Regulatory conditions for the last mile
Bundesnetzagentur invites comments on new regulatory conditions for the last mile
Kurth: "Ex post regulation of fibre loops will provide planning security and enable new broadband investments"
Year of issue 2011
Date of issue 2011.01.25
The Bundesnetzagentur has now made an important decision on how fibre connections are to be regulated. In future, only ex post controls are to be carried out for new fibre loops from Telekom Deutschland GmbH. A draft regulatory order on the matter has been sent to the EU Commission and the national regulatory authorities of the other EU member states.
"Ex post regulation of fibre loops is a solution which serves the interests of all involved. It will provide planning security for Telekom Deutschland GmbH without restricting them unnecessarily. Meanwhile, their competitors can rest assured that they will not be confronted with excessive prices or access hurdles. In the event of disputes, the Bundesnetzagentur is on hand to prevent abuse, and where doubt exists, to enforce fair conditions"
, declared Matthias Kurth, Bundesnetzagentur President.
"Ex ante regulation would not only be disproportionate at the present time, but would also result in practical difficulties, as we would need to work with numerous hypothetical assumptions for the construction costs and the risk premiums for the new infrastructure. Consumers' willingness to pay for faster broadband is limited, as market studies have shown. Competition from cable network operators also upgrading their networks to higher speeds also contributes to limiting the pricing scope for Telekom Deutschland GmbH. I therefore predict that the existing market forces will prevent Telekom Deutschland GmbH from setting unfairly excessive access prices that provide competitors with no room for manoeuvre. It's also in Telekom's own interests to set realistic wholesale prices which permit a sufficient margin, in order for the new access network to be fully utilised as soon as possible"
, continued Kurth.
An initial draft decision was already presented for national consultation with market participants last year, based on the updated market definition and analysis by the Bundesnetzagentur President's Chamber for the last mile market. The study found that Telekom Deutschland GmbH continues to hold significant market power here. Mass market-ready all-fibre loops were also included in the market for the first time, following Telekom Deutschland GmbH's announcement of an upgrade to this effect.
The original draft for consultation provided for the same level of regulatory intensity as applies to copper loops. In particular, there were plans to make these access charges subject to prior approval, too. Following evaluation of the national consultation, the intention is now to avoid strict ex ante regulation for fibre loops. In the upcoming regulatory period, these charges are to be subject initially to ex post controls in accordance with the abuse criteria.
The draft decision submitted provides for a continuation of the existing regulation for classic copper loops. Under this, Telekom Deutschland GmbH remains obligated to grant access to their local loops, to provide collocation, to ensure access to their multifunctional cabinets and cable ducts, to non-discrimination and to submit local loop contracts to the Bundesnetzagentur. In future they must also have the charges for granting access approved by the Bundesnetzagentur in line with the benchmark for costs for efficient service provision.
The EU Commission and the regulatory authorities of the other EU member states now have one month to comment on the draft decision submitted by the Bundesnetzagentur. This means that the final regulatory order can be expected at the end of February/beginning of March 2011.