With the goal of combining 500 million people into a single market, the European Commission wants to reshape the regulatory climate of Europes telecommunications industry, including imposing a form of network neutrality.
Under a proposal released Nov. 13, EU Commissioner for Information Society and Media Viviane Reding said reform "goes to the heart of the problem: the fragmentation of Europes telecoms market that is depriving European consumers of the benefits of cross-border competition in telecoms."
The EUs "new deal" for consumers would also reallocate spectrum for more efficient use. The EUs current spectrum rules are almost 40 years old. "Too many countries are sitting on unused radio spectrum," Reding said.
The spectrum proposal would also treat spectrum as "service neutral," allowing use of spectrum for broadband delivery by anyone who pays for it.
Pending approval by the European Parliament and the EU Council of Ministers, the new regulations could take effect by the end of 2009.
Reding criticized the traditional telecom structure in Europe, where former state monopolies still dominate local markets, as being "too cozy" with state regulators and called for an independent EU regulatory panel to protect consumers and to promote competition.
At the core of the pan-European telecom regulatory body is a proposal called "functional separation" for network operators, requiring the incumbent operators to separate their network infrastructure from units offering services on the network.
"As telecoms markets are more dynamic, functional separation allows network access to new entrants and the incumbents own retail division on the same terms," an EU reform statement said. "It gives new entrants a fair chance to build services using the incumbents existing infrastructure."
The proposal is strikingly similar to the old "unbundling" requirements once imposed on U.S. carriers by the FCC (Federal Communications Commission). An outgrowth of the 1996 Telecommunications Act, the FCC required that the Baby Bells make their last mile connections to users available to dial-up Internet competitors.
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A series of court decisions and FCC rulings eventually made the unbundling regime moot as carriers built their own broadband networks. The current debate over network neutrality stems from those rulings as supporters seek to open broadband networks to competition.
"Functional separation is an instrument to ensure fair competition leading to freedom of choice for consumers in a telecoms market dominated by one operator," the EU states.
European carriers are not thrilled by the functional separation requirement or the spectrum reallocation proposal.
"Member states must retain their freedom to decide on spectrum use in the broadcasting bands, in order to promote their audiovisual policies, media pluralism, cultural and linguistic diversity," the European Broadcasting Union said in a Nov. 13 statement.
The broadcasters also complain the EUs spectrum plans will lead to interference with television channels. "Interference is not a trivial problem. Viewers and listeners who have invested in digital equipment must be guaranteed stable reception and high-quality sound and video," the statement said.
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