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Is it OTT to say Digital Single Market Strategy is an ambitious overhaul of the telecoms regulatory framework?

Last Wednesday the European Commission released its Digital Single Market Strategy (please see our in-depth commentary on this release), and in doing so confirmed its intention to overhaul the Last Wednesday the European Commission released its Digital Single Market Strategy (please see our in-depth commentary on this release), and in doing so confirmed its intention to overhaul the telecoms regulatory framework. The exact nature of these proposals will not be presented by the Commission until 2016, however these reforms will focus on:

  1. a consistent single market approach to spectrum policy and management;

  2. delivering the conditions for a true single market by tackling regulatory fragmentation to allow economies of scale for efficient network operators and service providers and effective protection of consumers;

  3. ensuring a level playing field for traditional telcos and over-the-top ("OTT") players with consistent application of the rules;

  4. incentivising investment in high speed broadband networks (including a review of the Universal Service Directive); and

  5. a more effective regulatory institutional framework.


 

The adoption of the Connected Continent Package is seen as a first essential step in the Digital Single Market reform process. The initial Connected Continent Package was released in September 2013 by Neelie Kroes, former European Commissioner for Digital Agenda, with a real sense of urgency. This initial package was heralded as the big picture vision necessary for Europe's strategic interest, economic progress and the telecoms sector itself.

The current Connected Continent Package proposal has been significantly pared back since its debut in 2013, with only two elements remaining, net neutrality and mobile roaming. Initial elements of the Connected Continent Package that fell by the wayside appear to be making a resurgence under the latest Digital Single Market reform strategy, including spectrum policy, reform of the regulatory institutional framework and high speed broadband networks.

However, Member States have repeatedly voiced serious concerns regarding these elements. The Presidency progress report on the Connected Continent Package released in May 2014 noted that the Member States were worried about red tape, the impact on the existing structures (including NRAs) and investment into infrastructure, the consequences of the consolidation of the market for the effective competition and also about the shift of balance of power between the Commission and the Member States. It will be interesting to see how the European Commission intends to address these issues in its future reforms second time around.

What is new is the objective to ensure a level playing field for all market players, targeting OTT service providers. OTT service providers are not currently regulated in the same way as traditional telco players, as they fall outside the scope of rules regarding electronic communication services. How the Digital Single Market reforms intend to address the current asymmetric telecoms regulation will be proposed in 2016.

Whether or not the European Commission's rhetoric and "ambitious legislative steps towards a connected single digital market" will match the reality over the next year (or several years) will be yet another case of wait and see. In the meantime, we will continue to monitor the discussions of the Connected Continent Package with the European Parliament in the coming months.

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