Telco bosses fail to break deadlock on fibre funding

As the European Commission takes the bull by the horns and asks companies to address a lack of investment in high-speed fibre optic networks, big and small telcommunications firms are failing to break a deadlock on how fibre should be financed. 

CEOs from a broad range of companies met at a workshop organised by the European Commission to tackle the lack of investment in fibre optic cables, the next generation of Internet access after copper networks.

A letter penned by the CEOs of Alcatel Lucent, Deutsche Telekom and Vivendi has riled companies lower down in the food chain, which argue that big telcos do not want to play ball on financing fibre for fear of losing their dominant market share.

The 11-point letter of recommendation to help the Commission reach its broadband take-up targets is the product of a workshop on Wednesday (13 July) hosted by the EU commissioner for the Digital Agenda, Neelie Kroes.

Investors have shied away from backing fibre because the business case is not yet strong enough. Fibre cables across the EU are surprisingly few and far between compared to other continents and take-up of fibre is not guaranteed as copper is still a viable choice for many customers.

EU recommendations due in autumn

"While it is understandable that commercial players try to maximise their own advantages, we also need to recognise that we have common interests. We all want Europe to catch the high-speed broadband train," Neelie Kroes, the EU commissioner for the Digital Agenda, said after the meeting.

Last year, Commission set out an ambitious target of boosting download speeds to 30 megabits per second by 2020, which it is now in danger of missing if the Telco market cannot find a common ground.

Sources indicate that little progress was made at their roundtable discussion on the contentious point of funding fibre.

Incumbents still stand accused of hogging access to their ducts and competitors argue they should stop sweating their copper networks to attract more investors – and eventually more customers to fibre.

"We need to remove the excess profits from copper lines to make fibre more of an interesting proposition," said Ilsa Godlovitch from the European Competitive Telecommunications Association (ECTA).

Investors have indicated that they would co-finance fibre if the networks were sold as utilities, much like water and electricity, which they could then rent to various operators. This idea curries little favour with incumbents who own the networks.

Incumbents argue they are not completely against co-financing as long as it is voluntary and is done in area where there is little or no competition. ECTA argues that in areas deemed competitive, new operators would be forced to duplicate fibre lines to compete with incumbents.

"The word voluntary is very important from our perspective," said Thierry Dieu, a spokesperson from the European Telecommunications Network Operators Association (ETNO), which represents incumbent operators.

There seems to be little middle ground between the two sides, a fact Kroes appears to recognise: the Dutch economist and commissioner plans to unleash two new recommendations in the autumn to address a lack of competition in the sector.

In September, the European Commission will issue a recommendation on how companies should calculate fees for access to their networks and it will also begin a consultation on non-discrimination to try and even out the gap between incumbents and their newer rivals.