European Commission (EC) issued report Wed. on progress of teleco...

said EC might take legal steps by year-end against countries in cases where incumbents weren’t unbundling local loop under EC regulations. Liikanen said he and Competition Comr. Mario Monti would make decisions about legal actions by Dec. 20. “Our concern is still that incumbents are continuing to develop their own ADSL services at the expense of competition,” he said. Report said telecom customers in 12 member states could choose among more than 5 operators for long distance and international calls. EC said average level of Internet penetration in EU households hit 36% in June 2001. Competition among operators is reducing overall prices, with incumbents’ long distance rates down 11% since last year and down 45% since 1998 for 3-min. call in Europe, report said. But concerns raised by report include: (1) Wide variation in unbundling requirements across member states. (2) “Relatively small” number of unbundled lines in member states -- 640,000. (3) Availability of shared access to local loop in only 4 member states. To address issue of incumbents developing their own broadband offerings at expense of competition, report said that national regulators need to “set binding deadlines with credible penalties” to increase competition in this area. “Regulators also need to act to ensure that wholesale DSL is offered to new entrants on nondiscriminatory terms,” EC said. Other regulatory “bottlenecks” singled out by report included: (1) Interconnection, including cost of terminating calls in mobile networks and provision of flat rate interconnection for calls to Internet. (2) Continuation of high prices, “lengthy delivery times and absence of cost orientation for leased lines, particularly at speeds required for broadband and e-commerce rollout.” (3) Persistence of distortions of tariffs and “price squeezes” in certain cases. (4) Disparate rollout of rights of way, which report said is particularly important issue for 3G wireless networks. “We have recently heard the argument that in the present financial climate, implementation of local loop unbundling is no longer a priority,” Liikanen said. “The Commission strongly disagrees.” Liikanen also cited open letter sent to EC last week by WorldCom, KPNQwest, Energis and others that raised concerns about level of prices of leased lines in EU and length of supply times. EC is preparing response, Liikanen said. He said report didn’t show “glaring anomalies” for EU prices compared with similar leased line prices on East Coast or West Coast of U.S. “The spread of tariffs between member states is hard to justify on the basis of costs,” he said. Liikanen also said report showed that cost of terminating calls in mobile networks in EU was 10 times as expensive as terminating calls in fixed networks. “We know that the cost drivers in mobile networks are not identical to those in fixed networks, but this difference is too wide to be credible in terms of the actual costs incurred,” he said.