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* Governments to consider telecoms sector overhaul
* Big firms pushing for single, pan-European supervisor
* Single supervisor to be part of discussion - source
By Claire Davenport and Harro Ten Wolde
BRUSSELS/FRANKFURT, March 15 (Reuters) - The EuropeanCommission will sketch out a blueprint for a single telecomsmarket in coming months, forcing governments to decide how muchpower they could surrender to Brussels regulators to make itfunction.
Wrapping up a two-day summit on Friday, EU leaders asked theEuropean Commission for a plan by October, including "concretemeasures to establish the single market in information andcommunications technology as early as possible".
The move kicks off months of drafting by the EuropeanCommission of new proposals on mobile spectrum, price regulationand mergers in a sensitive industry that is an economic backbonefor EU countries trying to climb out of recession.
For governments resisting handing more power to Brussels,such as Britain's, the process could be painful and slow.
Britain's Conservative Party, which leads a coalitiongovernment, wants to repatriate some powers from the EU and haspromised a referendum on EU membership if it wins the nextgeneral election in 2015.
Recent stand-offs between national governments and EUinstitutions over planned reforms of financial supervision showsuch pan-EU efforts require lengthy negotiation.
For now, the Commission is treading carefully on how muchauthority Brussels should have over telecoms companies.
"We should not discuss some ideal institutional structure inadvance of building consensus on the specific areas where weneed to make a difference," a Commission source told Reuters.
The aim, said the source, was not "central planning" butmore convergence.
A diplomat from an EU member state said the regulatoryoverhaul being overseen by European telecoms commissioner NeelieKroes would focus on creating a set of rules that leaves littlewiggle room for governments to interpret them in their own way.
"The single regulator would be a natural consequence of sucha plan," the diplomat added.
SPURRING INVESTMENT
Big companies believe one regulatory voice in Europe wouldhelp them fulfil their goal of merging across markets andinvesting in faster, next-generation broadband.
Telecom companies in the United States, Japan and SouthKorea have been spending heavily on networks, but similarefforts in Europe have been held back by four straight years ofrevenue decline.
Big companies that want more mergers have backed Kroes inthe hope of helping the European industry out its slump.
Some, such as Vodafone and France Telecom,want her to go further and plan for a single telecoms regulator,a suggestion many firms had previously opposed.
"The unification of the market would not only benefit asector which employs 1.2 million people, but also positivelyimpact the economy as a whole," the telecoms industry lobbygroup ETNO said in a statement.
The GSMA, which represents 800 mobile operators globally,said it welcomed a true single market because it would help theEU compete with the United States which "over the past decadedelivered substantially higher levels of investment".
France Telecom-Orange also welcomed moves to a singlemarket, saying it would deliver 'a clear and predictable'regulatory space.
Kroes said on Friday she sympathised with operators wantingto expand their businesses that were held back by a patchwork ofregulation in 27 different EU markets.
"It means they don't get the advantages of organising theiroperations to serve an EU-wide market, and can't reach the sizeand scale needed to invest," she said in a blog post.
She has been dropping clues in recent speeches on proposalsfor mobile spectrum, price regulation and mergers, foreshadowingthe sector overhaul. The proposals will be released in June andwill go to a summit of EU leaders in October.
