Access to telecoms networks
Alternative operators denounce Commission’s draft
By Manon Malhère | Tuesday 11 December 2012
Although they have not even been published, the measures being considered by the European Commission to regulate access to telecommunications networks (calculation of access charges and principle of non-discrimination) have already raised an outcry by alternative telecoms operators. Seen by
Europolitics,the last draft of the recommendation that has just been transmitted to the Body of European Regulators for Electronic Communications (BEREC) does not meet their expectations that it should garantee robust measures to ensure full competition on telecommunications markets. BEREC has to give its opinion on the text, which the Commission is expected to adopt in 2013.
“The Commission proposes rules that undermine the growth potential of the sector, leading to higher consumer prices, less competition and no additional investments. A lose-lose scenario for consumers and businesses, competition and the economy, in the name of promoting NGA [next generation access] investments that are already happening anyway,” said Tom Ruhan, chairman of the European Competitive Telecoms Association (ECTA).
The debate began in 2011, when the Commission launched a consultation on the calculation by national regulators of the charges to be paid by competing operators for access to the dominant operators’ telecommunications networks. It proposed to reduce charges for access to the incumbents’ copper networks in areas where investments in NGA networks, and more specifically fibre networks, are not being made. The idea is to foster investment in NGAs and especially fibre. The alternative operators, who note that the incumbents have made excessive profits from their copper infrastructures, backed this approach. The incumbents represented by ETNO vehemently opposed it. They argue that lower copper prices would discourage investments because it would lead to a drop in retail prices and consequently a decline in earnings. A decrease in copper access prices would also discourage consumers from migrating, claim the incumbent operators (see Insight in
The Commission took a stance, on 12 July: in contrast with the approach it had originally considered, it decided not to try to lower charges for access to copper networks as a way to boost investments in NGAs and specifically fibre. It also said it intends to give national regulators a fair degree of flexibility in calculating NGA access charges.
This reversal comes with conditions, however: stricter provisions will be applied to guarantee non-discrimination in access to telecommunications networks, announced the Commission.
Regarding the lowering of charges for access to copper networks, the alternative operators knew that they lost the battle, but probably not completely. “We firmly believe that copper price should decrease in order to rebalance the existing situation and to mitigate the risk of a structural competitive squeeze also taking into account the national specificities,” said Wind Telecomunicazioni CEO Maximo Ibarra.
In its draft text, the Commission sets in particular the following objective: once the cost methodologies of wholesale charges for access to telecommunications networks is implemented (deadline is 31 December 2016), the average monthly rental access price of the full unbundled copper local loop in the EU, which results from the application of the recommended methodology, would fall between €8 and €10. With such a braket, prices will increase in about ten member states, summed up an expert to
Europolitics. Prices will decrease in a few member states only (four), he specified.
The provisions that will apply to guarantee non-discrimination in access to telecommunications networks provided in the draft text are also controversial.
The Commission provides different measures. For example, the national regulatory authorities would impose on the significant market power (SMP) operators the obligation to take measures in order to ensure equivalence of access to telecoms networks (in other words, to give competitors the same “inputs”) when it is “proportionate and justified”. And the draft text says that “such an obligation could be disproportionate, in particular where the compliance costs […] outweigh potential competition benefits” that are likely to apply to copper networks.
However, the provisions on ending the practice of margin squeeze that are said to be the most controversial. Overall, the challengers accessing the incumbents’ telecommunication networks sometimes cannot make enough of a margin to stay in business with this practice (the incumbent operators charge very high rates and/or apply charges downstream to consumers).
Alternative operators have several times called on the Commission to take robust measures in this field. They find that national regulators should “systematically” check that the dominant operators are not artificially eroding competitors’ margins by carrying out margin squeeze tests (4538).
However, in its draft text, the Commission does not provide systematic ex ante margin squeeze tests, it is deplored.
“The Commission proposes rules that undermine the growth potential of the sector”