The European Commission’s two leading commissioners, Viviane Reding (Telecoms) and Neelie Kroes (Competition) do not agree on functional separation as a driver of more competition in the market for next generation communications services, according to the Financial Times.
The European Commission’s two leading commissioners, Viviane Reding (Telecoms) and Neelie Kroes (Competition) do not agree on functional separation as a driver of more competition in the market for next generation communications services, according to the Financial Times. Regulators in France and Italy are already leaning in the direction of functional separation and I’m afraid Kroes’s staff is listening too much to “old skool” arguments.
While Reding cites to the example in the UK, where BT split its services and infrastructure businesses, with the result that there is more broadband competition in that country, Kroes believes that functional separation discourages investment.
I am not surprised by Neelie Kroes’s views on this but she does not ask the right questions: functional separation discourages investment — but by whom? If she’s looking only at telcos and cable companies, well of course, they want to own the customer, control things from end to end. But if she looks at the total investments made by service companies, software and content developers, well, decoupling infrastructure from services is a bonanza for everyone. The telecom and cable firms might complain but BT has shown that one can decouple and thrive.
The Amsterdam FTTH experience
Neelie Kroes made it very difficult for Amsterdam’s FTTH network, listening too much to the local telecom and cable incumbents. In the end the network deployment has gone ahead but not without legal entanglements. She goes up against behemoths like Microsoft who want to control the customer and the device, but does not do the same for large enterprises that want to control communications infrastrucutre.
She should ask why in the Netherlands (where she comes from), a densely populated country, we don’t have FTTH as vastly deployed as say, in Sweden. People here spend a lot of money on broadband and communications services.
An EU super regulator like the FCC?
Kroes’s second point – that the EU should not create a super regulator like the FCC, which is what Reding is pushing for – has something going for it.
One of the good things about the way telecom regulators are structured today – separate regulators per country – is that it is difficult for the big operators to lobby in one place. They have to go country by country.
If you have a forward thinking Commissioner like Reding, it’s nice to have a super European FCC led by her, but if you have a Kevin Martin sitting there, how unfortunate.
The way it is structured today, even if you have a European Chairman Martin, as long as there are country regulators like ARCEP (France) or Ofcom (UK) who are more forward thinking and understand functional separation, they can get it done in their own countries, show good results and the other countries will follow, regardless of what a Martin says. Eventually the European Chairman Martin has to cave in and acknowledge that it works. Since the EU now has 25 countries, that’s 25 chances to show things working well by doing them differently from what a Martin wants. With a super regulator FCC style, all innovation is squashed, if the regulator happens to be headed by a Martin; but with diffused regulation, you get more chances.
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