The Romanian regulator proposes to deregulate the broadband market in the country. ANCOM is removing all ex-ante obligations applied to the incumbent operator after analyzing trends on market shares, barriers to entry and concluding that the retail market of fixed Internet access services is competitive. The European Commission through the Article 7 procedure accepted this measure.
Intel strongly supports this ruling which is consistent with our view that where consumers have a real opportunity to switch among competing facilities, mandatory access obligations on new NGA (e.g., last mile FTTx) investment are not necessary to protect competition and unduly discourage broadband investment. Indeed, they may well discourage new entrants as well as incumbents from investing in new last mile facilities. We applaud the European Commission’s sensible, pro-investment, pro-competition and pro-consumer ruling.
In our recent filing in the European Commission’s Telecom Framework consultation we explained the above position in more detail. There we recommended that access requirements not be imposed on an operator’s new last mile fiber (FTTx) investment where there is “effective” competition and we defined as effectively competitive those markets where consumers can choose among three facilities-based competitors. We also recommended that the regulator monitor market performance and require the incumbent to provide access to conduit and ducts available to competitors.
By way of example, a market where there is new incumbent fiber investment, cable modem access and the possibility of ULL entry would meet the effective competition test. Other forms of facilities-based competition (4G, municipal fiber and other alternatives might meet the case in some markets now or in the future) would be also considered.
Also, the regulatory approach taken in Portugal is instructive. In 2009 the regulator effectively relieved the incumbent of wholesale broadband access obligations on new last mile network facilities, including fiber where it faced broadband competition from a cable operator and an ULL operator. In a large portion of the territory, where competition from both cable and ULL operators is present, there are no effective wholesale access obligations (except for access to ducts and in-building wiring). This approach based on the above definition of effective competition has encouraged substantial private capital investments in last mile network facilities, including fiber, and should be emulated.
We also applaud the EC’s “Article 7” approval of the CNMC decision in Spain. However, CNMC’s new definition of effective competition appears too cautious as it requires the presence of “(i)… at least 3 NGA networks (FTTH or HFC) deployed, and (ii) each of the NGA networks has a coverage of at least 20% of the area of influence.” Let us hope it does not curtail Spain’s record of pro-consumer FTTx investment.
Our review of the evidence and analysis supports the contention that markets that meet our test generally are rivalrous, see price declines and share changes, and attract more new investment and services.
See, for example, “Alternative Operators Investing in NGAs” by Herrera-Gonzalez and Garcia-Arribas, “National Fiber Strategies” by Arthur D. Little, “The deployment and penetration of high-speed fiber networks and services: Why are EU member states lagging behind?” by Briglauer and Gugler or “Why is Europe lagging on next generation access networks?” by Briglauer et al.
(2015), “Why is Europe lagging on next generation access networks?” http://bruegel.org/2015/10/why-is-europe-lagging-on-next-generation-access-networks/
(2014), “Alternative Operators Investing in NGAs”, http://econstor.eu/bitstream/10419/101387/1/795227388.pdf
(2013), “National Fiber Strategies” http://www.adlittle.de/uploads/tx_extthoughtleadership/National-Fibre-Strategies_ADL-Report_HR_01.PDF
(2013), The deployment and penetration of high-speed fiber networks and services: Why are EU member states lagging behind? Telecommunications Policy 37 (10), 819-835.