The European Commission (EC) is unhappy with the closed-door access
incumbent telecom carriers give to the competition, and decided Monday to
throw the gauntlet in order to get them to open up broadband access lines.
In March, 2001, the EC adopted five directives to regulate the industry,
which were essentially incumbent-friendly and relied more upon market
forces to determine competition. The directives were to go into effect
July 25, 2003.
That’s all changed, with stronger wording going into the directives that
treats carriers like British Telecom (BT), Deutsche Telekom and France
Telekom as monopolists.
Using Article 82 of the EC Treaty as a template, every carrier will be
judged in relation to its market position in each country. If there is no
real competition in one area, the new regulatory guidelines go into
effect. However, if there are one or more carriers in a market with
“significant market power,” regulators aren’t allowed to impose any
obligations to that incumbent network.
The revised guidelines go into effect today.
The change in mindset, from market-driven to regulatory-driven, bears a lot
of similarities to efforts in the U.S. to get incumbent local exchange
carriers (ILECs) like Verizon Communications and SBC
Communications to unbundle their networks. Called the
Telecom Act of 1996, the legislation gave the Federal Communications
Commission (FCC) the power to enforce compliance.
Mario Monti, EU Commissioner for Competition, points to the “disappointing”
number of access lines available to competitors in Europe — 900,000 lines
— and the foot-dragging going on at the incumbent carriers to open more.
“In many countries unbundling has not gone beyond a merely experimental
stage,” he said.
Regulations governing unbundling the local loop have been in effect since
January, 2001, when the EC implemented the measure to “provide a lighter
regulatory touch where markets have become more competitive.”
But the regulation and actual enforcement, along with incumbent compliance,
has been spotty at best. Critics point to the increasing cost for digital
subscriber line (DSL) and slow rollout of broadband throughout Europe as a
sign that this “lighter” touch isn’t enough.
At the behest of those critics, the EC launched a sector enquiry into each
European Union nation and immediately found violations to tariff
regulations that are part of the unbundling process. Tariffs are the fees
incumbent carriers charge competitors to use its unbundled access lines.
Charged in the regulation violations was France Telecom subsidiary Wanadoo
— for predatory DSL pricing — and Deutsche Telekom for “margin squeeze,”
or undercutting, in local access costs. Three other member nations were
charged for shared access violations and another five were singled out for
not giving out unbundled lines to the competition because of availability,
when they in fact did have the lines.
“A sector enquiry is not carried out for the beauty of the exercise, but
with a view to identifying possible competition problems and taking action
to resolve them,” Monti said. “Even though the process of unbundling is
not an easy one, I believe that there is no smoke without fire and that the
numerous complaints by access seekers at national and European levels do
reflect actual competition problems.”
