Analyst Commentary

• Five countries have been referred to the European Court of Justice (ECJ) for not implementing competition rules.
• Germany has been sent to the ECJ for data retention rule infringement.

Today we focus on four developments:

• EU Competition Rules: The European Commission (EC) has referred five countries to the ECJ for failing to implement the latest set of telecoms directives by 25 May 2011. The EC has proposed that the five countries—Belgium, the Netherlands, Poland, Portugal, and Slovenia—be fined daily until the changes are implemented. The Dutch government has since responded, giving details of its plans to implement the rules within 24 hours.
• German Data Retention: The EC has asked the ECJ to fine Germany for failing to introduce EU laws on data retention. The EC said that Germany has been given a considerable amount of time to introduce the 2006 EC directive into German law, but the German government has failed to overcome the rejection of such legislation by its top court in March 2010. The EC is recommending that the ECJ fine Germany EUR315,307 per day.
• Polkomtel's Q1 Results: Polish mobile operator Polkomtel has reported its first-quarter results with revenues flat year-on-year (y/y) at 1.76 billion zloty (USD491 million). Earnings before interest, tax, depreciation, and amortisation (EBITDA) grew 1.1% y/y to PLN708 million, giving an EBITDA margin of 40.2%. Mobile subscribers nudged up 0.4 percentage point to 13.9 million, while average revenue per user (ARPU) stood at PLN39.
• Polish Mobile Consultation: The Polish regulator UKE has opened consultations for five licences in the 1,800-MHz band. The consultation is open for comments until end-June.

Our Take

The rules that the EC is pushing to be implemented in Belgium, the Netherlands, Poland, Portugal, and Slovenia are designed to increase competition and consumer protection. Among the changes is the requirement for one-day fixed or mobile number portability (MNP), while also beefing up data protection requirements and increasing transparency over traffic management practices (see Europe: 25 November 2009: EU Parliament Clears Telecoms Reform Package, to Take Effect Mid-2011). The fines issued vary between EUR13,000 and EUR112,000 per day. They are likely to speed up implementation progress in the four laggard countries.

However, the prospect of fines is unlikely to make a substantive difference to Germany's reluctance to implement data retention rules. The German Constitutional Court rejected the data retention proposals, saying that it represented a deep intrusion into telecommunications privacy. German culture has strong ideas on personal privacy, and so Germany and the EC are likely to reach an impasse.