The Development of Telecommunications Policy in the European Union - Essay Example

The Development of Telecommunications Policy in the European Union Telecommunications sector has witnessed considerable attention by the European institutions that have taken several measures to regulate the sector. European Commission considered that the provision of basic household services, including telecommunications is the key to ensuring equity and social cohesion. In June 2001, a communication on the new framework for cooperation on activities related to the European Unions information and telecommunications policy was formed. The European Commission was invited by communication Member States to join in efforts to reform the EUs information and communication policy. This comes before the European Parliament espouses a comprehensive communications strategy in 2002. Euractiv. (2009), Clifton, J. et al. (2011) Levi-Faur (2002) has confirmed that while the Europeanization of the telecoms and electricity industries led to some liberalization, it was a mediating factor rather than an independent one. The real effective governance structure is located in Brussels and it will affect the way telecom in Europe states develops in the future. Six suggestions that aim to capture cross-sectorial and cross-national variations in the ability of Europeanization to shape liberalization are provided. Firstly, the effect of EU membership is stronger in the move to liberalize the electricity sector than the telecoms sector. Secondly, the effect of Europeanization on liberalization is stronger in the southern countries than in northern Europe. Thirdly, because unbundling in telecoms, the privatization of ownership and the move towards the creation of independent regulatory authorities are less the product of Europeanization than of the advance of retail competition. Additionally, EU membership served as a catalyst for liberalization in some countries. Furthermore, the post-liberalization effects of Europeanization could be more important than the last effects. The advance of liberalization is not responsible Europeanization, but the process of Europeanization has created another layer of political control that might be able to check and cut abuse of power by European actors. Lastly, Europeanization might be an essential factor in maintaining future competitive regimes in electricity sector more than telecoms sector. Levi-Faur (2002) Europeans and the WTO Telecommunications The WTO signed in on15 February 1997, the Fourth Protocol of telecommunications, which formalized the emerging liberalization in telecommunications worldwide. The accord involves 69 countries are Signed and accounted for more than 90 percept of the telecommunications revenues. Since 1 January 1998, the new regime allowed telecommunications sector to be governed by the global rules for the processes of the WTO with the GATS framework. Singh, (2008) Singh (2008, p.151) has argued that: These commitments allow for cross-national investments in telecommunications (or hasten them given that this process precedes 1997), and trade in basic and many value-added telecommunications services are governed by liberalization norms, both features backed by WTO rules of transparency and MFN. Most significantly, 63 of the 69 governments also agreed to introduce “regulatory disciplines” to observe the WTO rules. They did so by signing on to a “Reference Paper” in telecommunications that governs regulatory aspects of the sector. Negotiators realized early on that the credibility of the telecommunications liberalization will rest in the hands of the regulatory authorities; the Reference Paper seeks to ensure such safeguards through transparency, regulatory independence, and safeguards against anti-competitive practices of incumbent monopoly providers are they state-run or private carriers. Moreover, the inability of public-run utilities in the world to meet users’ demands leads to more momentum for liberalisation negotiations, which is providing opportunities for rival providers to meet user demands. However, the national monopolies in Europe have strong support from powerful anti-liberalization trade unions, which leads to domination on telecommunications whether in service provision or equipment manufacturing, except for a few countries that were liberalizing. Therefore, these moves have shaped pressures by users for telecommunications services, because the monopolies were unable to provide. Liberalization of telecommunication has started within individual states, whereby the United Kingdom is the first in 1981 by privatize its monopoly, British Telecom. Singh, J. P. (2008) “The telecommunications accord, in fact, pushed countries to legitimize their incipient preferences and hastened the process of liberalization.” Singh, J. P. (2008. p.152) The basic telecommunication agreement can be divided into two stages. The first stage of NGBT negotiations has begun in April 15, 1994 and continued until the same date in 1996. At this stage there were no any agreement signed. The second phase has started in April 15, 1996 and continued until February 15, 1997. This stage featured the reconstituted GBT and signed agreements with 69 governments. By that stage, the European Commission has negotiated instead of 15 member states and tried since the mid-1980s, to get a consensus between them toward firming a liberalization technology. Singh, J. P. (2008) European Commissions Relationship and National Governments Thatcher (2001) considered that the European Commission was able to convince the national governments to accept its role in telecommunications policy although this role was against the wishes of governments. Instead, it did that by relying on the strong support that it got from the European Court of Justice (ECJ) and transnational groups. That struggle has created European Community (EC) regulatory. “The studies postulate that the Commission was the driving force behind EC policy, has put the Council under clear supranational pressure to agree on regulatory measures’ and ‘initiated an influential European-wide policy debate and enacted its own measures” Thatcher (2001). The relationship between the European Commission and national governments has offered telecommunications as a valuable case for three reasons. First, the European Commission outperformed in the exercise of its role in the telecommunications sector more than other sectors such as electricity and gas. Secondly, there is evident conflict between European Commission and member states. Lastly, telecommunication sector contains both cooperation and conflict between the European Commission and national governments. Cooperation between national policy-makers and the European Commission have forced the European Community to enter into telecommunications regulations. Indeed, the discussions about a European Community telecommunications policy started in 1979 - 1980 between representatives of industry and national government/PTO official. The European Commission prepared between 1980-1983, limited proposals for market opening in cooperation with the Senior Officials Group on Telecommunications (SOG-T) and EC policy and national officials. The proposals, which were requested by the Council of Industry Ministers, were balanced by other measures to spend European Community funds. This also urged telecommunications management to be compatible with standards, open national markets for one form of terminal equipment, and start an experiment in opening up public procurement by inviting competitive tenders. The Council accepted the Commission has and put forward six lines of action that involved the small market-opening, expansion of transnational infrastructure, and helping less developed European Community areas (Thatcher, 2001). Liberalisation and Europeanization of European telecom sector To achieve the desired developments in the European telecom sector, the European commission is considering a liberalisation approach. Reformist considers liberalization as an excellent idea that would bring the desired changes in the sector. Although liberalisation is considered the main process that would create the desired changes in the sector, the process has been in operation since 1980 s. The process has however progressed steadily although it has not achieved the desired benefits. According to (Hodgson, 2000), the European commission has proved to be an important factor in the realization of a liberalized telecom sector. Hodgso also notes that the European commission responsible for regulating the telecom sector has been transformed into a political outfit. This implies that the European commission is hoping to achieve liberalization of the telecom sector though political channels. The author also notes that the political approach applied by the commission would cement the relationship between the different players in the sector. In this political mission, the European commission relied on treaties and agreement established during the creation of the EU. Using these treaties as the guiding and unifying principals, the European commission aimed at creating telecommunication policy that would unite all the players in the European telecom sector (Humphreys and Simpson, 2005). Achieving a European telecom policy was one of the EU development agendas that led to the creation of the EU. Initially harmonizing the European telecom sectors seemed to be a dream of the European commission since the set agendas seemed unattainable. After failed unification attempts, the European commission is considering a liberalization approach. In this approach, the European commission hope to achieve unification of the different players in the sector indirectly. The creation of telecom networks is perceived as the next big factor that will bring about major developments in the European Union. Development of telecom networks is also considered as the backbone of the developing European information society. It is anticipated that European society that will depend heavily on communication and information such that it seems logical to brand it an information society. This society is expected to dominate European nations although information dependent societies will be evident in other countries. The modern European economy will rely heavily on convenience and reliability resulting from improved telecom networks. The overreliance on telecom networks will be evident on both individual enterprise and corporate. To achieve these benefits, the European Union is considering introducing or increasing competition among the different players operating in the telecom industry. The European Union is also considering setting up regulations to enhance competition among the different players in the sector. The unionization of the European telecom industry has gone through several processes to achieve the modern developments however; the EU commission has a lot that it requires to achieve through the formation of telecommunication policies. Connecting Europe To achieve Europeanization the European commission has adopted a 50 million Euro project to enhance Europe’s digital networks and transport. The funds are targeted to a number of projects that are aimed at increasing Europe’s connectivity and revive economic growth through creation of employment (Singh, 2008). The funds will be channelled into key infrastructures and economic sector to enhance service delivery by establishing competitiveness. The proposed funds will also be channelled towards development of roads, railway networks, power grids and most importantly the creation of broadband networks. These funds are not just aimed at the traditional development of transport and communication networks but they are meant to create connectivity within the European Union. The collective developments of communication and transport networks within the European Union seem to have an adequate source of the missing links concerning the proposed unification of the European countries. Creating the missing link in the unification of the European countries will result in the creation of employment opportunities and social integrations around the European Union Unlike the previous programs that aimed at the European transport sector, the different projects supported by the EU funds are aimed at creating a transport network that relies on renewable sources of energy. This implies that though the stimulus program realized by investing the funds, the EU is moving towards greener economy. The EU is also considering setting up a monitoring program that will be mandated with regulating the sector. The European commission is mainly concerned with regulating the fixed telephone and broadband networks within the European Union. According to Clifton et al (2009), developing the telecom sector of the European Union is important in the Europeanization process regulating the sector is of equal importance. This implies that the European Union will only realize maximum potential in the telecom if it fully regulates the sector. It also implies that the European commission has the task of regulating the sector in addition to its ordinary duties and responsibilities of ensuring a connected European union. The commission will achieve this objective by setting up consultant teams. These teams will be part of commissions that are aimed at establishing a common market in the telecom industry. Although establishing a common market for broadband and telephone networks was not a part of the initial Europeanization objectives, the process has been adopted as a side measure to enhance competence. Through the establishment of a common market, the European Union hopes to enhance the Europeanization process by creating a deficit in the supply of telecom services. By introducing a competition factor within the sector the European commission hopes to achieve a faster rate of growth towards the Europeanization process (Clifton et al, 2011). Creating competition in European telecom sector is the best strategy that the commission hopes will bring about the desired changes in the sector. The European commission also hopes to achieve the much-needed changes within the set deadlines. This implies that competition as a factor and strategy will cause the desired changes within the telecom sector. The commission also hopes to boost non-discriminatory access of telecom infrastructures by different operators in its effort to speed up the process. With this strategy, the commission hopes to eliminate dominance of a particular operator in the sector. By eliminating the dominance of key players in the sector, the commission hopes to achieve a level playing field that will promote a healthy competition (Thatcher, 2000). Secondly, the commission is targeting cost–oriented solutions to achieve or enhance competition in the sector. In these endeavour, the commission is targeting at controlling prices for different requirements within the sector. These developments have achieved benefits that are readily evident within the sector. The results of these developments are visible in all economic sectors. A household survey carried out recently indicated that 40% of European households are consumers of bundled TV and internet services. The report also shows that 50% of the remaining fraction has aspirations of becoming regular customers (Clifton, et al, 2011). The survey also indicated that majority of the people are limiting the usage of their fixed telephones due to overreliance on mobile phones and e-E-calls for their communication needs and requirements. The 2011 surveys also indicated that downloading and uploading internet speeds did not comply with the speeds indicated by the service providers. Some customers also complained that they experienced breakdown of network supply often contrary to their service provider’s assurance. This result indicates that the European telecom industry has a long way to go before it achieves the desired changes. The results also confirm that competition is a key catalyst in the realization of development agendas in the telecom sector. The European telecom sector has important issues that it needs to solve before it attains the required development in the telecom sector. Another important issue that has attracted a lot of controversy is the issue of roaming cost charged by different operators within the EU member states (Simpson, 1999). Although the EU is moving towards a harmonized telecom sector, the roaming cost charged by different operators within the industry remains high. The European commission is charged with the responsibility of harmonizing the sector considers this as an important issue and has proposed some important changes in the sector. If the proposed changes are effected, roaming costs charged by different operators on their customers within the EU might be eliminated. Conclusion The European telecom sector has realized massive changes that have led to the creation of the modern telecom sector. Although the sector has achieved many improvements there is a lot that requires to be achieved for the sector to acquire the Europeanization status. Several approaches have been applied in the sector to create the current changes. The principles are still under application to bring the proposed changes. Political and economic approaches are some of the main approaches that have been used to refine the sector. The political approach has been widely applied and it is responsible for the creation of the European telecom policy following the creation of the European commission. The telecom policy was aimed at inducing unification of the different players in European telecom sector. However, the policy failed to produce the desired changes in the anticipated unification. Following this failure, the European commission is considering liberalization as a method of unifying the different players in the telecom sector. The WTO protocol was developed by the European Union with the prospects of establishing liberalization and unification of the telecom industry. Currently the EU commission is considering making changes in the transport and communication sector to achieve changes required in the industry. The commission is targeting the transport, power, and communication sector. The commission also hope to achieve full regulation and control of the telecom sector to increase rate of achieving the anticipated benefits. Although controlling the sector is important, Europeanization is beyond EU’s jurisdiction. References Clifton, J., & Díaz-Fuentes, D., Revuelta, J. (2009): " Explaining Telecoms and Electricity Internationalization in the European Union: A Political Economy Perspective", European University Institute, Robert Schuman Centre for Advanced Studies, WP 2009/62. ISBN 1028 3265 . Clifton, J. Díaz-Fuentes, D. Fernández Gutiérrez, M. & Revuelta, J. 2011. Is Market-Oriented Reform Producing a “Two-Track” Europe? Evidence from Electricity and Telecommunications. Unpublished. Levi-Faur, D. 2002. On the Net Impact of Europeanization. The EUs telecoms and electricity regimes between the global and the national. European Integration online Papers. EIoP. (6) 2002-007 http://eiop.or.at/eiop/pdf/2002-007.pdf Levy, D. 1999., Europe’s revolution: broadcasting regulation, the EU and nation state. London: Routledge. Simpson, S. 1999. The changing totems of European telecommunication governance: liberalization, market forces and the importance of the EU regulatory package. Singh, J. P. 2008. Negotiation and the Global Information Economy. 1st ed. Cambridge: Cambridge. New York: University Press. Thatcher, M. 2001. ‘The Commission and national governments as partners: EC regulatory expansion in telecommunications 1979-2000’, Journal of European Public Policy, 8 (4), 558-584. Simpson, S 2011, The potential of soft governance in the EU information society: lessons from the EU electronic communications regulatory framework , in: UK Political Studies Association Annual Conference ‘Transforming Politics – New Synergies’. Panel: ‘The Public Interest and EU Information Society Policy: the Role of Soft Governance’, , 19-21 April 2011, London. 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