Telcos ill-pleased at EU’s fibre proposals

4 Oct 2011

The European Union (EU) is looking at implementing new proposals designed to foster the rollout of fibre-optic networks across the continent by cutting profits generated on legacy copper networks. However, the plan has been swiftly condemned by a number of European heavyweights – such as France Telecom, Telefonica and Telecom Italia – which say that rather than increase developments, it will actually act as a bar on progress. Reuters notes that within minutes of EU Commissioner Neelie Kroes laying out the proposal in Brussels yesterday, a swathe of telcos had expressed their concerns about the plan. Ms Kroes announced that the EU will open a consultation on the fibre proposals, including measures to trim the amount telcos can charge rivals for accessing their copper networks. As an incentive however, the EU is understood to be mulling an approach that would exempt telcos from the lower rental charges if they present credible and achievable ideas on investment in fibre. The commissioner argues that such a plan may free up the current bottleneck stopping incumbents and other major carriers from investing more in the rollout of ultra-high speed broadband, suggesting that some telcos are complacent and able to sit back and milk healthy profits from their existing infrastructure set-ups, rather than plough money into FTTX projects.

In a swift rebuttal, Telecom Italia CEO Franco Bernabe said the plan was ‘simply crazy’ and ill-timed, given the present tough economic conditions and the difficulties a number of companies are facing with falling sales and profits. Mr Bernabe said that rather than looking to increase the financial pressures on the industry, the Commission should be lowering taxes, reducing regulations and stimulating an environment conducive to creating improved profitability. ‘I think we are in a Kafkaesque environment. I don’t understand what people are thinking and what kind of world they are living in,’ he added. Bernabe’s thoughts were echoed by his counterpart at TDC Denmark, with Henrek Poulsen denouncing the idea saying: ‘This will reduce profits in the industry so there will be less money to invest.’ Meanwhile, France Telecom general secretary Pierre Louette bemoaned the EU’s consultation saying it brought more unwelcome uncertainty to the industry. For its part, the French giant is already moving ahead with plans to spend EUR2 billion in fibre by 2015, he said, noting that the telco does not need further encouragement from regulators.

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