EU plan could push up access costs for broadband challengers

Reuters News
Posted: Nov 30, 2012 1:09 PM

By Foo Yun Chee

BRUSSELS (Reuters) - Smaller telecoms providers may have to pay more to rent space on networks owned by former monopolies as part of efforts to boost the fiber broadband rollout, a European Commission document seen by Reuters showed.

The Commission's recommendation came after strong criticism from major operators, such as Telecom Italia SpA, forced it to backtrack from an initial proposal to cut such access charges to legacy copper networks.

The proposal underlines EU concerns that economic growth in the 27-country European Union could lag behind the United States and Asia because of a lack of broadband connectivity.

Under the new plan, which is subject to scrutiny by national telecoms regulators and could still be modified, monthly rental access prices per customer would have to range between 8 and 10 euros by the end of 2016.

If the range is adopted, it could lead to higher charges in 10 EU countries including the Netherlands, Austria, Poland, Hungary and Estonia, which currently offer rates below 8 euros.

For example, the rent in Slovakia would double from the 4.20 euros charged in October 2011, the Commission's data showed.

On the other hand, Ireland, which currently has the highest monthly cost at 12.41 euros, Finland, Britain and Luxembourg would have to bring their prices down.

Incumbent operators such as Deutsche Telekom AG, Telefonica SA, France Telecom SA and Telecom Italia, inherited copper-based networks when they were privatized in the 1990s.

The former monopolies have said they need the cash from rents to invest in costly fiber broadband which can deliver much higher speeds than traditional copper lines.

The EU document also said that new fiber broadband networks would not be subject to regulation. The EU executive had floated the idea in July, saying a regulatory holiday would be valid as long as there was enough competition in the market.

"The national regulatory authority (NRA) should not maintain or impose price control obligations, including obligations for cost-orientation," the document said.

(Reporting by Foo Yun Chee; Editing by Robert-Jan Bartunek and Helen Massy-Beresford)