Midair Collision

It becomes a man-bites-dog story when Viviane Reding does something that makes economic sense. If the EU telecom commissioner's track record is any indication, though, it won't be long before the dog bites back.

For the moment, polite applause is in order for Ms. Reding's plan, announced Monday, to allow cellphone usage on commercial flights within the European Union.

M.E. Cohen

Not because everyone will welcome the sound of their fellow travelers chattering at 30,000 feet. (The potential customer backlash is so great that Lufthansa, for one, says it doesn't plan to offer the service.) Rather, it's praiseworthy that Ms. Reding says an airline that receives a license for an in-flight cellular network from one EU member state will be able to operate it in any member state's airspace.

Given the cross-border nature of most European air travel, this may strike some readers as the handiwork of Captain Obvious. Of course such licenses should be recognized EU-wide. It would be ridiculous to require nation-by-nation permitting, right?

Well, licensing is precisely the issue that Brussels neglected to tackle last year when regulating the "exorbitant" (Ms. Reding's word) fees for using a cellphone while abroad, known as roaming. As noted in this space back then, one of the reasons these prices were higher than those for domestic calls was the lack of a true pan-European network – which in turn owed to the lack of a pan-European operating license for mobile service providers.

Requiring telecommunications companies to buy permits in each member state, often through expensive auctions designed to pad state coffers, has meant that no company can offer mobile service throughout Europe without relying on rivals. This drove costs and thus prices up. But instead of addressing the heart of the issue by creating a pan-European license, Ms. Reding last summer slapped price controls on roaming service.

So far, price controls aren't in the offing for the new airborne mobile services. Nor is EU legislation to govern the partnerships that airlines will form with network builders and service providers (which will beam calls back to Earth via satellite, rather than directly to land-based towers, to avoid interfering with pilot communications). Nor are there any plans for regulations to limit the nuisance factor from midair yakking.

At least, not yet.

While acknowledging the need to let this new market figure such matters out for itself, Ms. Reding simultaneously suggested that companies not do anything that might incur her wrath. "If consumers receive shock phone bills, the service will not take off," she warned. Or, as her spokesman put it Monday, Brussels will "make sure the industry gets a chance to show that they are consumer-responsive themselves."

The industry could be forgiven for not finding these statements reassuring. The subtext here – act as I'd like you to act, or else I'll make you act that way – is becoming an all too familiar refrain in Brussels, which it is also applying to food-labeling standards and a register for lobbyists, among other matters.

Ms. Reding is among the worst offenders when it comes to mandating voluntarism. She moved to slash roaming fees by more than half just months after asking telecoms to shape up. Her staff likes to point out that Brussels spent seven years trying to bring the charges down, but this is misleading. The bulk of that time was spent by antitrust authorities looking for evidence of collusion. Once it became clear that prices were being set legally in the market, Ms. Reding decided the market mechanism should be illegal in this instance.

More recently, she's given mobile operators just five months, until July 1, to overhaul their business models for "data roaming," or the transmission of emails and text messages while abroad. Last month she again acted prematurely by settling on an EU-recognized technology standard for mobile television.

The mobile TV standard is particularly egregious. This technology is emerging, with various competitors still creating or fine-tuning their innovations. Ms. Reding claims to want to avoid a "standard war" that would set back the development in Europe of this market, which Brussels thinks could be worth €20 billion ($31.48 billion) world-wide within three years.

In December, Europe's national telecom regulators decided against picking a winner here. It's hard to imagine that the market for television on mobile phones matured in just four months.

Part of Ms. Reding's rationalization was that the anointed standard, known as DVB-H, is "currently the most widely used" one in Europe. But while DVB-H will soon be available in 16 of the EU's 27 member states, the uptake of mobile TV is still very shallow in Europe: just 1% of potential users in Italy, one of the service's early adopters. Clearly, the market has not yet spoken.

The broader point is that, like many other EU regulators, Ms. Reding doesn't really trust market mechanisms, seeing them instead as something that must be tolerated for a short while and then dumped. Given Ms. Reding's track record, firms or investors looking at airborne cellphone services in Europe shouldn't put too much faith in her free-market curtsies.