Twenty-eighth Report of Session 2013-14 - European Scrutiny Committee Contents


4   The Telecommunications Single Market

(a)

(35305)

13562/13

COM(13) 634

(b)

(35304)

13555/13

+ ADDs 1-2

COM(13) 627


Commission Communication: On the telecommunications single market


Council Regulation laying down measures concerning the European single market for electronic communications and to achieve a Connected Continent, and amending Directives 2002/20/EC, 2002/21/EC and 2002/22/EC and Regulations (EC) No. 1211/2009 and (EU) No. 531/2012

Legal base(a)  —

(b) Article 114 TFEU; ordinary legislative procedure; QMV

DepartmentCulture, Media and Sport
Basis of considerationMinister's letter of 29 November 2013
Previous Committee ReportHC 83-xvii (2013-14), chapter 2 (16 October 2013)
Discussion in CouncilDecember 2013
Committee's assessmentPolitically important
Committee's decisionNot cleared; further information requested

Background

4.1  The background to the Commission Communication and this draft Regulation is set out fully in our previous Report; likewise the very detailed and helpful analysis of both documents by the Minister (Edward Vaizey) in his Explanatory Memorandum of 10 October 2013.[10]

Our assessment

4.2  It was notable that the Minister challenged the analysis cited by the Commission and described the issue of any net economic benefits to the EU market from both the package in its entirety and each individual element as unproven. In particular, he noted that, although a drive for more industry consolidation underlies some of the proposals, it was not clear that greater consolidation was the right answer: that, on the contrary, Ofcom analysis suggested that the market differences cited by the Commission stemmed from lower competition and greater pricing-power of incumbents in the US, rather than scale effects; and that fierce retail competition in domestic markets across the EU tended to drive down prices, margins and revenues, and also improve the quality of services. He saw competition as already a clear strength of the EU market, which did not appear to inhibit investment, with EU operators also investing similar shares of their revenue as non-EU counterparts. Thus, he said, these measures were unlikely to radically alter the prospects of those Member States that already embraced competition in broadband markets. Set against this, he clearly saw the EU's comparatively slow roll out of Next Generation technologies as the area in which it genuinely lagged behind the US and parts of Asia.

4.3  Moreover, with regard to individual proposals, the Minister:

  • did not believe that national notification and compliance has hitherto been a material obstacle to pan-European operations, or see single authorisation as a substitute for addressing ineffective or inconsistent regulation, and noted that the administrative burden for operators in the UK would also increase radically;
  • noted that the proposals on Coordination of Use of Radio Spectrum would involve "a shift in competence from national regulators, which we would not want to see", with the Commission acquiring a power of veto over national draft decisions on spectrum assignment procedures and licence conditions if it considers they would damage the internal market;
  • underlined the well-documented value of spectrum to Member States' economies, and was accordingly concerned that the Commission would be extending its competence into matters that are currently a national responsibility;
  • at the same time believed that a pan-EU rollout of 4G mobile broadband services would have an immediate positive impact on the European economy and be more effective than further harmonisation of rules on spectrum auctions, noting that the Commission had not used its existing powers to expedite the allocation of spectrum for 4G service in Member States that had not yet done so;
  • saw the wider use of the Radio Spectrum Policy Group to develop harmonised technical conditions and issue guidance on licence fees and durations as a better alternative to the Commission's proposal;
  • believed that a better approach in the area of Virtual Unbundled Local Access (VULA) would be for the Body of European Regulators for Electronic Communications (BEREC) to develop minimum reference offers in greater detail, in close consultation with industry; and notes that the proposal would constitute a significant transfer of power from National Regulatory Authorities (NRAs) to the Commission, which would risk NRAs being prevented from being innovative;
  • believed that an open Internet can be achieved through self-regulation, and that transparency of traffic management policies employed by ISPs is the key;
  • was concerned that such a quick return to further regulation may introduce costly and unnecessary burdens and encourage an anti-competitive market environment; noting that the recently agreed Roaming III Regulation was negotiated as a ten-year Regulation; and
  • was also concerned that the proposal to change the role of its Chair carries the risk that BEREC may no longer be able to act independently of the Commission, and may represent the first step towards a centralisation of BEREC's functions to Brussels and the erosion of national regulators' discretion.[11]

4.4  The theme of the Minister's analysis was familiar to those who had been engaged in this area over the years: an apparent determination by the Commission to undervalue the established process of taking this highly complex and fast-moving area forward in close coordination with NRAs and the industry, and instead to press for the enhancement of the Commission's direct control. BEREC was a case in point: only this summer an independent assessment by PWC concluded that its structure was relevant and efficient and that it had, thus far, successfully fulfilled its functions.[12]

4.5  It was perhaps therefore not entirely regrettable that there appeared to be considerable constraints on the Commission's timeline being met. In the short term, we asked the Minister to write to us in a month's time, to let us know how the Commission's proposals were received at the October European Council and what sort of report was likely to be made to the 6 December Telecoms Council.

4.6  In the meantime, we retained the documents under scrutiny.[13]

The Minister's letter of 29 November 2013

4.7  The Minister says that discussions on the Telecoms Single Market package at the 24-25 October European Council focused on the digital economy, innovation and services — areas chosen because Member States believed that they have the potential to create growth and jobs — and that there was only a short discussion on the package at Council, much less than was originally expected and in the main due to other matters on which Council wished to focus. The Minister notes that the Council Conclusions welcomed the presentation on the proposals from the Commission and encouraged "the legislator to carry out an intensive examination with a view to timely adoption".

4.8  The Minister comments thus:

"This is regarded as Council indicating agreement with the aims of the proposals but reflecting concern about some of the detail.

"What is notable is that other measures also covered in the same section of the Conclusions — those promoting the Digital Single Market — were assigned specific completion dates. This can be seen as a reflection of the relative importance assigned by Council to the proposal's agreement."[14]

4.9  With regard to the 5 December Telecoms Council, the Minister says that the package will be discussed, rather than reported on, at a morning-only Council:

"The absence of a report reflects the relatively slow progress the package has made thus far, with an initial exchange of views at Working Group level taking place this week following some discussion on the associated Impact Assessment in the previous two weeks.

"I anticipate that the discussion will be in the form of an orientation debate. This will be steered by a Presidency paper and will seek responses to three specific questions. I anticipate this paper will be published a week before Council and I intend to cover my responses in detail in my Pre-Council Statement."

4.10  In the relevant part of his WMS, the Minister says:

"The Council will take part in an "orientation debate" guided by a paper and two questions from the presidency. The first question relates to the proposal for a regulation of the European Parliament and of the Council laying down measures concerning the European single market for electronic communications and to achieve a connected continent (first reading—EM13562/13 and 13555/13 + ADDs 1-2). It asks member states to indicate what actions contained in the proposal they regard as priorities; and whether it is appropriate to carry out such actions at EU or member state level. The main points of the UK intervention will include: a view that while UK welcomes the objectives of the proposal, we remain concerned that the link between the stated aims and the constituent elements of the package remain unclear or unproven in a number of circumstances; signal, our support for action at EU level for the pro-consumer parts of that package; support for the eventual reduction of the EU roaming rates to zero; and support for proposals that could accelerate the roll-out of new technologies across the EU. Finally, we will state that we do not support the proposals laid out in the package that would give the Commission further competency over spectrum management nor those that would result in the introduction of regulation covering issues relating to net neutrality."[15]

Conclusion

4.11   We are grateful to the Minister for this further information, which we are drawing to the attention of the House because of the widespread interest in telecoms issues.

4.12  For the same reason, we are also drawing this chapter of our Report to the attention of the Culture, Media and Sport Committee.

4.13  We look forward to hearing from the Minister in two months time about what subsequent developments have taken place, and what the prospects are then for this package prior to the 2014 European Parliamentary elections.

  1. In the meantime, we shall continue to retain the documents under scrutiny.



10   See HC 83-xvii (2013-14), chapter 2 (16 October 2013). Back

11   See (34917) 9291/13: HC 83-v (2013-14), chapter 12 (12 June 2013). Back

12   The Body of European Regulators for Electronic Communications (BEREC) was established by Regulation (EC) No. 1211/2009 of the European Parliament and of the Council of 25 November 2009, as part of the Telecom Reform package. It replaced the European Regulators Group for electronic communications networks and services which was established as an advisory group to the Commission in 2002. See http://berec.europa.eu/ for full information. Back

13   See headnote: HC 83-xvii (2013-14), chapter 2 (16 October 2013). Back

14   The Council Conclusions are available at http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/139197.pdf. Back

15   See 5 Dec 2013: Col. 63WS; also http://www.publications.parliament.uk/
pa/cm201314/cmhansrd/cm131205/wmstext/131205m0001.htm#13120551000003. 
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