* 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 at the Mobile WorldCongress 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'ssix and China's three, leaving a fragmented market and waryinvestors. Policymakers in Brussels, including Kroes, envisageone day having four to five strong pan-European operators tospur investment.
Today, Europe's telcos are building 4G and fibre broadbandonly slowly, leaving swathes of the region poorly covered andmaking the EU's target to reach 50 percent of the populationwith superfast broadband by 2020 look out of reach.
This has led many European telcos to lobby the EuropeanUnion for a more benign approach to mergers and acquisitions andsofter regulation of mobile call termination fees and broadband.
Kroes said the Commission would be more aggressive inpressuring states to follow Brussels' guidance for the sector,especially on releasing 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 in Barcelona is likely to bewelcomed by big telcos like Vodafone and Telefonica and is a change from last year when the two sidestraded barbs over who was at fault for slow network investment.
But CEOs still have questions, raised in a meeting withKroes on Tuesday, over how to turn the rhetoric into reality.
POLITICALLY SENSITIVE
Among the most politically sensitive questions is whether atruly European telecom market would need a single EU regulatorinstead of national authorities implementing Brussels' guidance.
Kroes has not publicly called for a single regulator, but ina media briefing she said the idea was "a very interesting andefficient" way to create a single telecoms market.
Conversations have begun in recent weeks among EU policymakers, member states, and telecom executives over the idea,according to three people familiar with the talks.
Countries like France, Germany and Britain may oppose cedingmore power to Brussels, especially if it means losing control ofspectrum auctions that bring billions to public coffers.
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.
Asked whether the EU could one day sell spectrum instead ofgovernments, Kroes smiled and said: "Why not?." As a first step,she added that such auctions should be more coordinated and nothave big price differences between countries. Seventeen out ofthe 27 member states do not yet have operational 4G networks.
As the debate begins, CEOs were intrigued by the idea offorging a unified market for telecom services in Europe, and didnot reject talk of a single regulator out of hand.
Vodafone Chief Executive Vittorio Colao said the challengewould be finding consensus over sharing power.
"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."
Vimpelcom CEO Jo Lunder said there were pros andcons to looking at Europe as one market. "I think we need toprocess this a little bit internally and talk to thecommissioner and understand her views and arguments."
Olaf Swantee, the head of Britain's biggest mobile operatorEE , sounded a more cautious note: "Thetheory to have one regulator might be OK but there's still risk- because you would have decisions that are not reallyappropriate for the UK being taken in Brussels," he said.
"I think a single regulator is not a solution to problem regulators in certain markets."
After Tuesday's meeting, Kroes said the CEOs agreed to backthe single-market effort and would next start discussions with"their heads of states and national regulators."
GALVANISING THE SECTOR
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.
Vodafone (VOD)
