Functional separation within the European Union: Debates and challenges

Since rising to prominence in the UK, functional separation has been widely discussed as a way to address the tensions that exist between incumbent fixed-wire telecommunications operators and new entrants that use their networks. The suggestion that functional separation could be employed by national regulatory authorities to achieve structural objectives has sparked considerable discussion across the European Union (EU). Through surveying the attitudes of Member States, this paper highlights that support varies across the EU with debates being influenced by the broader political and commercial contexts within which the telecommunications industry is located. It is also shown that a key debate across the EU is the extent to which functional separation will affect the willingness of incumbent operators to invest in infrastructure.