EC: Unbundling Will Bring Telecom Prices Down

BRUSSELS (04/26/2000) - A European Commission plan to end the stranglehold that former telecommunications monopolies hold over the local loop will lead to major changes in telecom costs and services to consumers, European Information Society Commissioner Erkki Liikanen told a press conference today.

"During the next six months, the situation for consumers (in the European Union) will change dramatically, because competition will grow rapidly," the Commissioner said.

The Commission recommendation urges EU countries to require their former telecom monopolies to end their exclusive control over the local loop by Dec.

31, 2000. The local loop refers to the last segment of a communications network that brings a voice, data or video transmission from the central office switch to the individual home or office.

Under the terms of the recommendation, EU countries must ensure full unbundled access to the copper local loop of incumbents under "transparent, cost-oriented and non-discriminatory conditions," according to Liikanen. This will give new entrants access to the local loop to deploy all types of advanced services to users including new broad band multimedia services, according to the Commission.

By opening the local loop to competition, the recommendation is designed to give smaller service providers access to the end-user consumer, which will rapidly lead to increased competition, a process that will bring prices down to the level necessary to accelerate the take-up of the Internet and electronic commerce, according to the Commission.

Unbundling will be particularly useful in facilitating the spread of DSL (Digital Subscriber Line) technology, which will allow high-speed Internet transmissions over the traditional copper wire. "Once DSL is widely available, the costs will plummet," a Commission official who asked not to be identified told IDG today.

During the press conference, Competition Commissioner Mario Monti agreed with Liikanen's belief that major price reductions can be expected. He pointed out that, following the Commission's decision last year to investigate a complaint filed by MCIWorldCom Inc. about the abusive pricing of mobile operators, mobile costs plummeted by 50 percent.

"My impression is that this demonstrates that once we put in motion a specific behavior, the impact is rapid," Monti said.

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