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BT reprieved from broadband price controls by Euro digital chief

BT Openreach should be free to set wholesale prices for its fibre-optic network and get a break from further price cuts on copper-carried ADSL broadband services.

Euro digital networks chief Neelie Kroes has decided major telecoms operators need an incentive to invest in fibre networks that will deliver 30Mbps-plus speeds to everyone by 2020.

The old state operators like BT will still have to charge the same prices to everyone on their networks, but they won’t be forced to lower prices any more as long as they’re fair.

Neelie Kroes, VP of the EC for the DA

Kroes, who is vice-president of the European Commission for the Digital Agenda, wants everyone in the EU to have access to at least 30Mbps by 2020, with at least half at 100Mbps.

Kroes blogged: “We’re going to need those high speeds: and the ‘next generation’ fibre networks to support them. Those great new great apps and services – like the cloud, smart cities, or e-Health — won’t all be able to run properly on the copper networks that underlie today’s ADSL connections.

“But choking off those services will choke off tomorrow’s growth. We need strong, healthy companies to invest in the necessary infrastructure – and to compete to invest where it makes sense.”

The new EU policy, which will run until 2020, will be welcome to BT Openreach, which faces annual cuts on its wholesale charges to ISPs like Sky and TalkTalk until 2015.

UK communications regulator Ofcom has so far allowed BT to set its own prices for fibre access but will review the situation every three years, despite calls from ISPs for a fixed tariff from 2013.

BT’s strategy director, Sean Williams, told the House of Lords communications committee last month: “”It’s very difficult for us to make a long-term investment if the regulatory regime changes every three years.

“If there’s one thing I could ask it’s not to regulate the price over an extended period of time so that there is a balance of risk.”

The European Commission will also propose pan-European laws to encourage re-use and sharing of fibre-optic duct infrastructure by different operators, and to make sure governments release radio spectrum for 4G mobile broadband.