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Telecom giants push for EC action on local loop

Five of Europe's large telecommunication companies have written to the European Commissioner for Competition, Mario Monti, complaining about "methodological anti-competitive behaviour" by former telecommunication monopolies.

The five responded to calls from the European Commission earlier this week for telcos to produce hard evidence that incumbent suppliers were blocking efforts to open up to competition the local loop, the link between the subscriber and the local exchange.

The chief executive officers (CEOs) of Cable and Wireless (C&W), Arcor, Groupe Cégétel, Wind Telecomunicazioni and QS Communications, said that in spite of a one-year-old European Union law designed to boost competition, they and other new market entrants "still face entry barriers".

The five companies urged the commission to separate the local loop "structurally" from the incumbents, if they continue to prevent fair competition.

The commission is sympathetic to their concerns. In the year since the local loop law was passed, only 2% to 3% of local lines have been opened up to fair competition, according to the commission.

Last December, it accused Deutsche Telecom of squeezing its profit margins to force rivals out of the market. In May, the competition regulator accused France Télécom of predatory pricing to support its ISP (Internet service provider) subsidiary Ganado.

A Competition Commission spokeswoman said the allegations made in informal complaints pointed to a "pattern of discrimination" by incumbents across the 15 member states of the European Union.

In the first quarter of this year, an average of 6,000 phone lines a week across the EU were unbundled to allow the subscriber a choice of operator, according to commission research. During the same period, telecom incumbents established 65,000 new high-speed ADSL (Asymmetric Digital Subscriber Line) Internet connections a week. Competitors can only offer a rival ADSL service if they have access to the local loop.

A representative of the incumbent operators was unsympathetic. "It sounds like a cry of desperation by the new entrants," said Michael Bartholomew, director of the European Telecommunications Network Operators' Association, a trade body that represents the incumbent operators.

Bartholomew said the incumbents have spent €330m (£212m) establishing to accommodate competitors in local exchanges, but he added, " There are alternative, less costly ways of providing fast Internet, such as cable TV lines and fibre-optic lines. The reason why so few local telecom lines have been unbundled is that there is no market demand from competitors for local loop products."

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