EU Lawmaker Seeks to Kill Telecoms Unbundling Plan

BRUSSELS, May 6 (Reuters) – A European Commission proposalto boost competition by forcing telecom companies to run theirnetworks and commercial arms separately should be scrapped, atop European Union lawmaker said on Tuesday.

EU Telecoms Commissioner Viviane Reding has proposed"functional separation" when all other means of increasingcompetition have failed, but some EU states such as Germanyremain uneasy.

"I feel we do not need functional separation," said AngelikaNiebler, the German centre-right lawmaker who chairs theEuropean Parliament’s industry committee.

The assembly and EU governments have joint say on Reding’sproposal, part of a package to update the bloc’s telecom rules.

Niebler said she would submit amendments to deletefunctional separation from Reding’s draft package.

Functional separation has already been introduced inBritain, where former state-owned monopoly BT (BT.L: Quote, Profile, Research) runs itsnetwork and services as separate units.

Big operators elsewhere, such as Germany’s Deutsche Telekom(DTEGn.DE: Quote, Profile, Research), France Telecom (FTE.PA: Quote, Profile, Research) and Spain’s Telefonica(TEF.MC: Quote, Profile, Research), say functional separation would inhibit investment bycreating legal uncertainty if its application was disputed.

British telecoms regulator Ofcom has described this argumentas a myth, saying BT was investing 10 billion pounds ($19.6billion) in new networks.

Catherine Trautmann, a French socialist steering the measurethrough parliament, said functional separation should remain anoption for national regulators to use as a last resort but onlyafter thorough analysis.

"I agree it should be optional. It will be applied in somecountries. In some countries perhaps it should be applied,"Trautmann said.

Any application should be justified to ensure it promotedinvestment and any disputes resolved within two months to avoidlegal uncertainties, Trautmann added.

Several members from across the political divide backed thisapproach, and only Niebler spoke in favour of scrapping theproposal.

"We should introduce it but only when absolutely necessary.We need very clear criteria when this is needed," said RomanaJordan Cizelj, a Slovenian centre-right lawmaker.

Herbert Reul, a centre-right lawmaker from Germany, saidReding’s proposal may need adjusting to ensure more legalcertainty for companies and make investments more secure.

"We have said we need clear criteria when it comes tofunctional unbundling," added Silvia Adriana Ticau, a Romaniansocialist.

Fabio Colosanti, Reding’s most senior civil servant,welcomed Trautmann’s approach to functional separation.(Editing by Dale Hudson)