CURRENT ACCOUNT: A mixed ruling by the Federal Communications Commission (FCC) to retain strict network access obligations on the local US telephone firms, known as the Baby Bells, pleased few people last week.

The ruling removed some of the regulatory burdens from the incumbent Baby Bells but, crucially, failed to give them immediate freedom from existing network access regulations.

This means the Baby Bells' competitors can get cut price access to the incumbent firm's telecoms networks to provide their customers with high-speed internet services.

The decision split the commission down the middle in a tight 3:2 vote, and caused the chairman of the FCC, Mr Michael Powell, to criticise the ruling.

"The American public would be the ultimate loser," according to Mr Powell.

He fears the Baby Bells will continue to restrict capital expenditure because of the regulatory decision, delaying a rebound in the moribund telecoms sector.

Eircom is one of a number of European incumbents singing from a similar hymnsheet - despite a written commitment from the Valentia Consortium promising to maintain capital expenditure at the time of the purchase. Eircom boss Phil Nolan has made no secret of his plan to cut back on investment unless the regulatory environment is more favourable.

But the FCC's decision to maintain network access regulation will weaken Eircom, and other European incumbent's, pursuit of a weaker regulation in Europe.

The fact that the US liberalised its telecoms sector much earlier than Europe means that competitors here have had less time to establish themselves in the market. The much lower level of broadband penetration in Europe also signals that the European Commission is unlikely to back down on its guiding mantra for the past few years - unbundling the local loop.

In this climate it seems unlikely that Mr Nolan's view of the market will be entertained.