Reding rules out regulatory freeze to boost big telecom’s investments

By Anna McLauchlin

Date: 17/11/05

The European Commission is backing away from suggestions that it might bring in an EU-wide moratorium on regulating telecom operators while they invest in new voice, data and video technologies known as 'new generation networks' (NGN).

But the competitors of powerful incumbent telecom companies are still worried that a moratorium could work its way into a review of EU telecom law currently underway and to be finalised in 2006.

Information Society Commissioner Viviane Reding announced in September that she would "certainly be looking into the question of a regulatory moratorium".

Reding also lauded a move by the German regulator to impose a "light touch" regulatory approach on emerging markets.

On Friday (11 November), the new German coalition government agreed that it would exempt a EUR 3 billion investment by Deutsche Telekom into a high speed 'VDSL' internet project from regulatory action.

But one Commission official told European Voice that the EU executive was "not very favourable" to exempting incumbents from regulation.

And on Monday (14 November) Reding's spokesman Martin Selmayr said that the Commission in fact had "some concerns about the intentions in Germany" but was assuming that "the German government will discuss this with us".

Selmayr told European Voice< that Reding had only used the example of the NGN moratorium as one of the ideas put forward by incumbent operators to encourage investment in new technologies.

Large telecom operators such as France Telecom or the UK's BT are currently subject to regulation which forces them to give other firms access to their infrastructure in order to provide competition.

"EU rules stipulate that we have to regulate where there is a problem of competition," he said. "So if operators are asking to be exempt from regulation even when they have a dominant position, then that is not going to happen."

But Ilsa Godlovitch from the European association for alternative telecoms company ECTA said that she was still worried that the situation in Germany could "set a precedent" for discussions taking place as part of the EU telecom review.

"Politicians shouldn't even be involved in this," she said. "It is an issue for regulators, which are there to examine the market and apply remedies where there is a dominant player. Incumbent companies like Deutsche Telekom are clearly trying to circumvent the current process by trying to convince governments that regulation is holding them back."

According to broadband take-up figures published by ECTA in October, those member states with the most competitive markets like the UK have the highest broadband take-up, while those that have had problems opening up to competition like Germany and Ireland have lower take-up rates.

"The only reason that you have a choice about where to buy broadband is that there is a legal requirement for incumbents to open their services up to competitors," Godlovitch said. "This is economic regulation to ensure fair competition, it has nothing to do with red tape and shouldn't harm investment."

But telecom operators insist that they need assurance that they will not be hit by regulation if they invest in NGN.

"The groups building NGN in Europe are those that have the capital to invest. A moratorium, as long as it were applied across the EU, would help to encourage that investment," said Michael Bartholomew, director of ETNO, the European Association representing larger telecom operators.

The European Commission was backing away from suggestions that it might bring in an EU-wide moratorium on regulating telecom operators while they were investing in new voice, data and video technologies known as 'new generation networks' (NGN).

European Commission: Information Society: Telecom http://ec.europa.eu/information_society/topics/telecoms/index_en.htm

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