France Telecom - functional separation

France Telecom's Champeaux critical of EU telecom proposals

Jacques Champeaux, head of regulatory affairs at France Telecom, says the group has 'mixed feelings' over European Commission proposals to overhaul the telecoms market, arguing that measures such as functional separation take away the incentive to invest in new infrastructure.

'Even when presented as last recourse, we believe it (functional separation) goes in the wrong direction,' said Champeaux.

'The Commission presents it as just an additional remedy in the toolbox, but if a regulator has not been able to implement a simple remedy, it will be very difficult to implement an intrusive remedy such as functional separation,' he said.

Functional separation is a measure under which a telecoms company with a dominant market position could, if other measures failed, be forced to separate its networks and services divisions to guarantee that rivals can access its infrastructure.

According to Champeaux there is big difference between the telecoms and energy industry, for which the Commission recently proposed similar measures which call for the separation of European electricity and gas grid operations from supply, generation and production.

'There is clear evidence that there won't be new technology for electricity, but in telecommunications there is a real possibility to create full infrastructure competition,' Champeaux said, stressing that the introduction of functional separation would amount to 'a move back to a monopoly'.

Asked whether the group has been in contact with EU competition commissioner Neelie Kroes and EU industry commissioner Guenter Verheugen, Champeaux said it is 'interesting that the opinions were against functional separation and the need for a new European authority'.

Commenting on the EU's proposals as a whole, Champeaux told reporters: 'It is not a fully consistent message: on the one hand there is a real message on deregulation, with the Commission acknowledging we need less regulation.'

But on the other hand, 'some measures in the proposals make us believe that the European Commission does not think we can achieve full competition'.

Champeaux also feels that creating a new EU agency called the European Telecom Market Authority, which would be made up of the directors of the 27 national telecommunications agencies, is 'a bad message on less regulation and full competition'.

EU Telecoms commissioner Viviane Reding will present her proposal to change the current EU telecoms framework on Nov 13.