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Telco Rules Expose EU’s Fake Digital Single Market

The European Union often falls short of Brussels’ grand visions. Witness member states’ unease with the free movement of people, and half-hearted attempts at creating a banking union. Telecom regulation is no different. A new set of rules does little to make tangible the so-called “digital single market”.

On Wednesday the European Council and Parliament finally agreed a regulatory code proposed by the European Commission in 2016. It means a cap on cross-border call charges within the bloc, at 19 cents per minute, compared with a current average of 60 cents according to a 2016 study by consumer body BEUC. That’s a blow to mobile operators, who thought they’d seen the last of price caps after last year’s abolition of charges for using mobile phones abroad, known as “roaming”.

The likes of Deutsche Telekom, Vodafone and Telefonica will also be disappointed by the bloc’s lame attempt to boost investment in superfast 5G mobile networks. A minimum licence duration of 20 years is lower than the originally mooted 25 years. That makes it harder to persuade sceptical shareholders that operators can make a return by building pricey 5G, which the Commission reckons will cost around 60 billion euros in Europe.

Granted, there are a few crumbs for telecom bosses frustrated at having to deal with a patchwork of member state regulators. The EU effectively formalised its preference for business models focused on building 5G and full-fibre broadband, and can overrule national regulatory decisions it thinks depart from its framework.

But Europe’s telecoms market is still far more fragmented than China or the United States. China Mobile and Verizon, for example, are almost three times the size of Deutsche Telekom, measured by market capitalisation. No operator has a sizeable presence in Germany, Britain and France, the top three markets. Policies that might create a true digital single market, like auctioning off spectrum licences centrally, are unthinkable since member states refuse to yield control over important sources of revenue.

European regulators might argue size doesn’t mean greater investment, but operators Sprint and T-Mobile are making the opposite case to U.S. regulators by pitching their merger as creating a 5G champion. They’ll probably get a better reception than their European peers. – Reuters

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