Telecom companies in ‘war of experts’ on new regulation

France Telecom and incumbent operators voiced ‘mixed feelings’ over European Commission proposals to overhaul the telecoms market, but new market entrants stressed the supposedly positive impact of regulation on investment.

Director of Regulatory Affairs at France Telecom Jacques Champeaux opposed the Commission’s plans to introduce a European regulator and give national telecom regulators powers to split incumbent operators into separate companies, in charge of networks and operational business respectively (see EURACTIV 17/10/07, 26/09/07 and 28/06/07). 

Addressing journalists in Brussels on Tuesday, 6 November, he said the latter measure, which has become known as ‘functional separation’ or ‘structural separation’, “is a real risk for next-generation networks”. He went on to explain his view that the measure would create a dedicated company operating the network business, which would amount to a new monopoly. 

He said that this would curb “a unique opportunity to move from service and infrastructure competition to network competition”, where two or more networks, such as fibre-optic, cable and wireless compete with each other for end users. 

Champeaux’ arguments are backed by a report prepared for the incumbent association ETNO by the consultancy LECG, which warns against the supposedly “long-term negative impact of mandatory functional separation on access network investment and competition”. 

On the same day, ECTA, the association bringing together new market entrants on the telecoms market, published a report stressing the positive impact of regulation on investment. Richard Cadman, Director of SPC Network, the consultancy which drafted the report, said: “What this study shows, more emphatically than any study before, is that there is a direct and positive correlation between investment levels and the effective implementation of pro-competition regulation.” 

Cadman went on to explain: “That is because one of the risk factors of investing in competitive telecoms services is the regulatory environment – effective regulation minimises the risk and thereby encourages investment.” 

The Commission will present its proposal for an overhaul of EU telecoms rules on Tuesday, 13 November. 

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