Five of Europe's large telcos have written to the European Commissioner for Competition, Mario Monti, complaining about "methodological anti-competitive behaviour" by former telco monopolies in the market for local services in Europe.
Complaints roll into EU about anti-competitive behaviour
The CEOs of Cable & Wireless in the UK; German firm Arcor; the French Groupe Cégétel; Italian Wind; and QS Communications in the Netherlands, said that in spite of a year-old EU law designed to open up the local loop to competition (the local loop is the link between the subscriber and the local exchange), they and other new entrants to the market "still face entry barriers".
The five companies urged the Commission to separate the local loop "structurally" from the incumbents if they continue to prevent fair competition.
This move follows a request from Monti that telcos should submit their complaints about the dominant companies in their countries as the Commission is concerned about anti-competitive practices in this market.
The Commission believes that unbundling the local loop is essential for the rollout of high-speed, broadband internet access — a key political aim in the EU.
Monti said that the Commission is aware of alleged discriminatory practices by existing telcos beyond the two cases regarding Deutsche Telecom and France Télécom they are already examining, and hinted that further antitrust cases may soon be opened.
Competition Commission spokeswoman Amelia Torres said the allegations made in informal complaints pointed to a "pattern of discrimination" by operators across the 15 member states of the EU.
The discriminatory behaviour is not necessarily to do with pricing, but is more about the conditions facing new entrants, such as the ability to install their equipment in incumbents' local exchanges, she said.
Some incumbents are alleged to have been causing "unjustified delays" in installing equipment and to be providing inferior services to new entrants, she said.
The Commission said that in the year since the local loop law was passed, only around two to three percent of local lines have been opened up to fair competition. In the first quarter of this year an average of 6,000 phone lines a week were unbundled across the EU to allow the subscriber a choice of operator, according to new research by the Commission.
During the same period telecom incumbents established 65,000 new high-speed ADSL (asymmetric digital subscriber line) internet connections a week. Competitors can only offer a rival ADSL service if they have access to the local loop.
However the EU competition regulator is unlikely to consider the call for a breakup of the incumbent operators, said a source familiar with the Commission's thinking. "There is no doubt that the new entrants are having it tough right now but is it realistic to ask for the incumbents to be broken up? Such action would be disproportionate," she said.
A representative of the incumbent operators was unsympathetic.
"It sounds like a cry of desperation by the new entrants," said Michael Bartholomew, a director of Etno (European Telecommunications Network Operators Association), a trade body which represents the incumbent operators.
The expectations for local loop unbundling are too great, he said. "It is not the magic wand that will create broadband internet access in Europe. There are alternative, less costly ways of providing fast internet, such as cable TV lines and fibre-optic lines. The reason why so few local telephone lines have been unbundled is that there is no market demand from competitors for local loop products," he said.