UK broadband deregulation welcomed in Brussels 

The European Commission approved and warmly favoured the initiative. "I welcome the precedent set by Ofcom's proposal to define sub-national geographic markets," commented Information Society Commissioner Viviane Reding.

The complex procedure of dividing national markets in different local sub-markets is considered by many as a key step in overcoming the digital divide between urban and rural areas within countries.

According to the most recent figures, which the Commission will publish next March alongside a new proposal on the digital future of the EU, the average broadband coverage in EU member states varies from 94% in the cities to 72% in remote areas. "Greece, Slovakia, Latvia, Italy, Portugal, Lithuania and Germany feature an even larger gap between coverage in urban and rural areas," reads the document obtained by EurActiv.

Ofcom has split the UK into four markets for wholesale broadband, and in doing so has identified areas where the competition among operators is sufficiently developed not to require further regulation. In addition, in the regions where the regulator counted at least four wholesale providers and a retail market of over 10,000 premises, it decided to lift regulation. This will concern 64.4% of British households.

"The lifting of rules does not create a legislative vacuum because competition law is still applied. Therefore the consumer is not unprotected," explained Commissioner Reding's spokesperson, Martin Selmayr.

"Ofcom's discovery of effective competition in a substantial part of the UK broadband market shows that the more effective a national telecoms watchdog regulates, the faster the move to competition law can be, inbuilt in the EU's telecoms rules," added Commissioner Reding.

Ofcom's proposal is a consequence of the functional separation established in the UK telecoms sector between network and service providers, argued Selmayr. The Telecoms package review proposed by Commissioner Reding last November is trying to introduce functional separation across the EU.

"At this crucial phase of broadband development across Europe, it is important to ensure consistency across member states," warned  Competition Commissioner Neelie Kroes. "Both over-regulation and under-regulation could stifle investment and lead to higher costs for households and businesses. Any de-regulation of sub-national markets should therefore be based on competition law principles".

"This is a very timely lesson that work is now just commencing on the EU telecoms package," commented Liberal Democrat MEP Sharon Bowles, party spokesperson on competition and intellectual property. "One of my roles in that will be to press for the rest of the EU to be equally open and competitive, giving the UK access to their markets. Without the EU pressing for such reform, many countries simply would not consider introducing functional separation".

"Functional separation is not necessary. There are plenty of other less invasive measures at our disposal. In France, whoever is in charge of the network has to regularly provide 150 indicators to show that it is not hampering service competitors," said Jacques Champeaux, executive vice-president of France Telecom, during a hearing in the European Parliament on Thursday.

"The process must be transparent, efficient and reliable. The framework should allow operators to run a service that provides good service at a fair price for the consumers throughout the EU," said  Catherine Trautmann, Socialist Group rapporteur on the Framework Directive.