European Communications

Last update11:04:00 AM

Operators welcome Europe’s new broadband investment proposals

Last week, the EC’s VP Neelie Kroes set out a policy statement on broadband investment ahead of its formal adoption at the end of this year.

The conclusions of a 10-month consultation are aimed at jump-starting superfast broadband roll out across Europe.

Operators had claimed they were not being incentivized to invest in next generation networks.

However, in a statement outlining the policy, Kroes said she wanted to send out a positive signal that the telecoms sector “has a strong and stable future”.

There are seven general conclusions.

The most significant relate to “securing truly equivalent access by alternative operators to incumbent networks”, a focus on issues vital for healthy competition “potentially allowing us to lighten regulatory intervention elsewhere” and “regulatory stability and consistency over time”.

On the tricky question of whether to cut the price of copper, it was decided that a phased decrease would not spur NGA investment.

Operators that European Communications spoke to broadly welcomed the news.

"BT has long been in favour of regulatory clarity and certainty and so these are very welcome proposals,” said a spokesperson for the UK operator.

“The business case for fibre is tough and most companies are unwilling to make this long term investment, so the regulatory certainty being proposed is encouraging.”

Kroes indicated that the proposals would be set in stone until 2020.

A spokesperson for TeliaSonera said the Sweden-based operator also welcomed the news:

“By removing the demand for fiber price regulation and instead focusing on equal treatment, an opportunity for flexibility in price levels and business models is created which is necessary for a broad build out in Sweden and other countries.

“By giving long-term guidelines lasting until 2020, the Commission secures the necessary stability needed when investing in infrastructure.”

On Wednesday, TeliaSonera revealed that revenues from IP had outstripped those of fixed line for the first time.

Swisscom told European Communications that its view echoed that of industry body ETNO.

Its chairman, Luigi Gambardella, particularly welcomed increased pricing flexibility for NGA.

“This is as an essential instrument to allow for new business models to emerge and support return on investment, and in particular that cost-orientation for fibre networks could be avoided reflecting the increased competition from other platforms,” he said.

Telekom Austria also said it was in broad agreement with ETNO.

“We welcome Commissioner Kroes announcement on the policy and regulatory approach ...  and believe this is an encouraging step in the right direction.”

Tim Johnson, chief analyst at research house Point Topic, said operators were right to be pleased but only if they are willing to accept an open network model – similar to how BT’s Openreach is mandated to provide equal service to all comers in the UK. 

“That could be a big step for some and may require quite a lot of pressure from the EC,” he warned.

Nevertheless, he said Europe could expect to see superfast broadband roll out more quickly.

“The biggest players will be able to invest with confidence that they will be able to achieve reasonable cost recovery rather than being driven down to marginal cost prices. 

“These are the players which can make the difference – the contribution of alternative networks is bound to be relatively small.”

However, Johnson also warned that prices for consumers could rise in the short term.

“But it should help to provide Europe with a good quality broadband infrastructure which will be cheaper and deliver better results in the long run.

“This is the emphasis that Europe needs at the moment. Increasing investment will be vital to dragging ourselves out of recession," he added. 

There is much yet to do, as Kroes freely acknowledges:

“We must still clear the way for more content and services to circulate in a real digital single market.

“We also need public-private financing with the Connecting Europe Facility.

“And we must help local and national government reduce the planning and engineering costs of broadband roll-out.

“But no-one can say from today that the EU is not doing its bit to promote investment in competitive high-speed broadband,” she said.

Encouragingly, it appears the industry has got its act together finally.

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