EU to force operators to split network and retail

Telecommunication companies will be forced to run their network and retail services separately under new measures adopted by the European Parliament, which is hoping to boost competition and give consumers more choice.

EU Telecoms Commissioner Viviane Reding, who drafted the package, wants to make it easier for new entrants to compete with established operators in a 300 billion ($443 billion) sector so consumers have a wider choice of cheaper services.

The EU assembly voted by 597 in favour, with 55 against and 29 abstentions on a proposal to force telecoms companies to run their network and retail services as separate businesses to give competitors easier access to their networks.

Big operators such as Deutsche Telekom and France Telecom opposed this "functional separation" measure, which would be a "last resort nuclear option" for national regulators if other pro-competition measures failed.

However, the assembly watered down another key strand of the package, Reding's proposal for an EU telecoms "super regulator" that would also include Internet security.

It voted 490 in favour with 105 against and 14 abstentions on creating a less powerful alternative Body of European Regulators in Telecoms (BERT) that would not include Internet security.

The body will be funded by a mix of EU and national funds. Reding wanted it funded purely by the EU budget, a step she believed would ensure it was fully independent and not beholden to national governments that could be tempted to protect former state-owned operators.

"This vote is very good news for European consumers. It's a strong signal for the single market in the EU," Reding's spokesman Martin Selmayr told a regular news briefing.

"One thing we regret is that this new agency does not have responsibility for network security," Selmayr said, though he added that the parliament had made sure the regulator would be able to operate independently in the interest of consumers.

The assembly will vote later today on a final strand to the package - beefing up consumer rights in the sector.

EU governments and parliament have the final say on the package and the assembly's first vote will form the basis of a joint deal with member states.

The assembly also voted to scrap Reding's plan to give the European Commission a veto over national competition "remedies".

It backed steps to make more efficient pan-EU use of radio frequencies freed up by broadcasters switching from analogue to digital so that mobile phone operators can offer new services in several countries.

However, the vote ensures that member states remain in charge of spectrum usage nationally and Reding's aim of stronger pan-EU decision making on spectrum was diluted.

The final strand to be voted on later is a measure to improve consumer protection such as by strengthening the obligation on operators to provide a minimum service of specific quality at an affordable price for everyone. Consumers would have better information on prices and services.