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Monti threatens telecom incumbents 
Tuesday, May 28 2002
by Matthew Clark


Mario Monti, the European Union Competition Commissioner, said he is considering
fines for incumbent telecoms in Europe for not giving full access to local loops.


This is not the first such threat made by the European Commission. In March the
Commission said it was considering lawsuits against Germany, France, the
Netherlands, Ireland and Portugal for failing to allow entrant telecoms to access
the local loops of former monopolies such as Deutsche Telekom in Germany and
Eircom in Ireland. Access to these local loops, the so-called last mile, is
considered a necessity if smaller telecoms are to be able to offer affordable
data services.



"We must bring de facto monopolies in the local loop to an end," Monti said on
Tuesday at a conference in Brussels. "Competition law will be necessary in
complementing the regulation in force," he added.  



In his speech on Tuesday to the European Association of Cable Communications,
Monti did not single out a specific telecom operator or nation that he would look
to take action against. It is also worth noting that Eircom recently opened parts
of its network up to rivals in Ireland, namely Esat, so that the BT subsidiary
would be able to launch its own broadband service. 



Officially, the EU opened its phone markets to competition over four years ago in
a move that was supposed to give rivals full access to local loops to offer
high-speed data services. But last year, executives from entrant telecoms, such
WorldCom Inc., KPNQwest and Energis Plc, wrote an open letter to Monti urging him
to take action and open incumbent networks up to competition. 



Additionally, earlier this month the European Commission said that it is
considering a fine against Deutsche Telekom, the largest phone company in Europe,
for overcharging competitors who want local loop access. The Commission said
Deutsche Telekom was charging more to competitors than to its own retail
subscribers to use the lines.



Importantly, the move against the German telecom was the first time Brussels had
sent a direct statement of objection to an operator for failing to grant access
to local loops. "The current assessment leaves no doubt that local loop
unbundling is not developing fast enough," the Commission said in a statement at
the time. 



DT rejected the notion that it was over charging and pointed out that its prices
had been approved by Germany's telecoms regulator. 



And while the accusation the commission made against DT was the first of its
kind, the Commission has shown an increasing desire to force incumbent telecoms
to be more competitive. Earlier this year the commission claimed that France
Telecom's Internet subsidiary Wanadoo was charging prices that stifle
competition. The Commission has also accused the Dutch incumbent KPN of
anti-competitive moves.