Resignations hit telecoms reform plans

Date: 25/03/1999

By Peter Chapman

British Telecom and AT&T are set to win the European Commission's blessing to merge their international networks.

Clearance of the venture, which is expected early next month, will be the first test of Acting Competition Commissioner Karel van Miert's promise that it would be “business as usual” for the institution's day-to-day anti-trust activities.

But as he prepares to approve the latest telecoms mega-merger, which will create a company with estimated annual sales of €9 billion, sources admit that the mass resignation of the College of Commissioners could hamper moves to boost competition in the telecoms market.

The institution is currently reviewing the working of the EU's regulatory package since the sector was liberalised last year. This includes an investigation into the workings of the 'open network provision' rules designed to force the former monopolies to interconnect their networks with new rivals at a fair rate.

But other telecom reforms targeting competition policy are likely to be a casualty of the moratorium on new proposals from the Commission.

Efforts to finalise a directive setting the conditions for the legal separation of cable TV networks from former monopoly operators will be shelved until a new Commission team has been appointed. The directive was intended to bring extra competition to local markets via the cable networks, which can be adapted to carry Internet and voice services.

Sources say plans for an April 'sector review' of areas where competition may still be lacking could also be hit. This includes probes into the high price of leased lines, the low levels of competition in local markets and high charges for using mobile phones abroad.

” All of the timing of these initiatives is now uncertain,” said one EU source. “But if you don't act, then the market will suffer - that is the logical conclusion.”

Van Miert's plans to clear the tie-up between AT&T and BT are, however, likely to go ahead as planned. He hinted last month that the merger, which will give the two former monopolies massive economies of scale on their services to corporate clients, would secure clearance - with conditions attached.

Much attention has focused on AT&T's EU-based activities for signs of overlaps with BT. These include its ACC calling cards unit and its TCG venture, which serves small and medium-sized companies in the UK, Canada and Germany.

Analysts predict that AT&T will also be forced to spin off its 22&percent; stake in UK local cable network provider Telewest.

Telewest, which is a direct competitor to BT in local voice telephony markets, entered the AT&T fold when the US giant acquired US cable network operator TCI last year.