Will reforms in Europe influence telecoms regulation in Australia?

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15 October 2013

Australian telecoms operators may be interested in following the telecommunications reform debate happening now in Europe. In the past, both the ACCC and the ACMA have referred to EU legislative developments in their assessments. For this reason, any changes adopted by the EU may influence future decisions of the ACCC and the ACMA in the telecoms sector.

On 12 September, the European Commission (EC) released a package of proposed changes to telecommunications regulations. The reforms aim to create a single market for telecommunications across the EU and include reducing roaming charges to consumers, harmonising rules applicable to telecom operators and introducing an EU wide protection of net neutrality. 

Alongside the legislative changes, the EC has also published a Recommendation to harmonise costs that incumbent operators can charge other operators for the access to their copper networks.  The Recommendation is intended to provide certainty to investors with the aim of fostering the development of next generation broadband services.

Many of the changes proposed by the EC are also ‘live issues’ in Australia and the debate over the European reforms will no doubt be closely watched by our own regulators and operators.

MAIN CHANGES IN THE PROPOSAL

1. Harmonise and simplify rules for telecom operators

There are currently 28 separate national telecommunication markets across the EU, each of them with different players and different regulations. 

In order to create a single telecoms market, the EC considers it is essential to harmonise the legal requirements imposed on operators.

The main reform proposed in this regard is the creation of a single authorisation system for the entire EU.  Other measures include introducing a demanding threshold for regulating telecoms sub-markets, which is likely to reduce the number of regulated markets, and further harmonising the regulation for accessing competitive services.

The legislative reform package also reinforces EC powers to ensure uniform application of telecom regulations by National Regulatory Authorities (NRAs).

2. Harmonise consumer protection by eliminating mobile roaming and international call surcharges

The proposal is to reduce certain prices charged to consumers by the telecom operators. In particular:

  • Roaming charges will be banned from 1 July 2014: and
  • Premium operators charges for international calls will be prohibited.

This proposal has sparked controversy as it means eliminating a lucrative revenue stream for telecom operators. Some commentators have even suggested it will affect operators’ abilities to invest in new infrastructure.

3. Improve coordination of wireless-frequency auctions

The EC considers that differences in timing, conditions and cost of acquiring radio frequency spectrum make it hard to develop integrated wireless networks between countries.
The reforms aim to deliver more timely and predictable spectrum availability for operators active in the EU.  
Spectrum is also a hot issue in Australia given ongoing concerns about availability and pricing. 

4. Safeguard net neutrality and set common criteria for wholesale broadband access rules

The EC proposes to explicitly recognise the right of users to full access to the open internet regardless of the cost or speed of their internet subscription. This measure, which favours consumers and portal operators such as Google but arguably harms carriers, has also been controversial.

The EC has justified the measure on the basis that several of its jurisdictions were already considering passing laws on this issue.

However, net neutrality is likely to be intensely debated in the EU Parliament as several lawmakers have expressed opposing positions.

5. Increase certainty for investors

As a complement to the legislative changes, the EC also published a Recommendation to harmonise costs that incumbent operators can charge other operators for the access to their copper networks.

It is intended to provide long-term stability for copper access prices, ensure equal access and set the conditions under which price regulation is no longer warranted.  The ACCC are considering very similar issues as part of its Fixed Services Review.

As a general rule, recommendations adopted by the EC are not formally binding.  Nevertheless, as the proposed regulation foresees to confer the EC veto powers over the decisions of the NRAs, in practice, the Recommendation would be binding.

CONCLUSION

If adopted, the telecommunications legislative package will be a significant step towards achieving an integrated telecoms market within the EU.  It may also encourage consolidation to create EU-wide operators that would be better placed to compete globally. 

Some of the issues addressed in the reforms, namely the elimination of roaming charges, the spectrum and access to copper networks pricing along with the explicit recognition of the net neutrality are topics currently being discussed in other jurisdictions including Australia. 

Both the ACCC and the ACMA have in the past referred to the EU legislative developments in their assessments. For this reason, the position finally adopted by the EU in these matters may influence future decisions of the ACCC and the ACMA in the telecoms sector.




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