Top European Regulator Calls for Telco Mergers

It isn't every day that one hears a major telecom regulator call for significant consolidation of providers in a market. But that is precisely what Europe's top technology regulator, Neelie Kroes,European Community commissioner for the "Digital Agenda," says is necessary in Europe.

Further mergers would create  a handful of strong cross-border telecom leaders, which can invest more in mobile and broadband networks to close the gap with the United States and Asia, Reuters reports.

To be sure, Europe's market is more fragmented than that of the United States, China, Canada or Australia, larger countries where a relative handful of leading firms already is the pattern. To the extent that communications is a scale business, larger size makes a difference.

What might not be so clear is the extent to which a wave of mergers and consolidation necessarily would provide a better climate for investments in fiber to home facilities the EC wants to see built.

At a tactical level, current calls for even-lower wholesale rates for leasing copper access facilities to competitors will create a worse climate for fiber investments.