EC may extend competition rules to cable companies

The European Commission is considering extending the reach of rules to ensure fair competition among high-speed Internet providers to include cable companies as well as the large former telecom monopolies, a spokesman said on Monday.

“The Commission is working on a draft recommendation to help national regulatory authorities to establish whether individual companies are dominant or not,” said Per Haugaard, spokesman on information society matters.

Until now special rules were deemed necessary only for those telecom companies that had public monopoly status prior to the market liberalization, introduced in 1998.

These companies are considered to have had a head start in the market for broadband internet access, and Commission competition officials are concerned that some of the incumbents might be abusing that advantage.

According to Commission figures, 6.34 million out of a total 10.8 million high-speed Internet subscribers are connected via the incumbent telecom operators.

But the Commission is looking ahead to a potential situation where cable companies rival the incumbents.

“At the moment it isn’t clear whether the special rules would apply to cable companies,” Haugaard said. He added that including cable companies would fit in with new EU telecom rules that will come into force in the summer.

“The new telecom legislation is technology neutral in order to boost competition between platforms,” he said. “We have to look at it from the consumers’ point of view: What are the viable alternatives for broadband access, and who has significant market power in broadband access, regardless of what platform they use?”

Incumbent telecom operators have been putting pressure on the Commission to scrap special rules for new emerging markets. They argue that they have faced huge costs as a result of separate liberalization legislation, which forces them to open their local networks to competitors.

Some have conceded defeat in that lobbying battle and are instead now calling on the special rules to apply to all high-speed Internet service providers, such as cable companies, as well as on themselves.

U.K.-based Telewest, one of the largest cable companies in the EU, still makes only a small fraction of its revenues from offering high-speed internet. During the first three quarters of last year, its Internet division accounted for just 5 per cent of its 1.5 billion euro (CDN$2.46 billion) total sales.

Haugaard said the special rules, known as ex-ante regulations, are only seen as a short-term phenomenon to help manage the transition to a normal, competitive marketplace. “In the medium to long term, these rules won’t be needed as the markets become more competitive; at that point these rules would be rolled back,” he said.

The wording of the recommendation under discussion in Brussels has not been finalized yet, Haugaard said. It may be completed in the coming weeks, he said.