Europe acts to nip cable 'abuses'

MATHEW HORSMAN

The European Commission has launched an investigation into plans by three telecoms operators, including Ireland's Telecom Eireann (TE), to expand into cable television.

The competition directorate in Brussels has sent "requests for information" to TE, Telefonica and Telecom Italia, to determine whether their plans constitute an "abuse of a dominant position". Last week, it announced a review of Telecom Italia's privileged position in the mobile phone market.

The EC is intent on preventing monopoly telecom operators from dominating the emerging markets for multimedia, fearing that the lack of competition will reduce consumer choice and lead to higher prices for services.

The drive to protect new entrants to the market comes as existing players seek to retain their dominance. BT last week reached a deal with the Labour Party to allow it access to the broadcasting market, in return for supplying fibre-optic connections for public institutions at no cost. It is also rumoured to be in talks with Rupert Murdoch's News Corporation about a joint venture to broadcast multimedia services on BT's domestic network.

The Commission's concern about TE's cable aspirations follows the announcement that the Irish operator was raising its stake in Cablelink, the leading cable company, from 60 per cent to 75 per cent. Cablelink is considering using TE's phone network to expand broadcast capacity. The Commission fears the plan would limit competition in the Irish cable market.

The EC recently adopted a directive aimed at liberalising the market in 1996 for certain "non-reserved" telecoms services, including data transmission and video-on-demand. Full liberalisation of the telecom market is scheduled for 1998.

The EC is also concerned about Telefonica's plans in Spain to upgrade its network to allow delivery of multimedia services. Telefonica has a joint venture with Prisa, the country's largest publishing and pay-TV company, to develop new direct-to-home services.

Telecom Italia is also developing a fibre-optic network capable of carrying telecom and broadcasting services, spending $7.8bn to connect 50 per cent of Italian homes by 1998.