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Europe's Difficulty
Competing In the Global Information Economy
There is a dirty secret in the European
telecommunications industry, the
European Commission has initiated infringement
proceedings against UK government because the government and BT have
failed to comply with
European law. The UK government has been
ineffective at implementing and
enforcing both telecommunications regulations
and more importantly fundamental
competition law.
The UK handling of unbundling, including
carrier pre-selection (CPS),
has been one of the most diabolically handled
telecommunications disasters in recent
European history. Consumers and business have
been damaged to the tune of billions of Euros.
And BT and Oftel have failed to address how
these damages will be compensated.
Businesses and consumers need broadband like
humans need oxygen. BT and Oftel have
created a cost structure that makes it
difficult for consumers to get cost-effective,
reasonable access to broadband. Oftel and BT
are effectively spitting in the face of the
Prime Minister, who has rhetorically stated
that integrating the U.K. into the global
information economy is critical. While the UK
Parliament has initiated preliminary
investigations
into this debacle, the problem is still not
solved.
It is not only the UK where consumers and new
entrants have had
billions of Euro stolen, but market damage and
havoc is being reaped in
nearly every country in Europe. The question
is how should new entrant
phone companies and consumers be compensated
for this?
For over 15 years there have been declarations
from Brussels to liberalise
the European telecommunications market. The
European Commission's vision was
that Europe should have an information economy
that would be globally
competitive. Today most European heads of
states make passionate speeches
about how their governments are preparing
their citizens for a new
information society. However, in most EU
countries, below the political
rhetoric there is bureaucratic friction at
work which threatens to expose
the politicians as emperors who are in fact,
not wearing beautifully adorned
robes.
National Regulatory Authorities and incumbents
have stubbornly dug their
heels into the ground and progress has been slow, painful and the result is
the continued squeeze of billions of Euros
from innocent European
consumers.
Why have the National regulators been so
ineffective? There are at least
three reasons:
1) Many national governments
own or have owned at the time of
critical regulatory decisions major portions
of their incumbent phone
companies;
2) Incumbents phone companies spend
substantial resources on
lobbing NRA and their national political
apparatus attempting to support
policies that are contrary to consumer
interests;
3) Many of the NRA do not
understand the issues they are confronted with
nor the damages they create
in the marketplace from delaying decision
making or as a result of making poor decisions. Because most NRAs do not have
proper leadership at the top,
technocratic civil servants end up ducking and
weaving in a frenzied
tactical fashion as opposed to solidly
implementing clear, cohesive comprehensive
strategic initiatives.
Many telecommunications issues appear very
technical so most consumers are
generally unaware that they are being taken
advantage of by their
governments and their national phone
companies. When an incumbent fails to provide
Carrier Pre-Selection, or fails to unbundle
the local loop, or provide
reasonable dial-up internet access the man on
the street generally does not
immediately draw the logical conclusion that
his government has effectively
damaged him by not forcing the incumbent to
comply with European law. Even
if the consumer was both sophisticated and had
the financial resources to
initiate legal action, from a practical point
of view he would be unlikely to endure the many years of legal
proceedings
that this would entail. Importantly, many telecommunications issues
are made to artificially appear
more complicated so as to confuse the
consumer. Very few issues are
presented for what they are-which are
fundamental competition issues, not
obscure technical or number issues.
Under European law new entrant phone companies
have legal remedies against
law breaking national governments and law
breaking incumbents. The painful
reality for consumers however, is that the new
entrants are often victims of
a divide and conquer strategy that has been
effectively pursued by NRAs and
incumbents. Generally the approach is don't
hold us accountable for our
legal violations and our damages and we
promise to provide your company with
advantageous treatment in the future.
How can consumers and new entrants tap into
compensation owed to them by governments and incumbents? First, when the
next wave of incumbent
consolidation takes place the EU Director
General for Competition can demand
that compensation funds are established by
incumbents, to be paid to new
entrants and consumers. The distribution of
those funds could be handled by
the Commission or an organisation appointed by
the Commission.
Parliament's in each of the EU member states
should initiate long-overdue
Parliamentary investigations of both incumbent
phone companies and their NRAs. Executives of the incumbent phone
companies should provide sworn
questions and answers into the strategies that
their companies have
successfully executed which has slowed down
the development of Europe's
information economy and created billions of
Euro's of damage. One day there will be
the equivalent of the digital Nuremberg trials
and those
that conspired to hold back Europeans from low
cost access to telecommunications services
will be held accountable.
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