Commission Rules Italy Can Raise Wholesale Telecom Charges

The European Commission on Thursday backed plans by the Italian telecommunications regulator to increase wholesale access prices by 24 percent over two years for telecom providers. The news comes as the Commission prepares to issue guidelines on wholesale charges for the entire E.U. before the end of the year.

However, the Commission also expressed its concern that Italian regulator AGCOM has not consistently applied the model to calculate prices that different operators would be charged for accessing Telecom Italia's network. It has asked AGCOM to re-examine its cost calculation using data based on an efficient company managing a newly built copper network.

Demand for the Internet in the E.U. has been rising by 50 percent to 60 percent annually and the Commission wants to encourage investment in next-generation fiber optic networks. However, it appears that in Italy such investment has not been forthcoming. It has been reported that Telecom Italia's profits went up by 3 percent while investment planned for 2010-2012 is 20 percent lower than previous levels.

"It is crucial that dominant telecoms operators in all E.U. member states charge competitors a fair price for access to their copper networks. Fair access enhances competition in consumer services and provides the right investment signals," said Digital Agenda Commissioner Neelie Kroes.

Some estimates suggest that it will cost at least €300 billion (US$416 billion) to upgrade E.U. networks, but the Commission has pledged to get every European online.

Thursday's announcement is not legally binding, but AGCOM is required under E.U. telecoms rules to "take utmost account" of the Commission's comments.

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