* Europe falling behind U.S., Asia in fixed, mobile
* Spectrum, broadband rules need more harmony-Kroes
* Debate over a single telco regulator begins
* CEOs intrigued by idea, fear political barriers
By Leila Abboud and Kate Holton
BARCELONA, Feb 26 Europe's top technology
regulator called for more consistent telecom regulations to help
create a true regional market for mobile and fixed services and
boost investment in much-needed infrastructure.
European Union commissioner Neelie Kroes said the bloc's 27
member states needed to align their approach on mobile spectrum
and fibre broadband, among other issues, or risk further
weakening telecom operators' ability to invest in infrastructure
and keep Europe competitive with the United States and Asia.
"We need a European telecoms market that is more coherent,
more integrated, more efficient; with lower investor risks and
higher investor rewards," said Kroes, according to a copy of the
speech to be delivered at the Mobile World Congress trade show.
While U.S., Japanese, and South Korean telcos invest heavily
in networks, Europe's players have been struggling to pay off
debts as their ability to generate cash is hit by fierce
competition and harsh regulation.
Europe has about 100 mobile operators to the United State's
6 and China's 3, leaving a fragmented market and wary investors.
As a result, Europe's telcos are building 4G and fibre
broadband only slowly, leaving swathes of the region poorly
covered and making the EU's target to reach 50 percent of the
population with superfast broadband by 2020 look out of reach.
The situation has led many European telco executives to
lobby the European Union for a more benign approach to mergers
and acquisitions to reduce the number of operators, as well as
softer regulation of mobile call termination fees and broadband.
Kroes said the Commission would be more aggressive in using
the power given to it in the EU Treaty to pressure states to
follow Brussels' guidance for the sector, especially on
releasing more spectrum for mobile broadband.
The EU has authorised 1200 megahertz of spectrum for
wireless broadband, but on average countries have only awarded
65 percent of it, she said.
Kroes' pro-investment message is likely to be welcomed by
the bosses of Europe's big telcos such as Vodafone and
Telefonica. But they will also have big questions when
they meet with Kroes on Tuesday afternoon over how to translate
the rhetoric into reality.
Among the most politically sensitive questions will be
whether creating a true European telecom market would require
having a single EU regulator instead of the current system of
national authorities who implement guidance from Brussels.
Kroes has not publicly called for the creation of a single
regulator. But conversations have begun in recent weeks among EU
policy makers and telecom executives over the idea, according to
two people familiar with the talks.
Countries like France, Germany and Britain could oppose
ceding more power to Brussels, especially if it means losing
control of spectrum auctions that bring billions into public
In France and the Netherlands, regulators used spectrum
auctions to introduce fourth mobile operators to boost
competition and lower consumer prices, and would be wary of
losing the ability to shape markets.
Vodafone Chief Executive Vittorio Colao said the challenge
would be finding consensus.
"I am in favour of more European integration not less; I'm
in favour of single regulations and making it homogenous. But
it's a big political topic, it's not a business topic."
Olaf Swantee, the head of Britain's biggest mobile operator
EE , questioned whether a single regulator
was the right way.
"The theory to have one regulator might be OK but there's
still risk - because you would have decisions that are not
really appropriate for the UK being taken in Brussels," he said.
Talks on how to galvanise the European telecom sector after
four straight years of revenue declines look set to continue.
The European Telecommunications Network Operators'
Association, which represents 37 companies, is also working on
proposals to submit to the EU in the coming months, its head
Luigi Gambardella said in an interview.
It plans to ask the European Commission to allow more
mergers within individual countries in exchange for backing
Brussels' efforts to create a regional market, he said.
Such consolidation to reduce the number of mobile operators
has been viewed with suspicion by antitrust regulators in
Brussels over fears that it leads to higher prices.
Last year when Austria's smallest mobile player Hutchison
sought to buy third-place Orange Austria, the deal ran
into stiff opposition and only got approved after concessions
including giving up spectrum and selling assets.
"We need to do our homework to prepare something to present
a proposal on how to further integrate the European telecom
market while creating value for the operator," said Gambardella.
"Fostering a so-called single market for telecoms in Europe
would require that the Commission allows in-market consolidation
as a first step to rationalise the fragmented mobile and fixed
landscape in Europe."