ECTA backs BEREC opposition to ‘premature’ fixed voice deregulation; disappointed at weak backing for LLU

16 Oct 2014

ECTA (the European Competitive Telecommunications Association) has backed the opinion published earlier this week by BEREC (the Body of European Regulators of Electronic Communications) which asserted that it is premature to remove the retail fixed telephony access and wholesale fixed call origination markets (Markets ‘1’ and ‘2’) from the list of regulated telecommunications markets as recommended by a European Commission (EC) decision earlier this month.

Contrary to the EC recommendation, BEREC considers that the two fixed line markets should stay on the regulated list, given that regulators’ decisions in a significant number of Member States indicate that these markets are not competitive and therefore justify the continuation of regulation. ECTA points to the fact that, out of 28 European regulators, only three to date have deregulated the retail access fixed telephony market (Finland, Netherlands and Romania, whilst Germany has deregulated a specific high-end segment of the market); and similarly, only three regulators (Estonia, Finland and Romania) have deregulated the wholesale fixed call origination market. TeleGeography notes that another regulator, the Belgian Institute for Post and Telecommunications (BIPT), has indicated it will act in accordance with the EC recommendation in the retail and wholesale fixed line markets, according to an announcement last month reported by CommsUpdate.

Erszebet Fitori, director of ECTA, stated the position of the organisation (which represents more than 100 alternative telcos): ‘Premature deregulation represents a step back in the liberalisation process. Regulation is there to ensure that those markets which are structurally uncompetitive receive the right push towards competition. Forcing the removal of regulation prematurely will drive competitors out of the market, raise prices for users, stifle innovation and take away hard won benefits from European consumers.’

As reported previously by CommsUpdate, an opposite view to the BEREC/ECTA consensus on fixed line deregulation is – unsurprisingly perhaps – held by incumbent telecoms operators, who have argued the move towards deregulation will help boost investment in broadband infrastructure. Backing the incumbents, lobby group the European Telecommunications Network Operators’ Association (ETNO) was cited last month as saying: ‘Competition from alternative platforms and over-the-top [OTT] service competition are today well established, and this [EC] recommendation is the right instrument to adapt regulation to the new market reality.’

Another crucial aspect of the recent EC recommendation was a modified wholesale framework recognising that ‘virtual access products’ – which include virtual unbundled local access (VULA) – can be considered substitutes to physical unbundling when they fulfil certain characteristics. ECTA expressed concern at this development in the wholesale field, as it said ‘physical access is key to ensure that alternative operators can effectively compete and innovate at the retail level, by building pioneering and affordable offers, which end users can benefit from.’ ECTA added that it was disappointed that BEREC’s published opinion ‘did not take a more pro-competitive stance and has not tackled other issues of great importance such as the need to ring-fence physical access.’ On additional related issues, ECTA stated: ‘The over-emphasis on geographic segmentation of the broadband markets should have also been tackled [by BEREC] and a bolder position on the need to segment the market designed to serve business customers would have also been desirable.’ On the other hand, BEREC’s published opinion did include a call for EC guidance on how to tackle joint dominance and oligopolistic market structures.

ECTA underlines that the EC must now take the BEREC opinion into account in a review of its recommendations. Potentially this could lead to the fixed voice markets being ‘put back’ on the regulated list, whilst ECTA also urges that the other issues it has highlighted are tackled in the review process, including the question over maintaining physical LLU.

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