European Union antitrust regulators will examine deals such as the proposal by Telefonica and Royal KPN (News - Alert) to combine their German assets, based on their impact on national markets rather than the whole EU. That deal would create a new market leader, at least ranked by subscribers.
EU regulators are already examining Vodafone (News - Alert) Group’s €7.7 billion ($10.2 billion) bid for Kabel Deutschland Holding.
Somewhat ironically, in light of EC proposals to create a single EC telecom market, the deal is being scrutinized in the context of German market competition, not in the broader context of how competition would be affected at the EC-wide level.
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One issue for the German mobile market is the minimum number of service providers deemed necessary to maintain adequate levels of competition and innovation.
The Telefonica (News - Alert) merger with KPN’s E-Plus would reduce the number of providers from four to three, a situation that the European Commission obviously will consider, though so far EC regulators say there is no "magic number "of providers” that always will encounter opposition from regulators.
Eventually, EC regulators might be more concerned about market share across the EC, whereas today that is less a concern.
Some might argue it remains to be seen whether the new EC “Connected Continent” regulatory framework will promote investment as much as it promises to enhance customer value by slashing international roaming costs.
The European Commission’s Connected Continent plan aims to create a unified telecommunications market within the 28 member states that reduces end user costs for cross border communications but also makes it easier for service providers to gain scale in their businesses.
In part, the new proposed rules would simplify telecom regulations across the EU, giving service providers access to all 28 markets with a single authorization. The proposal also aims to loosen regulations and streamline wholesale network access procedures for service providers wanting to use an incumbent network.
While not mandating specific new roaming rate reductions, the proposal bans incoming call charges starting on July 1, 2014. That will essentially encourage service providers to offer phone plans that apply everywhere in the European Union, with no distinctions between domestic and roaming prices.
The plan also will allow customers to “decouple” their domestic calling service from their roaming calling service, using a single subscriber information module.
The proposal also prohibits companies from charging more for a fixed network intra-EU call than they do for a long-distance domestic call within the EU region.
For mobile intra-EU calls, the price could not be more than €0.19 per minute (plus VAT), lowering costs for consumers.
The proposed network neutrality rules have several elements. Blocking and throttling of Internet content and apps would be banned, giving users access to the full and open internet regardless of the cost or speed of their internet subscription.
On the other hand, service providers will be able to create and sell “specialized services” with assured quality (such as IPTV (News - Alert), video on demand, apps including high-resolution medical imaging, virtual operating theaters, and business-critical data-intensive cloud applications) so long as this did not interfere with the Internet speeds promised to other customers using “best effort” Internet access services.
In doing so, the EC is trying to preserve best effort Internet access without prohibiting the development of new types of managed services that actually require quality of service guarantees or features.
The proposal also would coordinate spectrum assignment across the EC region, to make it easier to provide EC-wide 4G mobile access and Wi-Fi access.
Edited by Alisen Downey