Reform Proposal Emerges to Sharp Criticism From Telecom, Fiber and Rights Groups

The “Connected Continent” telecom overhaul package approved Wednesday by the European Commission would enshrine net neutrality into law, bar incoming roaming charges and require governments to coordinate their spectrum assignment plans. If adopted by the European Parliament and Council, the EC said it will be a major step toward creating a single European telecom market that could one day include an EU e-communications regulator. The proposal, subject of intense debate as various draft documents leaked, is likely to face strong opposition, based on early criticism. Before the final version emerged Wednesday, it was attacked by the Fiber to the Home (FTTH) Council Europe, German Association of Telecommunications and Value-Added Service Providers (VATM) and French citizens’ advocacy group La Quadrature du Net.

Despite 26 years of telecom regulation overhaul, “the sector still operates largely on the basis of 28 national markets,” the EC said in a news release. No operator spans the entire EU, and operators and customers face differing practices and rules, it said. A genuine single market means one where consumers can get services from any EU operator, without discrimination, no matter where they're based, it said in a statement to the European Parliament and Council (http://bit.ly/1ehrx9I). It also means operators can offer competitive services outside their home country and market them to users throughout the EU; and that excessive charges for intra-EU calls and roaming are gone, it said. “A genuine single market in line with this vision will require a single EU regulator responsible for interpreting and implementing a harmonised legal framework,” it said. “It would also require a single system for imposing regulatory remedies, and possible further harmonisation of spectrum allocation and assignment."

The proposal (http://bit.ly/18bT49d) creates a single authorization process for operating in all member countries and further harmonizes the way operators can rent access to networks owned by other companies to provide competing services. It would ban incoming call charges while roaming in the EU beginning July 1, and bar operators from charging more for a fixed intra-EU call than they do for long-distance domestic calls.

The proposed regulation also would give consumers new rights. They would include the right to plain-language contracts with more comparison information, more rights to switch providers or contracts, and the ability to walk away from a contract if promised Internet speeds aren’t delivered, the EC said. A more coordinated approach to spectrum assignment would spur 4G deployment by allowing mobile operators to develop more efficient and cross-border investment plans, it said. National administrations would still be in charge of spectrum, but would have to operate within a more coherent environment, it said.

The package recommends costing methodologies and nondiscrimination to increase certainty for investors and cut down on divergences among regulators, the EC said. The change would further standardize and stabilize costs incumbents can charge for access to existing copper networks, and ensure that access-seekers have truly equivalent access to the networks, it said.

A key element of the overhaul is its guarantee of net neutrality. The proposal would allow companies to provide differentiated services as long as they don’t interfere with Internet speeds promised to other customers, akin to express mail services, the EC said. That means “no blocking, no slowing of service, no matter what subscription you have,” said Digital Agenda Commissioner Neelie Kroes in a written statement. But all network and technologies are different, as are consumer needs, she said: “Subscriptions with different internet speeds or data volumes remain possible.” Consumers “must get the package they pay for,” and would be able to walk away from contracts if Internet speed commitments aren’t met, she said.

The proposal is a first step, the EC said. Further action will be needed to complete the single telecom market, mostly by more coordination of regulatory enforcement, it said. The EC will prepare the ground for the next commission by readying a review of how the existing mechanisms for ensuring regulatory consistency could be enhanced, it said. That review could also examine the need for a single EU regulator, it said.

The EC “missed an opportunity to have a better focused fibre policy” by continuing to ignore issues such as too little fiber investment and a vision of how the industry can accelerate investments for the benefit of the broader economy, said the FTTH Council Europe in a statement. The proposal identifies slow rollout of LTE and tries to find ways to speed up next-generation wireless, and it should have focused policy on fiber as well, said council Director General Hartwig Tauber. “The Commission refuses to prioritise fibre to the home investments on the grounds of technology neutrality,” with the results that regulatory policies effectively promote copper upgrades that can’t support the capacity needs of users, fixed or mobile, into the future, he said.

The proposal didn’t fare any better with mobile operators. The GSM Association said the package “needed to focus on measures that address the region’s growth, jobs and competitiveness challenges.” The EC correctly identified where progress is still needed, including in consolidation, deregulation and equal regulatory treatment of companies that offer functionally equivalent services, but the proposed regulation risks undermining regulatory certainty, clarity and consistency for consumers and businesses, it said. “The proposals have suffered as a result of the requirement to accelerate procedures to match the pact set by the legislative timetable."

Network operators welcomed the costing recommendation and that the EC “rightly” recognized that Europe is losing out on a “major potential source of growth stemming from the telecoms sector.” But those operators, represented by the European Telecommunications Network Operators’ Association, said the proposals won’t create the momentum needed to achieve digital agenda targets and boost economic growth. ETNO said the EC shouldn’t pursue provisions that divert investment resources from the sector. Instead, the association said the EC should focus on market restructuring, a shift to light-touch regulation and creating a level playing field between the rules that apply to over-the-top online services and those applicable to telecom services.

"Kroes is completely unpredictable, contradicts itself [sic] and the project is politically dishonest,” said VATM Managing Director Jürgen Grützner. Roaming isn’t free, because a customer calling abroad uses two networks and should have to pay for that, he said. Grützner said he fears “terrible consequences” if the proposal goes through. Customers could sign mobile contracts in countries, such as Romania, where prices are relatively cheap on a small network, and then make almost-free calls anywhere in the EU without paying a fair amount for the roaming service, he said.

La Quadrature du Net accused Kroes of “rushing a flawed lobby-driven text” on net neutrality after spending years denying the need for legislation. The proposal pretends to defend the principle of net neutrality by banning blocking and throttling but “makes it completely meaningless by explicitly allowing undue commercial discrimination through prioritization,” it said. Kroes’ stance on net neutrality is a “death sentence for innovators,” said European Digital Rights Executive Director Joe McNamee. After promising the European Parliament strong measures in favor of neutrality, Kroes “is now seeking to ensure its destruction,” he said. It’s up to EU lawmakers now to safeguard freedoms in Europe, he said.

McNamee attacked provisions that, among other things, allow special deals as long as they don’t “substantially” impair the general quality of Internet access services; and aren’t “widely used as a substitute for internet access services.” There was opposition from senior EC commissioners to Kroes’ plan, he said. The Directorate-General for Justice “went so far as to state that they were ‘concerned that such provisions risk having a great negative impact on consumers’ freedom of expression and information, as guaranteed by Article 11 of the Charter’ of Fundamental Rights,” McNamee said.