The European Commission will propose giving national regulators the power to split up incumbent telecoms firms such as Eircom if they continue to frustrate competition.
Information Society commissioner Viviane Reding announced the measure yesterday as she published a report showing Ireland's poor take up of broadband technology.
The commission's 12th annual report on the EU telecoms market shows Ireland is ranked 16th out of 25 EU states for the uptake of high-speed internet services.
Just 10.3 per cent of Irish homes and businesses have broadband compared to an EU average of 15.7 per cent. The best performing state is the Netherlands at 29.8 per cent.
Across the EU the uptake in broadband connections is improving with 20 million broadband lines added between October 2005 and October 2006.
The report pinpoints the lack of progress in opening Eircom's network to competitors through local loop unbundling as a key problem.
It also highlights the lack of effective enforcement powers open to ComReg to enable it to force Eircom to properly open its network, particularly the miserly maximum fine that is worth just €3,000.
In an attempt to tackle the slow pace of unbundling in several EU states, including Ireland, Ms Reding is proposing giving regulators the power to order the "functional separation" of incumbent firm's networks and their services arms.
She said this was one tool that could enable regulators to force incumbents to open their networks.
Britain is currently the only EU state that has persuaded the incumbent British Telecom to separate its network arm from its services arm. This means firms must create a separate management structure under the supervision of regulators to ensure competitors have easy access to the last mile of networks, which run into homes.
An EU official said there has been a rapid increase in requests to offer broadband services by British Telecom's rivals when "functional separation" took place.
Ms Reding also floated the idea of creating a type of "European FCC", modelled on the US Federal Communications Commission, to oversee and co-ordinate the work of national telecoms regulators such as ComReg. He said she did not want to abolish national regulators but rather would like to seem them function in a consistent way.
One of the key findings of the commission's 12th annual report on the telecoms market was that there was a wide variety regulatory systems across Europe. This created legal uncertainty for telecoms operators, according to Ms Reding, who cited the example of Greece were delays to regulatory appeals were hampering the market.
The report highlights delays as a key feature in Ireland where the appeals panel took more than a year to hear a single case despite having been set guidelines to hear cases within four months. It says the Government has admitted the mechanism has not delivered on some of its initial aims, especially regards speed and cost of proceedings.
