EC Commissioner Neelie Kroes has received support from an industry lobby group in her efforts to bring down copper network access prices.
In a letter to the Commissioner, the chairman of the European Competitive Telecommunications Association (ECTA),…
EC Commissioner Neelie Kroes has received support from an industry lobby group in her efforts to bring down copper network access prices.
In a letter to the Commissioner, the chairman of the European Competitive Telecommunications Association (ECTA), Tom Ruhan, called on Kroes to take “firm and bold action” to protect competition in the European telecoms industry. Ruhan said that regulators need to change the way that wholesale charges for the copper networks of incumbent operators are organised.
In many European countries, incumbents charge competitors to access their copper networks on the basis of the “current cost” of the network. This model values the copper network at the price it would take now to replace it.
In his letter, Ruhan argued that this practice had “distorted normal market economics and incentives to invest”, and had left incumbents with the incentive to prolong the life of their copper networks.
In place of this system, Ruhan suggested that wholesale charges should be based on their “historic cost”, which takes account of how much it took to build the network when it was originally constructed.
He said that the historic cost model would mean that the value ascribed to copper and returns on capital would be “normal”, rather than “excessive”.
Ruhan called for “swift, decisive action from the European Commission and national regulators “.
ECTA is a trade association that supports new-entrant telcos, ISPs and suppliers to the communications industry.
Its members include BT, KPN, Telenor and Vodafone, although Ruhan specified that in his letter he was representing the views of alternative operators, and was not reflecting the views of ECTA members with incumbent interests.
Spokespeople for Neelie Kroes was not immediately available for comment.
At the Mobile World Congress in Barcelona last week, Vodafone CEO Vittorio Colao criticised regulators for their “continuous intervention” on issues like mobile termination rates.
Colao’s remarks received a sharp reply from Neelie Kroes. She said that she wanted the mobile sector to have more spectrum and a bigger market, but added that “a fair competition in roaming is a good exchange for those opportunities”.
