EC calls on CNMC to update plans for wholesale broadband charges

29 Oct 2013

Spain’s newly enlarged competition watchdog, the Comision Nacional de los Mercados y la Competencia (CNMC), has been directed by the European Commission (EC) to withdraw or amend the proposals under which it plans to set the wholesale broadband prices charged by fixed line incumbent Telefonica Espana.

In calling for changes to the proposals, the European body noted that it had previously warned the CNMC’s forerunner, the Comision del Mercado de las Telecomunicacinoes (CMT), in June 2013 that the plans may not be compatible with European Union (EU) telecom norms. Further, at that date the EC had argued that the proposals could be detrimental to competition, while also suggesting that they would not incentivise investment in high speed broadband. In particular, the Commission said it was ‘concerned that the Spanish regulator´s proposed price setting model would lead to regulated prices up to 50% above cost-efficient levels,’ noting that ‘the wholesale broadband access product is the only regulated offer on Telefonica’s fibre network and the Spanish regulator does not plan to impose other competition safeguards such as stricter non-discrimination rules’.

Now, following a three-month ‘in-depth’ investigation into the matter, the EC said it had concluded that the CNMC’s measures still lacked transparency and contained an element of arbitrariness, saying that the Spanish regulator had failed to justify in detail the price levels that had been set. Meanwhile, the Body of European Regulators of Electronic Communications (BEREC) is also said to have expressed support for the majority of the EC’s concerns. As a result, the CNMC has been given three months to withdraw or amend its proposals, and should it not do so the EC has said it will consider ‘any appropriate legal steps’.

Commenting on the matter, EC Vice President Neelie Kroes was cited as saying: ‘Price stability and transparency of price-setting mechanisms within each Member State are indispensable to set the right conditions for competition and investment in the telecoms sector. Despite variations in national circumstances, we must also ensure further regulatory coherence to promote a single market for telecommunications.’