EU Looks for Profit, Competition Balance in Fiber
European telecommunications operators such as France Telecom SA and Deutsche Telekom AG will be able to make “attractive profits” under proposed rules for third-party access to their high-speed fiber networks, the European Commission said.
Rules on pricing for access to these large operators’ networks “will fully reflect investment risk,” the commission said in a statement today containing its proposals. Those operators nonetheless won’t have a “regulatory holiday” in exchange for investing in fiber, the commission said.
France Telecom SA, the largest French operator, said in July it would spend about 2 billion euros ($2.6 billion) on domestic fiber networks in the next five years as part of an effort to win new customers. The EC’s proposals are designed to encourage competition and reduce a gap with provision in Asian countries such as Japan and South Korea, according to the commission.
If the proposals are adopted by the 27-member European Union, the rules “should force dominant operators to open up their fiber networks to competition,” the European Competitive Telecoms Association said in a statement. The association’s members include Wind Hellas Telecommunications SA and Bouygues SA’s Bouygues Telecom unit.
Timetable
The proposals include setting a five-year timetable for “efficient radio spectrum management” between telecommunications and broadcasting, and plans for new financial instruments to encourage broadband investment.
The commission, the EU’s executive arm, is also proposing a 2013 deadline for opening radio spectrum on the 800 megahertz band to mobile services. The band is currently used for television broadcasts.
That deadline may mean operators buy additional spectrum to accommodate data-hungry devices, such as Apple Inc.’s iPhone, before they need it, Graham Friend, managing director of telecommunications consulting firm Coleago, said by phone.
“Not everyone is experiencing congestion in the same way,” he said. “Some operators will be in the position of buying spectrum that won’t start creating value for them for some time afterward.”
Increased Competition
“We are not using investment over competition or the other way around,” Neelie Kroes, European Commissioner for the Digital Agenda, said in a televised press conference in Brussels today. “We are playing for both. Europe needs both investment and competition.”
While Europe has the highest average levels of broadband take-up worldwide, only about 1 percent of Europeans have a high-speed fiber Internet connection directly to their homes, compared with 12 percent of Japanese consumers and 15 percent of South Koreans, according to the commission.
Consumer organization BEUC said in an e-mailed statement that it “applauds the declaration of the EU that it will study solutions for financing the development of high-speed access.”
To contact the reporter on this story: Matthew Campbell in Paris at mcampbell39@bloomberg.net.
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