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Thursday, 12 July 2012 - EU sides with big telcos on fiber broadband plan |
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See the best of Reuters photography.  See more | Photo caption  Coal miners riot Clashes over Spain's proposal to decrease coal production.   Slideshow  Paralympic athletes A few of the athletes heading to London to compete in the Paralympic Games.  Slideshow  EU sides with big telcos on fiber broadband plan Tweet Share this Email Print Related News UPDATE 1-EU sides with big telcos on fibre broadband plan 11:44am EDT Analysis & Opinion Getting some competition for efficiency Related Topics Tech » By Claire Davenport and Leila Abboud BRUSSELS/PARIS | Thu Jul 12, 2012 11:45am EDT BRUSSELS/PARIS (Reuters) - European regulators backed away from forcing big telecom operators to charge smaller rivals less for renting space on their networks, changing tack in their efforts to spur the buildout of fiber broadband. The European Commission had argued that the only way to get telcos to pick up the pace of building faster fiber networks was to make renting old copper lines less lucrative. The idea triggered months of public sniping between regulators and major telecoms, with Telecom Italia CEO Francesco Bernabe calling the proposal "simply crazy". Large European telecom companies on Thursday welcomed the rethink while representatives of roughly 100 alternative Internet providers complained that the change meant customers would continue to be overcharged. Network tenants like Fastweb and Iliad say rents are too high while the copper wire owners say they need the cash from rents to invest in fiber infrastructure. Governments and EU officials are growing increasingly concerned that the region's economy could fall behind Asia and the United States through a lack of broadband connectivity. "In 2012 alone, 35 million Chinese households will be connected to very fast broadband," said Neelie Kroes, an EU Commission vice-president in charge of the Digital Agenda. "We need to do much better to change that." FALLING BEHIND At the end of 2011, the EU had just one quarter of Japan's 20 million fiber customers in 2010 even though Japan's population is under a quarter of the EU's 500 million citizens. In the past, Kroes said fiber buildout in the EU required 270 billion euros in investments. Under the new proposals, companies like Telecom Italia and Telefonica will not have to lower the fees they charge for using their legacy copper networks. In addition, the rents on new fiber broadband networks will not be subject to regulation as long as regulators say there is enough competition in the market. The EU Commission also pledged to keep this approach in place until at least 2020, responding to calls by big operators for regulatory certainty ahead of costly network buildouts. "The evidence shows that lowering copper prices (from 9 euro a month) will not induce greater investment in very fast broadband," Kroes said at a press briefing on Thursday. The commission will continue to work up recommendations on copper line pricing and, before year-end, will publish guidelines to ensure changes do not bury competitors. HARD CHOICES Telecom analysts say the Commission largely made the right choices but that in some markets new fiber infrastructure would be slow to arrive as a result. Bernstein Research said though the decision reduces the risks that players like Deutsche Telekom could face from lower fees, "we do not think it will lead to any major fiber builds, and instead will improve the returns on incremental build." British Telecom (BT), France Telecom and Telefonica will all benefit from a more stable outlook, wrote Bernstein's Robin Bienenstock in a note. "The business case for fiber is tough and most companies are unwilling to make this long term investment, so the regulatory certainty being proposed is encouraging," said BT in a statement. The ECTA, a trade association for smaller telcos, said the regulators' change of heart meant "incumbents will ... be allowed to continue overcharging consumers and starving competitors on existing networks. "The EU already lags behind other regions of the world when it comes to super fast broadband...and these measures will set us further back." ONGOING DEBATE The debate over how the EU could encourage broadband investment first flared in October 2011, when Kroes said incumbent operators were too comfortable -- and earning healthy profits -- with their old networks and had little interest in spending heavily on faster fiber networks. She floated a proposal of gradually reducing the fees operators could charge for access to spur investments. The commission spent months meeting with investors, companies, and consulting regulators in member states to study the impact of such a plan. (Reporting by Robert-Jan Bartunek, Kate Holton; Editing by David Cowell) Tech Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints   We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.   Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Connect with Reuters Twitter   Facebook   LinkedIn   RSS   Podcast   Newsletters   Mobile About Privacy Policy Terms of Use AdChoices Copyright Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us   Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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