(See below the Update of October 17, 2013, concerning the final opinion of Berec)

Berec, the European agency based in Riga representing the national telecom regulators (such as AGCOM, ARCEP, OFCOM ecc) published a statement reacting negatively to the Single Market proposal announced by DG Connect Commissioner Neelie Kroes on September 11. The statement is highly critical vis-à-vis the proposal and the assumptions on which it is based as well as the procedure followed by the Commission.

While Berec confirms support for the Commission’s general objective as to the promotion of the single market and greater investments in the sector, the following negative comments are raised:

Why so much rush?

Berec is concerned that the proposed regulation is being rushed through the European legislature without proper explanation and full exploration of its potential.          NOTE: For sure, the integration of the single market is a milestone for the European Union, which would have deserved a proper initiative at the beginning of the Commission’s mandate, in 2010, rather than a rushed initiative in 2013.  It is a pain that this important proposal has been hastily formulated at the end of the 5 years mandate, with so very little chance and time to succeed.

Changing tha paradigm of competition

Berec is concerned about the shift of the European framework from a pro-competitive model to the new consolidation paradigm.          NOTE: Berec has been very critical vs. Commissioner Kroes’ attempts to radically revise the 2009 Framework by means of a simple the recommendation announced in July 2012 and finally approved on September 11 (included in the Single Market Package). Because of the reservation of Berec, such recommendation has been finally substantially modified. However, it remains the fact that while national regulators wants to protect competition on national level, by contrast Commissioner Kroes seems adamant to waive it in exchange of more market consolidation.  However, even within the European offices this matter appears controversial, because commissioner Almunia (competent for Competition) has stated in several occasions that consolidation should occur on paneuroepan basis rather than on national one.

A disruptive proposal

Berec is concerned that the draft regulation will jeopardise the integrity of the EU framework and its achievements, in terms of investment, competition and consumer benefit. Berec even challenges the Commission’s assumptions regarding the state of the telecoms sector in Europe, as national regulators do not share the bleak vision suggested by Brussels. Therefore, the proposal risks undermining legal certainty, in contrast to the Commission’s own stated objectives of creating a predictable regulatory environment.             NOTE: the assumptions of the Commissions are controversial because comparing EU with other macro-areas like US and China is often arbitrarious. Europe is still a puzzle of markets and some of them are performing much better than US, South Korea and Japan. The number of operators in the EU is a consequence of such fragmentation, not of an excessive number of players. In each national market European consumers can benefit of maximum 3 or 4 mobile operators and en equivalent amount of fixed providers, less than in other markets outside Europe.

Inaccurate centralization

Berec is concerned that the proposal represents a substantial shift in the balance of power between the Commission, Member States and National Regulatory Authorities, centralising competences at the Community level. These proposals risk undermining the ability of national regulators, whether acting individually or collectively, to take appropriate and proportionate regulatory action in all the relevant markets.                NOTE: tension between central and local powers is a déjà vu in Europe (even Viviane Reding renounced in 2008 to her dream of an European regulator). However, it is evident that some parts of the proposal are surprisingly dirigist even for a liberal politician like Kroes. To make an example, Berec objected the Commission’s target to frozen the price of access network in Europe beyond the establishment of a common methodology: pursuant to the national regulators, such costs must be necessarily assessed on the basis of national circumstances, they cannot be decided in Brussels.

Lack of transparency and involvement

According to Berec, this legislative initiative was also not subject to a public consultation, and therefore did not benefit from the input of consumers, industry players and national regulators. As a result, the Commission has not had the opportunity to test the extent to which its proposals will deliver on its stated objectives, or the extent to which they are operationally feasible or effective, or might otherwise have unintended consequences.              NOTE: this is an issue, however the Commission believes that the proposal was preceded by various kind of contacts and consultation at various levels and for different scopes, and therefore a consultation would not be needed any longer. In this respect, the easy availability of leaks circulating during the inter-service phase suggests that the Commission facilitated information to spread in order to compensate the absence of public consultation and to have stakeholders well aware about the reform. However, it must be noted that permitting leaks is nothing comparable to a public consultation. The reason why a proper public consultation has been skipped is basically timing. Commissioner Kroes wants the reform to be clearly on road during the last part of her mandate, in order to be able to gain the political dividend.

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Berec is not explicitely saying anything about the delicate chapters of the proposal regarding spectrum allocation, net neutrality and international roaming. Im my opinion, Berec shares some general ideas of the Commission but is may have reservations on the details of specific proposed measures. At this time, however, it is too early to show all playing cards.

The statement of Berec is a very bad signal for the Commission, in light of the European telecom Council scheduled for October 24 and 25 in Brussels, because the national regulators’ position is reflecting wider reservations of the European governments vis-à-vis the Single Market  proposal.

Berec will held a workshop on the Single Market Proposal on September 25 in Riga.

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UPDATE of October 17, 2013: Berec has published an opinion on the Single Market proposal.  The content of the document reflect the negative view of the national regulators vis-à-vis the proposal as expressed in the above statement of September 16, 2013. Following that public announcement, Commissioner Kroes had met the head of national regulators in order to make change their mind, however it did not worked. The current draft is just a bit more diplomatic in the form, but still very negative for the merit.