EU Commission deregulates telecoms market for fixed line voice calls

* Retail, wholesale fixed line voice markets no longer regulated

* Consumers increasingly use mobile, Skype to make voice calls

* New high-quality broadband market will remain regulated

By Julia Fioretti

BRUSSELS, Oct 9 (Reuters) - European regulators can remove limits on the prices that leading telecoms firms such as Orange (Taiwan OTC: 4554.TWO - news) and Telecom Italia (Other OTC: TIAJF - news) can charge smaller operators for accessing their telephone networks for voice calls, the European Commission said on Thursday.

The move was hailed by the Commission as an example of how increased competition from alternative services like online service Skype could lead to a liberalisation of Europe's telecoms industry and unlock much-needed investment in superfast networks to make the continent more competitive with the United States.

"I am delighted to announce this cut in telecoms red tape. It is the result of increased competition in telecoms markets and it takes us a step closer to a real connected continent," said Neelie Kroes, the EU's outgoing Commissioner for telecoms.

Under the revised "recommendation on relevant markets", national regulators will no longer have to prove to the Commission that prices charged by telecoms operators to both retail and wholesale customers - i.e. other operators - for accessing their fixed line telephone networks need to be regulated.

Should a national authority wish to keep regulating its market, it will have to prove to the Commission that competition alone would not guarantee fair prices for consumers.

The Commission can, however, veto a national regulator's plans to regulate a market if it disagrees with its assessment.

The German regulator, for example, already signalled over the summer that it would continue regulating parts of the fixed line voice market.

The move was welcomed by industry lobbying group ETNO, whose members include Deutsche Telekom (Xetra: 555750 - news) , Telecom Italia and TeliaSonera, as they will have more freedom in charging both smaller operators for giving access to their networks and retail customers for making fixed calls.

"EU citizens and businesses demand superfast networks: moving away from unnecessary regulation is a fundamental first step if we are to unlock the massive investments needed," said ETNO's chairman Luigi Gambardella.

The increased use of mobile phones and the expansion of voice-over-IP services such as Skype, which allow people to make calls over an Internet connection, have slashed prices for fixed calls.

In 2012, revenues from fixed telephony at major telecoms companies dropped by 5 billion euros ($6.5 billion) to 59 billion euros, according to data from ETNO.

PREMATURE DEREGULATION

Smaller players, however, say opening up the wholesale market could hurt their margins since they must rent capacity on networks from incumbents to allow their customers to make fixed-line calls.

Their view, shared by the EU's group of national telecoms regulators, BEREC, and consumer groups is that such deregulation is still premature and that price hikes will be passed onto consumers.

"Ex-ante regulation has proven very efficient in opening up telecommunications markets to increased competition and therefore should be maintained, in particular considering that competition levels are not the same across different member states," said Monique Goyens from consumer group BEUC.

But the Commission said that the number of customers who are either unable or unwilling to use broadband to make calls - typically the elderly - is low.

In a move welcomed by alternative operators the Commission also redefined two broadband markets so as to recognise the importance of providing so-called high-quality broadband products, typically more advanced and reliable services used by businesses.

Smaller operators who don't own the underlying infrastructure say regulating the high-quality access market is necessary to ensure they are not shut out of providing lucrative broadband services to businesses.

For example, an operator serving a business will often need to be able to ensure a high-speed, reliable connection, which requires it to be able to access the incumbent's network for timely repairs in case of a fault. (Editing by Greg Mahlich)