EU telcos say soft regulation will offset credit crunch

Europe’s leading telecoms operators have called for a softening of regulation across the sector, to encourage investment in next generation infrastructure in the face of the credit crunch.

On Friday, some of the carrier community’s leading lights gathered in Venice for the annual general assembly of ETNO (the European Telecommunications Networks Operators’ association).

In the opening address, ETNO members called on EU telecoms ministers for a clear strategy to boost risky investment in high speed broadband networks, cautioning policy makers against regulatory measures, which the body claims to risk further affecting operators’ revenues and their ability to invest.

In 2007, ETNO said that revenue in the telecoms sector grew by only 1.6 per cent against 2.3 per cent in 2006. Across the same period, investment also only increased by 1.4 per cent against 4.1 per cent in 2006 – the lowest investment growth since 2003. Aggravated by the ongoing financial crisis, slowing investment trends could lead to a further delay in the deployment of high speed broadband access networks, further affecting Europe’s competitiveness, the association said.

“The economic priority of the next few years must be investment in fibre-based Next Generation Networks (NGN) and mobile broadband networks through policies that create the incentives for that to happen. Such investments are large-scale, in the range of hundreds of Billions Euros (Eur300bn for Europe only). They are supposed to last for decades and need a stable and predictable policy and regulatory environment,” said Michael Bartholomew, ETNO director.

“We are however concerned that the current financial crisis could lead to a new wave of regulation in all sectors of our economy.If regulatory policy continues to constantly focus on pushing prices down, ever more capital will be withdrawn from the industry. The most recent example is the move to cut mobile termination rates in the EU at an even lower level than costs. If this trend continues, it risks pushing the ICT sector into an economic downturn further deepening the recession of our global economy.”

ETNO identified a number of areas where it believes regulatory policies can be tweaked to encourage investment. These include lowering the costs of deploying new networks through symmetric obligations to open up all ducts capable of carrying communications networks; and using access regulation to allow for a fair risk sharing between the investor and access seekers, given the high risk of investment in new access networks.