BRUSSELS -- The European Commission's plan to lower Internet access prices to copper
networks in order to boost next generation networks is flawed, say Europe's leading telecom organizations.
In October, Digital Agenda Commissioner Neelie Kroes revealed proposals to reduce copper access prices in a bid to encourage incumbent operators to invest in new fibre-based broadband networks. Telephone companies have built their networks for decades using copper, which is now aging infrastructure. But a new study for ETNO (the European Telecommunications Network Operators association) shows that lowering the price of copper network access could have the opposite effect.
According to the report, carried out for ETNO by Plum Consulting, a reduction in the access price of copper would harm investment since it would lower retail prices in the market for both current and next generation access and thus reduce demand and lower the price for fibre
, said the report.
It claims lowering copper prices would also reduce free cash flow, which is likely to reduce discretionary capital expenditure on infrastructure.
Cable Europe also described the Commission's approach as "a bit short sighted."
"It overlooks the competitive dynamic at work to which we're contributing. We're delivering in Europe today when it comes to competing with incumbents. With these solid competitive credentials, cable is a good reminder that there are natural market forces already at play and pushing incumbents to invest in next generation infrastructure," said Gregg Svingen
, Cable Europe spokesman on Tuesday.
"It's also worth noting that every regulatory action has a consequence -- some can be unforeseen or unintended. Any wash-over effect on the overall market risks distracting investors in other parts of this crucial marketplace. We urge the Commission to consider less intrusive regulation especially as regards costing methodologies," Svingen continued.
But, said Kroes in October, alternative network providers claim that copper access prices are too high given that the value of operators' copper assets has largely depreciated. "For the time being, telecom companies are hesitant to commit significant funds to fiber rollout. As a result, incumbents prefer to make good, easy profits on legacy infrastructure rather than invest significant amounts in new fiber networks," she said.
The commission is committed to fibre optic networks as a means of bringing high-speed 30 Mbps+ broadband to every single European by 2020, with at least 50 per cent having access to a 100 Mbps service.
In Canada, the Harper government is drafting a digital economy strategy which may include a broadband speed target. For now, the only regulatory goal is the one set by the Canadian Radio-television and Telecommunications Commission (CRTC), which wants every household in the country to have access to 5 Mbps by the end of 2015.
Meanwhile, BCE Inc.'s Bell Canada and Telus Communications Co. are adding fibre optic lines to their networks to keep up with the Internet speeds offered by cable companies.
(With files by Howard Solomon, Network World Canada)