* Europe falling behind U.S., Asia in fixed, mobile
* Spectrum, broadband rules need more harmony-Kroes
* Debate over a single telco regulator begins
* CEOs intrigued by idea, fear political barriers
By Leila Abboud and Kate Holton
BARCELONA, Feb 26 (Reuters) - Europe's top technologyregulator called for more consistent telecom regulations to helpcreate a true regional market for mobile and fixed services andboost investment in much-needed infrastructure.
European Union commissioner Neelie Kroes said the bloc's 27member states needed to align their approach on mobile spectrumand fibre broadband, among other issues, or risk furtherweakening telecom operators' ability to invest in infrastructureand keep Europe competitive with the United States and Asia.
"We need a European telecoms market that is more coherent,more integrated, more efficient; with lower investor risks andhigher investor rewards," said Kroes, according to a copy of thespeech to be delivered at the Mobile World Congress trade show.
While U.S., Japanese, and South Korean telcos invest heavilyin networks, Europe's players have been struggling to pay offdebts as their ability to generate cash is hit by fiercecompetition and harsh regulation.
Europe has about 100 mobile operators to the United State's6 and China's 3, leaving a fragmented market and wary investors.
As a result, Europe's telcos are building 4G and fibrebroadband only slowly, leaving swathes of the region poorlycovered and making the EU's target to reach 50 percent of thepopulation with superfast broadband by 2020 look out of reach.
The situation has led many European telco executives tolobby the European Union for a more benign approach to mergersand acquisitions to reduce the number of operators, as well assofter regulation of mobile call termination fees and broadband.
Kroes said the Commission would be more aggressive in usingthe power given to it in the EU Treaty to pressure states tofollow Brussels' guidance for the sector, especially onreleasing more spectrum for mobile broadband.
The EU has authorised 1200 megahertz of spectrum forwireless broadband, but on average countries have only awarded65 percent of it, she said.
Kroes' pro-investment message is likely to be welcomed bythe bosses of Europe's big telcos such as Vodafone andTelefonica. But they will also have big questions whenthey meet with Kroes on Tuesday afternoon over how to translatethe rhetoric into reality.
Among the most politically sensitive questions will bewhether creating a true European telecom market would requirehaving a single EU regulator instead of the current system ofnational authorities who implement guidance from Brussels.
Kroes has not publicly called for the creation of a singleregulator. But conversations have begun in recent weeks among EUpolicy makers and telecom executives over the idea, according totwo people familiar with the talks.
Countries like France, Germany and Britain could opposeceding more power to Brussels, especially if it means losingcontrol of spectrum auctions that bring billions into publiccoffers.
In France and the Netherlands, regulators used spectrumauctions to introduce fourth mobile operators to boostcompetition and lower consumer prices, and would be wary oflosing the ability to shape markets.
Vodafone Chief Executive Vittorio Colao said the challengewould be finding consensus.
"I am in favour of more European integration not less; I'min favour of single regulations and making it homogenous. Butit's a big political topic, it's not a business topic."
Olaf Swantee, the head of Britain's biggest mobile operatorEE , questioned whether a single regulatorwas the right way.
"The theory to have one regulator might be OK but there'sstill risk - because you would have decisions that are notreally appropriate for the UK being taken in Brussels," he said.
Talks on how to galvanise the European telecom sector afterfour straight years of revenue declines look set to continue.
The European Telecommunications Network Operators'Association, which represents 37 companies, is also working onproposals to submit to the EU in the coming months, its headLuigi Gambardella said in an interview.
It plans to ask the European Commission to allow moremergers within individual countries in exchange for backingBrussels' efforts to create a regional market, he said.
Such consolidation to reduce the number of mobile operatorshas been viewed with suspicion by antitrust regulators inBrussels over fears that it leads to higher prices.
Last year when Austria's smallest mobile player Hutchison sought to buy third-place Orange Austria, the deal raninto stiff opposition and only got approved after concessionsincluding giving up spectrum and selling assets.
"We need to do our homework to prepare something to presenta proposal on how to further integrate the European telecommarket while creating value for the operator," said Gambardella.
"Fostering a so-called single market for telecoms in Europewould require that the Commission allows in-market consolidationas a first step to rationalise the fragmented mobile and fixedlandscape in Europe."
Vodafone (VOD)
