All for one fibre, one fibre for all, says ECTA

Countries should separate the provision of new fibre networks from their operation, executives from telcos struggling to enter new national markets told the European Commission and major banks on Tuesday.

Countries should separate the provision of new fibre networks from their operation, executives from telcos struggling to enter new national markets told the European Commission and major banks on Tuesday.

"The commission and regulators should focus on making the economics work for fibre roll-out and avoid political deals with dominant firms," said members of the European Competitive Telecommunications Association (ECTA), a lobby group for new entrant telecoms operators, internet service providers (ISPs) and other communications suppliers.

The executives, mostly CFOs and COOs, called on the commission to adopt a "utility model" in which competitive services were sold over a shared fibre. This would best limit costs and risks of investing in fibre, they said.

The proposal came as the commission looks for ways to encourage investment in networks that will meet its targets of universal access to 30Mbps broadband and for half of the population to have access to 100Mbps broadband by 2020.

The executives believe there is a business case for fibre if traffic is collected on one network. But they fear that incumbents, usually former state-owned monopoly telephone companies, whom they said were essential in any fibre roll-out strategy, lacked the financial incentive to invest. This is because they had often been able to charge higher rates for their legacy networks than it cost them to provide it.

"Incumbents have had a real windfall from their legacy assets," said ECTA chairman Tom Ruhan. "Now is the time to wean them from relying forever on the networks they inherited from the days of public ownership. The commission should make clear that the era of supernormal profits for copper is over. It is time for incumbents to work with others and invest for the future."

Ruhan called on regulators to resist political deals with incumbents in exchange for "empty promises on fibre investment". He said history had shown that relaxing competition rules does not benefit consumers or increase investment.

"Incumbents will invest in fibre on their own or in a consortium if the business case stacks up and is more profitable than sweating their old network," Ruhan said.

He said policy makers could stimulate investment through how they regulated wholesale charges; they could stimulate demand by encouraging incumbents to switch off copper, and they could promote efficient business models through financial instruments.

Digital Agenda commissioner Neelie Kroes earlier asked telco CEOs for their ideas on how to increase investment in fibre networks. They are due to report on 13 July.

Picture: flakeparadigm/flickr

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