European telcos baulk at EU broadband proposals

Several of Europe’s biggest telecoms companies have expressed dissatisfaction with European Union proposals for regulating the next generation of broadband networks.

EU telecoms commissioner Neelie Kroes said last month that Europe’s major operators will continue to be obliged to provide competitors with cut-price access to their infrastructure, dashing hopes that a gentler regime would apply to the roll-out of next-generation fibre networks than that which has dictated access to old copper connections.

With independent bodies like the FTTH Council Europe saying that at least $400 billion will be needed to upgrade the continent’s internet connections to bring them in line with those in Asia’s leading economies, many incumbents are now complaining that they will not be able to afford their share of this bill if compelled to give access to rivals.

France Telecom CEO Stephane Richard said he was “not fully comfortable” with the new regulatory proposals, warning that they would damage the investment case for new fibre. Franco Bernabe, CEO at Telecom Italia, foresaw that Europe’s incumbents would be forced into becoming no more than “dumb pipes” for the traffic of other service providers.

“Clearly if regulation goes further than is necessary to protect competition, it can scare off potential investors,” said James Walsh, technology associate at international law firm Eversheds. “The trouble that regulators face with next-generation networks is where to strike the balance between regulating the price that network operators have to offer for wholesale access, and allowing them a fair return on their investment. In cases where incumbent network operators have significant market power, some constraints on pricing need to be put in place to ensure that, ultimately, consumers can obtain reasonable prices for communications services. However, this should not be to such an extent as to stifle technological developments. National regulators within Europe will need to take this into account to ensure that next-generation networks are bankable.”

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