Phone firms told to make TV ventures independent

Date: 17/06/1999

By Tim Jones

EUROPE'S phone giants will be told next week to split their telecommunications and cable television arms into "clearly separated legal entities" in a parting shot from outgoing Competition Commissioner Karel van Miert.

The new law, which is due to be agreed by European Commissioners next Wednesday (23 June), is intended to prevent any attempts by former monopoly operators such as Deutsche Telekom, Telecom Italia and Telefónica de España to keep cable companies out of their markets for telephone services.

"It is another step in the Commission's campaign to stop incumbents stitching up the market now that it is open," said an official.

The new directive will be approved under Article 90 of the Treaty of Rome, which allows the Commission to bypass national governments to ensure that companies with "special or exclusive rights" respect EU rules.

The Commission's Directorate-General for competition (DGIV) concluded that a four-year-old law demanding accounting separation between cable and telecoms operations was insufficient to protect the burgeoning market for interactive video and data transmission services.

Officials say that when he publishes the directive, Van Miert will warn that some operators may be forced to abandon their cable operations as the price for clearance of an alliance under the Union's anti-trust rules.

The outgoing Commissioner has taken some of the toughest decisions against cable TV ventures, particularly those involving phone companies. He has twice blocked link-ups involving Deutsche Telekom and media/ publishing firms Bertelsmann and Kirch; and Telefónica and Canal Plus abandoned their Cablevision enterprise following DGIV inquiries.

Keyword: Cable television.