France Telecom SA (FTE), Deutsche Telekom AG (DTE) and Telefonica SA (TEF) are among European phone companies questioned by regulators about talks held by the group on technology standards to compete with Google Inc. (GOOG) and Apple Inc. (AAPL)
The other companies involved are Telecom Italia SpA (TIT) and Vodafone Group Plc (VOD), as well as trade association GSMA. The CEOs of the companies, four of which are former national phone monopolies, met for the first time in Paris in October 2010. The meetings focused on operating systems and capacity for handling surging data traffic on wireless networks as consumers increasingly surf the Web on mobile phones.
“The requests for information relate to the manner in which standardization for future services in the mobile- communications area is taking place,” Antoine Colombani, a spokesman for European Union Competition Chief Joaquin Almunia, said by e-mail. “These fact-finding steps do not mean that we have competition concerns at this stage, nor do they prejudge the follow-up.”
Lawyers from the GSMA association attended each meeting to prevent anti-competitive discussions, Daniel Gurrola, vice president of strategy at France Telecom’s Orange unit, said in London today. No formal EU probe has been opened, Colombani said.
“What’s happened within the group of European telecommunication operators has always been characterized by maximum transparency toward the European authorities, which have timely been informed of all the activities,” Telecom Italia Chairman Franco Bernabe told reporters in Rome today.
‘War of Words’
“A formal review is to say the least peculiar,” said Robin Bienenstock, an analyst at Sanford C. Bernstein & Co. in London. “We think it is really a part of the escalating war of words between the EU regulator and the telcos.”
The extent of EU regulation of telecommunications investment is “simply crazy,”Bernabe said in October. The same month, Neelie Kroes, the EU’s commissioner for digital affairs, said the 27-member bloc would review whether companies charge rivals too much for access to old copper-line networks.
European politicians, desperate to boost the use of faster Web services to meet targets, aid economic growth and catch up with Asia, argue that profits from existing networks may make the phone incumbents less willing to invest in new technologies. The former monopolies, faced with falling revenue in their home markets from traditional voice calls, say the reverse is true as they need copper profits to invest in faster fiber networks.
Mounting Investment Needs
Most European operators are seeing profits stagnate or decline in their home markets because of competition and mounting investment needs. While former monopolies are calling for less state regulation, they’re also complaining about unfair treatment from U.S. technology companies such as Apple and Google, whose bandwidth-hungry video services have supplanted phone companies’ own online offerings.
The GSMA, which organizes the Mobile World Congress in Barcelona and represents almost 800 of the world’s mobile operators, said today it has received requests for information from EU competition authorities and will respond in due course.
Spokespeople for Telefonica and Vodafone declined to comment.
“The EU Commission was always informed about the topics we discussed and the results,” Deutsche Telekom said in a statement today. “Deutsche Telekom and the other participants expect from the commissions’ activities a clear signal how to enforce the European model of Internet industry and how to make it compatible with the big U.S. players like Google, Apple and Amazon.”