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Europe unhappy over local loops

Legal action looming

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The EU Competition Commissioner has said the unbundling of local loops in Europe remains slow, once again suggesting that legal action may be on the horizon.

Although he has made similar comments in the past, EU Competition Commissioner Mario Monti once again warned incumbent telecoms and member states that any failure to unbundle local loops effectively could result in serious pressure, and possible legal action, from Brussels.

Access to these local loops, the so-called last mile, is considered a necessity if smaller telecoms are to be able to offer affordable high-speed data services. Local loop unbundling (LLU), or the lack thereof, has in the past been blamed for Ireland's slow rollout of DSL, its high DSL prices and its current lack of flat-rate dial-up services.

"I can confirm to you that local loop unbundling continues to be one of the priority areas for the Commission," Monti said at the start of a hearing on network access in Brussels on Monday.

"Both DG Competition and DG Information Society...will do everything within our powers to foster effective access to the local loop and to ensure a level playing field between all actors on the market."

"So far, the Commission has focused on the rights of access and price distortions such as predation or margin squeezing. It may well, in the near future, expand its field of action to the issue of discrimination, both with the tools offered by competition law and the unbundling regulation," Monti added.

The Commissioner went on to say that the "extremely disappointing" LLU efforts that had taken place so far have resulted in only 900,000 lines being unbundled since December 2000, when the EU's directive on LLU was passed. He went on to say that there has been considerable progress in some countries, "but the overall picture is still bleak."

"Even in those countries where figures could seem encouraging, we have received strong signs of discontent on the conditions offered by the incumbent," Monti continued. "I believe that there is no smoke without fire and that the numerous complaints by access seekers at national and European levels do reflect actual competition problems."

The Competition Commission is the EU's regulatory arm, and in recent months it had threatened to sue the governments of Germany, France, the Netherlands, Ireland and Portugal for maintaining regulations that allegedly favour the former telecoms monopolies in those nations.

It is worth noting, however, that Esat, Eircom's biggest single competitor in Ireland, was recently given access to some exchanges outside of Dublin. Subsequent to the agreement between the two companies, Esat launched its own DSL service and is now hinting that it may launch a flat-rate dial-up product in the coming months.

Whether the Commission does launch legal action on the issue remains to be seen but in what appeared to be a strong warning, Monti reminded concerned parties that the Commission recently opened two formal proceedings against France Telecom and Deutsche Telekom for predatory pricing and margin squeeze in local access, respectively.

he Commissioner also reminded listeners to his speech that the Commission had, on more than one occasion, launched infringement proceedings against member states for failure to implement telecoms-related directives, suggesting that it would once again be willing to initiate proceedings for LLU unless conditions improve. © ENN

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