EC proposes massive telco shake-up

Incumbents face 'structural separation' showdown

The European Commission (EC) could be on a collision course with Europe's biggest telcos after publicly backing the idea of breaking-up incumbent operators.

Speaking last night, Viviane Reding, the commissioner responsible for Information Society and Media, said she planned to publish proposals that that would "for the first time consider the policy option of 'structural separation'" for Europe's biggest operators, giving rivals equal and non-discriminatory access to their networks.

Reding cited the UK, where regulator Ofcom has already taken such steps with BT to create a new access services division - Openreach. She also pointed to the US where she argued that "the opening up of the telecom monopoly of AT&T" starting in 1984 had helped give consumers "a true choice".

"Today, the EU rules in force do not foresee structural separation as a regulatory remedy on the telecom markets," said Reding. "But I see that the United Kingdom, which has opted for a form of structural separation at national level, has made good experiences with this remedy.

"I believe that the policy option of structural separation could answer many competition problems that Europe's telecom markets are still facing today. Perhaps we have to be as radical as regulators were in the US in the 1980s to make real progress?"

She went on: "Of course, we will have to find our own European solutions, adapted to the needs of our continent. But 'a European way of structural separation' is certainly a policy option that needs to be discussed intensively in the forthcoming months."

Part of Reding's speech yesterday focused on how telcos are no longer restricted to operating within their own national boundaries and are instead creating networks across Europe. She also highlighted how current European regulations are not imposed evenly by every nation, leading to distortions across the EU.

Her remedy for both of these, which has already drawn criticism, is the creation of a single European telecoms regulator.

"The most effective way to achieve a real level playing field for telecom operators across the EU would of course be create an independent European telecom regulator that would work together with national regulators in a system, similar to the European System of Central Banks," she said.

Such a move would mean that all EU rules and regulations would be applied "consistently in all Member States".

A spokesman for the European Regulators Group, which represents the EU's telecoms regulators, played down Reding's comments by saying "if the system isn't broke, don't fix it". ®