Review of the EU Telecoms Rules. Current trends show existing rules are not adapted to tomorrow’s risky investments

Date

28 Jan 2009

Sections

InfoSociety

BRUSSELS – Recent data show that Europe continues to lag behind the USA and Asia in the deployment of high speed broadband networks1. This situation could further worsen as revenue and investment slow down in the EU telecoms sector. Estimates for 2008 indicate a revenue growth of 0.8% - the lowest growth rate since 2003 – and an investment increase of only 1.5%2.
“Current trends show that existing rules need to be adapted to encourage risky investment in new networks. As underlined by the recently adopted EU Recovery Plan, high speed broadband access networks will renew growth and help Europe overcome the economic crisis. Next generation access networks must therefore be the key priority of the negotiations between the EU institutions in order to reach a second reading agreement.”, says Michael Bartholomew, ETNO Director.
“The current economic and financial instability makes NGN investment even more risky. Therefore all players should be encouraged to tackle the NGN challenge instead of assuming that only well-established operators should bear the risk of deploying the next generation access networks”, added Bartholomew.
ETNO does not call for the end of all regulation but for a better targeted regulation and improved incentives for risky investments, as proposed by the European Parliament in first reading.
Regulatory intervention should focus on areas where infrastructure competition between networks is unlikely to emerge, through a geographical segmentation of markets and regulatory remedies.
When access to the new network is regulated, the revised Directives should allow for a fair risk sharing between investors and access seekers.
“Risk sharing mechanisms would enable the investing companies and the access seekers – under the supervision of the regulator - to agree over longer term contracts and larger quantities of access products. These would reduce the risk for investors and benefit consumers as operators who share part of the investment risk would get more advantageous access conditions”, added the ETNO Director.
Similarly, the revised rules should also allow for more pricing flexibility for operators to develop new business models and respond to consumer needs for new services and various levels of speeds offered at different tariffs.
Regarding functional separation, ETNO remains convinced that it should not be part of the mandatory remedies, as it could further discourage risky investment in new access networks, to the detriment of European businesses and consumers.
However, if the institutions agree to include functional separation, it should be accompanied with stringent and meaningful conditions for its application as a last resort remedy. ETNO regrets that the Council’s common position would make it possible to apply this burdensome, costly and irreversible remedy without significant safeguards. As proposed by the Parliament, prior to enforcing it, NRAs should demonstrate that all other existing remedies have failed and that there is little or no prospect for infrastructure-based competition.
ETNO understands the goal of ensuring a fast adoption process in order to bring the necessary legal certainty for the sector. This Review represents a unique opportunity to create the right conditions for next generation access networks that must not be missed.
For more information, please contact: Thierry Dieu, ETNO Communications Manager Tel: (32-2) 219 32 42 Fax: (32-2) 219 64 12 E-mail: dieu@etno.be
ETNO’s 43 member companies from 36 European countries represent a significant part of total ICT activity in Europe. They account for an aggregate annual turnover of more than 250 billion Euros and employ over one million people across Europe. ETNO companies are the main drivers of broadband and are committed to its continual growth in Europe.