UPDATE 2-EU governments reach deal over telecoms measures

* Formal position adopted in Council of Ministers

* EC’s Reding says not as ambitious as Commission’s plan

* Talks now start on final agreement

* Chance of final deal before Spring recess (Adds ETNO reaction, details)

By Huw Jones

BRUSSELS, Nov 27 (Reuters) - European Union governments reached a deal on Thursday to increase competition in telecoms markets and offer consumers a wider choice of cheaper services.

“We have managed to reach political agreement within the Council of Ministers,” French Industry Minister Luc Chatel said at a meeting of EU telecoms ministers.

The European Parliament has joint say with EU governments over the package that was authored by EU Telecoms Commissioner Viviane Reding.

Negotiations now start on a final deal by ironing out the key differences between what Reding proposed and what parliament and governments have adopted so far.

Both governments and parliament have watered down Reding’s original proposal though it will still create a new EU telecoms regulatory body, introduce powers to split telecom operators into business units to boost competition.

Consumer rights are beefed up, by making it easier to switch operators by allowing them to move to a new phone company within just a day and keep their old number.

There was also an agreement to cap prices of roamed mobile phone texts and data downloading. [nLR90888]

“It is obvious our text is far more ambitious than the text on the table at the moment and which has now been agreed,” Reding told the ministers.

“The Commission will stick to its original position,” Reding said, adding later that some states will back her.

Britain, Sweden and the Netherlands abstained from Thursday’s vote due to concerns over different issues that will be taken up in negotiations with parliament.

“On the key points we still have work on the table but there is nothing which can give me the impression there will be a stop in the procedure,” said Catherine Trautmann, a French socialist member of parliament who is sponsoring the legislation.

“I am sure we can have a result before the end of the legislature,” Trautmann said.

The main elements of the package include:

-- Reding wanted a new EU-funded telecoms regulator that also looked at Internet security. Parliament wants a less powerful body, partly funded by the EU and excludes Internet security. EU states agreed to set up an even weaker body to simply coordinate decisions among national telecoms regulators;

-- Reding sought a veto on steps taken by national regulators deemed insufficient to boost competition. Parliament watered this down in favour of effectively giving the new EU body the last word. EU states said regulators will only take account of the Commission’s opinion but must explain why if it is disregarded;

-- Reding wants some pan-EU coordination of managing spectrum or freeing up radio waves for new uses such as mobile television. Parliament backed some loose coordination but EU states insisted spectrum is a purely national competence.

-- Reding, parliament and now EU states agree that national regulators should have the option of forcing a telecoms group to “functionally separate” and run its network and services arms separately to give competitors full access to a network.

-- EU states backed parliament’s move to reject a French request that Internet service providers could cut off subscribers that download copyrighted material.

-- Parliament introduced risk-sharing so that operators who want to use someone else’s new network should contribute to building it. EU states agreed a dominant operator has to give access to its network and that the investment could be taken into account in the access fee;

ETNO, which represent big telecom operators like France Telecom FTE.PA, Deutsche Telekom DTEGn.DE and Telefonica TEF.MC said ministers missed an opportunity to encourage investments and recognise the risk they entail.

“Furthermore, in the current context of economic and financial crisis, the adoption of functional separation and a weakening of the conditions for its imposition goes against the objective of boosting next generation networks and sends a negative signal to investors,” said ETNO Director, Michael Bartholomew.

The adoption on Thursday of a formal position means there is now a stronger chance of a final deal before parliament goes into recess next spring ahead of its June elections. (Reporting by Huw Jones; editing by Simon Jessop and Rupert Winchester)