Regulatory: Bringing Europe together

Regulatory: Bringing Europe together

Alex Brown, partner at Simmons & Simmons, examines how 10 years of regulatory changes have altered the face of telecoms and looks at future legislation.

When we celebrated the new millennium (and the birth of Capacity), few of us could have imagined what would follow in the next decade. From the boom and bust in financial markets to the first black president being elected in a western nation in 2009, we have witnessed seismic shifts in our economies and societies. There have also been phenomenal developments in the telecoms industry over the last 10 years. In particular, demand for broadband services has reached unprecedented levels; the internet has evolved to become not only a means to email and search for information, but to download music and video, to share photos and socialise through real-time messaging and social networking facilities. All these activities require ever-increasing broadband width and download speeds, putting unprecedented pressure on providers. But that’s the future; let’s look at the road we have travelled first.

In 2000, the European Commission introduced a new regulatory framework for electronic communications networks and services, in response to recommendations from the special European Council of Lisbon in March 2000 and the results of the public consultation on the 1999 Review of the Electronic Communications Sector. The package consisted of a number of Directives designed to further open up markets within member states and to encourage competition in the industry. The new regulation was intended to provide a coherent, reliable and flexible approach to the regulation of electronic communication networks and services in fast-moving markets. This lighter regulatory touch aimed to make markets more competitive while ensuring that all users received a minimum level of service at an affordable price and that their basic rights were maintained.

It’s fair to say that to a large extent the Directives have worked, with each member state translating the objectives into regional  legislation to foster a vibrant and healthy pan-European marketplace. That said, harmonisation and consistency of regulation is patchy. In 2007, the European Commission published legislative proposals to review the earlier framework and these proposals were approved in late 2009. The new package of Directives is designed principally to achieve greater harmonisation in regulation across the EU member states and it will shape the future growth of the industry.

The next decade will see the new regulatory framework rolled out and measures introduced in member states to strengthen consumer rights and competition within Europe’s telecoms markets. The new rules will ultimately affect every European citizen, communications service provider and – in the case of the new rules relating to electronic marketing –every marketer operating in the EU. It represents an important step in creating, in the words of Viviane Reding (the EU Telecoms Commissioner) “a true single market for Europe’s telecoms operators and consumers”.

The EU Telecoms Reform Package will also see the creation of the Body of European Regulators for Electronic Communications (BEREC). BEREC will be a new legal entity with legal, administrative and financial autonomy established for the purpose of overcoming obstacles to the progress of harmonisation and regulation of electronic communications in the EU, due to inconsistent regulatory approaches taken by 27 member states. Its membership will comprise the heads of the 27 member states and a representative from the European Commission and it will, among other things, issue opinions, recommendations and guidelines of which the member states must take “utmost account”. The EU Commission will also oversee regulatory remedies to reduce inconsistent regulation that distorts competition and makes providing multi-jurisdictional services more difficult than it should be.

The new legislation also tackles the thorny and topical issue of net neutrality. It empowers national regulators to set minimum quality levels for network transmission services so as to promote net neutrality in the face of the fast growing data traffic. One of the key industry and regulatory developments to watch for in the coming years is how the telecoms industry responds to the growing data requirements of consumers and business, and how and whether regulators interfere with new technical and commercial models associated with transmission of data traffic. The EU Telecoms Reform Package is both an opportunity and a challenge for providers and new entrants into the EU telecoms market. It frees the way for the development of new methods of electronic communications services delivery and encourages investment in infrastructure, but equally it also imposes new regulatory burdens on providers in a bid to protect consumers and encourage competition.

Alex Brown, partner, Simmons & Simmons
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