ECTA welcomes Vice-President Kroes’ plans to set guidance on regulated telco prices

Excessive wholesale charges are hampering affordable broadband and fibre investment, jeopardizing take-up of high-speed services

Brussels, 30 November 2010: Delivering the key note address at the 2010 ECTA regulatory conference this afternoon, Vice-President Kroes, Commissioner for the Digital Agenda, announced Commission action to issue guidance on setting wholesale telecoms charges and addressing discrimination by dominant firms.

“ECTA strongly supports Commission guidance on two issues which are central to enforcing the telecoms Framework and achieving a vibrant and competitive market with affordable high-speed broadband - setting wholesale charges and ensuring non-discrimination”, said Director of ECTA, Ilsa Godlovitch.

Wholesale charges have a significant impact on retail prices for broadband and the level of choice in the market and therefore it is vital that these regulated charges are not set at a level that will detrimentally affect consumers and competition. Recent experience in Italy, where the regulator has approved a 20% price increase in regulated access charges for Telecom Italia despite criticism from the Commission, highlights the importance of action at the EU-level.

In many countries prices for legacy copper telephone lines have been set on the basis of what it would cost a theoretical operator to build a new network today rather than the actual costs that were incurred by the dominant firm. This can lead to incumbents making supernormal profits on the assets they inherited from the monopoly era which have largely been written down. Further, excessive wholesale prices invariably result in higher retail prices, potentially hindering the take-up of broadband, contrary to the EU2020 targets.
Dominant firms are demanding higher charges on their legacy network and at the same time are suggesting that wholesale charges for the modern fibre lines which replace them should be set at a high level to reflect what they say are risky investments.

“It’s time for a reality check on regulated prices,” said Ilsa Godlovitch, Director of ECTA “It is important for regulators to understand what the actual costs are, and not to accept a theoretical price if that allows supernormal profits on networks that have already been funded by taxpayers long ago. Equally regulators should be checking carefully if investments in fibre are as risky as incumbents claim. Renewing networks is something all infrastructure players must do eventually, and questions should be asked about why these investments were not made earlier, especially in countries where incumbents have benefited from high charges for their legacy copper infrastructure.”

The Commission will also be issuing guidance aimed at preventing discrimination by dominant firms, which will cover regulators’ new powers to mandate functional separation. This is important in ensuring that dominant firms play fair and do not try to undermine their competitors’ services to reap benefits for themselves.

“When you have vertically integrated firms, it is vital that they treat their competitors in the same way as they do themselves and do not use dirty tricks to delay or degrade their rivals’ services,” added Ilsa Godlovitch, Director of ECTA.

For further information please contact:
Ilsa Godlovitch, Director Brussels Office, ECTA.

Tel: +32 2 227 2718             

About ECTA
The European Competitive Telecommunications Association (ECTA) looks after the regulatory and commercial interests of new entrant telecoms operators, ISPs and suppliers of products and services to the communications industry. ECTA works for a fair regulatory environment that allows all electronic communications providers to compete on level terms in order to multiply investment and innovation throughout an effective European internal market.  The association represents the telecommunications industry to key government and regulatory bodies and maintains a forum for networking and business development. ECTA member companies include operators, service providers and suppliers as well as National Associations of such which all contribute towards regulatory policy development and participate in our comprehensive range of networking events, conferences, seminars, briefings and executive meetings. www.ectaportal.com