Industry expert: Reding is the ‘saviour’ of EU telecoms

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The nascent optical fibre connection market underpinning super-fast Internet should be subject to rules aimed at avoiding the creation of new monopolies, telecoms industry chief Innocenzo Genna told EURACTIV in an interview, praising Information Society Commissioner Viviane Reding as the ‘saviour’ of the EU telecoms sector.

As negotiations over the telecoms package potentially approach the final round, the EU institutions are debating what indications they should give industry to spur investment in so-called Next Generation Networks (NGNs), the optical fibre connections meant to replace copper.

After a strong lobbying campaign led by the main telecoms operators, the European Parliament decided to introduce detailed legislation on NGNs within the draft telecoms package, the set of rules overhauling electronic communications in the EU. 

The Commission also issued a draft recommendation in September on NGNs, to be translated in a formal text in the coming months (EURACTIV 19/09/08). Recently, Brussels also circulated the idea of using mobile termination revenues to fund fibre investments (EURACTIV 04/02/09).

Meanwhile, negotiations among the Parliament, the Council and the Commission are drawing to a close ahead of a vote on the entire telecoms package during the Strasbourg plenary in April. The Parliament is supporting the line of the main operators, such as Telefonica or Deutsche Telekom, by asking for a risk-sharing clause for investing in NGNs, which implies that those intending to use the new connections will be required to share the economic risk of deploying them (see EURACTIV’s interview with ETNO Director Michael Bartholomew).

New entrant operators, such as Tele2 or Tiscali, instead favour the so-called risk premium. In other words, it will be up to those who deploy the networks to ask higher prices for letting other operators use their infrastructure. A small company could therefore shed the economic risk of digging for new lines when the demand for super-fast Internet is still weak. Once the market will take-off they will be allowed to enter, although at higher prices. That will guarantee genuine competition in the sector.

According to Genna, who heads the European Competitive Telecommunications Association (ECTA), risk sharing is “a veiled regulatory holiday,” which would allow big operators to create new monopolies in the new market of fibre connections, undermining competition and therefore damaging consumers.

In his battle to guarantee a better regulatory environment for the firms he represents, Genna confides in Viviane Reding, whom he defined the “saviour” of competition in the European telecoms sector. The commissioner favours a risk premium rather than risk sharing, and in other circumstances adopted favourable positions towards new entrant operators, proposing for example a big cut in mobile termination rates, which benefit incumbents (EURACTIV 19/02/09).

To read the interview in full, please click here

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