Tuesday, September 3, 2013

A real telecommunications market

As a result of recent consolidation movements in the telecommunications industry, the Spanish incumbent Telefonica has called for the European markets to be more similar to the US or the Chinese markets. That is, large markets with a small number of vertically integrated competitors under a common regulatory regime. I mostly agree with the objective, but not necessarily for the same reasons. The segmentation of the telecommunications market is an example of the many things that still separate us from a really integrated Europe. For example Satellite TV operators act under national licenses, despite the fact that obviously satellites can broadcast beyond borders. Similarly, mobile phone licenses and roaming respect member state frontiers despite the fact that the spectrum does not need to respect any legal border (paradoxically, the sound of the telephone is the only remaining physical frontier between many member states, although many other regulatory and legal frontiers remain). I also think that it would be more efficient to have European licenses and truly European integrated operators that exploit scale economies and compete among them. Although the action of the European authorities has left member states less discretion in liberalizing telecoms than electricity, still markets are mainly national and national authorities have an important role. Spain has just eliminated its telecom independent regulator despite warnings by the European Commission, with the support of, if not following direct advice from, Telefonica. European regulators are better than national regulators because their quality is higher and the risk of capture lower, in the same way that in football’s Champions League referees are better than in national leagues.

1 comment:

  1. That is, substantial markets with a little number of vertically coordinated contenders under a normal administrative administration. I basically concur with the goal, however possibly for the same explanations. The division of the telecommunications vertically integrated market is a sample of the numerous things that still divide us from a truly mixed Europe.