Incumbent telcos leech cash from altnets, starve broadband market
Europe’s incumbent telcos are sucking all the cash out of what is meant to be a competitive market in telecommunications infrastructure, endangering the chance that the union will meet its Digital Agenda targets of 30Mbps for all and 50% of citizens using 100Mbps broadband by 2020.
Members of ECTA, the association of “challenger” or altnet telcos, have asked Digital Agenda champion Neelie Kroes to force incumbents to cut the price of renting incumbents’ copper lines.
“At the prices charged for copper, all the cash flows have gone to the incumbent, and entrants have been persistently cashflow negative. In Portugal, we understand there are now no active competitors using unbundling, whilst in Poland there is only one remaining altnet,” ECTA director Ilsa Godlovitch told Br0kenTeleph0n3.
While local loop unbundling appears to have been a disaster in Europe, the same may become true for fibre access.
Incumbents argued previously that they need high prices for copper lines to fund fibre roll-outs. ECTA told Kroes yesterday most incumbents are not installing fibre to households, but are only installing fibre to cabinets (VDSL). This cost relatively little and could undermine competition by limiting altnets’ ability to unbundle the incumbent’s access network, they told Kroes.
“Many incumbents installing VDSL have been able to retain nearly 100% market share of these (local) lines, a position which would strengthen their dominant position even further in years to come,” they said.
|Share of unbundled sub-loops and VDSL WBA lines of total number of FTTN/VDSL lines of the SMP operator (in %). Mid 2011|
|Access to the unbundled sub-loop||Wholesale broadband access to VDSL connections||Total|
|AT||0.00%||Partially no access||0.00%|
|BE||No access||No data available||1.00%|
|DE||No data available||No data available||8.10%|
|DK||No data available||No data available||No data available|
|ES||0.00%||No data available||44.70%|
|FR||No FTTN/VDSL roll-out||No FTTN/VDSL roll-out||No FTTN/VDSL roll-out|
|HU||0.00%||No data available||No data available|
|IE||No access||No access||0.00%|
|IT||No FTTN/VDSL roll-out||No FTTN/VDSL roll-out||No FTTN/VDSL roll-out|
|PL||0.00%||No data available||No data available|
|PT||0.00%||No data available||No data available|
|SE||0.00%||No data available||No data available|
|UK||<1%||Partially no access||No data available|
|Source: WiK Consult|
ECTA chairman Tom Ruhan said, “The liberalisation experiment which Europe began in the late 1990s is close to failing.”
Regulations do not help even leading telecoms competitors. Without change Europe might go back to monopolies and duopolies for broadband services within five years. “This will not deliver more investment in broadband and will have a negative impact on the services and prices consumers receive,” he said.
The European Commission is redeveloping its ideas on wholesale charges and competition in the telecoms sector. Incumbents have challenged proposals that would compel them to invest in fibre to homes in exchange for retaining higher charges on their legacy copper infrastructure.
CEOs of altnets, which according to the FTTH Council, currently operate 55% of Europe’s FTTH lines, argue that incumbents have been receiving subsidies for years, and have drained competitors of capital, yet have failed to modernise their networks.
ECTA said these views did not represent those of ECTA members who are also incumbents, such as BT and Danish telco TDC. It is unlikely this difference can or will be resolved.
All ECTA members generally support the principle of open wholesale access to incumbents’ networks at home and abroad.
Now, if they can just get beyond their cosy gentlemen’s agreement not to rock the boat in each other’s home markets, Kroes might see her dream fulfilled.