Telcos advise EU regulators on fiber networks rollout

The Commission is warned to avoid political deals with legacy operators

European regulators should focus on making the economics work for fiber rollout and avoid political deals with dominant firms, telecommunications companies said Wednesday.

Chief financial and operating officers from leading telcos met with European Commission representatives on Wednesday to discuss ways to promote investment in ultra-fast fiber networks. Such investment is essential if the Commission is to deliver on its target of half of consumers using 100Mbit-per-second connections by 2020.

Business leaders at the meeting said that a utility model in which a single fiber is installed and is open to competition is the best way to limit the costs and risks of investing in fiber. Several countries have experimented with models in which telcos co-invest with local authorities or specialists in infrastructure.

While there was agreement that there is a good business case for fiber if traffic is collected on one network, there was concern that incumbents lack the financial incentive to invest because in many cases they have been able to charge much higher rates for their legacy networks than it cost them to provide the service.

"Incumbents have had a real windfall from their legacy assets, but 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 super-normal profits for copper is over -- it is time for incumbents to work with others and invest for the future," said Tom Ruhan, chairman of the European Competitive Telecommunications Association (ECTA).

Companies also agreed that once an open fiber network is in place, customers should be migrated as quickly as possible to limit costs and ensure consumers benefit immediately from the additional capacity fiber has available.

"Incumbents will invest in fiber on their own or in a consortium if the business case stacks up and is more profitable than sweating their old network. Policymakers can stimulate investment through their approach to regulating wholesale charges, they can encourage consumers to take up fiber through strategies to switch off copper and they can promote efficient business models through financial instruments," said Ruhan.

ECTA represents the regulatory and commercial interests of new-entrant telecom operators, ISPs and suppliers of products and services to the communications industry.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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