The big split: Reding eyes cable change

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BRUSSELS -- Wide-ranging telecoms reforms are set to blow apart cable monopolies across Europe when they are unveiled by EU Information Society and Media Commissioner Viviane Reding in November.

Reding on Thursday said that her planned reforms could force telecoms and cable giants to separate their networks from their services such as broadband and cable.

The commissioner has been frustrated by the way emerging broadband and cable companies are blocked across the EU as many former state-owned monopolies -- which own the networks -- will not let rivals use the infrastructure.

Reding wants to split the service from the physical transmission networks to give competitors equal access to networks through a "functional separation."

"We need a striving, competitive market, and an industry that makes money," Reding said. "We will propose functional separation as a possible remedy in the regulatory toolbox."

The plans are due to be formally unveiled on Nov. 13 as part of major telecoms reform. Having recently seen her audiovisual reforms agreed, and having forced mobile operators to slash roaming fees, Reding was bullish in the face of criticism from EU members with powerful one-time monopolies.

"If a politician only does what everyone wants, then they will never act," she said. "Companies that do not shy from competition have nothing to fear."

The measure would be available to national regulatory authorities, many of which have few resources at their disposal to open up their cable and telecoms markets.

"National telecom regulators must be well equipped to ensure the objectives of the EU telecom rules: effective competition on crucial markets, such as broadband access and tangible consumer benefits," Reding said.

The separation would allow telecoms groups to retain their own networks, but mean that the companies would have to create separate management structures to placate regulators. The two parts of the company would then have to deal with each other on the same terms and conditions as they deal with third parties.

The separate parts would normally not only have separate accounting records, but also separate management, offices, and facilities. However, Reding stopped short of proposing "structural separation," which would split the company into two separate parts.

Reding upheld the U.K. as a model example of how services can be split from infrastructure -- and how it spurs investment in the telecoms and media sector.

In the case of BT, the Openreach division was created -- and overseen by U.K. telecoms watchdog Ofcom -- to ensure that all rival operators have equal access to BT's local network.

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