European Commission adopts new telecom rules

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CORRECTED 7:07 p.m. PT Nov. 13, 2007

BRUSSELS -- Long-awaited reforms to the European Union's telecom rules were unveiled Tuesday in a bold bid to overhaul broadband delivery and revolutionize the way radio spectrum is allocated to broadcasters.

The measures were formally adopted by the European Commission -- the EU's executive authority -- which said they would allow Europe's 500 million consumers to benefit from better and cheaper communication services, whether they use mobile phones, fast broadband Internet connections or cable TV.

Speaking in Strasbourg, France, EC president Jose Manuel Barroso said the measures would create a single, liberalized market for EU's 300 million euro ($438 million)-a-year electronic communications sector. "Telecoms is a field where our single market can bring about very concrete results for every citizen in terms of more choice and lower prices," he said.

The measures aim to promote investment into new communication infrastructures, in particular by reallocating radio spectrum as a result of the switch-off of analog TV and the move to digital. They also contain measures designed to make communication networks more secure in the face of viruses and other cyber attacks.

A new regulator, the European Telecom Market Authority, will oversee the process, ensuring that market rules and consumer regulations are applied consistently across the EU's 27 members. Made up of the directors of the 27 national telecommunications regulators, it will advise national regulators on regulatory issues.

The most controversial element of the package is expected to be the plan to give national telecom regulators new powers to split business and network arms of dominant operators. The move could speed up the delivery of broadband and on-demand services if established telecoms operators -- in particular, the former state-owned monopolies -- are forced to compete with emerging services for consumers.

However, the plans already have been attacked by the former monopolies in countries such as Germany and Spain, who claim they will simply create more bureaucracy. "It certainly is going to result in fewer investments for new or alternative networks," said Michael Bartholomew, director of the European Telecommunications Network Operators' Assn., which represents incumbents such as Deutsche Telekom and Spain's Telefonica.

But emerging rivals say splitting business and network arms -- or "functional separation" -- is vital if Europe is to enjoy a vibrant telecoms and broadcast market. "Europe could today have been a worldwide broadband leader if regulators had had the opportunity to use functional separation to support open markets," the European Competitive Telecommunications Assn. said.

The main architect of the plans, EU Information Society and Media Commissioner Viviane Reding, said that dominant telecoms operators, often still protected by government authorities, remain in control of critical market segments such as broadband.

"This restricts consumers' freedom of choice: 10% of EU citizens still have no broadband access at all," she said. "This is why new consumer rights, a new dose of competition, an effective system of independent telecoms regulators, new investment into competitive infrastructures and more space for new wireless services are needed to put Europe's digital economy on track."
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