Telecom firms given IT warning

Date: 09/10/1997

By Chris Johnstone

TOP Commission officials are warning Europe's dominant telephone companies against endangering competition by expanding into some Internet activities.

In a two-part letter, the head of the European Commission's Directorate-General for competition (DGIV) has warned firms that they should steer clear of becoming involved in the allocation of key national Internet address areas, known as national domains. It adds that their involvement in such a money-making activity would present a clear risk to competition, by boosting their dominant position.

The warning from Director-General Alexander Schaub follows demands from some of the biggest telecoms companies, which are expanding rapidly into the Internet market, for clarification on the issue of becoming 'registrars' - responsible for handing out addresses.

The Commission's stance is likely to damage the ambitions of some of the biggest players in the Internet market such as Deutsche Telekom.

The Commission spells out that it believes the allocation of Internet names should follow a similar pattern to that of national telephone numbers. Existing rules ban telephone companies from taking part in this activity, reserving it instead for an independent regulator.

The Commission initiative has also been sparked by international moves to shake up the system for sharing out Internet domains by widening the number of companies involved in the lucrative name allocation business. The shake-up, agreed at an international conference in Geneva in May, is also aimed at overcoming a shortage of some of the most popular Internet domains.

So-called domains are organised on international, national, or sectoral lines with the only international area for commercial purposes - the .COM address - already highly congested.

However, competition officials have still to judge whether companies' participation in the share-out of much broader Internet area addresses which have an international appeal (generic top-level domains) poses competition problems.

Commission officials have therefore demanded that telecoms companies reply to a list of questions asking for details of the most important national and generic domain names registered to them, information on what Internet services are provided at the moment and on each firm's strategy in the sector.

Telecoms companies have also been advised on how they could cut the chances of competition procedures against them if they stay or become involved in the market for generic top-level domains.

That advice includes dividing the Internet-names business from the rest of the company by giving it separate accounts, operating the business as a commercial concern, and allocating names without discrimination and without links with other services.