The most controversial of the reforms is the creation of a new pan-European regulatory body to ensure that market rules are applied "more consistently, independently and without protectionism in all 27 EU member states".
The proposed body, called the European Telecom Market Authority (ETMA), would have more teeth than the existing European Regulators Group (ERG): it would have the power to overturn decisions made by national regulatory authorities (NRAs), and to separate the service and infrastructure arms of dominant operators to help stimulate competition.
In a statement, the EC said the ability to intervene would not result in a "one-size-fits-all" solution. It argues that in a single market in which telecom operators offer their services to consumers in several countries, similar competition problems need to be addressed by similar remedies – which isn't always the case at the moment.
"A more European regulatory approach is particularly justified in telecom. After all airwaves know no borders. And the internet protocol has no nationality," said José Manuel Barroso, President of the European Commission.
The EC also seeks to deregulate a number of markets where competition has successfully started up, thus giving regulators more time to focus on other markets – notably broadband access – where competition needs a helping hand.
"We should concentrate regulation on those markets where structural competition problems persist, such as access to high-speed broadband services. This is where almost all of the national telecom regulators have identified serious and sometimes even growing competition problems," said European telecommunications commissioner Viviane Reding.
The proposals will be thoroughly debated by the European Parliament and the EU Council of Ministers and, if approved, will need drafting into law in the member states, which is expected to happen by 2010.
At the heart of the debate is whether increased regulatory powers in Europe will help or hinder investment in new networks. The European Telecom Network Operators Association (ETNO), which represents incumbent operators like Deutsche Telekom, contends that over-regulation reduces the roll-out of new networks, and harms competition.
It also expressed concern about enforced local loop unbundling. "Adding such a remedy will create further uncertainty as regulators risk focusing on this tool rather than on the existing remedies to achieve competition that are less costly and time-consuming to implement."
Not surprisingly, however, the European Competitive Telecommunications Association (ECTA), which represents new entrant operators and ISPs like Virgin Media, Tele2 and Fastweb, welcomes the proposals, because they give NRA's the tools to dismantle monopolies.
The ERG, which would be displaced under the proposals, believes the reforms add unnecessary layers of bureaucracy. "There is no need to wait until 2010. The ERG is ready to act today on the agenda being proposed by the Commission," said Roberto Viola, chairman of the ERG.