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COMPETITION REIGNITES BROADBAND

Eight EU countries had broadband penetration levels above 20% and Northern Europe led the table back in 2006 now in 2010 has this improved

with the Netherlands having the highest penetration at 33%, followed by Denmark, Finland and Sweden. And, for the first time, average penetration in the EU15 countries was, at 19.9%, comparable with the average penetration of 19.6% in the US and 20.2% in Japan (OECD Broadband Penetration, December 2006).

Success in many of the high ranking countries in Europe can be attributed partly to local loop unbundling, the process whereby competitors rent the last mile from the national telecoms incumbent and offer their own broadband services to consumers. 

The impact had been particularly pronounced in the UK, where the introduction of functional separation in January 2006 had contributed to a quadrupling in the number of unbundled lines within a year and an explosion of triple play offers including telephone services and TV. By contrast, middle and low ranking broadband countries typically had minimal or no unbundling.

Innocenzo Genna, Chairman of ECTA, said, “Europe’s broadband leaders have shown that unbundling is very positive for consumers, and is an efficient way to encourage competition by allowing competitors to share the last mile, which otherwise is usually prohibitively expensive to duplicate.”

However, despite EU-wide rules applicable to unbundling since 2001, success stories were still in the minority. Seventeen of the 25 countries examined still had very low levels of unbundling.  Genna added, “This is a missed opportunity. ECTA is hoping that governments will use the opportunity of the forthcoming Review of the EU Telecoms Framework, to boost the power of regulators to ensure that measures like unbundling are enforced effectively and in a future-proof way.”

The pro-competition body agreed that functional separation should be available for regulators to use as a remedial action where other regulatory measures are insufficient to tackle the incumbents’ entrenched market power. Functional separation is a process whereby the incumbent creates a separate unit for its bottleneck assets, including unbundled loops, and helps ensure that essential pro-competitive rules are adhered to.

Functional separation had been successfully introduced in the UK, and is actively being considered in Italy and Sweden. However, most European regulators currently lacked the power to mandate it.