Europe’s New Broadband Won’t Be A Telco Monopoly, Warns Reding

The European Commission will not relax its tough stance on telecoms monopolies, despite the pressure to deliver next generation broadband networks (NGNs) quickly, said Commissioner Viviane Reding.

Europe needs fast broadband to remain competitive, but the EU telecoms commissioner competitor warned telecoms companies that she had no intention of backing down on the zero-tolerance approach she has taken to abuses of telco power, i a speech this week at the annual conference of the European Competitive Telecommunications Association (ECTA).

Last week, the EC released a public consultation on plans for what it calls Next Generation Access (NGA) broadband networks. The consultation takes the form of a draft Commission Recommendation which stakeholders can comment on until 24 July 2009.

“The draft Recommendation has attracted a lot of interest already,” said Reding. “From the one side, I have heard the criticism that the Recommendation does not recommend a generalised roll-back or even a dismantlement of ex ante regulation. Firms, it is said, need to be given regulatory holidays – by means of the law, by means of overly broadly defined markets, by means of new markets or by means of a dogmatic preference for passive over active remedies – otherwise they will simply not invest.”

However Reding was at pains to point out that the EC won’t turn a blind eye to anti-competitive behaviour simply to get NGAs/NGNs built in time. “We all know that this is a criticism which simply is not going to fly. I have spent the last years fighting for effective competition in telecoms markets. I am not going to turn my back on our policy of liberalisation and pro-competitive ex ante regulation. After all, this policy has led to successful and often deep market entry in the past, and it has contributed to wide usage and take-up of services. The last thing we need is new monopolies, and the poverty and artificial scarcity of services that would inevitably go with it.”

But despite saying that she would not allow existing or emerging telecoms companies to dominate markets, Reding added that there had to be some recognition and support for the companies, that are investing in high-speed broadband.

“High-speed networks are not there yet and need to be built in the first place. Investors in these networks therefore need to be able to make financial returns commensurate with the risks they incur,” she said. “Cost-oriented access as in today’s copper world may under these new circumstances need to be modulated, subject of course to the continued possibility of market entry and sustainable new entrant business models.”

She added that the EC was trying to establish a balance between support for incumbents, such as the UK’s BT and its 21CN network, and emerging players, in order to get high speed networks built but in a way that ensures a competitive market for consumers and businesses.

“What I think this shows, is that the draft Recommendation that we have put into public consultation cannot be categorised simplistically as being pro-incumbent or pro-alternative operator,” she said. “But let me also be very frank with you: It is not the role of the Commission to take sides between incumbents or new entrants; but to make sure that there is effective competition in a Single Market that triggers investment, innovation and consumer benefits.”

Reding also made reference to the UK’s Digital Britain report and the plans to fund high-speed roll broadband with a levy on fixed telephone lines.

“In the UK, Lord Carter last week told us in his Digital Britain report that the government sets the objective of all British households to be served by broadband networks with bandwidths of at least 2 Mbit/s by the end of 2012, eased by the creation of a Next Generation Fund,” she said.

As part of the Digital Britain report, the UK government introduced a 50p-a-month tax on phone lines, to create a Next Generation Fund to pay for faster broadband across Britain. The EC is investigating whether this fund breaks any European competition rules.

The Next Generation Fund will be administered by telecoms regulator Ofcom, and is expected to gather between £150 million to £175 million each year, from a “small levy” of around 50p a month on each copper phone line, according to culture secretary Ben Bradshaw, who took the post from Andy Burnham in Gordon Brown’s recent reshuffle of government posts.