Major Reform of EU Telecom?

In a major revamp of its rules on wholesale access to optical loops, the European Commission executive branch has decided that, where competition is weak, incumbents must create separate “wholesale access” companies that sell services to all service providers.

Known as “structural separation,” the model resembles that current in the U.K. market, where BT and all other wireline providers buy access services from a wholesale OpenReach company.

The plan still must be ratified by member nations, and opposition is expected. National regulators are happy to be given more powers, but do not want the EU executive to be allowed to overrule their decisions and insist that they do not need an EU watchdog.

The European Commission says the new rules could be applied by the end of 2009, but observers expect EU states such as Germany, France and Spain to water them down.

If ratified, however, the decision essentially means competitors will have wholesale access to incumbent fiber-to-home facilities. The decision stands in stark contrast to rules in the U.S. market, where cable and telco providers are not required to lease such facilities to competitors.