Feuding telcos France Telecom and Deutsche Telekom will be able to resell the services of their international joint venture Global One, under proposals made today by the European Commission.
But analysts said they are unlikely to do so in many markets, including the UK, for fear of cannibalising revenue of their many local investments.
The EU wants to remove many of the operating restrictions placed on Global One in 1996 when the company was seen as a powerful and potentially monopolistic telecoms force.
But the telecoms market has changed dramatically and there are now other substantial competitors to Global One, not least the BT/AT&T joint venture, the EU said.
"The Commission has taken into particular account the fact that the BT/AT&T venture, with initial revenues forcecast at approximately 10 times of Global One, will not be restricted in the same manner as Global One is by the decision," the EU said in a statement.
With the restrictions lifted, FT and DT will be free to sell Global One services, along with their own services, in one contract. They will also be able to provide all telecoms services, including voice telephony, on both a resale and facilities basis, in all EU countries.
In addition Global One can resell all voice and data services FT and DT make available to third parties.
Global One last year reported revenue of $1.1 billion, compared with BT/AT&T's joint venture, which had an estimated $10 billion annual revenue.
Global One said it welcomed the EU move: "Global One is very pleased to see the Commission is making this move. We feel it can only be of benefit to our customers."
The proposal will be available for public review for about a month before a final decision is made.
Analyst James Bennett at CIT Research said if FT or DT started selling Global One services in Europe, they could end up competing with themselves and their existing investments.
"Whether Global One would want to get back into [selling switched minutes] I don't know - it would impact on the local investments that the parents have in Europe," he said.
In the UK, France Telecom is a major shareholder in cable operator NTL and has pledged $5.5 billion (€5.16 billion) to the company since it agreed to purchase the business operations of Cable & Wireless Communications. (see Newswire 26 July)
"Why on earth should the parents channel revenue through a revenue sharing operation - that to me is illogical. Judging by how the parents get on, I can't see that they'd be willing to give up a strong revenue stream," said Bennett.
FT and DT very publicly fell out earlier this year when the German company turned its back on its French strategic partner and pursued a merger with Telecom Italia. The deal collapsed, but FT has since criticised DT for its actions.
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