EC infighting could affect telcom revamp


BRUSSELS -- Plans to scrap Europe's telecom and cable monopolies could be threatened by an internal spat within the European Commission, the EU's executive authority.

EU Competition Commissioner Neelie Kroes is battling the proposals drafted by Media and Information Society Commissioner Viviane Reding -- due to be published in November -- that call for an overhaul of EU telecom rules and would allow regulators to split the services and network arms of telecom companies.

Newer cable and telecom companies, struggling to gain a foothold in markets dominated by such former state-owned telecoms monopolies as Deutsche Telecom and Spain's Telefonica, say that Reding's plans are the only way to guarantee fair competition.

However, Kroes insists the plans ultimately could tangle the media and telecom sector in red tape, hurting investment. She is backed by Europe's former monopolies, the so-called incumbents, who are campaigning against the separation of services and networks.

Incumbents say that, under the rules, they will have to finance most of the expected spread of fiber-optic cables but then be forced to grant access to new market entrants. Kroes, fresh from a stunning court victory over Microsoft, also can count on support from Guenter Verheugen, the EU Industry Commissioner.

The plans first need to be backed by the EC, then EU governments and the European Parliament. They also contain provisions that would create a new, pan-European regulatory authority comprising EU's 27 national telecom watchdogs.

In an internal commission document, Kroes' officials warn that Reding's plans "introduce more bureaucracy, increase the complexity and duration of the administrative process and will tend to result in more regulation." It adds that, 10 years removed from the EU's liberalization of electronic communications, there is already increased competition in the €289 billion-a-year ($407 billion) sector and less and less need for regulatory intervention.

The measure "is not only superfluous but also damaging," it said. "In the electronic communications sector, granting powers to a community agency to perform competition assessments can only create confusion and impinge on the commission's competences."

Verheugen's office added to the criticisms, suggesting that it will simply add bureaucracy, creating a new agency with staff of 110.