June 9, 2011 / 4:18 PM / 9 years ago

KPN faces setback from new Dutch telecoms law

* New Dutch telecoms law to ban extra VOIP charges

* KPN assessing impact of proposed new telecoms law

* Dutch Parliament to vote on new law on June 14

By Roberta B. Cowan

AMSTERDAM, June 9 (Reuters) - Dutch telecoms firm KPN (KPN.AS), which is struggling to reverse a decline in its domestic business, faces a new setback if the government bans telecoms providers from charging extra for internet services.

The proposed new telecoms law, which has broad support from Dutch political parties, would stop Dutch telecoms operators from charging extra for specific voice over internet protocol (VOIP) services including Skype and instant messaging such as WhatsApp, used on Apple’s APPL.O iPhone.

KPN has lost market share in its mobile business, largely because smartphone users are increasingly turning to free forms of communication such as Facebook, Twitter and instant messaging, at the expense of traditional mobile services. [ID:nLDE73K06E]

In May, KPN flagged that it plans to raise data prices for consumers as it tries to offset revenue losses — for example, following the example of France Telecom FT.PA, which charges customers for using Skype.

KPN shares have underperformed the Amsterdam market .AEX, down 16 percent in the past three months.

But KPN’s proposals prompted resistance from consumers and promises from politicians to tackle the issue.

Dutch Economy Minister Maxime Verhagen on May 25 said the government was considering a new telecoms law to ensure that consumers do not have to pay extra to use certain online applications, namely VOIP.

Verhagen said that the telecom operators’ charges on certain services such as Skype or WhatsApp “go too far.”

“Everyone should have access to all information on the internet, and placing a price on internet traffic based on the amount of data used or the speed at which it is supplied is okay,” said Verhagen in a statement following the parliamentary debate on the proposed law on Wednesday.

KPN declined to say how the law will impact the pricing of its new data and voice packages, due to be released this summer, adding it has not yet quantified the impact. “We are disappointed that the Parliament did not take more time to prepare this law,” said Patrick Mikkelsen, a KPN spokesman, adding that KPN is now studying the proposed law and considering the consequences for customers and the company.

“While this isn’t an existing revenue stream that KPN will lose overnight, it does represent a setback in their plans to turn around the Dutch wireless business,” said RBS analyst Giles Thorne.

KPN’s 47 percent share of its home market is under threat as it competes with Vodafone Group (VOD.L) and Deutsche Telekom AG (DTEGn.DE) and increasingly with cable firms wooing customers away with bundled packages of super-fast broadband, television and telephone services. Vodafone and Deutsche Telekom could not be reached for comment.

Analysts including Thorne warn that if other European countries follow the Dutch example, it will put further downward pressure on mobile phone charges, eroding operators margins.

The new law is expected to be passed when the Dutch parliament votes on June 14. (Reporting by Roberta B. Cowan; Editing by Sara Webb)

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