EU Commissioner suggests new regulatory approach

Speaking to a mixed audience of government officials and corporate executives, Reding said "competition drives growth -- not monopolies."

Key to creating a competitive telecom market is, among other things, the development of alternative infrastructure, such as cable and wireless networks, which can compete with the public networks of entrenched incumbents, according to Reding. Regulators can play a big role in this process by supporting the development of competitive networks, she said.

IP (Internet Protocol) technology is another tool regulators could use to foster competition. With platform-neutral IP, they could establish a "functional separation" between the "passive network," or underlying infrastructure consisting of cables and components, and the "active network" comprising the many different services that run on top, Reding said. A functional separation could make competition much more effective in a services-oriented environment, but such a separation would have to be done "in a careful way," she warned.

Even though GSM (Global System for Mobile Communications) was everything but an open global standard when the European Union initially agreed to the need to establish a pan-European mobile phone system, policy makers in Brussels have since acknowledged the need for standards to be established by the market -- and not government.

Reding pointed to the current standards battle in Europe over broadcast mobile TV technology. "Several standards are fighting for the pole position," she said. But governments shouldn't decide because they could select the "wrong standard" and "lock " industry into a technology that may be inferior or commercially unattractive.

Governments need to minimize regulation in the digital era, including spectrum allocation, Reding said. Many of the entry barriers in the wireless sector that exist today are bureaucratic, not technical, and governments should get rid of them as soon as possible, she said.

Wrapping up her speech, Reding had a word of advice for Chinese regulators: they should participate in global telecom standards rather then favoring their own.

"We are living in an open world," the Commissioner said. "Government should not be setting standards, but should be providing the legal framework to create free and open competitive standard setting."

Reding's remarks mirrored the concerns of European WCDMA (Wideband Code Division Multiple Access) equipment makers that worry about being locked out of China if the government favors the homegrown TD-SCDMA (Time Division Synchronous Code Division Multiple Access) standard and local suppliers that support it.

At present, WCDMA, which dominates Europe and huge chunks of Asia, the U.S.-supported CDMA 2000 and China's self-developed TD-SCDMA are the three potential 3G (third-generation) mobile network technology standards for China.