- European industry ministers yesterday passed a law that, effective January 1, liberalises local telephone networks, paving the way for cheaper, quicker internet access for businesses and, to a lesser extent, homes in the European Union.
The local loop, or final mile of phone line to homes and offices is the last remaining segment of the European telecoms industry to be liberalised.
The regulation aims to intensify competition and stimulate technological innovation on the local-access market, through the setting of harmonised conditions for unbundled access to the local loop, the commission says in a statement. This will enable the rollout of broadband services and low-cost internet access to business and residential users simultaneously across the European market, the statement says.
The new law is great news for small and medium-sized companies, but it won't revolutionise the residential market, says Simon Hampton, public affairs director at AOL Europe.
"Markets that have already unbundled the local loop have seen a growth in competition aimed at the small business users, but residential users haven't seen the same benefits," Hampton says.
AOL (America Online) views flat-rate, capacity-based charging as the most important initiative regulators should promote to boost online access from homes. The UK has adopted "FRIACO" -- flat-rate internet access call origination. FRIACO has been in place in the UK since June. Germany and the Netherlands look set to follow suit.
"A number of companies (including AOL and British Telecommunications) are offering unmetered access in the UK now," says David Orr, spokesman for British Telecommunications, the former monopoly. "Residential access to the internet here is the cheapest in Europe," he says.
"The EU has decided to focus on small and medium-size enterprises. It hasn't yet embraced the real priority for residential internet use," Hampton says.
But the commission insists this law will benefit households. "Our studies show there is a correlation between access costs and internet uptake in homes," says Per Haugaard, spokesman for the commission, the EU's executive body. "The regulation will bring down local phone charges, which will we think will stimulate dial-up to the internet."
About 30% of households in the EU are connected to the internet.
"Hopefully, the local-loop regulation will go a long way in getting the remaining 70% of households online," Haugaard says.
BT welcomed the new regulation. "It will open us up to competition in our home market, but it will also give our overseas activities access to other European countries' local markets," he says.
"The UK and BT are well set to meet the requirements of this new law," Orr says.
Six of the 15 countries in the EU have already opened up this sector of their telecoms market. The nine remaining countries, including the UK, France and Spain have says they will have followed suit by January 1, 2001, the date the new Europe-wide law takes effect.
The regulation was passed at record speed for the EU institutions, the commission says. It was proposed by heads of state at a summit in Lisbon in March.
"This proves (the EU) is able to act at internet speed when necessary," says Erkki Liikanen, commissioner for enterprise and the information society says.