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Telefonica May Face Competition Fine from EU Regulators

1:31 am on July 4, 2007 | Category: Business, Corporate, Internet, Regulation, Telecom Services

Spain’s dominant telecommunications provider, Telefonica, could face a major regulatory fine if the European Commission rules later today that it did not allow competitors sufficient resale access to its ADSL broadband network.

Sources familiar with the matter believe that there is a high probability of a fine, which one newspaper, El Pais, reported could be as high as â‚¬100 million. Telefonica is widely expected to appeal any decision which finds it at fault of illegally hindering its rivals.

“We hope the case will be closed without a fine because we have always acted in good faith and according to the CMT’s regulations,” a spokesman for Telefonica said. Spain’s national telecom watchdog, Comision del Mercado de las Telecommuncaciones, has effectively been overruled on this matter by the European Telecom Commission.

“It is clear that the EU regulator does not trust the national ones … That would be understandable if Telefonica were a state telecom … but it has been privately owned for some time now,” commented one source familiar with the situation.

European regulators are attempting to manipulate Spain’s internal telecom market where, despite all the present accusations, rival broadband providers are actually entering the market at a respectable rate. Of the 5.76-million ADSL connections routed over Telefonica’s network, only 4-million are the telecom incumbent’s own retail lines. The remainder are all leased lines operated by smaller rivals.

Update: The European Commission has imposed a massive fine of â‚¬151-million on the Spanish carrier, claiming that “Telefonica weakened its competitors, making their continued presence and growth difficult.”

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