Regulatory Concerns Over Decreased Competition in Mobile Tariffs

Regulatory authorities from six European countries have raised alarms regarding the potential decrease in competition within the telecommunications sector, particularly as it relates to mobile tariffs. They have expressed concerns about the implications of adopting regulatory practices similar to those in the United States, suggesting that such a shift could hinder competition and lead to increased prices for consumers.

The Federal Competition Authority (BWB) and the Regulatory Authority for Broadcasting and Telecommunications (RTR) in Austria have emphasized that proactive regulation combined with subsequent adjustments promotes competitive markets. In contrast, 'ex post' regulation tends to facilitate market consolidation, resulting in higher consumer prices. This stance was articulated amidst ongoing discussions about telecommunications policies in Europe.

Belgium, Ireland, the Czech Republic, Portugal, and the Netherlands have echoed these sentiments, underscoring the importance of competition in driving innovation, investment, affordability, and consumer choice within the telecommunications industry. The authorities cited the merger between Hutchison 3G Austria and Orange Austria as a cautionary example, highlighting significant price increases that followed the consolidation.

According to the BWB, customers experienced an average price hike of 14 to 20 percent, while new customers faced increases of 50 to 90 percent for typical smartphone usage between 2013 and 2014. The authorities argue that the narrative comparing the number of telecom providers in Europe to the U.S. is misleading, as the intensity of competition is markedly different between the two regions.

The Austrian regulatory framework has successfully allowed for the reduction of specific prior regulations while maintaining market openness. The authorities noted that there are significant national disparities within the European Single Market regarding infrastructure development, consumer protection regulations, and other related rules. Thus, a careful examination of proposed mergers is essential from both a European and national perspective.

In Austria, the BWB is particularly attentive to the interests of small and medium-sized enterprises, known as the 'hidden champions' of the economy. The BWB's General Director affirmed that anti-competitive mergers generally do not yield broad economic benefits, and any potential mergers in the mobile sector will undergo rigorous scrutiny.

The discussion was ignited by the European Commission's 'Competitiveness Compass,' which outlines ambitious goals for Europe's growth, resilience, and technological sovereignty. Some interpretations of the report suggest that competition may serve as a barrier to these objectives, thus advocating for reduced regulatory hurdles to encourage the formation of 'European champions' in the telecommunications sector.

While the report contains valuable insights, it has been noted that the telecommunications sector may not be its strong suit. The ongoing discourse around competition regulation in Europe remains crucial, as stakeholders assess the potential ramifications on consumer choice and market dynamics.