The big five EU telecom operators in dire straights

Press conference by Neelie Kroes, Vice-President of the EC, on the Net Neutrality. (EC Audiovisual Service)

Press conference by Neelie Kroes, Vice-President of the EC, on the Net Neutrality. (EC Audiovisual Service)

British Telecom, Deutsche Telekom, France Telecom, Telecom Italia and Telefónica constitute the exclusive club of major telecom operators in the European Union. The very oligopolistic character of the market has prompted the European Commission some years ago to forcefully introduce ground breaking changes in the EU telecom market.

Towards the end of 2009 the Commission managed to secure political agreement on a package of broad reforms to bring about a competitive single telecoms market. The twelve changes brought about with this package made the life of consumers easier. They were the following:

1. A right of European consumers to change, in 1 working day, fixed or mobile operator while keeping their old phone number.

2. Better consumer information.

3. Protecting citizens’ rights relating to internet access by a new internet freedom provision.

4. New guarantees for an open and more “neutral” net.

5. Consumer protection against personal data breaches and spam.

6. Better access to emergency services, 112.

7. National telecoms regulators will gain greater independence

8. A new European Telecoms Authority that will help ensure fair competition and more consistency of regulation on the telecoms markets.

9. A new Commission say on the competition remedies for the telecoms markets.

10. Functional separation as a means to overcome competition problems.

11. Accelerating broadband access for all Europeans.

12. Encouraging competition and investment in next generation access networks.

Still in 2011 the Commission was about to launch infringement proceedings against sixteen Member State that had failed until then to comply with EU telecoms law and regulations. The main item in question was consumer protection. National telecom companies had been for years operating as absolute state monopolies and had developed a very rigid culture vis-a-vis consumers. It took the Commission many years of legal fights to enforce the above rules.

The last attainment of the Commission was a generous reduction of mobile roaming rates (calls between member states), in two instalments that made the intra-national mobile calls accessible to the wider public within the European Union.

In short all over the past ten years the Commission worked very bravely against a long tradition of monopolistic culture in almost all member states.
ICT technology explosion

For some time now however the ICT technological explosion all across the digital spectrum has opened new horizons in the wired or wireless telecom market. Entire brand new sectors of economic activities are continuously born using the telecommunication infrastructures. The classical telecom operators are watching almost helplessly the revolution that takes place through their networks but is not controlled by them.

Of course all the European heavyweights like British Telecom, Deutsche Telekom, France Telecom, Telecom Italia and Telefónica are very active in all those new markets, from novel mobile advertisements applications to new Internet services like cinema film distribution and the like.

But still a lot of new applications escape them or even worse new telephone call providers with breakthrough technologies can offer cut cost services, which undercut the wire network owners’ profits. Today city calls are offered for free almost all over the European Union.
In reality the entire telecom and Internet services market is in crossroads. The major network operators, usually the heirs of the old telecom national monopolies see the earth moving under their feet but they cannot demand a return to the monopolistic past. National telecom authorities in most of the EU member states empowered with new mandates to oversee fair competition rules are watchful and punish them whenever they try to exploit their privileged position as owners of the wires.

It seems however that while the member states telecom authorities are adamant in this game, the giant telecom firms of the central EU member states like the above mentioned five companies find more willing listeners for their “problems” in Brussels. And seemingly they have started discussing these problems with their major old enemy the DG Competition and probably with the participation of the competent Commissioner Joaquín Almunia.

There are reports on the European press of high level meetings between the big ones. That kind of reports alone could have been used against them as attempts to form a trust. If the information that Brussels dignitaries are also present in those discussions is true, then there is obviously something very big going on but it is difficult to understand what may be the outcome. The slightest attempt by the big five to come to some kind of agreement can be considered as an attempt to form a mighty monopoly.

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