Nkom advises ESA of proposed changes to price regulation of Telenor’s fibre-based services

21 Jun 2021

Norway’s National Communications Authority (Nasjonal kommunikasjonsmyndighet, Nkom) has sent a draft decision on updated price regulation of access to Telenor Norge’s fibre network to the EFTA Surveillance Authority (ESA). Announcing the development in a press release, the regulator noted that with Telenor subject to a requirement not to put buyers of access in margin squeeze, it now intends to revise the current regulation. Specifically, it has said it is proposing changes to the principles of margin squeeze testing for the telco’s Virtual Unbundled Local Access (VULA) fibre service. Currently, the Nkom conducts margin squeeze tests and gross margin tests of Telenor’s fibre-based products in the retail market twice a year, with a view to ensuring companies buying wholesale access to the telco’s fibre network do not suffer a margin squeeze.

As per the proposed changes put forward, the first will see the market share that is assumed for an ‘efficient provider’ in the test reduced from 20% to 15%, while the second will see a stricter requirement introduced for the gross margin for individual fibre products offered by Telenor to companies, so that the gross margin for these products shall be at least 40%. Meanwhile, the Nkom plans to introduce a new requirement for the carrier to document passed margin squeeze tests and gross margin tests before the company can implement price changes or launch new fibre-based products in the retail market. According to the regulator, this new requirement will prevent access buyers from experiencing margin squeeze in the period until Nkom carries out its next margin squeeze test.

With the ESA having one month to comment on the Nkom’s proposals, the Norwegian regulator has said that, once it receives any feedback, it will take this into account and then look to issue a final decision.