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IP: European locals thrown for a loop

From: David Farber <dave () farber net>
Date: Thu, 09 Aug 2001 06:18:06 -0400

From: "Janos Gereben" <janos451 () earthlink net>
Subject: European locals thrown for a  loop
Date: Wed, 8 Aug 2001 14:47:44 -0700
MIME-Version: 1.0

      EU prepares to take action on local loop fiasco
      Dawn Hayes - www.the451.com

      London - The European Commission's competition directorate is
preparing to take legal action against member states that have failed
to inject sufficient competition into dominant phone companies' local
loop networks. Topping that list is the UK, where British Telecom has
stalled competitors' plans to provide DSL service by hindering their
access to its local exchanges, along with charging them high prices
and claiming it has encountered technical hitches.

      The lion's share of the 40 to 50 contenders that planned to
compete in providing DSL services in the UK have either dropped out,
like WorldCom, or gone bust, like OnCue Communications did last month.
Of the handful that remain - Colt, Easynet, Energis and wholesale
operator Bulldog - at least one is drawing up plans to take the issue
to the European Commission, since the UK telecom regulator Oftel has
failed to resolve the problem. In the meantime, BT's wholesale DSL
charges are crippling companies like Video Networks, which buys DSL
capacity to provide video-on-demand services to residential customers.

      But the UK is by no means the only offender. According to the
European Competitive Telecommunications Association, incumbent phone
companies in Austria, Belgium, France, Germany, Ireland, Italy,
Portugal, Spain and Sweden still retain control of almost all DSL
lines in their domestic markets, as incumbents seek to get first-mover
advantage over competitors. Denmark, Norway and Finland, and to some
extent the Netherlands, have made progress in giving competitors
access to incumbents' local exchanges.

      That process is crucial for competitors, which need to colocate
their equipment in order to provide alternative services to customers.
DSL technology, which divides existing copper wires into high and low
frequencies so that they can carry data, voice and video, is expected
to be an important step toward creating a more efficient EU economy -
as well as new services for residential customers. BT claims to have
installed about 70,000 DSL lines, but its competitors claim the real
figure is 169 lines.

      Although Oftel is being criticized for doing too little, too
late, the regulator is expected to rule this month that BT must reduce
the £6.17 ($8.64) per-month fee it had proposed to charge competitors
for shared DSL line access. Bulldog, the sole company that plans to
provide wholesale DSL services to residential customers in the UK, has
lobbied Oftel to cut that price by 70%. According to Vincent
Pickering, general counsel for Bulldog, BT's charges are the result of
BT's own inefficiency.

      BT's prices for shared-line access are the highest in Europe, a
reversal of the situation only five or six years ago when the UK led
the charge on telecommunications deregulation and lower prices.
Wednesday was the closing day for comments to Oftel on the subject,
and a decision on pricing from Oftel is expected to come as soon as
next week.

      The European Commission does not have jurisdiction over prices
set by dominant carriers in individual EU member states, but where
government agencies fail to implement EU legislation, its council of
ministers can call for the European Parliament to force member states
to comply with a law introduced on January 1 that mandates competition
in the local loop.

      The Commission has used its teeth before, notably in a landmark
case in the early 1990s when it took the French government to court
over its refusal to implement a directive that mandated competition in
the sale of telecom terminal equipment. The European Commission won.
Officials from the Commission's telecom directorate, DG13, and its
competition directorate, DG4, have indicated they are prepared to take
action.

      In the UK, a move by EC authorities may be overtaken by
commercial imperatives if reports that Babcock & Brown is seeking to
buy BT's local network and that German bank WestLB is planning to buy
its entire network infrastructure are correct.




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IP: European locals thrown for a loop David Farber (Aug 09)