Technolgy Rules: Europe to cap intra-EU call fees as part of overhaul to telecoms rules

European Union institutions have reached a political agreement over an update to the bloc’s telecoms rules that’s rattled the cages of incumbent telcos.

Agreement was secured late yesterday after months of negotiations between the EU parliament and Council, with the former pushing for and securing a price cap on international calls within the bloc — of no more than 19 cents per minute. Texts will also be capped at a maximum of 6 cents each, Reuters reports.

While roaming charges for EU travelers were abolished across the bloc last summer, the parliament was concerned that charges for calls and texts between EU Member States is often disproportionately high — hence pushing for the cap, which was not in the original EC proposal.

The Commission proposed a new European Electronic Communications Code back in 2016, to modernize telecoms rules that had stood since 2009 — to take account of technology and market shifts, and align the rules with its wider Digital Single Market strategy.

The proposal broadly focused on pushing for consistency in spectrum policy and management; reducing regulatory fragmentation; ensuring a level playing field for market players and protections for consumers; and incentivizing investment in high-speed broadband networks.

And on the incentivization front, the new rules agreed yesterday update the powers of national regulators to act against dominant players — such as by being able to impose access to their network.

For a case study on why such interventions might be necessary you could look at the fiber investment and network-access foot-dragging of a former incumbent telco such as BT in the UK, for example, which has long favored eking out copper. While its network infrastructure division OpenReach was last year ordered to be legally separated — around a decade after it was functionally separated by the regulator. Yet complaints over BT’s lack of investment in broadband infrastructure and access for rivals to its networks have, nonetheless, persisted.

On the consumer front, the new EU telecoms Code also includes measures intended to make it easier to change service provider and keep the same phone number; measures around tariff transparency to make it easier for people to compare contractual offers, and the ability to terminate a contract without incurring additional costs; as well as additional protections around bundled services.

For operators there are deregulation measures for co-investments — intended to promote “risk sharing in the deployment of very high capacity networks”. And the Code sets wireless spectrum licenses at at least 20 years — also intended to give carriers the “predictability” they need to speed up 5G and fiber deployments.

Though this is shorter than operators had hoped, and the European Telecommunications Network Operators’ Association (ETNO) — whose membership is made up of incumbent telcos such as BT — has been quick to voice its displeasure, describing the code as a “missed opportunity“, and complaining that it adds extra complexity while also failing to incentivize investment.

“The Code will not ignite the much needed rush to invest in 5G and fibre networks and it will add complexity to an already burdensome system,” it writes. “The agreed law foresees only limited progress on spectrum policy, a complex and watered down compromise on incentivising fibre investment, uncertain triggers for imposing regulatory remedies and no fair playing field for digital services users and providers.”

Smaller, fiber-to-the-home broadband players are sounding much happier though…

The FTTH Council Europe congratulates the co-legislators for reaching today’s agreement on the #EECC and welcomes the regulatory push to #fibre investments & end-user benefits. More info: https://t.co/azx0VW8R6q pic.twitter.com/gCLk2pNKZr

— FTTH Council Europe (@FTTHCouncilEU) June 6, 2018

Congratulations for the results of the new telecom code. The wholesale only model will boost investments in FTTH in Europe. No more conflicts of interest of incumbents @delcastillop @GabrielMariya @ViolaRoberto

— Luigi Gambardella (@lgambardella) June 6, 2018

ETNO also criticizes what it describes as “the unfortunate decision to regulate intra-EU calls” — arguing this is an unjustified, populist measure, and sniping that it creates legal uncertainty by setting what it couches as “a highly dangerous precedent for all other European industries”.

That’s not the view of the European Consumer Organization, BEUC, which describes the measure as “a good next step towards a real single market for consumers”.

“Consumers should no longer have to worry about excessive costs when calling another EU country from home. The end of roaming charges was a big first step, but it did not deal with the high costs of phone calls to another EU country when at home,” its director general, Monique Goyens, told us in a statement.

“Market concentration is bad for prices and consumer choice. A small group of players should not be able to take control of the market. Thanks to what has been agreed, national regulators can take measures to intervene and maintain a healthy level of competition,” she added.

“Telecom services regularly rank among the top most complained-about markets. This new law upgrades some important consumer protection measures. Telecom clients will for instance be able to end their contract early and choose a better deal.”

And of course the Commission is putting a positive spin on the outcome, two years on from its proposal to modernize the rules.

In a statement welcoming the end of the negotiations, Andrus Ansip, the VP in charge of the Digital Single Market, said: “This agreement is essential to meet Europeans’ growing connectivity needs and boost Europe’s competitiveness. We are laying the groundwork for the deployment of 5G across Europe.”

In another supporting statement, Mariya Gabriel, commissioner for digital economy and society, described the new rules as “bold and balanced” — saying they would provide “faster access to radio spectrum, better services and more protection for consumers, as well as greater investment in very high speed networks”.

While political accord on the new telecoms code has indeed been reached between the EU institutions, members of the EU parliament and Council still need to vote to adopt it — after which the bloc’s Member States will have two years to transpose it into their national laws.