Raw Data: Big Carriers Win an E.U. Victory on Landline Charges

Neelie Kroes, the European commissioner for telecommunications, signaled the new era July 12 when she announced that further cuts in wholesale access charges, a basic type of regulated fee that operators receive from rivals, would discourage network investment and thwart the commission’s goal of creating a superfast broadband grid by 2020.

The decision by Ms. Kroes, a Dutch policy maker who served as the European Union’s competition commissioner from 2004 to 2010, drew praise from big operators and criticism from smaller carriers, most of which lack national coverage of their own and must lease access to a former monopoly’s landlines to deliver their services to customers.

Besides giving operators more pricing power over their older copper networks, Ms. Kroes said she might permit them to ban competitors temporarily from the new, faster fiber networks that are crucial to fulfilling the commission’s broadband aspirations. The announcement was an about-face in European policy.

Ms. Kroes’s predecessor, Viviane Reding, who is now the European justice commissioner, had sued Deutsche Telekom over its decision to ban competitors from its new fiber grid, which uses a technology called V.D.S.L.

Ms. Kroes, an economist and member of the Dutch free-market People’s Party for Freedom and Democracy, has taken a softer tone with Deutsche Telekom, France Télécom, Telefónica and Telecom Italia than Ms. Reding, a Luxembourg conservative who in 2007 pushed through the first European retail price controls on mobile roaming charges.

Whether the new incentives translate into new networks is up for debate.

The European Union is far from its goal of wiring the 27-nation bloc with superfast broadband. Currently, half of E.U. residents have access to broadband with download speeds of at least 30 megabits per second. The goal by 2020 is 100 percent. Only 2 percent of E.U. households have access to the broadband speeds of 100 megabits per second. The commission’s goal is to cover half the E.U. population.

“These recommendations will encourage operators to invest, strengthen competition across all networks and allow alternative operators to compete on more than just price,” Ms. Kroes said in announcing the policy change.

Large operators, which have been lobbying for the concessions, cheered the change of direction in Brussels. “This will facilitate planning investments in next-generation networks,” said Luigi Gambardella, the chairman of the European Network Operators’ Association, the Brussels group that represents large operators.

The European Competitive Telecommunications Association, which represents smaller operators, said the decision would do the opposite. With the former monopolies allowed to extract large profits from old copper networks, carriers will have little incentive to build, they argued.

As a safeguard, Ms. Kroes said she would draft guidelines to discourage dominant operators from controlling access to landline networks to the disadvantage of rivals and consumers. But her recommendations require approval by E.U. countries and could be watered down.

The European Consumers’ Organization said it was surveying its members before responding. The same Brussels group criticized Ms. Kroes, saying she had set the initial retail price cap on mobile data roaming too high. The cap, which took effect July 1, is 70 euro cents, or 85 U.S. cents, per megabyte, a multiple of domestic rates.

For E.U. consumers, the new approach may usher in an era of rising prices, as operators ban competitors from the fastest networks and derive greater profits from old copper landlines. At least that is how telecommunications investors judged it. They bid up shares of European carriers 3.5 percent, on average, the day after the announcement.