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Europe set to unbundle fiber


Published: 7 October, 2011


How do you tell whether a strategy like unbundling the local loop is working in broadband?

Well the penetration of broadband in Europe and the many countries within it, when compared to other countries, even the US, shows that competition not only drives choice, but it drives down pricing. It's good for consumers and that should mean it's good for operators. But listening to operators this week you wouldn't think so.

There have been howls of anguish from telcos over the European Commission's decision to begin two consultations - one about how fiber will be treated exactly like copper - wholesaled and unbundled, and the second to check that unbundling rules are being followed in Europe. The results will help the Commission draft Recommendations which will become law.

Neelie Kroes, European Commission Vice President for the Digital Agenda, is behind the consultations and has been accused of being mad, and her ideas unworkable.

The over-arching principle is fairly easy to grasp - which is that the Telcos in Europe should not be able to offer wholesale broadband any cheaper to its own retail group that it can offer rival groups. And this involves taking a close look at Telco costs to stop them pulling the wool over regulator eyes. The cost of the copper in the ground, the cost of maintaining that copper, the cost of adding new backhaul and new access lines, and adding a premium so the telco can make a margin.

For too many years operators have complained that they do not make enough money to contemplate installing fiber, while the real reason is that protectionist regimes allow Telcos to grab fat profits from copper, with few or no rivals able to operate. So why would they install fiber when they are making so much on copper?

Moves have been afoot to copy the US and get the authorities to agree relief to fiber programs to unbundling - what they call "investment incentives." Kroes is having none of it. The EU has proved that unbundling works to stimulate competition and choice, why would they suspend it on fiber?

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