EU telecoms try to ward off break-up moves

Europe's former telecom monopolies warn of anti-competitive affects of proposed split


Europe's former telecommunications monopolies warned today that any attempt to split them up would harm the European Union's competitiveness.

The comments come at the end of a three-month public consultation on the Union's five-year-old e-communication law.

Launching the consultation at the end of June, the European commissioner in charge of telecom, Viviane Reding, said she is considering breaking up dominant telecom companies, or imposing so-called ‘Chinese walls’ within them to prevent them from stifling competition.

Structural separation of different services such as broadband internet access and fixed-line telephony has worked well in the UK, the commissioner said. British telecommunications watchdog, Ofcom advocated such separation between departments responsible for infrastructure and those handling specific telephone services within national incumbent, BT.

"The UK move has been a good experience. Why not look at it with the view to applying it across the EU?" said Reding at the time.

The prospect of being broken up has sparked an angry response from the former telecom monopolies.

"Adding structural regulatory remedies leading to a greater or lesser extent to the separation of services and infrastructure, would certainly not be an adequate answer," said Michael Bartholomew, director of the European Telecommunications Network Operators Association (ETNO) in a statement issued Tuesday.

"Forced separation between networks and services reduces incentives for network investment. This would further reduce EU competitiveness at a time when massive investment is needed for the roll out of more performing access networks," said Bartholomew.

Instead of more intrusion in the telecom market by regulators, ETNO is demanding less. It wants the Commission to set a strict timetable for the dismantling of industry-specific laws that were introduced five years ago to help foster competition in markets that had been dominated by state-owned monopolies.

"Now that there is significant competition, regulators must not anymore solely focus on reducing market shares of certain players," Bartholomew said.

The Commission is expected to announce the results of the review at the beginning of next year, along with legal proposals designed to modernise the 2001 laws with market developments since then.

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