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EU unveils plan to open up phone, Internet sector

The European Commission unveiled a plan Tuesday to create a single pan-European Union telecommunications body as part of a larger proposal to reform the way telecoms are regulated in the bloc.
/ Source: The Associated Press

The European Commission unveiled a plan Tuesday to create a single pan-European Union telecommunications body as part of a larger proposal to reform the way telecoms are regulated in the bloc.

Under the proposal, which some large telecommunications companies have criticized, the European Telecom Market Authority would be able to push national regulators to tackle large telecom companies and their stranglehold over national markets.

"Dominant telecoms operators, often still protected by government authorities, remain in control of critical market segments, especially of the broadband market. This restricts consumers' freedom of choice," EU Telecom Commissioner Viviane Reding said.

The regulatory body could force a split of telecom networks and access providers, a measure the EU's executive arm would foster competition and reduce costs for customers. In 2006, the EU telecoms sector was worth ??649 billion (US$946 billion), or 2 percent of the 27-nation bloc's economy.

Smaller telecom businesses blame regulators' inaction, among other reasons, for holding back the rollout of high-speed Internet across Europe. Only one in five households in wealthy Western Europe has broadband, with high prices and little choice keeping people off-line.

The "functional separation" plan has triggered divisions within the EU's executive arm. Neelie Kroes and Guenter Verheugen, the EU antitrust and industry commissioners, respectively, have expressed concern that parts of the plan could harm investment and add to red tape.

The proposal _ expected to be adopted by EU member states only in several years, and probably in a diluted form _ follows on the heels of another regulatory measure pushed through by the commission, which tackled the high costs of cross-border mobile phone use by imposing a price ceiling on roaming charges.

But the EU plan, widely discussed in the past weeks, faces fierce opposition from major companies such as France Telecom, which argue that splitting the management of a company's infrastructure and retail operations could harm investment in next-generation networks.

ETNO, the association of European telecommunications operators, said the proposal would lead to "losses in efficiency and the ability to coordinate complex investment decisions."

But the European Competitive Telecoms Association, a group of recent telecom entrants that compete with once state-owned telephone providers, backed the proposal, saying that just under 20 percent of western European households now have broadband Internet.

It said this has changed radically as companies are able to use existing infrastructure to offer their own services, mentioning British moves to open up the market that saw an explosion of choice for customers.

Some 25 percent of British customers use telecom operators other than the dominant company. Slovakia and Finland are at the other end of the chart, with virtually no customers using services of an alternative operator, according to the commission.

The European Telecom Market Authority would bring together the heads of existing national authorities into a body that would advise the commission on telecoms issues, Reding said.

Among other changes, the EU proposal includes the rights to switch telecoms operators within one day; to transparent and comparable price information; and the possibility to call freephone numbers from abroad.