* Digital commissioner meets mobile industry heads
* Open to lengthening telecom airwave licences to 25
* Vodafone/Orange chiefs: EU policy imperils investment
* U.S. telecoms watchdog to pursue light-touch regulation
(Recasts with European Commission offering concessions)
By Eric Auchard and Sophie Sassard
BARCELONA, Spain, Feb 28 The European Commission
is opening up to some policy changes that telecoms companies
want but is still but resisting mobile operators' efforts to
merge with competitors inside national markets, executives said
The CEOs of Vodafone and Orange used an
annual mobile industry gathering here to renew calls to
regulators to help operators build scale and boost investment
after years of what they see as overly consumer-friendly
policies that cut into revenues.
At a closed-door meeting on Monday with senior mobile
industry executives, commissioner Andrus Ansip said he supported
compromise on an issue the industry considers critical,
longer-term licences for airwave spectrums, according to a
senior source present at the meeting.
The meeting participant quoted Ansip as saying he was open
to extending the length of airwave spectrum licences in Europe
to 25 years from the current 10-15 years. "It could be 25 years
- that's what (Ansip) said."
The source added: "When we had our roundtable, he was saying
the right things about light-touch regulation, about having the
same rules for equivalent services and on one of the biggest
pain points: the duration of spectrum."
Under a patchwork of national rules, European governments
typically rent radio spectrum for limited periods of up to 10-15
years to network operators to build new wireless services. By
contrast, U.S. rules let operators buy spectrum indefinitely.
European operators must thus invest in networks to tap
licensed frequencies with no certainty as to how long they will
have access to these airwaves.
Executives in the meeting called for a policy of 35-year or
indefinite licence duration, as in the United States, the
industry source said.
"But that's a good step forward," the source said, referring
to the 25-year licensing proposal.
DRAWING THE LINE
European regulators are still underestimating how much the
present framework hinders the capacity of telecoms operators to
sustain investment, unlike the regulatory landscape enjoyed by
their U.S. peers, the region's industry leaders argue.
"Obviously, it is easier for a company to get some return
out of huge investments that we have to make in the networks
when we have credible size. It's so obvious," Orange CEO
Stephane Richard said during a panel session with regulators at
the Mobile World Congress trade fair in Barcelona.
The competition regulator rejects the industry's arguments
that mergers are necessary to enable big new investments in
mobile broadband networks, saying that effective competition is
the main driver for investment.
The European Commission last year blocked Hutchison's
10 billion pound ($12 billion) bid to buy O2 UK from
Telefonica, saying it would have led to higher U.K.
prices by leaving only two other network operators.
That followed TeliaSonera and Telenor's scrapping
of a planned merger in Denmark after EU Competition Commissioner
Margrethe Vestager said the national market needed at least four
mobile network operators.
"There continues to be a missing element in the debate: the
awareness of how much investment is needed and how low the
returns are," Vodafone CEO Colao told reporters in Barcelona.
Executives pointed to the looming loss of revenue from a
deal clinched by European lawmakers this month to pave the way
for the abolition of roaming fees consumers pay when using
mobile phones in other countries.
"We are celebrating the death of roaming but nobody has
figured out how to replace revenues for telcos," Colao said.
Colao compared the position of operators in Europe to the
United States, where the new chairman of the Federal
Communications Commission, Ajit Pai, said this week that he sees
no reason to review AT&T's planned $85 billion acquisition
of Time Warner.
In a keynote speech in Barcelona, Pai said: "Our approach
will not be zero regulation but light-touch regulation ...
acting with humility as we seek to regulate the most dynamic
marketplace that history has ever known."
"Big deals are getting done in the U.S. while in Europe
small deals are being blocked," Colao said, adding that he was
frustrated that the sale of Vodafone's operations in New Zealand
to Sky Network Television was blocked.
Colao said that he had had a good meeting with Ansip, who
said he was open to cross-border mergers but consolidation
within national markets was more tricky.
"It depends on the concrete situation and Commissioner
Vestager will deal with those very specific situations. But
cross-border consolidation is more than welcome," Ansip said
while speaking on the panel with U.S. FCC Commissioner Pai.
($1 = 0.8049 pounds)
(Writing by Georgina Prodhan; Editing by David Goodman/Ruth