Liikanen denies “cave-in” to big operators

Date: 12/12/02

By Peter Chapman

ERKKI Liikanen, the enterprise and information society commissioner, has rejected claims by the head of a leading internet service provider that he has "caved in" to powerful former monopoly operators over plans to regulate broadband networks.

The war of words comes as Liikanen prepares a hit list of "relevant market" areas in which competition might not take hold if national regulators fail to set tough regulations to prevent the former monopolies squeezing out new rivals.

Renato Soru, chief executive of Italian internet giant Tiscali, told European Voice that the commissioner had deleted a sector known as "bit-stream access" from drafts of the list of relevant markets which will be subject to the new regulations. These are due to be unveiled early next year and be in force by the summer.

Bit-stream access provides the most economic means for internet companies to get access to the telephone wires owned by the former monopoly operators to provide fast broadband connection to the public.

Companies like Tiscali fear the incumbents will price their new rivals out of the market by demanding exorbitant rental fees to connect with their existing networks to service customers.

The apparent decision to remove bit-stream access from the equation follows a series of high-level meetings between Liikanen and the former monopoly operators.

They warned him of dire consequences from over-regulation at a time when the industry faces unprecedented levels of debt.

Soru - who also met Liikanen last week - said such a move would spell the end of competition for internet and was at odds with the Commission's policy of boosting access to cheap and fast broadband services.

"This to me is not only dangerous; it is the end of competition in telecom. Broadband is not just another market. It is going to be the most important market for telecoms. To say that it [bit-stream access] is not going to be targeted and is going to be left to the abuse of [those operators in] dominant positions is to say that competition has been cancelled.

"We are very scared about that. The result will be very clear. Incumbents in national markets will run internet access as a monopoly."

The EU passed a law two years ago forcing operators to open up "local loops", the final mile of telephone wires connecting exchanges to homes and offices. But since then few newcomers have taken advantage of this liberalisation measure. Soru blames high rental costs.

Using "unbundled" local loops across a country like Italy would cost firms like his hundreds of millions of euro and would be uneconomical away from urban centres.

By contrast, offering the public access to the internet via bit-stream technology would cost internet service providers a "negligible" €80 per customer.

Liikanen insists there has been no U-turn on what constitutes a relevant market. His department was still working out its position and had not even formulated a draft, said. "I will not pre-empt anything," he told this newspaper. "There has been no document sent to inter-service consultation [in other Commission departments]. It will come early next year."

However, the Finn admitted that bit-stream access was a hotly contested issue. He said former monopoly operators had worked overtime to ensure it was not on the list of relevant markets.

"There is no lack of lobbying from all in that area. But it does not distract us," he added.

Erkki Liikanen, the enterprise and information society commissioner, has rejected claims by the head of a leading internet service provider that he has 'caved in' to powerful former monopoly operators over plans to regulate broadband networks.