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Brussels split over telecoms

25 сентября 2007

Sharp divisions have emerged within the European Commission about a plan to intensify competition in the region’s telecommunications market by splitting up big companies such as Deutsche Telekom and Spain’s Telefónica.

Neelie Kroes, European Union competition chief, and Günter Verheugen, the industry commissioner, have attacked a proposed overhaul by fellow commissioner Viviane Reding of laws to govern the bloc’s €289bn-a-year ($407bn) electronic communications sector.
They warn the proposed review could create more bureaucracy and harm investment. The angry response by two heavyweight EU commissioners exposes tensions in the Commission about how to strengthen the development of ultra-fast broadband networks and to allow new operators to flourish in the union.
Under the plans,a telecoms company with a dominant market position could, if other measures failed, be forced to separate – but not to sell – its networks and services divisions to guarantee that rivals could access its infrastructure.
Ms Kroes’ officials argue this clause – known as “functional separation” – risks affecting investment in the sector, especially in new, ultra-fast broadband networks.
An internal document written by her department, and seen by the Financial Times, said the measure “is not only superfluous but also damaging. Functional separation does not prevent discrimination of alternative operators”.
A second suggestion likely to be proposed by Ms Reding, the EU media commissioner, is the establishment of an EU telecommunications regulator.
But this drew a scathing response from Ms Kroes’ officials. “In the electronic communications sector, granting powers to a community agency to perform competition assessments can only create confusion and impinge on the Commission’s competences.”
At the same time, officials working for Mr Verheugen, the German commissioner, question the need for a new agency that would require an extra 110 staff.
Ms Reding is expected formally to launch her plan in November, and the vigorous debate in the Commission suggests it may change before publication.
She cites the case of BT, the leading UK telecoms group, as a positive example of functional separation. The company agreed with regulators in 2005 to establish an independent unit to be responsible for giving the operator’s rivals access to its network that runs from phone exchanges to homes.
Ofcom, the British regulator, says the split is one reason behind the doubling of maximum broadband speeds in the UK.
Some national regulators in the union already have the power to impose functional separation, but Ms Reding wants to ensure all telecoms authorities can apply the measure in a consistent way.
Ms Reding was behind a law introduced this year to slash the cost of lucrative mobile phone “roaming” fees – a decision that enraged big operators.
She is also embroiled in a court case with Berlin about its decision to stop rivals selling services on Deutsche Telekom’s new €3bn broadband infrastructure, amid a disagreement about how big operators were to guarantee a decent return on investments.

Источник: Financial Times

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