Europe pays lip service to telecoms review

EC's Verrue points to unbundling as the key for competitive growth.

As he unveiled the European Commission's plans for a regulatorywth. review of the telecoms industry, Robert Verrue, director general of the EC's Directorate XIII, spoke of the important role that services would play. "The telecoms services sector is the single most important contributor to economic growth in Western Europe," he said, speaking at the ADSL Forum Summit in Vienna.

In a demonstration of its support for the Forum's efforts to promote ADSL in Europe, Verrue promised that Directorate XIII - which deals with telecoms and IT - would revise the EU's regulations.

"Europe's wealth and influence will increasingly depend on its capacity to embrace new technologies," he said. "With growing convergence between the telecoms, IT and media sectors and the rise of the internet and electronic commerce, telecoms per se now constitutes only one part of the overall picture. This means that the regulatory framework is already being challenged by market and technological developments."

Verrue went on to outline issues which could feature in the 1999 review and gave prime place to discussions on the unbundling of the local telephone loop.

"Access networks are a key component in all telecoms services but in particular for the deployment of advanced technologies and services, including high-speed internet access," he said.

Weakness in the competition

Verrue noted that competition in the local loop is very weak in Europe, with the provision of fixed-access networks still dominated by incumbent operators. "Greater access competition would lead to falling prices and more innovation in the development of access network technologies, including cable modems and ADSL," he said.

While Verrue conceded that 'for the time being' member states are not bound to unbundle the local loop, he rejected the limited options for providing local services currently open to new telecom providers. He argued that renting ducts and poles from incumbents generates operational problems and that buying temporary access for customers on a per-minute basis limits the functionality to narrow-band services, as well as limiting profits.

Verrue said that entrants to the market would prefer to rent the local copper loop on a semi-permanent basis - to gain access to customers and to deploy broadband services.

Also predicting that unbundling would increase long-term infrastructure investment by lowering the entry risks, Verrue invited national regulatory authorities and market players to contribute to the debate.

Hans-Erhard Reiter, chairman of the ADSL Forum, said: "This is very positive but the directive will take about 18 to 24 months, so the biggest challenge is that the legislation is far-sighted enough that we're not forever running after technology."