European telco chiefs protest over proposed new rules
Letter from 30 chiefs says European Parliament changes would deter network investment
The chief executives of 30 of Europe’s largest telecoms companies and equipment vendors have written to heads of state and national telecoms ministers, in a lobbying effort against changes in regulations that they say would deter investment in new networks.
Their letter represents the latest attempt by the industry to get a reform of telecoms regulations back on track, after the European Parliament derailed European Commission proposals this year, which were aimed at deregulating companies to encourage billions of pounds of investment in 5G and full-fibre networks.
The parliament has added various amendments, including proposals around “joint dominance” to tackle potential “oligopolies” in some European telecoms markets. Proposals to lengthen spectrum licences, to harmonise auctions of airwaves and to impose new retail regulation on international calling rates within the bloc are also being objected to by the industry. It had widely supported the commission’s original proposals around the new Electronics Communications Code.
The letter, seen by the Financial Times, has been signed by the chief executives of Deutsche Telekom, BT Group, Orange, Telefónica and other incumbent operators. Telecom Italia’s executive chairman Arnaud de Puyfontaine has signed as have the chief executives of Ericsson and Nokia, who sell the equipment needed to build faster networks. The companies spend a combined £26.6bn a year in Europe, according to the document.
The letter says that the uncertainty introduced into the Electronic Communications Code has turned what looked like a much-needed overhaul of the rules to encourage investment into “bad news for all those who understand the strategic necessity of building a European Gigabit Society”. It even argues that it would be preferable to keep the current rules, long the bane of a sector facing structural decline, rather than adopt the amended proposals.
The document also notes that uncertainty around the proposed reforms has created a “sharply negative” sentiment for investors in telecoms, who are increasingly reticent to invest in companies facing huge spending commitments to build new networks but also more onerous regulation. It says that a deterioration in the investment climate is expected following the European Parliament’s amendments.
The letter was sent ahead of separate meetings of European heads of state and telecoms ministers in Luxembourg next week.
The European Parliament’s proposals to introduce new regulations reflects concerns in countries including Belgium and the Netherlands that telecoms oligopolies are forming at the expense of competition.
A study by Jones Day and Compass Lexecon, commissioned by Vodafone, has criticised the amendments to the Electronic Communications Code for not bringing the framework in line with competition law, regarding significant market power and joint dominance. “It is highly probable that if these criteria are kept in the code, they will generate a high degree of inconsistent regulatory interventions,” the paper concludes.