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SPEECH/08/400












Viviane Reding

Member of the European Commission responsible for Telecoms




Towards a True Single Telecoms Market that Delivers in terms of Competition, Investment and Consumers




















European Parliament debate on the EU Telecoms Reform
Brussels, 2 September 2008

Main messages of this speech:

– "Let us take advantage of the continent Europe. Let us get rid of the barriers that lead to fragmentation and loss of economic and social efficiency."

– "We all know that the existing arrangements for cooperation between national regulators within the Community framework (the ERG, the European Regulators Group) have to be improved if they want to be useful."

– "The Commission welcomes Parliament's proposals for a Community body. [...] The "Body" is the means to an "end", not an end in itself. It is nothing more than an instrument to improve regulatory consistency. That is why the other side of the internal market coin is so important and why Parliament is absolutely right to reinforce the "Article 7" consistency procedure for notifying national market reviews in which, by the way, the "Body" will play its part."

– "Such a Community body, with all that entails, has to be fit for purpose. It has to operate in such a way that it is efficient, fair, reliable and above the suspicion that it is perhaps closer to some regulators than to others."

– "There must be full Community financing. National financing, in whatever proportion, will place the "Body's" credibility into question and open the door for administrative and legal uncertainty."

"I would warn the Parliament to be on its guard against the "Belgian football club approach". You know that the ERG has been created by the Commission as its advisor. Recently, the national regulators established a private law body under Belgian law, to act as a secretariat to the International Regulators Group, the IRG. The IRG operates outside the Community framework and has a membership beyond the 27 Member States. In practice, nobody knows where the IRG begins and the ERG ends. The Commission wants to finish this confusion by establishing a clearly defined and accountable EECMA. We certainly do not want a private Belgian company, alien to the Community approach and the guarantees it provides, to be involved in European decision-making!"

– "We cannot accept that having been through the whole lengthy Article 7 review process, the notifying national regulator can just say "Thank you very much for your point of view, but I prefer my approach" and simply do as if nothing had happened ! That is why the Parliament is right to say that the whole process cannot simply end in a whimper. Industry, consumers and tax payers will not appreciate if we build a sophisticated and time-consuming regulatory edifice, that is not capable of making a difference. That is why the system needs to have a backstop, namely that ultimately there can be a binding decision of the Commission."

I would firstly like to thank the rapporteurs, in particular, and the Parliament generally, for the hard work that has been put into the examination and improvement of the Commission's proposals. I know that this has involved extensive preparation, hearings with stakeholders, and the consideration of literally hundreds of amendments. I know that you have been working against the clock. But it is often in such circumstances that the best results are achieved. That certainly applies here.

No matter how adequate the existing Regulatory Framework is in many respects, there is a real need to improve it. We have to reinforce the protection of consumers, by ensuring that they can exercise a properly informed choice between a variety of competing products and services. We have to ensure that when Member States manage their national spectrum, which is a very precious resource, they realise social and economic benefits because their management is efficient, transparent and flexible and because there is a better coordination at EU level. We have to make sure that our regulatory system will facilitate and not hinder investments in next generation networks, so that Europe remains competitive in the twenty-first century.

Finally, (and this underlies all our endeavours), we must reinforce the internal market. This is not about just paying lip service. It is about equipping the EU with an efficient, competitive single market that brings economies of scale not just to the electronic communications sector, but also to the citizens and so the economy at large. It is the wider economic benefit that has to be seized: let us take advantage of the continent Europe. Let us get rid of the barriers that lead to fragmentation and loss of economic and social efficiency.

On all these four fundamental subjects: consumer protection, spectrum, investments and the internal market, I must congratulate the Parliament for identifying the underlying problems and, having made the right diagnosis, for putting forward real solutions.

Let me turn first to the internal market mechanisms. This is where the stakes are the highest, and where the discussion ahead with Council still promises to be difficult. I say this in spite of the recognition by the Ministers themselves (at the end of the Slovenian Presidency) that we need to improve the consistency of the internal market for electronic communications.

Recognition, all right, but what of the solutions? Parliament has rightly seen that there is just one debate, (not two), when it comes to the "Body" and mechanisms for improving the functioning of the internal market, (in particular the Article 7 mechanism for notification of national market reviews). Those are two sides of the same internal market coin. They belong together.

We all know that the existing arrangements for cooperation between national regulators within the Community framework (I mean the ERG, the European Regulators Group) have to be improved if they want to be useful. That is why the Commission welcomes the amendments that build on the Commission's proposal for a more transparent, accountable and effective form of cooperation. Above all, the Commission welcomes Parliament's proposals for a Community body. But, such a Community body, with all that entails, has to be fit for purpose. It has to operate in such a way that it is efficient, fair, reliable and above the suspicion that it is perhaps closer to some regulators than to others.

That is why, (if we are to be coherent), there must be full Community financing. National financing, in whatever proportion, will place the "Body's" credibility into question and open the door for administrative and legal uncertainty. We know out of experience that hybrid financing creates problems. So why not avoid such problems?

In this respect, I would also warn the Parliament to be on its guard against the "Belgian football club approach". I should explain a little. You know that the ERG has been created by the Commission as its advisor. Recently, the national regulators established a private law body under Belgian law, to act as a secretariat to the International Regulators Group, the IRG. The IRG operates outside the Community framework and has a membership beyond the 27 Member States. In practice, nobody knows where the IRG begins and the ERG ends. The Commission wanted to finish this confusion by establishing a clearly defined and accountable EECMA. We certainly do not want a private Belgian company, alien to the Community approach and the guarantees it provides, to be involved in European decision-making!

That is why there is still a need for further consideration on a number of legal and institutional issues concerning the establishment of the "Body", in particular its governance structure. We have to find the right means to safeguard the independence of the national regulators, in a way that guarantees a Community-based approach.

But, above all, I must stress the fact that the "Body" is the means to an "end", not an end in itself. It is nothing more than an instrument to improve regulatory consistency. That is why the other side of the internal market coin is so important and why Parliament is absolutely right to reinforce the "Article 7" consistency procedure for notifying national market reviews in which, by the way, the "Body" will play its part.

Parliament's arbitration mechanism in new Article 7a shows that the Commission and the Parliament stand together in seeing the need for an operational consistency mechanism that will make a real difference. Parliament's solution is to enable the Commission to step in to require a national regulator to change its regulatory approach, if after a peer-review by the "Body" a problem has been identified. We will have to discuss further the details of Parliament's approach, so as to respect the institutional balance laid down in the Treaty.

But what I find absolutely right is the logic of the approach taken, which is to find the right balance between the interests of subsidiarity and those of the internal market, and then to draw clear operational conclusions. Thanks to the peer-review carried out through the "Body", there is a means to benefit from the pooled expertise of the national regulators alongside their sensitivity to what are legitimate local differences. It surely makes sense that when the Body advises that there is an internal market problem, in conjunction with the concerns raised by the Commission, which is the guardian of the Treaty, then there should be real consequences. In the interests of the internal market, and of legal (and that means business) certainty, there must be a power for the Commission to require the notifying national regulator to change its approach in such a case.

We cannot accept that having been through the whole lengthy Article 7 review process, the notifying national regulator can just say "Thank you very much for your point of view, but I prefer my approach" and simply do as if nothing had happened !

That is why the Parliament is right to say that the whole process cannot simply end in a whimper. Industry, consumers and tax payers will not appreciate if we build a sophisticated and time-consuming regulatory edifice, that is not capable of making a difference. That is why the system needs to have a backstop, namely that ultimately there can be a binding decision of the Commission.

I mentioned earlier the importance of creating a regulatory framework friendly to new investments. That is why the Commission in its proposals not just maintained but reinforced the competition-based approach to regulation, as competitive markets drive new investment. That is also why the Commission is grateful for the hard work of the ITRE committee to try to make the telecoms rules more investment friendly, especially as regards the large investments that are needed to modernise the old copper wires by putting fast optical fibre networks into place. These outmoded local loops - that the vast majority of European households and small businesses still depend on to connect to the internet -represent the choke point of the high speed internet; the point where the information superhighway slows down to a crawl.

I applaud the Parliament's moves to encourage infrastructure competition on these "next generation access" networks by proactively promoting the sharing of the ducts that house the new fibres and encouraging risk sharing of new facilities. These efforts are welcome and are in line with a recommendation that I am currently preparing to give guidance for national regulators on these issues. But the upgrading of the choke point in the high speed internet must not become a new and enduring bottleneck for competition in the future. We have plenty of evidence that the transition to fibre will make the business case for alternative investors much more difficult.

Unbundling of fibre is currently neither technically nor economically possible which means that alternative operators must invest in their own fibre or use a bitstream service of the incumbent. Colleagues, we have to face facts, in the many geographic zones where infrastructure competition proves not to be feasible, appropriate regulation will continue to be the only way to keep competition alive.

Competition brings with it lower prices, better quality services and more choice, so consumers are the real winners! But I do not kid myself, and I can see the Parliament shares these concerns: choice needs to be real. Consumers need to be empowered to make the most of competition and that also means being properly informed. That is why the enhanced ability to switch your supplier is so important, and why I welcome Parliament's support on the need to ensure that number portability is completed within 1 day. If it can happen in Australia in 2 hours, then 1 day should be entirely feasible in Europe. I also welcome the clarity that Parliament has added with its changes on enhanced consumer information; so that consumers really know what service they are getting from their providers and can make useful comparisons. This enhanced transparency also serves to support the open architecture of the internet. If there are any restrictions on accessing the internet, it is imperative that consumers are clearly informed of what those restrictions are. I am glad to see that both the Commission and the Parliament stand in agreement on these points.

What I find more difficult therefore to understand in Parliament's changes, is why subscribers are not similarly empowered and informed, when it comes to the privacy of their personal data? I know that Parliament takes the protection of citizens' fundamental rights very seriously, so I am surprised that the breach notification requirements in the Commission's proposals are diluted by the changes now on the table. The default position should be that subscribers know of a breach of security concerning their personal data, so that the appropriate precautions can be taken. It cannot be left to the service provider to determine whether such a breach is likely to cause the subscriber harm. How for example, can a provider know how sensitive that information is in individual cases? I would therefore urge the Parliament to reconsider its position on this issue.

Finally, turning to the subject of spectrum, I had no need to persuade Parliament of the importance of this subject!

The Commission welcomes the politicisation of the debate surrounding this vital resource. This debate goes far beyond the "technical" level, even if we will continue to owe a great deal to the hard work and solutions produced by the Radio Spectrum Committee. Much has been achieved under the Radio Spectrum Decision, and we should preserve this. But Parliament is right; more progress depends on integrating a political layer to this process, so that the stakes can be properly debated. A more efficient, and that means a more coordinated approach, among Member States brings about the prospect of a "win-win" scenario, whereby the achievement of social and cultural goals is enhanced, alongside great benefits for Europe's economy.

Important progress in maximising the digital dividend, and other such questions, can only be assured with the strategy and important political decisions agreed both by Parliament and the Council. So the Commission supports Parliament's legitimate goal of greater involvement in setting spectrum policy, and accepts in principle the changes Parliament is proposing. Of course, Council will surely have its say. I wish to signal that the Commission will stand by the Parliament in this debate, and will work to find the best institutional solution for defining spectrum policy in the future.


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