Telecoms CEOs call for pro-investment reforms from the EU

By Julia Fioretti

BRUSSELS, May 31 (Reuters) - The CEOs of some of Europe's largest telecoms companies swooped in on Brussels on Tuesday to press the EU executive to do more to promote investment in new networks as part of a forthcoming review of telecoms rules.

The heads of KPN (Amsterdam: KPN.AS - news) , Deutsche Telekom (LSE: 0MPH.L - news) , Proximus (LSE: 0DPU.L - news) , BT Group (LSE: BT-A.L - news) , Telekom Austria (LSE: 0NKL.L - news) and Telenor (LSE: 0G8C.L - news) met three European commissioners to discuss the need for investment in superfast networks to meet rising demand for data services.

The European Commission is reviewing the 28-member bloc's current set of 15-year old telecoms rules with the aim of encouraging operators to increase coverage of fibre-optic cable that can deliver speeds of up to 1 gigabit per second.

The six CEOs met with Competition Commissioner Margrethe Vestager, Commission Vice-President Jyrki Katainen and Guenther Oettinger, the digital economy commissioner.

"Telecom CEOs will vouch for a strong pro-innovation and pro-investment approach to regulation," they said in a joint statement with telecoms lobby group ETNO.

"Such an approach is needed to respond to European citizens' quest for ultrafast connectivity and innovative services."

The Commission faces the difficult task of balancing the demands of former state-owned monopolies that control most of the networks with those of operators who do not own their own infrastructure and therefore rely on access to those networks to serve their customers.

Current rules, the original purpose of which was to break the hold of the former monopolies, force operators with "significant market power" to give competitors access to their networks at regulated prices.

Companies such as Deutsche Telekom and KPN have long argued that such rules are a disincentive for investment since they lower the return on capital.

"That is the fundamental challenge the Commission faces," said Rob Bratby, a partner who specialises in the telecoms sector at law firm Olswang.

Bratby said that investors want certainty that regulators are not going to interfere, but such a laissez faire approach would cause consternation among competitors.

Challengers such as Vodafone and TalkTalk, argue that it is competition that drives investment and keeps prices affordable.

Loosening obligations on incumbent network operators to open up their infrastructure or give them more leeway to set access prices would be detrimental to such competition, they say.

(Editing by David Goodman)