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Regulatory Power Struggle
By jpenston | November 15, 2007 |
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This will end in tears…
Who Plays the Piper?
Bureaucracy is supposed to be subservient to politics. At least that is what I thought, but we have somehow arrived at a model where an unelected body - The Commission - feels powerful enough to make a play for control over telecoms policy and regulation throughout the union.
This is a power struggle and it could get a bit spicy. It might even be fun to watch two outspoken personalities such as Ed Richards and Viviane Reding slug it out - it certainly started that way.
The European Commission has publicly questioned whether the UK’s top telecoms regulator has any idea what he’s talking about when it comes to, er, telecoms regulation.
In a response to Ofcom chief executive Ed Richards’ letter to the Financial Times today, the commission said: “We note that Mr Richards takes position against a ‘central European telecoms regulator’. In this respect, we really wonder what Mr Richards is talking about.”
That was two weeks ago. Yesterday, the European Telecom Market Authority was announced.
“A more European regulatory approach is particularly justified in telecoms. After all airwaves know no borders. And the internet protocol has no nationality” said José Manuel Barroso, President of the European Commission.
The problem is that the deck is already loaded in Reding’s favour. The debate is set to be heard in the European Parliament, not at a national level, and it seems that the decision will never be sensitive enough (or the implications well understood enough) to make it worthwhile burning political points for the sake of the retention of sovereignty over such complicated matters.
The European Politics of Centralisation
The Eurocrats have skillfully crafted the words, using a hard sell to consumers promising lower prices and yet leaving enough ambiguity over what this means in practice.
It is clear to those who look however, that Viviane Reding is seeking to become the regulator, with underlings in existing national bodies tasked with implementing the central decrees. Call it a “super-regulator” or a “central European telecoms regulator” depending on how diplomatic you want to be, but if it has control over policy, that is what it is.
The grounds for such a bid are based on that over-arching principle of western civilisation: competition. It is argued that only through centralisation can the same grounds for competition be set in each member state.
Does anyone else see the irony of the clash between this and the other pillar of western political thought: democracy? If you leave it to the locals you end up with policies which favour local companies - so you have to dictate from the centre.
What’s in it for me?
The public is again being promised cheaper prices.
“The planned changes are designed to offer consumers cheaper broadband services and phone calls from fixed line and mobile handsets, the Commission also argues”, reports the BBC.
WHAT?
You mean to tell me that all this is necessary to reduce mobile roaming charges?!? You must think I’m stupid. If you want to achieve that simple goal, do what you did in May and mandate a cut in pricing.
What is this Really About?
This is about imposing a political philosophy on how the telecoms market should be structured. This philosophy says that monopolies are intrinsically bad and should be broken up.
This isn’t even about free markets anymore. The markets are in no way free to evolve because of constant interference, if not from government or local regulation, increasingly from the centre. Structural separation is the new creed and the crusade to impose it has begun.
For me this is hugely dangerous because as with any philosophical argument, your starting point determines your conclusion. I have a real problem with all of this because I cannot say which model is best, and the benefit of local control is that we are seeing a huge number of different variations played out and each can evolve from their own starting point.
When you reach perfection in policy, go ahead and impose it. Until then, diversity in the gene pool is good.
Mistaken Objectives
What is really needed, as I highlighted in my Dear Ofcom article, is a consistent set of objectives for regulators to meet with the policy levels already at their disposal. As described in that article, the broken bit is the bit that determines what Ofcom (and presumably other national regulators) are supposed to be achieving.
These are the elements that are left to politicians in the current model. There are weaknesses with that approach, not least the lack of expertise in government on what is undoubtedly a complex and specialised market. A further weakness is the short time frame under which politicians naturally operate and their need to “make announcements” to grab the attention of the people who decide their fate.
Perhaps that is where The Commission can play a role. By laying out targets for digital inclusion, defining minimum service criteria and so on, they can effectively set the baseline so that European citizens can expect the same level playing field. They can also take the long term view and set targets over many years.
What they do not need to get involved in the “how” question, or the policy answers to achieving the goals. If they try to, it will end in tears because there is such diversity in the baseline - how can you set a common policy for the range of countries between The Netherlands on one side and Bulgaria on the other?
Summary
At a time when the market needs certainty to enable the proper evaluation of investment in fibre, this is a bad move. It is based on enforcing an ideology that is at best, unproven in telecoms.
It is probable that The Commission will get its own way, because the issues are complex beyond the understanding of the people who have to make the decisions on whether to adopt the proposal. It centralises power, and yet the people deciding whether to adopt it are those that stand to benefit from such centralisation.
“From today onwards, a single market without borders for Europe’s telecoms operators and consumers is no longer only a dream,” said José Manuel Barroso, President of the European Commission. “Telecoms is a field where our single market can bring about very concrete results for every citizen in terms of more choice and lower prices, whether for mobile phones or for broadband internet connections. At the same time, a single market with 500 million consumers opens new opportunities for telecoms operators – if Europe helps to ensure effective competition and consistent rules of the game. This is why we act today.”
There is no such thing as a single European Telecoms Market and there never will be. The theory supporting competition for goods and services within Europe assumes the portability of those goods and the production and labour that goes into making them. A telecoms network is not portable - with the exception of mobile roaming - so you cannot go and buy your phone service from Germany if the suppliers there are cheaper than those at home because infrastructure is local.
What is needed is a common set of social and economic objectives - the “what” - but what I can see is an desire to control policy - the “how” - and this will be bad for telecoms users. The idea that The European Commission can make one policy that suits the needs of users operating on widely diverse historical networks, is I’m afraid, just wrong.
Topics: Ofcom |
November 21st, 2007 at 3:00 pm
Hey - still waiting for your next analysis of Ofcom’s NGA consultation!
November 21st, 2007 at 3:11 pm
Indeed you are…!
There’s a little time left to the deadline, but I guess a few of you will want to read my thoughts before you have to put in yours - which is nice to know.
I have a client project at the moment which has to take priority I’m afraid, but I should find time to add something before the end of this week.
Check back on Friday, say?