Commission sees secondary trading as an important incentive for more efficient use of spectrum. However, a broadcaster who does not want to take part in secondary trading cannot be obliged to do so.

What is the list of relevant markets? Why is it important?

The Commission Recommendation of relevant markets of 2003 lists those markets in which it is presumed that competition problems persist. In these markets, regulatory measures by national telecoms regulators can therefore be imposed on dominant operators where this is justified by sound market analysis.

Even though the 2003-list, with 18 listed markets (from retail to wholesale markets, from fixed and mobile telephony to broadband access and leased lines) is not exhaustive and national regulators can also look at other markets under certain conditions, the list is important because it sets the baseline for telecoms regulation. It is therefore seen as an important indicator by national telecoms regulators, by operators and by consumers.

What does the Commission propose to do with this list?

As part of the EU Telecoms Reform, the Commission will reduce the number of listed markets from 18 (2003 Commission Recommendation) to 7 (new Commission Recommendation 2007). National regulators will have to analyse the markets in the new list as soon as possible or re-examine the market at the appropriate review point (in cases where the market had already been analysed before).

Why does the Commission believe only 7 markets need regulating? Is competition law sufficient to deal with the other markets?

The reason particular markets have been removed from the list is related to the development of competition in those markets. In most of the retail markets, effective wholesale regulation today creates retail competition and brings the benefits of that competition to consumers, removing the need to also regulate retail markets. In some retail markets, most national telecoms regulators have already found effective competition.

That is not to say that problems will not arise in the future. Where markets still exhibit characteristics which can lead to problems, regulators need to decide whether these problems will be dealt with through competition law or under our Telecoms Rules. This will depend on the national circumstances and the nature of the problem itself. If a national regulator wishes to continue to regulate using the rules they can do so provided they can demonstrate a need exists.

When will the EU Telecoms Reform come into force in Member States?

From, today onwards, the Commission proposals for new consumer rights, for functional separation and for the European Telecoms Market Authority will be extensively examined and debated by the European Parliament and the Council of Telecoms Ministers. Parliament and Council will decide about the EU Telecoms Reform on an equal footing (the so-called co-decision procedure). Once accepted by both institutions, the 27 Member States will have to translate the results into their national legislation. This is expected to happen by 2010.

The new Commission Recommendation on Relevant Markets will be applicable immediately after the adoption by the Commission on 13 November 2007.

Source: European Commission
Sponsor a Guide

EUbusiness Guides offer background information and web links about key EU business issues.

Promote your services by providing your own practical information and help to EUbusiness members, with your brand and contact details.

To sponsor a Guide phone us on +44 (0)20 7193 7242 or email sales.

EU Guides