September 8, 2008 / 3:28 PM / 11 years ago

EU's Reding to set out return on telco investment

BRUSSELS, Sept 8 (Reuters) - The European Commission will recommend that new high-speed broadband fibre networks must be opened to competitors for an extra 8 to 12 percent “risk premium” fee, EU sources said on Monday.

EU Telecoms Commissioner Viviane Reding wants a uniform approach among the EU’s 27 national telecoms watchdogs so a new network is available for competitors on predictable terms to boost competition and bring down prices for consumers.

She sees next-generation networks as key to offering a broader range of faster services and helping businesses create jobs, particularly in less-populated areas.

EU rules guarantee access for competitors to traditional copper networks. Reding will say in the new guidelines to national regulators that this principle should continue with next-generation fibre networks, the sources said.

The European Commission is due formally to adopt the guidelines in coming weeks, and they have already received informal approval internally.

Reding angered operators when she first floated a uniform 15 percent risk premium on top of standard access fees for operators that want to use someone else’s new fibre network.

Deutsche Telekom (DTEGn.DE) and Telefonica (TEF.MC) say that being forced to share their new networks with competitors makes investment less economic and questioned how the Commission arrived at its figure for return on investment.

The Commission’s guidelines will recommend an 8 to 12 percent risk premium band for fibre networks, the EU sources said.

When topped up with a far smaller risk premium for any copper-based parts of a new network, the total premium should not exceed 15 percent.

The European Regulators Group, made up of the 27 national telecoms watchdogs in the EU, said it was concerned by the level of prescription in calculating risk premiums.

“At present we believe that the draft recommendation is too ambitious in the degree of harmonisation of regulatory approach it attempts to promote,” the ERG said in its submission to the Commission this month obtained by Reuters.

The guidelines are non-binding on EU states but if not applied, national regulators would have to explain the reasons publicly. (Editing by Dale Hudson)

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