EC recommends deregulation of two fixed telephony markets; redefines broadband markets

10 Oct 2014

Yesterday (9 October 2014) the European Commission (EC) issued a formal decision recommending that two fixed telephony markets – the retail market for access to fixed telephony (Market 1) and the wholesale market for fixed call origination (Market 2) – should be deregulated in all European Union (EU) countries, while deciding that wholesale fixed broadband markets should be redefined to reflect commercial and technological developments. The recommendations, which take effect immediately, were agreed with EU Member States, although the telecoms regulators in each country have the final say on implementation.

Explaining the reasons behind the deregulation recommendation, the EC’s press release stated: ‘There has been a decrease in volume of fixed calls as customers have turned to alternative solutions, such as [unmanaged or access-independent] voice-over-IP (VoIP) and mobile calls, but also to alternative providers, like over-the-top (OTT) players. Also, those customers who still use fixed telephony are now able to purchase fixed access from a number of different platforms, such as traditional telephone network, fibre or cable networks, and also from alternative operators offering broadband and voice services over unbundled local loops [ULLs], so competition has been increased.’ In an accompanying note, the EC clarified that the wholesale market for fixed call origination (Market 2) comprises both PSTN voice and managed VoIP over fixed broadband lines (i.e. typically over xDSL, cable TV or fibre access networks).

Neelie Kroes, the outgoing EU digital agenda commissioner, said of the deregulation decision: ‘I am delighted to announce this cut in telecoms red tape. It is the result of increased competition in telecoms markets and it takes us a step closer to a real Connected Continent.’

The EC furthermore recommended that regulators in EU countries redefine the boundaries of wholesale fixed broadband markets, ‘in order to limit regulatory burdens to what is strictly necessary for competitive broadband access and investment.’ The modified framework recognises that ‘virtual access products’ – which include virtual unbundled local access (VULA) – can be considered substitutes to physical unbundling when they fulfil certain characteristics. Consequently, under the latest decision, new Markets 3a and 3b alongside Market 4 (wholesale fixed [physical] network infrastructure access [including ULLs]) replace the previous list of Markets 4, 5 (wholesale broadband access [including bitstream]) and 6 (leased lines) in the EC recommendations on relevant electronic communications services susceptible to ex ante regulation.

The Commission added in its release that it is ‘increasing its focus on the distinct needs of business users, to make sure that competitive connectivity can unleash growth across the economy.’