Europe: Incumbent operators "regret" EC proposals on fibre access networks

[etno] ETNO regrets that the Commission’s Draft Recommendation on next generation access networks (NGA) issued today extends current regulatory obligations to these new networks and does not exploit the potential of new mechanisms to promote investment included in the revised directives by the European Parliament and Council. In its current form, the Recommendation would stifle rather than incentivise investment in NGA, which are widely recognised as a key driver of the EU economic recovery.

“The Draft Recommendation will discourage investors, whom the Commission proposes to bear onerous access and price control obligations. NGA require a more innovative and targeted regulatory approach, which encourages all players to invest and share risk, while keeping today’s vibrant competition”, says Michael Bartholomew, ETNO Director.

The recommendation would lead to disproportionate regulation as it foresees that all forms of access should be made available in parallel and provided at cost-based prices. Strictly cost-based prices for regulated access products would make it almost impossible for operators to negotiate access conditions on reasonable terms and undermine the NGA business case.

Moreover the draft recommendation ignores the principle of technological neutrality and aims to impose costly network architectures while introducing a bias against proven, state of the art fibre network solutions as deployed by the most advanced economies, increasing significantly the cost to investors and ultimately to customers.

By limiting its analysis of NGA regulation to the fixed access network, the Draft Recommendation underestimates the competitive development on today’s markets, leading to potential undue regulation of one technology platform. The Recommendation does not encourage regulators to take into account diverging conditions of competition within a given national market, as highlighted in the revised directives.

Although the recommendation includes the possibility for new pricing models allowing a fairer sharing of the investment risks, it severely restricts the possibility to apply them in practice, thereby hindering their potential to reduce risk and increase investment incentives.

“The EC recommendation should send a strong signal to encourage NGA investment and enable the emergence of infrastructure-based competition wherever possible, for the full benefit of consumers. It should neither prescribe the market outcome, nor select the winning technology or business models”, added Bartholomew.

Overall, by proposing such a rigid regulatory approach to NGA, the recommendation questions the various initiatives already developed by individual regulators to encourage risky investment while at the same time maintaining lively competition.

ETNO looks forward to participate in the forthcoming consultation and contribute to the creation of the most appropriate environment for risky investments and sustainable competition in NGA.

EC Recommendation on the Regulation of next generation access networks: Proposed approach would further slow down fibre investment in the EU