Regulators’ Monopoly Charges Hit UPC Stock

22 March 2001

A new and contentious consultation document by two Dutch regulatory bodies, Opta (telecoms) and Nma (monopolies) has hit the share price of Netherlands-based United Pan-Europe Communications. On the already twitchy Amsterdam bourse, UPC stock yesterday fell by14%.

The group reacted vigorously to the document, saying it would challenge a number of its assumptions and proposals. The report's definition of a high-speed internet service is the main bone of contention.

This should be categorised on the basis of transmission speed, the document suggests. UPC strongly disagrees: Chello, its subsidiary internet service provider, does not fall into that category, it insists, because its connection speeds cannot be guaranteed, being significantly slower in some areas than others. Peak demand also affects speed as groups of subscribers share a single cable.

Also at issue is the cable giant’s exclusive relationship with Chello – at present the sole ISP on the dominant UPC domestic network. This, the regulators imply (while naming no names), should be opened up to other ISPs on competition grounds.

Managing director of corporate affairs Manuel Kohnstamm said UPC had no objection in principle to opening its cable network to other ISPs but would do so only on commercial grounds. “I am counting on a sense of responsibility among everyone concerned,” he appealed. “In today's market, a certain stability is essential regarding the outlook.”

UPC is highly sensitive to the volatility of its share price which has undergone wild oscillation during the past few months. Meanwhile, watchdog NMa expressed its surprise at the document's impact, observing that it contained no conclusions, merely suggestions. The consultation process is expected to take several months.

News source: Financial Times