BRUSSELS (Reuters) - The European Union is leaning towards relaxing rules that force telecoms companies to open up their networks if they show willingness to co-invest with rivals in superfast broadband.
The European Commission has made fostering investment in new fibre-optic networks to meet rising demand for data services a major plank of a reform of the current set of fifteen-year-old telecoms laws when they are reviewed in September.
This marks a shift from the main purpose of telecoms regulation which has focussed on allowing new entrants to compete on a more level playing field with former state-owned monopolies.
But the costs of running optic fibre - which can deliver speeds of up to 1 gigabit per second - into households are high and telecoms operators such as Orange (ORAN.PA), Deutsche Telekom (DTEGn.DE) and Telecom Italia (TLIT.MI) have long complained that the current rules forcing them to open up their networks to competitors at regulated prices do not allow them get a decent return on investment.
EU regulators want to offer companies the carrot of lighter access rules if they give operators the chance to co-invest with them.
“Efficient investment projects which are based on open, good-faith and reasonable co-investment offers ... address the concerns that access regulation normally seeks to resolve and allow a lighter regulatory approach to those who move first or together,” Guenther Oettinger, EU digital Commissioner, said at a telecoms conference.
It is a model already adopted by France, where Orange, Numericable SFR NUME.PA and Free (ILD.PA) have all offered to do shared rollouts of fibre-to-the-home in some urban areas.
Operators who do not participate would still be able to ask for access later, albeit on less favourable terms, two EU officials said.
Companies which own legacy copper networks would still have “ownership monopoly”, one telecom lobbyist said, but challenger operators would equally have the benefit of long-term access to the network on good terms.
One EU official said some challengers might prefer to ask for access later rather than footing some of the bill of building the infrastructure. Equally, incumbents would prefer to go it alone but the high costs of rolling fibre out to households make that difficult.
Goldman Sachs has estimated that rolling out fibre-to-the-home costs between 500 and 800 euros ($907.12) per household. On the other hand upgrading a copper network using vectoring technology - the most advanced form of which can deliver download speeds of up to 800 megabits per second - only costs around 300 euros per household.
But the Commission signalled its discontent with vectoring when it scuppered Deutsche Telekom’s plans to use the technology in May.
“We do not pick winners,” an EU official said. “But there is an understanding that we need fibre.”
Operators rolling out fibre-to-the-home could see a more favourable treatment from regulators, the person said.
Brussels also wants to reward companies who adopt a “wholesale-only” model, whereby they sell access to their networks to other firms and do not offer consumers their own retail broadband packages, EU officials said.
While operators will not be forced to separate their infrastructure arm from the retail one, there will be incentives for those who do so.
The wholesale-only model would have the advantage of making the market less “litigious”, said Innocenzo Genna, a telecoms expert in Brussels, because the wholesale operator would have no retail business to defend.
The Commission has also been at pains to stress that any lightening of the access rules will not mean it has abandoned its aim of fostering competition.
“This is not a battle between competition and investment. It is a balance,” said Commission Vice-President Andrus Ansip, in charge of digital issues, at a conference in June. “Access-based competition will remain important.”
The Commission is looking at lightening rules on giving access where there are two parallel networks, for example a cable operator and a telecoms operator, and applying them to both, two EU officials said.
Cable operators such as Liberty Global (LBTYA.O) are currently not required to open up their networks in most countries, although the current EU regulation does not preclude it.
So-called “symmetrical regulation” could be less intrusive and more streamlined, the people said.
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Reporting by Julia Fioretti. Editing by Jane Merriman