EU asks Italy to think again on proposed cut in broadband prices

MILAN, Dec 12 (Reuters) - The European Commission has asked Italy's telecoms regulator AGCOM to withdraw or amend proposed cuts to the wholesale broadband prices that Telecom Italia (MDD: TIT.MDD - news) charges its rivals to access its network, saying the move would discourage investment.

In July AGCOM tentatively approved lower fees for rivals, a move that the former phone monopoly said would reduce its annual income by 110 million euros ($152 million).

"AGCOM has set these fees on the basis of inappropriate data and the way they are calculated has the potential to harm broadband investment incentives for both Telecom Italia and other operators," the Commission said in a statement.

The statement confirms a Reuters report last week.

Previously the Commission had said it was concerned that AGCOM had set prices based on a market review that was not up to date and that access prices for broadband services should reflect the most recent information.

Europe's top telecoms industry regulator Neelie Kroes is trying to align divergent national regulations to foster a single market in the European Union for telecoms and wants to encourage more investment in building high-speed networks across the bloc, but her efforts are opposed by some national regulators who do not want to hand over influence to Brussels.

Telecom Italia's rivals, Swisscom (Other OTC: SCMWY - news) 's Fastweb, Vodafone and Vimpelcom (NasdaqGS: VIP - news) 's Wind had welcomed the proposed cut in wholesale tariffs, saying it would open up a market still dominated by the owner of the country's largest fixed-line network.

On Wednesday AGCOM commissioner Antonio Preto said the national regulator had the last say on tariff decisions and could decide whether to comply or not with the EU recommendation.

If Italy decides to disregard it, however, the EU could open an enforcement action.