9 The Telecommunications Single Market
| Committee's assessment
| Legally and politically important |
| Committee's decision | Not cleared from scrutiny; further information requested; Opinion sought from Culture, Media and Sport Committee (decision reported on 4 June 2014)
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| Document details | (a) Commission Communication on the telecommunications single market (35305), 13562/13, COM(13) 634
(b) Council Regulation laying down measures concerning the European single market for electronic communications and to achieve a Connected Continent (35304), 13555/13 + ADDs 1-2, COM(13) 627
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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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Summary and Committee's conclusions
9.1 The Commission argues that, as the world moves
rapidly towards an Internet-based economy, Europe lacks a genuine
single market for electronic communications, and is consequently
losing out on a major source of potential growth. It also states
that decisive further action is needed to prevent any further
decline in Europe's global position in this sector; considers
what remaining barriers exist; and sets out measures that the
Commission believes are needed to change the existing regulatory
framework (last revised in 2009) in order to remedy the situation.
9.2 Recalling the conclusions of the 2013 Spring
European Council, calling for measures to create a Single Telecoms
Market as early as possible, the Commission published on 11 September
2013 a legislative package for a Connected Continent: Building
a Telecoms Single Market, which it says is aimed at building a
connected, competitive continent and enabling sustainable digital
jobs and industries; with proposed legislative changes to several
regulations that (the Commission says) would "make a reality
of two key EU Treaty Principles: the freedom to provide and to
consume (digital) services wherever one is in the EU".
9.3 The full background to the Commission Communication
and this draft Regulation is set out in the first of our previous
Reports; likewise the very detailed and helpful analysis of both
documents by the Minister (Mr Edward Vaizey) in his Explanatory
Memorandum of 10 October 2013.[33]
9.4 We hoped that the Minister might be able to provide
some reassurance on the outstanding issues after the June 2014
Telecoms Council. In the meantime, we asked the Culture, Media
and Sport Committee for its Opinion on the issues that had arisen
thus far.
9.5 We also continued to retain the documents under
scrutiny.[34]
9.6 Our most recent Report contains a further update
of 10 July in which the Minister outlined the latest position
on those areas where there was most disagreement — particularly
regarding the key elements of Spectrum Management and Net Neutrality
(see the body of our Report for a summary). He also explained
that he and his counter-parts from Italy, Spain, Denmark, Poland
and Romania had agreed to take forward an earlier UK/Germany initiative
and work together on producing an alternative text by shaping
the Commission's original proposals to those more in line with
the collective view of Council, so as to form the basis of a Council
Compromise text. The Minister believed that this group was "well-placed
to drive a Presidency text which incorporates the major elements
of current UK policy on the proposals". Once the Presidency
had produced that Compromise text — which he thought would
be in September/October — he would provide a comparison
with the UK's negotiating position and an update on wider issues
associated with the proposal. Beyond that, he foresaw "further
deliberations" within the (new) European Parliament (EP)
and Council; more negotiations; possible Trialogue sessions with
the EP after the Presidency gains a mandate from the Council;
and the adoption of a General Approach at the 27 November Telecoms
Council.
9.7 Against this background, we asked for that update
no later than 9 October, particularly as we envisaged that a debate
might be appropriate prior to that Telecoms Council.
9.8 In the meantime, we have now received the Opinion
of the Culture, Media and Sport Committee, which is as follows:
"The Culture, Media and Sport Committee
decided to seek expert advice from Ofcom, whose response is attached.[35]
It is clear from Ofcom's submission that at least some of the
proposals lack sufficient grounding in terms of evidence, analysis
and consultation. It is also evident that, while the European
Parliament subsequently attempted to amend or rework some of the
measures initially proposed, there remains much work to be done
to achieve outcomes that are proportionate and strike an appropriate
balance between national and wider European interests.
"The four most significant proposals in
the draft Connected Continent Regulation cover international roaming
charges, net neutrality, consumer protection and spectrum auctions
and assignments. On each of these issues, we would make the following
points:
· "The European Parliament shows welcome
signs of recognising that there are simpler ways to achieve lower
roaming charges than the Commission's draft Regulation. Furthermore,
it should be better recognised that smaller national mobile network
operators significantly contribute to market competitiveness;
· "While we share the Commission's
broad objectives of protecting consumers' access to unrestricted
internet access services, there is insufficient evidence of market
failure that indicates regulatory intervention on a scale envisaged
by the Commission;
· "We agree with the Commission's ambitions
to improve consumer protection across Europe, for example in relation
to making it easier for consumers to switch between service providers.
However, we believe that national regulators are best placed to
judge on what timescales desirable changes can be achieved, taking
into account the market situation in their individual Member States;
· "It is important to acknowledge the
necessity of close cooperation with our European partners in the
area of spectrum management. However, we agree with Ofcom that
spectrum management, and spectrum awards in particular, must remain
a national competence."
9.9 To illustrate what the Culture, Media and
Sport Committee says, we reproduce Ofcom's submission at the Annex
to this chapter of our Report. On spectrum management, Ofcom could
not be clearer:
"Ofcom strongly opposes the proposed transfer
of substantive responsibility for spectrum management from Member
States to the Commission, and considers that spectrum management,
and spectrum awards in particular, must remain a national competence."
9.10 We also note that "Ofcom does not see
a need for prescriptive and detailed rules on net neutrality,
as proposed in the Commission's draft Connected Continent Regulation".
Ofcom goes on to say:
"The internet is an enormously complex
and dynamic ecosystem, where the law of unintended consequences
looms very large and there are real dangers in attempting to regulate
(continually evolving) network engineering practices. In short,
every new rule is a potential new loophole.
"We are therefore concerned that, by
seeking to protect the (widely shared) regulatory objectives to
promote the open Internet into hardwired rules and rights, the
Commission's (and the European Parliament's) proposals risk undermining
the efficient management of network resources, the innovative
potential of the Internet, and ultimately the consumer interest.
The European Parliament's text, in particular, further compounds
the very restrictive language severely constraining operators'
ability to manage traffic on their networks, and raises serious
questions of enforceability and legal certainty. Of particular
interest in the UK, the European Parliament text is so restrictive,
it would appear to prevent the operation of the IWF blocked URL
list (which enables the rapid blocking of images of child sexual
abuse).
"It is worth noting that there is no
clear evidence of a market failure warranting this kind of regulatory
intervention"
9.11 We are most grateful to our colleagues for
the clarity of their views, and those of Ofcom, which we are drawing
to the attention of the House because of the importance of the
issues under negotiation.
9.12 We have no doubt that they will fortify the
Minister at this crucial juncture. We look forward to hearing
from him again no later than 9 October.
9.13 In the meantime, we shall continue to retain
the documents under scrutiny.
Full details of the documents:
(a) Communication from the Commission to the European Parliament,
the Council, the European Economic and Social Committee and the
Committee of the Regions on the Telecommunications Single Market:
(35305), 13562/13, COM(13) 634; (b) draft 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, and amending Directives
2002/20/EC, 2002/21/EC and 2002/22/EC and Regulations (EC) No.
1211/2009 and (EU) No. 531/2012: (35304), 13555/13 + ADDs 1-2,
COM(13) 627.
Background
9.14 Further progress to May - including the outcomes
of the EP First Reading - was reported by us in June this year.[36]
9.15 The Minister foresaw two major risks to HMG's
desired outcomes. The first concerned the Commission's spectrum
proposals: notwithstanding the Council's general opposition to
the proposals, EP support meant that it was becoming increasingly
clear that some form of action would need to be taken that addressed
the Commission's concerns but which did not compromise the current
existing balance of competence between individual Member States
and the Commission.
9.16 He also described a "second, and more serious
risk" regarding the proposals for net neutrality.[37]
The Minister recalled that "the current negotiating mandate
is to resist the introduction of regulation specific to net neutrality,
whilst exploring the options around same". However, the EP
First Reading deal now contained a specific definition of "net
neutrality", as well as a more restrictive approach to "specialised
services" and "traffic management" — this
being "in direct opposition to HMG's current negotiating
stance" and underlining "the contentious nature of this
issue as previously noted in the most recent Commons Committee
Report".[38]
9.17 On 10 July the Minister reported that at the
Telecoms Council the out-going Greek Presidency had presented
a Progress Report whose Conclusions emphasised focusing efforts
on where agreement could be easily reached. Commissioner Kroes
had offered support for taking action on mobile roaming charges
and the European Parliament's proposal on handling the consumer
protection elements, which the Minister said were in-line with
current UK policy. However, she also stated that she believed
the majority of Member States supported legislative action on
net neutrality and spoke in support of the Commission's spectrum
proposals — both current UK Red Lines. She also stated again
that the Regulation was not a la carte underlining an expectation
that each of the major elements would be retained in any agreed
Regulation in some form.
9.18 The Minister then dealt with a number of specific
issues raised by the Committee in previous latest Report, as follows:
— Single authorisation: the outcome
should be a simplification of bureaucracy as operators need to
engage with a single format with standardised content. Those Member
States that do not operate a notification scheme - such as the
UK - would not have to introduce its use; this would address and
mitigate UK's main concerns with this specific element of the
overall proposal and was in line with HMG's general policy aims;
— Spectrum: the Commission believed
that the existing spectrum management system prevents operators
from securing spectrum on a pan-EU basis, results in a fractured
spectrum allocation process and this, in turn, hampers the roll-out
of pan-EU digital services (both current and potential new services),
and that a harmonised approach to spectrum auctions under their
oversight would go some way in rectifying what it saw as a collective
failure to manage the EU's spectrum in an efficient and effective
manner. The changes that the Minister supported to the existing
governance structure concerned the Radio Spectrum Policy Group
— the high-level advisory group assisting the Commission
in developing radio spectrum policy for the EU, which has hitherto
played a pivotal role in driving harmonisation of the technical
aspects of spectrum management in EU — where the UK proposal
was based around evolving the RSPG's current role to address the
concerns of the Commission that drive their proposals. This approach
had the advantage that it would not create new Commission powers
over spectrum management and could easily be brought in action
through amending the RSPG Decision (rather than negotiating a
directive or regulation). Whilst there was general agreement in
Council regarding this proposal, the specifics had yet to be agreed.
Though this ran counter to the known positions of the Commission
and the EP, the desire of the Commission and the EP to secure
agreement on populist measures, in particular action on mobile
roaming and improved consumer protection, provided scope for securing
agreement also on the UK approach to spectrum management;
— Net neutrality: this was rather
more finely balanced than that of spectrum. There were clear supporters
for taking regulatory action across Council, many of them larger
Member States with accompanying QMV voting weights. The Commission
proposal had the firm support of the EP, which tightened-up the
original proposals. This has had the effect of firming-up support
of the Commission's text from stakeholders generally as the "lesser
of two evils". The Minister remained convinced that any regulation
might stifle innovation and that a self-regulatory approach was
most appropriate and had largely worked in the UK. However, he
believed it appropriate to consider other options and outcomes
at this stage, as the Compromise text was worked-up at official
level over the next three months; he suggested a further update
at that juncture.
Previous Committee Reports
Eighth Report HC 219-viii (2014-15), chapter 5 (16
July 2014), First Report HC 219-i (2014-15), chapter 5 (4 June
2014), Thirty-fourth Report HC 83-xxxi (2013-14), chapter 2 (9
February 2014), Twenty-eighth Report HC 83-xxv (2013-14), chapter
4 (18 December 2013) and Eighteenth Report HC 83-xvii (2013-14),
chapter 2 (16 October 2013).
33 See Eighteenth Report HC 83-xvii (2013-14), chapter 2
(16 October 2013). Back
34
First Report HC 219-i (2014-15), chapter 5 (4 June 2014). Back
35
Reproduced at the Annex to this chapter of our Report. Back
36
See First Report HC 219-i (2014-15), chapter 5 (4 June 2014). Back
37
Net neutrality is the principle that Internet service providers
and governments should treat all data on the Internet equally,
not discriminating or charging differentially by user, content,
site, platform, application, type of attached equipment, and modes
of communication. Proponents often see net neutrality as an important
component of an open internet, where policies such as equal treatment
of data and open web standards allow those on the internet to
easily communicate and conduct business without interference from
a third party. Back
38
For full details of the Minister's letter, see First Report HC
219-i (2014-15), chapter 5 (4 June 2014). Back
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