Incumbents resist push towards fibre in new EU regulatory framework

Wednesday 25 January 2017 | 22:14 CET | Background
ETNO, the lobby group representing incumbent telecom operators in the EU has published a position paper on the EU’s proposed new European Communications Code. At the ETNO-MLex Regulatory Summit 2017 in Brussels held by the industry group, operators expressed support for the addition of connectivity as a new goal in the regulatory framework, but were critical of any attempt to make fibre the most favoured solution to broadband goals.

ETNO has long favoured a mix of technologies to deliver broadband goals, and many of its members are pursuing upgrades of their copper networks, with FTTP only rolled out in select areas. Jos Huigen, Dutch operator KPN’s director of regulatory affairs, said “we are all aware that at some point it will require fibre, deep into our networks”. However, he pointed out that upgrading a copper connection to deliver speeds of 100 Mbps or higher, as targeted for all by 2025 in the EU’s plans, costs half the price and a third less time in terms of planning permission in countries like the Netherlands, compared to rolling out FTTH. 

These kind of realities need to be explained by the telecom industry to politicians and the public, Huigen said. The "deep distrust" from parliaments or consumers towards the telecom sector is not merited given what has been delivered in Europe to date, he added. 

The cable industry appears to agree that upgrading existing networks is enough to meet the Digital Agenda goals. Matthias Kurth, executive chairman of industry group Cable Europe, said at the conference that “not everyone will need a gigabit in 2020, only maybe some”, and operators in Europe are already doing a good job at meeting end-user demand. He noted as well the much lower cost of upgrading a cable network to Docsis 3.1, and how operators such as Comcast in the US are already delivering gigabit speeds on these networks.

Not enough neutrality on network technology is the first criticism from ETNO in its paper on the ECC. The group wants the definition of “very high capacity networks” to be more agnostic, allowing for other technologies such as G.fast, wireless or HFC to be included. Brian Williamson, a partner at the consultancy Communications Chambers, noted as well that too great an emphasis on fibre could preclude innovations in 5G. In the US, major players such as Google, Verizon and AT&T have chosen fixed wireless services as one of the first applications for testing 5G, he noted.

Vesa Terava, from the DG Connect at the European Commission, defended the stance taken in the ECC, saying fibre was a “good starting point, as right now it provides the best quality”. This does not mean that the Commission considers other technologies inferior to fibre, he said. “We know that investment cases vary. It should not be the role of the regulator to prescribe the technology.”

This was seconded by Anthony Whelan, director of the DG Connect, who said “no path towards the [connectivity] objectives should be disadvantaged” in the code. The aim of the regulation is to provide predictability and flexibility, giving national regulators a range of tools to deal with the variety of market situations across the EU, he said.

Whelan also defended the proposal to require national regulatory authorities (NRAs) to map the current state of broadband networks and future investment plans of operators, saying there is a need for more of this kind of dynamic data in market analyses. However, disclosing future plans is seen as a competitive risk by ETNO members. They also fear being forced to fulfil old investment plans even if market conditions change. Cable Europe’s Kurth called the proposal much too bureaucratic, noting that even Berec, the assembly of EU telecom regulators, was not especially keen on the idea in its initial opinion on the ECC.

Pilar del Castillo, the MEP rapporteur leading the regulation through the European Parliament, also named the mapping of future investment plans as a possible negative in the Commission’s proposal. She questioned whether any operator could truly guarantee future investments.

While parliament is still working on its response to the ECC, Del Castillo said she was also skeptical about the proposed co-investment models outlined in the code. The EC has offered the possibility of reduced regulation in situations where rival operators co-invest in very high-capacity networks. However, some ETNO members see the examples given in the code as too prescriptive and fear this could favour certain investment models over others in terms of regulatory treatment.

Del Castillo, and many others at the conference, were more positive on the proportionality built into the code in terms of access regulation. She said it was correct that the emphasis should be first on considering access to passive network elements, before moving on to stricter types of regulation, such as last mile access.

The parliament hopes to be ready for a vote on the ECC by the ITRE committee in June, Del Castillo said. Luukas Ilves, responsible for digital affairs at the Estonia representation to the EU, cautioned that the Council was not moving as fast as parliament. He said the aim is to have an agreement around the end of 2017.

The emphasis in Council talks is on ensuring enough flexibility for the various development models across the member states, according to Ilves. He said the Council members were “fairly content” with the Commission proposal, with only a few issues expected to raise questions in the negotiations ahead, such as duopolies and the network mapping. Ilves warned the telecom operators that if they came asking their governments for changes, for example on access regulation, they would need to have good arguments, with a concrete impact assessment of what could change as a result or whether there would be any harm to the market.

The Council would also need such arguments to support giving EU institutions a greater say on spectrum licences, Ilves said. Harmonising the methods for allocating spectrum and terms of licences is another major part of the Commission’s proposal and is something that has long proved difficult for EU states to agree. The member states’ instinct is to give as much power as possible to NRAs, which are considered politically independent – unlike the Commission, Ilves said. 

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