Original URL: http://www.theregister.co.uk/2012/07/13/neelie_kroes_broadband_investment/

Small ISPs to Steelie Neelie: 'You've turned your back on us'

Euro commish changes tune over telco copper price spanking

By Kelly Fiveash

Posted in Broadband, 13th July 2012 13:03 GMT

Brussels' vice-president Neelie 'Steelie' Kroes has confirmed that telco incumbents in Europe will not be reprimanded for using copper pricing as a barrier to rolling out fibre networks.

It's a change of tune from Kroes, who had proposed in October last year when public consultation on the pricing of access to broadband networks was announced, that incumbents such as BT should lower the costs for what she described as "largely depreciated copper networks".

Since then, the Commission has been poring over the submissions made on the topic to the digital queen's office.

"After examining all the evidence, and given the significant competitive relationship between copper and NGA [next generation access] networks, we are not convinced that a phased decrease in copper prices would spur NGA investment," Kroes said yesterday.

"Indeed, we now see fibre investment progressing relatively well in some Member States where copper prices are around or above the EU average."

Kroes admitted that she was trying to "produce durable regulatory guidance" that would apply between now and 2020 - the year that she hopes to see around half of European citizens (about 250 million people) using 100Mbit/s network connections.

The commissioner said she wanted to put forward three recommendations to help spur on stability in the market, which is complex not least for how different it looks across the 27 Member States.

In practice, this means that the existing telecommunications provider/s and regulators in each Member State – such as BT and national telecoms watchdog Ofcom in the UK – can largely continue to maintain control over ISPs accessing the established networks as “too much intervention constrains flexibility”.

As long as there is some form of competition, the European Commission – fixated with its €9.2bn digital agenda – is unlikely to intervene.

Kroes said:

Over a decade ago, we successfully introduced competition to European telecom networks. The results to date have been positive for consumers and businesses. But the transition to an expensive new generation of high-speed networks, co-existing with the old, poses special challenges.

Though the public sector can help, the real heavy lifting must be done by private investment. Clearly, whatever the network and whatever the operator, people need to see an adequate return before they will invest: taking into account the risks.

Kroes attempted a bit of elbow-digging in the ribs of incumbent telco bosses, however, by calling on cost cuts of the deployment of superfast broadband by offering "better re-use and sharing of duct infrastructure across sectors, and smoother permitting [processes]."

In the UK, the government is investing in a not-quite-nationwide rollout of faster broadband speeds of 24Mbit/s and above by 2015. The EU's target speed in its Digital Agenda for Europe is 30Mbit/s.

Earlier this month, competition officials in Europe stalled the UK's superfast broadband plans, citing concerns about the UK's allocation of state aid. BT is the only telco to have secured any of the funds.

The EC is also troubled about BT assertion that it is unlikely to rent out its dark fibre (unlit/unused optical fibre) on a wholesale basis to its rivals – while regulator Ofcom has declined to intervene in the matter.

The European Competitive Telecommunications Association (ECTA), which is a lobby group representing around 100 smaller ISPs, accused Kroes of failing to address the issue of a European broadband market that typically favours incumbents.

"We deeply regret the approach that Mrs Kroes is suggesting on price methodologies. As a result of this approach incumbents will not only be allowed to regain full monopolies on future networks, they will also be allowed to continue overcharging consumers and starving competitors on existing networks," said ECTA's chairman Tom Ruhan. ®