New EC Policy Bars Regulatory Time-Outs for Fiber Networks
"Regulatory holidays” for build-out of new fiber networks won’t be tolerated, Digital Agenda Commissioner Neelie Kroes said Monday, unveiling the European Commission’s proposed three-pronged approach to universal and high-speed broadband. The statements on broadband investment, regulation of access to new networks and establishing a five-year spectrum policy program make up a package of reforms the EC hopes will jump-start Europe’s digital economy. The proposals won general praise from the telecom sector, but a few niggling concerns remain, various sources said. The measures must be approved by the European Parliament and Council.
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The plan calls for access to basic broadband for all by 2013, and universal access at more than 30 Mbps by 2020 (CD Sept 13 p8). It sets out recommendations to national telecom regulators on how to foster investment in next-generation networks while keeping down investment risks. The package also contains a spectrum policy program to guide government decisions until 2015. Among other things, it requires EU members to release the 900 MHz/1800 MHz former “GSM” spectrum for wireless broadband services by January 2012 and the 800 MHz “digital dividend” bands by 2013. It requires an inventory of all spectrum use and seeks to boost European influence in international spectrum negotiations. The measures reject a request by Germany to ease rules to allow incumbents to make initial investments in fiber. Investments in new markets carry risks for established and new players, Kroes said.
The next-generation access (NGA) recommendation should force dominant players to open their fiber networks to competitors, said Hubertus von Roenne, chairman of the European Competitive Telecommunications Association. But there’s a long way to go before consumers see the results, he said. Setting the right wholesale price for the legacy copper and new fiber networks is the key to determining if consumers will benefit, he said. The European Telecommunications Network Operators’ Association worried the EC’s proposed application of cost-based, regulated access obligations isn’t appropriate in next-generation networks and highly competitive markets. “Pricing flexibility is essential” if operators are to respond to varying consumer demands, it said.
The EC appears aware that a key factor driving incumbents’ investment in fiber lies with the competitive situation of traditional ADSL based on copper networks, said Innocenzo Genna, an independent telecom policy adviser and former ECTA chairman. As long as dominant telecom companies can generate substantial profits through wholesale services over historic networks, they're not likely to migrate to fiber, he said. The EC decision to lay out a clear competitive framework also shows it doesn’t want a repeat of the 2001 move from dial-up to ADSL in which incumbents were able to rebuild their monopolies, he said.
A potential area of contention is a provision in the next-generation access recommendation requiring operators with significant market power (SMP) to update their existing wholesale products, including bitstream, to cover fiber access at least six months before launching their own fiber-based retail products, said telecom lawyer Winston Maxwell of Hogan Lovells. The provision not only confirms that major players must make fiber-based bitstream products available to rivals -- controversial in itself -- but also that the improved bitstream product must be offered before the dominant operator can start its own fiber retail product, he said. That’s good news for new entrants “but I bet the measure will be fought tooth and nail by SMP operators before national regulators and courts,” he said.
The NGA recommendation doesn’t prevent regulators from approving access models market players negotiate among themselves, which is a positive element, said Bingham McCutcheon telecom attorney Axel Spies on behalf of the German competitive carriers association VATM. The recommendations are fully compatible with the open-access model the VATM promotes, he said. Germany’s current debate over how to amend its telecom act should consider the EC’s approach, he said.
The Fiber to the Home Council Europe applauded EC recognition of the importance of upload speeds. The council also backed EC calls for regulated access to passive infrastructures such as civil engineering works. Cable Europe said the package underscores the key role fiber and cable play in meeting broadband targets. Regulation that seeks to promote competition between infrastructures “makes good sense for Europe, its businesses and its consumers,” said Managing Director Caroline Van Weede.
The broadband targets are “really just a minimum” that EU members should try to surpass, said FTTH Council President Chris Holden. While the broadband plan is a good start, it “does not bring us across the finish line,” said European Consumers’ Organization Director General Monique Goyens. She urged the EC to make fast and ultra-fast broadband part of universal service obligations.
The spectrum program isn’t specific enough, said Robert Horvitz of the Open Spectrum Foundation. Nevertheless, it’s good that the EC can “envision” allocating more spectrum for broadband below 790 MHz, and the continued verbal support for collective use and general authorizations are welcome, he said: Concrete proposals for new free access bands would have been better.
Broadcasters said any discussion of using the digital dividend for other services should be limited to the 800 MHz band. Reducing the amount of spectrum available to broadcasters beyond that band will hurt the diversity and quality of broadcasting services, raise interference levels and restrict the universal availability of free-to-air services, said European Broadcasting Union Director General Ingrid Deltenre.