March 14, 2012 / 10:46 AM / 7 years ago

European antitrust regulator questions telecoms

* Questionnaire sent to five companies, trade assoc

* Relates to meetings held among top operators since 2010

* Not yet an official antitrust probe

By Leila Abboud and Claire Davenport

PARIS, March 14 (Reuters) - The European competition watchdog is questioning five of Europe’s biggest telecoms companies to see if a series of meetings they held since 2010 on strategy and technical co-operation constituted collusion.

A questionnaire, which represents an information-gathering process and is not an official probe, has been sent to Vodafone , France Telecom, Telecom Italia, Deutsche Telekom, and Telefonica, as well as to the telecom operators’ trade group the GSMA.

The move is a sign of how relations between Brussels and Europe’s telecom incumbents are at a low ebb as fights over reducing roaming charges and how to finance costly network buildouts come to a head.

The inquiry also comes as operators are struggling to develop new services and technologies ranging from mobile advertising to new messaging technologies to counter competing and often free services from Apple and Google. These new efforts are leading big operators to increasingly seek to work together, and as a result have now attracted attention from competition watchdogs.

The initiative to hold meetings among the big five telecom operators was started by France Telecom CEO Stephane Richard i late 2010, and at that time he cast it as a way for the operators to discuss the major strategic and policy issues facing them.

For example, Richard has said the group discussed issues such as standardisation of technologies, whether they could work together a common ‘app store’ to sell games and software for mobiles to better compete with Google and Apple, and how to get these technology giants to contribute to the cost of building out networks.

The most recent meeting of the group was at the Mobile World Congress in Barcelona in late February, and its most recent initiative focuses on developing so-called Rich Communications Suite (RCS) that can enable video and picture chats on mobiles.

Antoine Colombani, a spokesman for Europe’s competition regulator confirmed that the questionnaire had been sent, but said the commission has not opened formal proceedings.

“The requests for information relate to the manner in which standardisation for future services in the mobile communications area is taking place,” he said, “These fact-finding steps do not mean that we have competition concerns at this stage, nor do they prejudge the follow-up.”

A spokesman for commissioner Neelie Kroes who oversees the telecom sector declined to comment on Wednesday.

Craig Pouncey, managing partner at law firm Herbert Smith in Brussels, said competition authorities can issue such questions without it necessarily leading to an official investigation.

“Such a questionnaire is not an infrequent occurrence,” Pouncey said.

Industry sources expressed surprise about the EU questionnaire, saying the meetings among the top operators were done in a transparent way with precautions taken to address anti-trust concerns. Lawyers were always present and a written account of each meeting was sent to regulators in Brussels at the time, the sources said.

The move come as European regulators are imposing steep cuts to fees operators can charge their customers traveling abroad and ratcheting down mobile termination fees more quickly than expected, both moves that directly hit the operators’ profits.

A debate has also been raging behind the scenes since summer to whether Brussels will reduce the amount telecom incumbents can rent out their old fixed-line copper networks as way to spur the groups to invest in new high-speed fibre broadband networks.

The war of words escalated as telecoms executives at the recent mobile conference in Barcelona accused Europe’s regulators of sapping the industry of much needed capital just when it faces huge investments in new, faster, fixed and mobile networks.

Vodafone Chief Executive Vittorio Colao hit out at the European Commission’s “auto-pilot regulation mentality” that risked crippling the region’s economic growth, while France Telecom’s Richard said the priority should be on investment not regulation.

In response, EU Commissioner Neelie Kroes, who has steered much of the telecoms regulation, hit back by saying she sided with consumers and “did not respond well to threats.”

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