Monday, March 23, 2009

Europe - heads of government and broadband

Summit backs broadband investment plan

European Union leaders backed risk-sharing pacts among operators on Friday (20 March) to pay the 300 billion euro needed to equip the bloc with high-speed broadband networks.

Industry officials said the move could allow operators to charge higher access fees to competitors that want to use the new networks. Under current EU rules, a dominant telecoms operator must allow competitors to use its network for a fee set by the regulator.

Deutsche Telekom, France Telecom, Telefonica and Telecom Italia all welcomed the move, highlighting that the existing system was devised for networks based on traditional copper lines.

ETNO, a lobby group for big European telecoms operators, said the decision sends "a strong signal that current rules need to be adapted in order to accelerate the deployment of new networks and ensure that all players take on the next generation access challenge".

Stumping up the huge sums needed to give the EU a high-speed broadband network will be a far riskier and costlier undertaking, and that financial risk must me shared, they say.

German initiative

The section on telecoms was inserted into the Council's summit conclusions following intense lobbying by Germany.

Pressure from Britain and France ensured the final wording stated that any risk-sharing pacts must not threaten competition in the market.

"To this end, various cooperative arrangements between investors and access seeking parties to diversify the risk of investment should be permitted, whilst ensuring that the competitive structure of the whole market and the principle of non-discrimination are maintained," the conclusions said.

Encouraging investment

German Chancellor Angela Merkel said the statement was needed to encourage investment in thinly populated areas.

"Through our regulation offices, we have an authority that makes sure competition is not distorted," Merkel told reporters.

"If policy is only directed towards costs being kept low for consumers, then this will never lead to those living far from big centres being able to benefit," Merkel said.

ETNO concurred with Merkel's sentiments, suggesting that EU rules need adapting to promote investment.

"Providing investment incentives and maintaining vivid competition are complementary objectives for the full benefit of consumers," said Michael Bartholomew, ETNO's director-general.

A timely statement

EU Information Society Commissioner Viviane Reding has proposed reforms to make the telecoms industry more competitive and cheaper for customers. Negotiations on their adoption by EU states and the European Parliament are at a delicate stage, with a key meeting between the two sides due next week to hammer out a final deal.

Reding did not include risk sharing in her draft reform, but with the backing by EU states it will now be included. "ETNO calls on EU policymakers to ensure that measures to encourage next-generation investment are now included in the EU telecoms package currently under revision," Bartholomew said.

Reding's spokesman said the summit statement reflected the Commission's view that there cannot be investment that discriminates between operators or excludes competition.

New entrants, who say they don't have deep pockets to fund new networks, may be concerned, but a source close to one of the big operators said the summit statement was a big political message to back their arguments.

"With the principle of recognising that investments are very risky there could be arrangements on what price to sell the next-generation services; that they can charge more than the at-cost rate that they charge today," the source said.

An EU diplomat said risk in new projects must be recognised, but in the form of a premium and not a barrier to new entrants.

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