July 22, 2024

Top Telecoms Chafe at Opening Up Networks to Rivals

BERLIN — When the chief executives of Europe’s biggest telecom companies meet on Wednesday in Brussels with Neelie Kroes, the European Union commissioner who oversees their industry, they plan to present her with a list of 11 suggestions on how to spur investment in high-speed broadband networks.

Markedly absent from the list, a copy of which was obtained by the International Herald Tribune, is a proposal being considered by Mrs. Kroes that large operators do not necessarily like: the creation of high-speed fiber networks that operate like utilities and are open to their telecom competitors.

Instead, the group plans to restate a series of principles that big operators have long espoused to keep those competitors off any new networks they might build. The group is led by Ben Verwaayen, chief executive of Alcatel-Lucent; René R. Obermann, chief executive of Deutsche Telekom; and Jean-Bernard Lévy, chairman of Vivendi, which owns the French mobile operator SFR.

“Europe needs healthy companies willing and capable to invest,” the group said as part of their recommendations, which go on to underline the distinction between network operators and operators that seek to simply lease access to a network. “Players who add value should be stimulated by the right incentives.”

The defensive tone of the network operators underlines the impasse Europe faces as it tries to stimulate economic activity by wiring most of its population to high-speed data networks: Most large telecom operators, the likely investors and builders of these new networks, benefit from the status quo, and have little interest in creating new, faster networks — and new competitors.

The reason for their reluctance is understandable. Under European law, all operators must lease access to any new network to their competitors, which in turn can often undersell the same operator because they do not have to cover the costs of running a network.

Mrs. Kroes, a Dutch economist and previously the European Union’s competition commissioner, called together the group of 39 chief executives and high-level representatives from companies like Apple, Nokia, Google, Vodafone, Telecom Italia and BT on March 3 to prepare “concrete proposals” on how Europe could accelerate the construction of high speed broadband networks.

Higher speeds enable the inexpensive, efficient delivery of data-heavy services like video, high-definition television and real-time online gaming involving multiple participants.

The European Commission’s goal, laid out in its so-called digital agenda, is to make broadband service with download speeds of at least 30 megabits per second available to all 500 million E.U. residents by 2020. Only 29 percent of the E.U. population is now connected to such networks, according to the commission, and only 5 percent actually buys the service.

“When it comes to building high-speed fiber networks, Europe needs a new investment paradigm,” said Henry Piganeu, who participated in the deliberations and is the managing partner of Cube Infrastructure Fund, based in Luxembourg. “Unfortunately, there was no consensus on this approach from the telecom industry that came out of the discussions of the C.E.O. roundtable.”

The Continent’s largest operators — Vodafone, Deutsche Telekom, France Télécom, Telefónica and Telecom Italia — have lobbied unsuccessfully for legislation that will give them guaranteed investment returns on new fiber networks they build, or the ability to simply refuse to lease access to competitors.

During the roundtable’s work over the past four months, a group of banking and financial investors were asked whether they would be prepared to invest if Europe were to create a series of telecom network utilities, entities that operate much like public electric, water and gas companies and run a common infrastructure that is leased it to all operators.

Article source: http://feeds.nytimes.com/click.phdo?i=6d243e5b5ae8e184951635e0dadd3601

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