European Telecommunications Commissioner Viviane Reding will shortly propose a new law designed to encourage incumbent operators to invest in next-generation infrastructure, including high-speed broadband networks, she said in a speech to industry players on Wednesday.

The massive task of installing new networks must be overseen by national telecom regulators, she said. The incumbents have been lobbying for what they call a regulatory holiday, to allow them time to establish the new networks and recoup their investments.

Reding said that where a dominant company creates the new infrastructure, they should be scrutinised just as they are in any other market they dominate.

However, she added that the companies must have a financial incentive to make the necessary investment, so they should be allowed to charge a premium of around 15 percent on the price it charges other operators for access to the improved networks, she said.

"In my personal view, these should include a risk premium of around 15 percent," she said.

The European Commission will release a formal recommendation for legislation before the end of July, with the view to getting it adopted in the fall.