The upcoming battle over telecoms deregulation – Euractiv
Reforms of the telecom sector are expected to be at the top of the policy agenda for the next EU mandate and a battle is already heating up over the need to deregulate it.
The drive to regulate the sector is reinforced by its role as the backbone of the digital economy. Telecom upgrades, including 5G standalone, are seen as key for Europe to meet its digital ambitions and remain competitive on the global stage.
Investments are necessary for these upgrades, as much as €174 to €200 billion at the European level, and the Commission sees deregulation as a vital tool to meet this funding goal.
But consumer groups and smaller telecom operators argue that deregulation would harm competition and end-users, particularly vulnerable groups.
The next Commission is set to review the European Electronic Communications Code (EECC) by December 2025. Political make-up of the new institutions, following June’s EU elections, will shape the reform, with a more far-right Parliament likely to resist EU-level reforms.
Former Italian primer minister and European central bank director Mario Draghi’s upcoming report, coupled with his possible appointment to a top EU job, could also influence the timeline.
The EECC applies to operators based on their market power and regulates both passive infrastructure, such as cables, masts, and sockets, and active infrastructure like switches, routers, and gateways.
The only telecoms regulation passed in the previous mandate, the Gigabit Infrastructure Act (GIA), regulates all operators irrespective of their market power and focuses on passive infrastructure.
In the next mandate, the principles of the GIA could serve as a “pivotal and fundamental part of future telecommunications legislation because it focuses on passive services” and regulates all operators, Innocenzo Genna, a digital transformation legal adviser for the Italian government, told Euractiv.
Deregulation
The gigabit recommendation, released in February, is the EU “Commission’s first push towards deregulation of the [telecoms] sector,” said Genna.
The gigabit recommendation is the Commission’s technical, non-binding guidance modifying how national telecom regulatory authorities should implement the EECC.
The recommendation signals a shift, said Genna. National regulatory authorities could now encounter increased resistance from the Commission when attempting to regulate operators with significant market power, he said.
Already, in April, the Commission vetoed a draft decision from the Maltese regulator to impose obligations on incumbent local operator GO.
In a reaction to the Commission’s February’s telecommunication white paper, the association of large telecommunications operators ETNO praised the recognition of scale as a crucial enabler and criticised the EU’s current market fragmentation as detrimental to the bloc’s interests.
A wave of recent acquisitions by US and Gulf operators in Europe’s market has sparked concerns over a loss of sovereignty.
But some industry players think deregulation heralds bad outcomes by favouring large telecom operators.
If “the balance of power” shifts, “giving even more power to the Commission to push through an ideological deregulatory agenda, competition and end-user interests could be irreparably damaged,” the European Competitive Telecommunications Association (ECTA) told Euractiv.
European consumer association BEUC voiced similar concerns.
Investments
The issue today is no longer to only foster competition but to increase investment, Alessandro Gropelli, ETNO’s deputy director general, told Euractiv.
Former Italian Prime Minister Enrico Letta echoed this sentiment in his report on the state of the single market in April.
The Commission estimated there is a €174 billion “investment gap” to meet the EU’s connectivity goals by 2030. Stakeholders challenged the use of the word “gap” in their responses in a public consultation.
Telecom expert Genna also challenged the notion of an investment gap, arguing that the necessary funds are largely in place, either through telecom operators’ planned investments or state public funds. For him, €174 billion investment for the whole bloc by 2030 is not an “extraordinary amount of money.”
Implementation
Cláudio Teixeira, a legal officer at BEUC, told Euractiv that “the [Commission’s] white paper’s starting point should be consumers’ access and affordability, not the profitability levels of telcos.”
The universal service obligation under the 2018 EU’s telecoms code mandates that member states ensure internet connectivity for low-income and remote households, which is still lacking in some member states, including Germany.
Yet, the EECC’s implementation faced significant delays. In 2022, the Commission referred ten member states to the Court of Justice of the EU for failing to transpose the Code by the December 2020 deadline.
As of June 2024, three member states still have not fully transposed the EECC, a Commission spokesperson told Euractiv.
[Edited by Eliza Gkritsi/Zoran Radosavljevic]
