EU to create super Ofcom?

The European Union may create a watchdog to monitor telecoms across Europe, according to the Commissioner in charge of Information Technology. However, as a sweetener, The European commission is proposing sweeping changes to the regulation of the telecoms industry. In a draft document, the EC says that it intends to withdraw from the regulation of a number of areas in telecoms provision.

In a speech last week Viviane Reding, the Commissioner for Information and Media, said that she wants to see ‘an independent European telecom regulator that would work together with national regulators in a system, similar to the European System of Central Banks’.

Once policy is agreed, it will be up to the member states’ national regulatory authorities (NRAs) to deploy the regulations in accordance with local factors. In the case of the UK, this will be the responsibility of Ofcom. However, worried that some member states might cheat in the implementation, Reding proposes that the new supra national watchdog would be able to step in.

She has also slammed countries like Germany who are maintaining local monopolies for their telecom champions and praised the UK for developing ‘structural separation’ of incumbent telecoms operators, for example in the creation of OpenReach out of BT, which should provide a level playing field of engineers and services to allow other companies to take advantage of local loop unbundling.

An example of the kind of thing Reding wants to see is in the new draft definition of important markets in the telecoms sector also published last week.

Under the new guidelines, the EU would be cutting back on the areas where it feels it needs heavy regulation, for example in the areas of price control and non-discrimination between customers. The strategy instead will be towards a light regulation environment and more of a reliance on the market and competition to keep prices down. It also recommends that ’emerging markets’ for new telecoms services should also be lightly regulated until it becomes clearer how the market is operating.

Among the areas where the EU may step back from heavy regulation are retail telephone call markets and the market for retail low-speed leased lines. If accepted, it means that many larger customers will be able to negotiate better deals with the telcos.

On the other hand, the EU might extend its regulation to include SMS termination. While this may not mean that SMS prices to customers would fall, it may mean some reductions in areas such as SMS to landlines.

The consultation period for the European Commission’s draft recommendation

ends on 30 September 2006. The consultation document is available at the EC web site.

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