Regulator Rules Out Split of KPN

Global Insight Daily Analysis
02 April 2007

The Dutch telecoms regulator, OPTA, believes that any move to enforce a "functional separation" of KPN's network into a separate business from its services would be a "disproportionate" step, OPTA Chairman Chris Fonteijn said on 30 March, according to a Dow Jones report. Speaking at a business conference in Amsterdam, Fonteijn was asked whether OPTA would consider using such a tool in an effort to boost competition in the Dutch telecoms sector. Fonteijn responded that OPTA "has investigated the situation" and has concluded that former incumbent KPN faces enough competition in the Netherlands from other cable companies that operate their own networks. Such a measure would be unnecessary, he said. Presenting a report on the European Union (EU) telecoms sector last Thursday, the EU Commissioner for Information Society and Media, Viviane Reding, said the commission is still considering including functional separation "as a tool in the toolbox" for national regulators.

If the EU did opt to do this, telecoms companies with national networks could be required by their local regulators to separate out their network operations into separate businesses from the services offered across these same networks. Significance: OPTA had considering compelling KPN to spin off its network assets into a new business, in a manner akin to the United Kingdom's Openreach approach. However, OPTA's new position follows on from a report by independent consultants Nera, which has advised that the circumstances in the United Kingdom are different to those in the Netherlands. The report contends that the cable operators in the Netherlands provide enough alternative-access infrastructure. In addition, the report warns that since KPN was planning to upgrade both its access and core network, forcing through a functional separation could discourage the company from investing in Next-Generation Technologies.

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