5 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 (reported to the House on 4 June 2014
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| Document details | (a) Commission Communication on the telecommunications single market; (b) Council Regulation laying down measures concerning the European single market for electronic communications and to achieve a Connected Continent
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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
5.1 The Commission states 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.
5.2 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".
5.3 We hoped that the Minister might be able to provide
some reassurance on the outstanding issues after the June Telecoms
Council. In the meantime, we considered the draft Regulation
legally as well as politically important.
5.4 We also drew that chapter of our Report to the
attention of the Culture, Media and Sport Committee, and asked
for its Opinion on the issues that have arisen thus far.
5.5 In the meantime, we continued to retain the documents
under scrutiny.[13]
5.6 The Minister now reports that, since his May
letter, his counter-parts from Italy, Spain, Denmark, Poland and
Romania have agreed to take forward the 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 undertakes to report in more detail
once the outcomes become firmer, but believes that this group
"is well-placed to drive a Presidency text which incorporates
the major elements of current UK policy on the proposals".
5.7 The Minister proposes to provide his next update
once the Presidency has produced that Compromise text; and in
that update, will compare the text with the UK's negotiating position,
as well as provide an update on wider issues associated with the
proposal.
5.8 We are grateful to the Minister for this further
very helpful update. He foresees the Presidency producing a Council
compromise text sometime in September/October, followed by "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.
5.9 What with the many uncertainties that remain
and given the summer break, the clock is now starting to run down.
It may well be appropriate for whatever text emerges from this
process to be debated prior to that Telecoms Council.
5.10 The Committee will next meet on 3 September
and 10 September, and then (given the conference recess) not until
15 October. We would therefore expect the next update no later
than 9 October.
5.11 It would also be helpful if we could receive
the Opinion on the current proposal, thus far, from our counterparts
on the Culture, Media and Sport Committee no later than that date,
and sooner if at all possible.
5.12 In the meantime, we are drawing this chapter
of our Report to their attention, and continuing to retain both
documents under scrutiny.
Full details of
the documents: (a) Commission
Communication on the Telecommunications Single Market: (35305),
13562/13, COM(13) 634; (b) Draft 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: (35304), 13555/13 + ADDs 1-2,
COM(13) 627.
Background
5.13 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,[14]
and further progress to May — including the outcomes of
the EP First Reading — was reported by us in June this year.[15]
5.14 The Minister foresaw two major risks to HMG's
desired outcomes based on the current positions of the European
institutions. 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.
5.15 The Minister concluded, however, that:
"I remain optimistic that the risks associated
with the spectrum element can be satisfactory managed to suit
the current negotiating mandate and provide an overall positive
outcome."
5.16 However, what he described as a "second,
and more serious risk" concerned the current situation regarding
the proposals for net neutrality.[16]
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". The outcome of
the EP First Reading deal was not as expected: instead, it 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".
5.17 Looking ahead, the Minister said that, with
the slow progress at Working Group level, the differences of views
on spectrum and the potential divergence in views on net neutrality
between Council and the EP, the most likely scenario was a Progress
Report rather than a General Approach at the 6 June Telecoms Council.
Given the other issues seeking attention in the first part of
their Presidency, the Minister judged that it might well prove
difficult for Italy to make this the top priority; it therefore
very much remained the case that much depended on whether those
Member States who wished to see some form of agreement remained
in the minority and whether any existing momentum imparted by
the joint UK-German initiative could be maintained over the Summer
period in time for negotiations to begin again in September 2014;
no agreement, or action on roaming alone, remained the possible
ultimate outcome. An appropriate time for his next update would
accordingly be shortly after the Telecoms Council and as preparations
to handover to the incoming Italian Presidency became firmer.
[17]
The Minister's letter of 10 July 2014
5.18 The Minister reports that at the Telecoms Council
the out-going Greek Presidency presented a Progress Report and
a single Member State (Estonia) intervened and supported the Report's
Conclusions of focusing efforts on where agreement could be easily
reached.
5.19 The Minister then continues as follows:
"Commissioner Kroes also intervened and
offered support for taking action on mobile roaming charges and
the European Parliament's proposal on handling the consumer protection
elements.
"These are 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.
"In their intervention, the incoming Italian
Presidency stated that this package would form one of three priorities
for their Presidency and they supported the Commission in terms
of its ambition on reaching an agreement by the end of this year,
as well a retaining each of the major elements.
"In the margins of Council, I hosted a Ministerial
multi-lateral with my counter-parts from Italy, Spain, Denmark,
Poland and Romania and an official representing the Germany. This
was building on the earlier German/UK initiatives. As a result
of this meeting, it was agreed that this group would 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.
This work would form the basis of a planned Council Compromise
text. This work is just beginning and I plan on reporting in
more detail once the outcomes of this group become firmer, but
I believe this group is well-placed to drive a Presidency text
which incorporates the major elements of current UK policy on
the proposals."
5.20 Against this background, the Minister provides
the following the anticipated timetable, with relevant major mile-stones:
| Mid-July:
| Working Group to complete first read-through as Italians assume Presidency. Multi-lateral group working on alternative texts. Presidency to call for written comments on Commission's proposals from Member States.
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| End-July & August:
| Summer break. Officials continue to draft & consider alternative texts.
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| September & October:
| Presidency produce Council compromise text. Further deliberations within EP and Council.
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| November:
| Negotiations continue. Possible Trialogue sessions with EP after Presidency gains mandate from Council. Draft Telecoms Council agenda indicates Council to adopt General Approach (27th).
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| December onwards:
| Proposal formally adopted by Council and EP.
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5.21 However, the Minister also notes that:
"there remains a clear risk that Council may not be able
to agree upon the compromise text. If this situation arises, it
may cause slippage into early 2015. Further, there is another
risk that the proposal may be withdrawn by any incoming Commissioner
under certain circumstances. This latter risk is largely unquantifiable
at the moment, as it is subject to the timetabling of the appointment
of the new College of Commissioners. It is likely this process
itself will miss its deadline of start of November, and I am aware
that Commissioner Kroes will remain in post until that process
is complete. These proposals may therefore gain some extra negotiation
time during that interregnum."
5.22 The Minister then turns to a number of specific issues raised
by the Committee in its latest Report, as follows:
SINGLE AUTHORISATION
"In my previous letter, I noted the risks from this proposal
in terms of creating an increase in regulatory burdens, as well
as leading to disputes between national regulatory authorities.
Since that letter, discussion on this specific element has moved
on and a simplification of the proposal has gained support from
both Council and the European Parliament (EP). As such, the proposal
is now centred on creating a harmonised notification form to be
implemented by those administrations that operate a notification
process. 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 - do not have to introduce its use.
"I am content that this outcome, if accepted,
will address and mitigate UK's main concerns with this specific
element of the overall proposal and is in line with HMG's general
policy aims.
SPECTRUM
"In the Report covering 9175/14, your committee
asks for: detail on the Commission's long-term concerns that are
driving the spectrum proposals; what changes UK is proposing to
the existing governance structure; and the prospects for securing
an agreement with the Commission and EP that safeguards the existing
competence balance. I address each in turn below.
"The main locus of the Commission's concerns
is based around what it perceives to be a negative impact of the
existing spectrum management processes on the continued integration
of the telecoms single market. They believe that the current
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). The Commission believes that a harmonised
approach to spectrum auctions under their oversight will go some
way in rectifying what it sees as a collective failure to manage
the EU's spectrum in an efficient and effective manner. The Commission
view the partial implementation of the Radio Spectrum Policy programme
(RSPP) as symptomatic of the situation.
"In terms of what changes the UK would seek
to the existing governance structure, the changes we support are
around the existing committee known as the Radio Spectrum Policy
Group. Its current role is as a high-level advisory group assisting
the Commission in developing radio spectrum policy for the EU
and it has been noted that this group has played a pivotal role
in driving harmonisation of the technical aspects of spectrum
management in EU. The UK proposal is based around evolving the
RSPG's current role to address the concerns of the Commission
that drive their proposals. It has the advantage that it would
not create new Commission powers over spectrum management and
these changes can easily be brought in action through amending
the RSPG Decision (a relatively simplistic process compared to
negotiating a directive or regulation). Whilst there is general
agreement in Council regarding this proposal, the specifics have
yet to be agreed.
"In terms of whether this proposal will be successful,
it is currently very difficult to judge but is not impossible
to draw some general conclusions. Whilst the proposal enjoys a
high level of support from Council (and this is in parallel with
general opposition in Council to the Commission's proposals) it
does run counter to the known positions of the Commission and
the EP. However, the proposal has every chance of gaining traction
with both as negotiations progress, as Council continues to resist
the spectrum proposals and thus reduce the probability of an overall
agreement being reached within the indicated tight deadline.
A final acceptance of the proposal covering the spectrum element
by both Commission and EP needs to be set against their perceived
desire to achieve an agreement that retains populist measures,
in particular action on mobile roaming and improved consumer protection,
and whether they are prepared to sacrifice such outcomes in order
to stick to their current positions on spectrum. I believe that
this situation should not be under-estimated and may very well
result in this proposal being contained in the agreed Regulation.
NET NEUTRALITY
"The issue of net neutrality is rather more
finely balanced than that of spectrum. There are clear supporters
for taking regulatory action across Council, many of them larger
Member States with accompanying QMV voting weights. However, the
final position of many Member States remains unknown at this juncture
but many will develop once the Compromise text becomes apparent.
The Commission is keen to retain this element of the proposal
and this proposal has 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'.
"I remain convinced that any regulation may
stifle innovation and that a self-regulatory approach is most
appropriate and has largely worked in the UK. There is some support
for this position. This coupled with general opposition to the
Commission's proposals mean that this element of the proposal
still requires some further development before being able to offer
a firmer view on likely outcome.
"However, I believe that it is appropriate,
as required by my Cabinet clearance on this proposal, that I consider
other options and outcomes at this stage, taking into account
the most recent developments in this policy space. I anticipate
that there will be some activity at official level over the next
three months as the Compromise text is worked-up and I suggest
that I provide a further update on developments at that juncture.
"I conclude by noting that agreement on the
proposals is still some way off, has a number of obstacles to
overcome, and may not be achieved at all; as such it is difficult
to predict the exact outcome. I believe that the next 3 months
are the most critical and unless the Presidency Compromise text
is able to garner support across Council, it is unlikely that
any wider agreement can be reached with the Commission and EP.
However, the UK is in a prime position to be able to inform the
Compromise text and drive wider processes.
"With this in mind, I propose that I write my
next update once the Presidency has produced that Compromise text;
in that update I will compare the text with the UK's negotiating
position, as well as provide an update on wider issues associated
with the proposal."
Previous Committee Reports
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).
13 First Report HC 219-i (2014-15), chapter 5 (4 June
2014). Back
14
See Eighteenth Report HC 83-xvii (2013-14), chapter 2 (16 October
2013). Back
15
See First Report HC 219-i (2014-15), chapter 5 (4 June 2014). Back
16
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
17
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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