Kroes’ plans to boost European fibre investment stirs controversy

The European Digital technology commissioner Neelie Kroes has outlined details of the policies she will put in place to ensure that investments continue to be made in broadband infrastructure in Europe. In a speech in Brussels Kroes said: “I want all industry players to receive the signal loud and clear – that they can invest profitably in the future connectivity of Europe, and compete on the basis of their investment.”

Investment in fibre networks is seen as a priority in order to achieve the EU’s goals of achieving a minimum internet access speed of 30Mbs/s by 2020. In her speech Kroes said that although a digital transformation was taking place it was being put under threat by a lack of investment. “We cannot let our networks be the bottleneck for this amazing opportunity”. She acknowledged that the public sector could only do so much in making large scale fibre networks a reality and that, “the really heavy lifting must be done by the private sector.”

Among her conclusions Kroes said that in order to ensure a level playing field, “incumbents should not be able to discriminate between their own retail arms and others”.

Controversially however, she also said that she did not believe that regulation should be used to force incumbents to lower the prices that they offer third parties for access to their copper networks.

“After examining all the evidence, and given the significant competitive relationship between copper and NGA networks, we are not convinced that a phased decrease in copper prices would spur NGA investment,” Kroes said.

“Indeed, we now see fibre investment progressing relatively well in some member states where copper prices are around or above the EU average.”

Kroes said that her final word on wholesale copper pricing would arrive later but that the price of €9 ($11) per month per user was reasonable.

However, there were strong words of disapproval from some quarters of the industry. While applauding the approach taken on non-discrimination, ECTA (European Competitive Telecommunications Association), said that Kroes’ stance on wholesale copper pricing would lead to higher prices for consumers.

In a statement, ECTA’s chairman Tom Ruhan said: “We deeply regret the approach that Mrs Kroes is suggesting on price methodologies. As a result of this approach incumbents will not only be allowed to regain full monopolies on future networks, they will also be allowed to continue overcharging consumers and starving competitors on existing networks. This is a departure from the approach taken with the NGA Recommendation in 2010 and might take Europe back to the pre-liberalization era. The EU already lags behind other regions of the world when it comes to super fast broadband – an important enabler of economic growth – and these measures will set us further back”.

ETNO, the trade association representing the incumbent operators, released a statement supporting the plans.

“ETNO considers that today’s statement will contribute to end a long period of uncertainty in the sector,” said Luigi Gambardella, chairman of the ETNO board. “Investors need a stable regulatory framework and today’s announcements by VP Kroes is an important step towards building investor trust.

Neelie Kroes will be the opening keynote speaker at the Broadband World Forum 2012, taking place on the 16 – 18 October 2012 at the RAI Exhibition and Convention Centre, Amsterdam, The Netherlands. Click here now to register your interest.

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