Far from scaling back regulation, the U.K. telecom regulator will have to be more vigilant, having accepted a British Telecom (BT) plan to open its network to rivals to fend off an antitrust probe, competitive telcos said Thurs. Amid a flurry of consultations, the Office of Communications (Ofcom) yesterday unveiled more details of a tentative pact with BT, saying it thinks the incumbent’s undertakings likely will address key competition problems. Competitors, still pondering the complex settlement, said they worry BT will have to be muscled into making good on its promises.
Dugie Standeford
Dugie Standeford, European Correspondent, Communications Daily and Privacy Daily, is a former lawyer. She joined Warren Communications News in 2000 to report on internet policy and regulation. In 2003 she moved to the U.K. and since then has covered European telecommunications issues. She previously covered the U.S. Occupational Safety and Health Administration and intellectual property law matters. She has a degree in psychology from Duke University and a law degree from the University of Tulsa College of Law.
Competitive telcos Tues. urged Germany’s telecom regulator to veto a Deutsche Telekom (DT) request for higher line-sharing rental rates. Last year, DT sought a monthly rate of 2.43 ($2.94) instead of the 4.77 ($5.76) it wanted to avoid European Commission (EC) antitrust action, the German Competitive Telecoms Assn. (VATM) said. Now, the incumbent again is seeking the higher rate for line-sharing, which lets rivals use the higher frequency spectrum of DT’s local loop to offer DSL products in competition with DT products. Earlier this year, the EC noted that Germany had fallen behind other European Union nations in broadband takeup. This was due partly to unfavorable line-sharing rules, said VATM, which commissioned 2 studies of its own. One found German monthly and one-time line-sharing fees are far higher than the average of the 10 best-priced European countries and could stand significant cuts. The 2nd study, which gauged margin squeeze between line-sharing prices and DT’s DSL end-customer product, found that even an efficient alternative telco can’t offer competitive broadband products. A win for DT will hurt Germany’s broadband market, VATM said, by: (1) Depressing delivery of broadband products, further weakening penetration. (2) Alienating potential investors and undermining current investments. (3) Triggering layoffs by competitors. (4) Leaving DT’s DSL product dominant in the retail market. (5) Reducing or ending competition among bandwidth, broadband content and services. In Feb., DT asked regulator RegTP for a hefty hike in its monthly charge for access to its unbundled copper loop -- which VATM strongly opposed (CD Feb 22 p6) and RegTP ultimately refused. That “was the carrot, and now comes the stick,” said Axel Spies, a German lawyer in Washington who represents VATM. Competitors fear RegTP will grant DT’s request because RegTP’s president doesn’t believe line-sharing is a viable alternative to full unbundling to let entrants reach end customers, he said.
European justice and home affairs (JHA) ministers agreed provisionally Thurs. to a 2-step approach to mandatory retention of communications traffic data. Meeting in Brussels, the Council said member states should first require communications services providers (CSPs) to retain fixed and mobile telephony data. Internet data and information about uncompleted phone calls would have to be retained starting later, letting CSPs that can’t now retain such data a chance to update their systems. Most of the delegations also agreed on a 12-month data retention period, with member states allowed to cut the time as low as 6 months in exceptional circumstances.
BRUSSELS -- European Commission (EC) oversight of content, TV, radio frequency management and Internet security would be viewed through the lens of convergence, under a proposal being presented today (Wed.) by Information Society & Media Comr. Viviane Reding. The perspective shift would mean “putting all the eggs in one basket,” Reding said here Tues. at a European Telecom Network Operators’ Assn. (ETNO) conference on next- generation networks (NGNs). Acknowledging the political risk, Reding said the convergence approach is the road to success in this “fascinating time.”
The EU now has no need for universal service rules covering mobile and broadband services, but someday could, the European Commission (EC) said Tues. Starting its first 3-year review of a 2002 universal service directive, the Commission said customers have widespread and affordable access to mobile technologies, with few using high-speed Internet access. Imposing universal access requirements at this point would harm rather than help them, the Commission said. But emergence of VoIP and other Internet-based services “challenges the current concept of universal service,” leading the Commission to call for an immediate long-term policy debate.
German Chancellor Gerhard Schroeder’s call for federal elections could hobble adoption of new telecom laws and cause uncertainty for the sector, a German telecom lawyer said Tues. After holding power 39 years, Schroeder’s Social Democrat party recently lost badly in North Rhine-Westphalia, the country’s largest state, said Axel Spies, a German attorney in Washington with clients in the industry. With a 28% approval rating, Schroeder stands a good chance of losing the election, expected to occur around Sept. 18, he said. A loss shouldn’t affect telecom regulator RegTP’s ongoing review, under the e- communications regulatory framework, of telecom markets, Spies said, but competitive telcos expect “significant delays” in release of new laws and rules. Amendments to the Telecom Act probably won’t be adopted as quickly as planned because of the need to set rules for reimbursing carriers for surveillance and eavesdropping and because the election campaign could slow things down. That would give Parliament a clean slat against which to debate the measures again after the election and restart the legislative process -- leaving telcos to deal with more unpredictability until year’s end, Spies said. Moreover, he said, the European Commission (EC) has threatened to sue Germany in the European Court of Justice over provisions in the country’s telecom act the Commission thinks don’t give the regulator enough discretion in controlling prices set by incumbent Deutsche Telekom. The Federal Ministry of Economics, RegTP and industry are working on a solution (parliamentary approval required) to head off a suit that “would put the entire German regime on price control in jeopardy,” Spies said. But it’s unclear now whether Parliament will be able to vote on the specific amendment by an end-of-June deadline set by the EC.
The U.K.’s 2 largest cable operators are coy about widespread reports they're in merger talks. The media frenzy began with a Sunday Times piece that was “pure speculation,” said an NTL spokeswoman, acknowledging that consolidation has been talked about for years. Telewest doesn’t comment on such matters, a spokeswoman said. But NTL said Mon. it sold its telecom operations in the Republic of Ireland to MS Irish Cable Holdings BV, an affiliate of Morgan Stanley, for 325 million ($417 million), a move its CEO said would let the firm focus on “growing and improving our U.K. communications and content distribution businesses.” The sale reportedly removes one of the last barriers to a $10.4 billion merger with Telewest. The merger is said to be necessary to let the firms compete with British Telecom in the telephony market and BSkyB in the pay-TV arena.
The European Commission (EC) announced 2 telecom workshops set for June 8. The first, on premium rate services (PRS), will involve a study by Cullen International and WIK Consult. The 2nd workshop will feature input from key players on access to universal international and national freephone services. German competitive telcos view PRS as a key way to help consumers reach customer service, govt., TV stations and the like, said Axel Spies, a Washington lawyer for the German Competitive Carriers Assn. In 2004, revenue from such services was 7% of all fixed-line communications, and the “innovative power” of the market sector safeguards many jobs, he said. In Germany, Spies said, entire industry sectors such as banks and insurance companies have had to review their internal procedures to keep pace with customer demands. Interactive quizzes, votes via SMS and viewer surveys are very popular, he said. In addition, freephone and shared-cost services have led to better customer service and lower costs. But consumers must trust such services, Spies said. “Abuses must be prosecuted vigorously, but over-regulation of this market sector should also be prevented.” In the U.K., burgeoning “rogue Internet dialing” scams last year prompted the Office of Communications (Ofcom) to consider the need for better regulation of PRS.
Not only did RegTP, Germany’s telecom regulator, reject a Deutsche Telekom (DT) request to raise rates for access to its unbundled copper loop, the watchdog ordered the incumbent April 29 to cut those rates. RegTP’s decision reduced DT’s fee from 11.80 ($15.28) to 10.65 ($13.80). DT had sought a hefty increase to 17.40 ($22.54) (CD Feb 22 p6). Rivals said the order is “a step in the right direction” but not enough. “If Germany wants to play in the champion’s league of the industrialized nations, the monthly fee should be below 10,” said Axel Spies, a Washington attorney who represents the German Competitive Carriers Assn. DT’s setup fees are still too high, stifling competition especially in the broadband market, Spies said. A DT spokesman said the telco is “disappointed.” After several unsuccessful bids to boost its access fee, DT doesn’t see why RegTP again spurned the argument that the carrier’s costs have risen, the spokesman said. The decision can be challenged in the Local Administrative Court in Cologne, said Spies, but it’s unclear whether anyone will appeal or whether a stay would be granted. DT said it’s evaluating options.
CAMBRIDGE, U.K. -- Three unlicensed spectrum technologies emerging from labs could spark competition in wireless communications, speakers said Wed. at the Cambridge-MIT conference on the future of such communications. “Things can only get broader” as ultra wideband (UWB), broadband over powerline (BPL) and radio frequency over fiber (RFF) technologies near commercial use, said Jon Crowcroft, lead principal investigator for the Cambridge-MIT Communications Innovation Institute. Each still faces technical and regulatory challenges, speakers said.