EC Gigabit Recommendation Panned by Alternative and Major Telcos
The European Commission will put the "final nail in the coffin of competition" if its proposed gigabit connectivity recommendation is accepted, said Luc Hindryckx, European Competitive Telecommunications Association director general, in an interview. The recommendation is part of a package…
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of measures unveiled Feb. 23, which also includes a Gigabit Infrastructure Act and a questionnaire on the future of Europe's electronic communications sector (see 2302230001). If approved, Hindryckx said, the recommendation "will irreversibly damage the pro-competitive and pro-consumer principles established in the long-standing European electronic communications framework." Under that framework, national telecom regulatory authorities who find a network operator has significant market power must impose specific rules on them to ensure competition. The EC, however, wants to boost the revenue of ex-monopolies such as Deutsche Telekom and Orange, which continue to dominate national markets, he said. The theory underlining the draft recommendation is that deregulating dominant players and allowing them to increase the wholesale prices they charge alternative telcos would motivate them to invest in very high-capacity networks (VHCN), he said. The proposal, however, ignores that challengers also have incentives to invest and that competition is the main driver of investments in VHCN: The less competition, the less investment. Other concerns, Hindryckx said, are: (1) A recommendation can be adopted quickly because it doesn't require approval by the European Parliament and Council. (2) The draft undemocratically overrules some aspects of the European Electronic Communications Code (EECC), legislation that required approval from the Parliament and Council. (3) Increasing wholesale charges will hike retail prices, fueling inflation. The recommendation should seek to harmonize the way regulatory authorities apply the EECC but, as written, it will discourage them from adopting pro-competitive measures to avoid confrontation with the EC, blogged telecom consultant Innocenzo Genna Friday. If in a given market there may be "prospects" of infrastructure competition, the regulator will be forced to let its guard down, he said. That will make access to infrastructure more difficult, with prices no longer cost-oriented. "All of this is referred to as 'flexibility,' a euphemism that actually translates as: no more competition." Big telcos, on the other hand, said the recommendation is too regulation-heavy. Rules for the fiber era should be different from those for the copper era, but the draft "still excessively relies on disproportionate regulatory intervention, as opposed to much needed incentives and cost recovery reflecting the business risk of network deployment," said the European Telecommunications Network Operators Association.