11th Aug 2022

MEPs keen to break up telecoms giants

  • The parliament has taken on telecoms incumbent firms, breaking apart network maintenance from retail sales of services (Photo: EUobserver)

The European Parliament has supported breaking up giant telecom firms and helping people switch mobile phone firm in a three-pronged legal package designed to deliver lower prices and offer greater protection to consumers.

On Wednesday (23 September), the chamber voted by 597 voices in favour of a plan to separate the network operations from the services operations of the large, previously publicly-owned telecommunications firms.

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Under the measures, national regulators would have the ability to split the dominant firms into two businesses - one that physically takes care of the phone lines and the other that sells the services, such as telephone calls or broadband internet, which use those lines. Although the two businesses would be separate units, they would remain within the same overall company.

The aim to prevent the dominant operator from giving preferential access to the network to its own retail services, instead of sharing them equally amongst all retail telecoms providers.

While most telecoms legislation in place in Europe already requires non-discrimination, preferential treatment is still quite common in practice.

The telecoms incumbents, for their part, have strongly opposed the move.

The European Telecommunications Network Operators' Association (ETNO) - the trade association representing the large telecoms players - said that the vote if backed by EU governments would lead to a decline in network investment.

The "introduction of functional separation in the list of possible remedies risks creating additional uncertainty and seriously discourage investment in new networks," the group said in a statement. "ETNO continues to believe that there has been no justification for the inclusion of such a far reaching, costly and irreversible obligation in the framework."

The trade unions representing telecoms workers also argue that separation will lead to underinvestment.

"The motivation to invest in the network will fall," said UNI Telecom, the union central for telecommunications employees. "A related worry regards the quality of service provided by a separated network. The new, separated network access unit of the incumbent would have, in theory, no link with retail operations. Thus, why should this unit seek to maintain or improve quality of service?"

EU regulator mooted

MEPs also voted 490 to 105, with 14 abstentions, to set up of a European telecoms regulatory group - the Body of European Regulators in Telecoms - which will comprise regulators from all 27 EU member countries, similar to the currently existing European Regulator's Group.

The move is a defeat for commissioner Viviane Reding, the author of the proposals, as she had originally wanted a strong telecoms regulator for the European Union supported by EU funds in order to assure its independence from national interests, and which would also include oversight of internet security.

MEPs however voted to leave that job in the hands of another body, the European Network and Information Security Agency.

Switching mobile companies

A third element of the telecoms package also gave a boost to mobile phone users.

In a 548 to 88 vote, MEPs swung in favour of measures to allow consumers to be able to switch their phone number to another operator within one day. Currently, such requests can take considerably longer, discouraging consumers from moving to another service provider, believing the move is too much of a hassle. Such barriers for consumers, argued MEPs also represented barriers to innovation in the industry.

"Consumers who are able to shop around, switch suppliers and take advantage of new technology and better offers are absolutely crucial to a thriving market," said UK centre-right MEP Malcolm Harbour to reporters after the vote. "How can you have a functioning market, if you can't or it's difficult to switch?"

Mobile phone contracts would also have to be much clearer for consumers to make sure they know what they are really signing up to, particularly with regard to price plans. Consumers would also have to be told about any restrictions to particular services, such as Skype, on their handset before agreeing to take out a contract.

All elements of the package must now be approved by the member states.

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