The telecom reforms proposals: ‘The EC has adopted a ‘carrot and stick’ approach’, says Ovum

“The telecoms reform proposals set out by the EC this week offer no surprises, however, they still set out ambitious plans for a single market across the EU,” according to Luca Schiavoni, telecoms regulation analyst at Ovum.

The measures will be a mixed bag for operators; consistency will be welcomed by all parties, although Ovum expects other areas to be kicked back on.

Schiavoni comments: “The EC has adopted a ‘carrot and stick’ approach, the carrot being freedom in setting prices for NGA access. This will definitely be welcomed by owners of fiber networks, although access seekers are likely to be very critical of such plans.

“The EC has also been relatively reasonable in its approach to net neutrality. Requiring transparency over broadband speeds and ease of switching is now almost a common response everywhere in the world. The commitment to maintaining the slow lane if forms of traffic management are used is likely to be a good enough commitment.

“Plans for a single European regulator have been put aside, despite the EC’s initial intentions. While there is a logical argument for one authority to oversee the sector, such a body would face significant issues with national differences and with spectrum auctions conducted on a country-by-country basis. Similar attempts were made in the past, but what we ended up with is what we today know as BEREC, which is little more than a beefed up version of the old European Regulators Group.

“The EC’s proposals on roaming do not come as a surprise either, since the issue is clearly close to the heart of EU politicians, in the wake of the upcoming elections. The pledge of “zero roaming charges” is almost certainly a vote winner and therefore likely to be adopted as it is; however, this is potentially not as harmful to operators as it looks at a first glance. There will be a significant incentive for operators to strike pan-European roaming agreements to offer “zero roaming” to customers, and avoid the obligations related to the decoupling that will come into force in July 2014. Conversely, alternative roaming providers will have little interest in entering a market where profit margins will be going down in the coming years. Consumers will indeed benefit from “zero roaming” throughout the EU, but operators will be still free to increase overall retail prices and the prices for roaming to non-EU destinations, which has already happened in many cases.”

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