4 The Telecommunications Single Market
| (a)
(35305)
13562/13
COM(13) 634
(b)
(35304)
13555/13
+ ADDs 1-2
COM(13) 627
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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
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| Legal base | (a) —
(b) Article 114 TFEU; ordinary legislative procedure; QMV
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| Department | Culture, Media and Sport
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| Basis of consideration | Minister's letter of 29 November 2013
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| Previous Committee Report | HC 83-xvii (2013-14), chapter 2 (16 October 2013)
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| Discussion in Council | December 2013
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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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.
- 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. Back
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