Large telecommunications companies must stop using copper-network pricing as a barrier to deploying fiber networks, or Europe will not meet its broadband targets, said the digital agenda commissioner on Monday.
Vice President Neelie Kroes made the comments as she announced a public consultation on the pricing of wholesale access to broadband networks. "We need next generation networks to deliver the bandwidth-hungry services and applications that will drive future growth. No one disputes that need. But there is no agreement on how to foster the deployment of such networks. Unfortunately, we see that, for the time being, telecom companies are hesitant to commit significant funds to fiber roll-out," she said.
The reason for such hesitancy is clear. Incumbent operators can generate huge returns from legacy copper networks, reducing the incentive to invest in fiber. But Kroes says that a gradual switch-off of copper could reduce the cost to such a degree that "new fiber investments would break even in less than 10 years."
Former state-owned telecoms operators, such as Deutsche Telekom, Telefonica, France Telecom and Telecom Italia inherited copper-based networks when they were privatized in the 1990s. Many of these charge for wholesale access to their networks at a rate equivalent to the cost of building the network today. However, such a situation would never occur.
The new consultation, which will be followed in a few months by a recommendation, will determine whether wholesale access charges are unduly inflated, making the operators' outdated copper-wire networks so profitable that they are less inclined to invest in new high-speed broadband networks.
The European Commission has set a goal of connecting all European Union residents to broadband service with download speeds of at least 30 megabits bps (bits per second), and half of E.U. residents with service at 100 megabits bps a second by 2020. The Commission has taken its new stance because at the current pace of investment, those targets will not be reached.