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EU's Kroes makes appeal for last-ditch telco overhaul

Neelie Kroes, european commissioner for digital technology, arrives at a meeting for European Liberal politicians in Amsterdam February 25,
Neelie Kroes, european commissioner for digital technology, arrives at a meeting for European Liberal politicians in Amsterdam February 25,

By Claire Davenport and Leila Abboud

BRUSSELS (Reuters) - Europe's top telecom regulator called for an end to mobile roaming fees and equal access to the Internet in a speech at the European Parliament on Thursday, as she sought backing for reforms to create one market for telecom services in the region.

In line with comments emailed to Reuters a day earlier, Neelie Kroes said her vision for the sector was for "pan-European operators helping consumers take advantage of a borderless market" as well as "increased investment in quality networks and content."

The reform effort stems from growing concerns that Europe is falling behind the United States, Japan and South Korea in terms of the quality and speed of broadband and mobile networks, although European consumers do benefit from paying among the lowest prices for telecom services.

The region's big operators like Telefonica, Vodafone and France Telecom often blame Europe's interventionist telecom regulation for sapping their ability to invest, as well as the fragmentation of national markets that hamper economies of scale.

Now roughly three months into Kroes' effort to come up with reforms to reverse Europe's lag behind the United States and Asia in mobile and broadband, some telecom executives and investors are beginning to worry that the action from Brussels will fall short of the rhetoric.

It appears that Kroes' team is preparing more limited measures than what telecom bosses had called for and what industry groups, including the European operators' association ETNO want, according to people briefed on the plans.

The idea of strengthening Brussels influence with a single regulator instead of 27 national-level bodies, which was suggested by some executives as a remedy for the hodgepodge of rules they face, has been dropped. So have pan-European mobile licenses instead of national ones sold by governments.

TOUCHY

Nor does Kroes' plan address demands from telcos that Brussels allow more mergers to create larger companies that can invest in mobile and fixed networks needed for growth.

Merger rules are determined by Europe's antitrust chief Joaquin Almunia, who signaled reluctance to allow industry consolidation in February.

The reason for the scaled-back ambitions is not only the sensitivity of centralizing more decision-making for telecom policy in Brussels, but also the tight calendar of European Union institutions. The Parliament elections start in May 2014 and the mandates of the EU's current commissioners, including Kroes' term, will end in the second half of 2014.

Kroes is also under pressure to draft concrete proposals before an October meeting of EU heads of state aimed at debating the telecoms reforms.

"It is my belief that we can deliver such a package - this full, final, package - around Easter 2014," Kroes told the European parliament.

ETNO, the European telecom operators' association, is drawing up ideas for the reform push but said on Wednesday that a "full revision" of telecoms regulation was needed to foster a single market.

"ETNO strongly believes that the single market should not be imposed through additional regulatory obligations," it said in a statement. " should be driven by market forces."

According to people briefed on the proposals, the package will include measures to end roaming and net neutrality - to stop operators from blocking Internet-based services like Skype or slowing down traffic.

Big telecom groups will likely oppose those moves, especially the call to end the roaming fees consumers pay when they are abroad. Companies are still implementing the EU's roaming caps from last year, which they say requires a technical overhaul and costs millions to put in place.

Kroes is also expected to propose changes to the way states allocate valuable mobile spectrum, making the terms more uniform.

Another proposal may be for a so-called "regulatory passport" allowing operators to deal with one authority in their country of origin to handle licensing and data protection compliance, for example.

However, national regulators would keep the vast majority of major policy decisions under their purview such as whether and how local operators must share fixed networks and high-speed broadband roll-outs.

Such a "regulatory passport" falls short of what France Telecom boss Stephane Richard said the sector needed.

"I plead for the creation of a real single market in Europe where we erase the borders between countries, have a single regulator, and one competition watchdog," Richard said at a Tuesday shareholder meeting.

"Only then can operators consolidate to get critical mass to be able to invest massively in networks."

(Reporting by Claire Davenport and Leila Abboud; Editing by Leslie Gevirtz and Patrick Graham)

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