The proposal amounts to enabling the National Regulatory Authority AGCOM to:

T-REGS Note: Directive 2002/19/EC enables such 'atypical obligations' to be imposed by regulatory authorities in 'exceptional circumstances' and subject to the procedure in Article 8.3 of the directive, i.e. the European Commission must take a decision authorising or preventing the adoption by the national regulatory authority of such measures, which amounts to an explicit veto power of the European Commission.

The precise wording of the proposed obligation, which is proposed to be inserted as the new Article 45 3-bis in the Codice, can be paraphrased as follows:

• AGCOM may define direct rules in order to ensure that the administration and management of all elements that constitute the access network and associated facilities, including the components necessary to supply broadband services, are subject to...

• A regime based on criteria of autonomy, of neutrality and functional separation of the other activities of the undertaking, with full guarantee of equality of treatment (external and internal) for all the operators demanding access.

• The regime would encompass the most appropriate organisational measures, determined by AGCOM. 

This could be achieved through the procedure that is already contained in Article 14bis of legislative decree 223 of 2006, converted into law 248 of 2006.

In order to ensure speedy availability of the new powers to AGCOM, it is proposed that the insertion of the new Article 45 3-bis in the Codice would be achieved by adding a section to draft legislation that is currently pending before Parliament (legislative proposal 2272).

The full text (available in Italian only) of the proposed legislative amendment and the accompanying recital can be accessed by clicking here.

The web page of the Italian Chamber of Deputies, on which the parliamentary process relating to legislative proposal 2272 can be monitored, can be accessed by clicking here.

For a discussion of this important development, please contact This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

Last week, the German regulatory authority (the Bundesnetzagentur or BNetzA) issued a consultation document with regard to a new analysis of Market 11, as well as a short document setting out future scenarios.

In the subsequently published BNetzA Amtsblatt (an official paper-only publication, to which T-REGS subscribes), and now also the BNetzA website, a formal consultation on proposed remedies has also been published.

This T-REGS news item provides a step-by-step overview of the actual content of BNetzA's 52-page main draft market analysis and SMP assessment document (available in German only and accessible by clicking here), BNetzA's 26-page draft decision on regulatory obligations ('remedies') as newly published by BNetzA for consultation (available in German only and accessible by clicking here) and BNetzA's separate (published earlier last week) 3-page document setting out a few questions on potential future scenarios (available in German only and accessible by clicking here). 

Market Definition

BnetzA proposes to define a nation-wide market for:

1. Unbundled/bundled access to local loops in the form of copper pairs at the Main Distribution Frame (MDF), or another point, which is located closer to the user (T-REGS Note: this could be a street cabinet or local building). Bundled access is only considered by BNetzA in those cases where unbundled access (i.e. naked copper) solutions "are not justified (technically or economically)";
2. Line sharing;
3. Unbundled/bundled access to the local loop on the basis of OPAL/ISIS (hybrid fibre/copper loops deployed to some extent, mainly in Eastern Germany) at the MDF, or another point which is located closer to the user. 

Three Criteria Test

BNetzA, in conducting its second analysis of Market 11, has (again) found high and non-transitory barriers to market entry, and BNetzA, in its current draft analysis, does not detect a tendency towards effective competition in the long term (T-REGS Note: the actual market share figures are blacked out in the public document). BNetzA also considers that the application of competition law alone would be insufficient to address issues that occur on the defined market. The regulatory authority foresees that "positive regulations" will have to be issued and that constant monitoring and frequent regulatory intervention will be required. It adds that "reactive measures are insufficient in this market", especially because their activation and effect is deemed to be too slow.

Market 11 is therefore proposed to be subject to further ex-ante regulatory intervention measures. 

Significant Market Power

The consultation document does not disclose specific market shares, but it can be clearly ascertained that Deutsche Telekom AG (DTAG) has a double digit market share, whereas the other operators jointly have a single digit market share in the markets for copper loops and hybrid (OPAL/ISIS) access networks. 

BNetzA considers that several players have sufficient access to capital markets or financial means to compete, but discards this criterion on account of DTAG's elevated market share. BNetzA also establishes that DTAG controls infrastructure which is difficult to duplicate, hereby underscoring that hurdles to market entry exist. DTAG's high degree of vertical integration also adds to the conclusion that the company has significant market power. The regulatory authority also states that it has barely detected competition on price and deems that there is a low degree of effective and potential competition, as well as a lack of countervailing buyer power. 

DTAG is therefore proposed to be declared as having significant market power on Market 11, as defined.  

Proposed 'traditional' remedies (confirming, but slightly amending, the 1st round Market 11 Analysis)

BNetzA indicates, in its new consultation document, that DTAG, as the operator that is proposed to be designated as having SMP, would be required to provide:

1. Fully unbundled access to the local loop, in the form of copper loops "at the MDF or a point closer to the network termination point " (e.g. street cabinet, end distributor - APL) as well as to shared access to the network termination point by means of the division of the usable frequency spectrum;

2. To the required extent, bundled access to the network termination point in the form of copper loops, including the variants OPAL/ISIS at the MDF;

3. For the purpose of 1 and 2 above, to grant collocation as well as, in the context of a request from either the requesting party or their mandated representative, access to these installations at any time;

4. In the context of the execution of the obligation as stipulated in 3 above, to allow possibilities for co-operation between the undertakings that have a right to access in such a way that such undertakings can connect with each other the collocation spaces they rent from the SMP undertaking and which are at the same MDF location, if an undertaking can guarantee one or several other undertakings the access to its self-provided or leased transmission pathways;

5. Contracts with regard to access according to 1-4 above must be objective, must grant equivalent access and must fulfill the imperatives of equal opportunity and fairness;

6. The fees for access according to 1-4 above are subject to approval of the regulatory authority BNetzA.

Proposed 'additional' remedies

BNetzA indicates, in its new consultation document, that DTAG, as the designated SMP operator, would, in addition, be required to provide: 

1. For the purpose of access to the network termination point, grant access to the cable conduits between the cable distributor (street cabinet or other local building) and the MDF, insofar the required empty space is available (T-REGS Note: This amounts to a specific duct access obligation, restricted to the specific context of access to street cabinet level, insofar this is technically possible);

2. In case that, for technical or capacity reasons it is not possible to grant access to the cable conduits, to allow access to unlit fibre strands (dark fibre) (T-REGS Note: This clearly indicates that dark fibre access is proposed to be a secondary obligation, in case duct access would be confirmed to be impossible);

3. Contracts with regard to access according to 1-2 above must be objective, and must grant equivalent access and must "fulfill the imperatives of equal opportunity and fairness";

4. The fees for access according to 1-2 above would be subject to approval of the regulatory authority BNetzA.

DTAG would also be required to publish a reference offer covering the points listed above.  

The Document Associated with the Market Analysis

The substantive documents are accompanied by a separate 3-page document (available in German only and accessible by clicking here). This document contains a set of questions pertaining to possible future scenarios. 

In this document, BNetzA is essentially addressing a few questions to market participants, with regard to their views and plans in a scenario in which copper loops would become shorter due to new investments by the incumbent operator DTAG in its network. In this scenario DSLAM or MSAN equipment is no longer (or would no longer be) installed in the Main Distribution Frame (MDF) locations, but closer to the network termination points, for example in street cabinets or local buildings, thereby shortening the local loop considerably. 

For those operators that would not wish or not be able to undertake the (considerable) investment to build/equip street cabinets with DSLAMs/MSANs, and that have, for example, already made considerable investments in installing DSLAMs in the DTAG MDFs and arranging backhaul, it could be/become necessary or useful to have access to not only the copper local loop (which would run from the network termination point up to the street cabinet and no longer to the MDF), but also to the infrastructure between the street cabinet and the (former) MDF. 

BNetzA indicates three possible options for DTAG competitors to gain access to the (shortened) local loop (essentially at street cabinet level): 

1. Competitors could invest in their own fibre backhaul (including the civil works and supporting infrastructure, such as ducts) up to street cabinet level;
2. Competitors could rent empty (DTAG) ducts leading to street cabinet level in order to reach these locations, and equip these with their own fibre and transmission equipment (T-REGS Note: the BNetzA press release contains a citation of Chairman Matthias Kurth indicating that use of ducts of third parties (i.e. others than DTAG) is a "theoretical possibility which is impracticable");
3. Competitors could lease dark fibre (in particular from DTAG) to street cabinet level. 

T-REGS Notes: No mention is made, either in the substantive 26-page draft decision on regulatory obligations ('remedies'), or in the 3-page consultation paper, of access to street cabinets, sharing of street cabinets, or sharing of active equipment inside street cabinets as such. 

The German regulatory authority suggests in its 3-page separate document that, in the absence of additional investments in network build-out by alternative operators, bitstream access (Market 12 of the EC Recommendation on Relevant Markets) may offer a solution in order to ensure competitor local loop access in the future. BNetzA openly raises the question as to whether it would be possible to enable (or mandate) bitstream access at MDF level (which would presumably encompass access to a network node aggregating the traffic from multiple DSLAMs/MSANs located in street cabinets, since DSLAM/MSAN card sharing is not mentioned). Such bitstream access would consist of two parts: 

1. the network segment between the network termination point and the street cabinet (single end-user traffic); and
2. the network segment between the street cabinet and the MDF (consolidated end-user traffic). 

BNetzA confirms in this context that current German bitstream regulations do not comprise access at the street cabinet level. 

Interested parties are invited, until 5 May 2007, to respond to the consultation documents and to address the accompanying questions. 

For a discussion of this crucial development, please contact This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

Late on Friday 2 March 2007, the Dutch regulatory authority OPTA published a new letter addressed to market participants relating to 'All-IP' (KPN's Next Generation Network initiative encompassing an upgrade of its core network and a fundamental restructuring of its access network, including the use of VDSL2 from street cabinets and FttX). 

OPTA's key new findings following its previous letter to market participants dated 24 Jan 2007 (and the publication of a study on the economic viability of sub-loop unbundling by alternative operators) are as follows: 

• Input received by OPTA from operators (in particular the altnet association ACT, bbned and Reggefiber) suggests that bilateral/multilateral discussions are underway 'in various configurations', between KPN and alternative operators as well as among alternative operators, with a view to determining appropriate alternatives for MDF access, and/or conditions under which MDF access could be phased out in a manner that is acceptable to alternative operators.

• OPTA considers, given that direct discussions are underway, that it would NOT be appropriate, for the time being, for OPTA to issue policy rules ('beleidsregels') for the phasing out of local loop unbundling from Main Distribution Frames (MDF access). Such phasing out had previously been explicitly envisaged by OPTA, but was subsequently called into question by means of OPTA's letter of 24 Jan 2007 (see the T-REGS news item with the same date). OPTA now considers that such policy rules should be published at the same time as the draft new market analyses, i.e. at the end of Q2 2007. 

On the basis of its latest findings, OPTA now 'appeals' to KPN and to alternative operators, essentially as follows:

• KPN is being explicitly encouraged and enjoined to take an initiative to reach a solution for phasing out MDF access that is acceptable to all parties concerned. Such an initiative should encompass SDF (street-cabinet) backhaul, modalities and conditions for phasing out MDF access, and the provision of WBA (wholesale broadband access).
  

• OPTA is explicitly asking KPN to make voluntary commitments, which could be taken into account by OPTA when formulating its draft market analyses. OPTA adds that new draft market analyses of M11 (unbundled access) and M12 (wholesale broadband access) are scheduled to be published by the end of Q2 2007, and that these will NOT be delayed, i.e. KPN is given 3 months at most to come forward with voluntary commitments that are supported by the other market participants.
  

• OPTA indicates that KPN has responded positively to OPTA's requests in this respect (which were put by OPTA to KPN in the week of 19 Feb 2007). KPN has committed itself to report on progress to OPTA by mid-March 2007.
  

• Alternative operators are explicitly invited and enjoined to participate in the process, and to consider KPN's current or forthcoming proposals. OPTA suggests bilateral and multilateral meetings between the industry and KPN in the context of this process, whereby OPTA will take a monitoring role, but OPTA is open to consider further roles. 

Also on 2 March 2007, OPTA published a study on the UK approach to functional separation of BT (voluntary undertakings made by BT Plc. to Ofcom, which led, amongst others, to the creation of OpenReach). 

Major conclusions drawn by OPTA from the study of the UK experience are as follows: 

• Imposing functional separation is not foreseen in current EU and Dutch law. Neither OPTA nor the Dutch competition authority NMa currently have direct powers to impose such separation. T-REGS Note: OPTA does acknowledge that Art 6a.11 of the Dutch Telecommunications Law provides a possible opening, but invoking this article requires a prior Ministerial Decision.  After the review of EU directives, and transposition in Dutch law (in 2009-2010), a functional separation remedy may become available. OPTA states that the proportionality of applying this remedy will then have to be assessed in the context of market analyses.
  

• OPTA's 'provisional position' (based on the market analyses it conducted in 2005) is that imposing functional separation on KPN would, in the currently prevailing circumstances, represent a disproportionate intervention, and could, in the context of prioritising infrastructure competition, have undesirable effects. OPTA's board (the 'College') states explicitly that it is of the opinion that the Dutch market situation does not call for a remedy that would assume that effective and sustainable infrastructure competition is non-existent or not attainable. Functional separation is considered to be an intrusive remedy of last resort, and the conditions for its imposition are not presently considered to be fulfilled.

• However, OPTA also states explicitly that it can see advantages in achieving functional separation, and that a voluntary commitment by KPN, covering (certain aspects of) the UK model, would be considered significant by the College, and could be considered in the context of market analyses. 

The full text of the OPTA letter of 2 March 2007 (6 pages in Dutch only) can be accessed by clicking here.

For a discussion of these and other regulatory developments in The Netherlands, please contact This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   or  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

"This is not a case of undermining competition" [...] "The regulation is formulated in a technology neutral way and is very closely oriented towards the European directions. The concrete decision, whether a certain market - e.g. DTAG's VDSL network - is subject to regulation, is not decided at the legislative level, but by the [regulatory authority] Bundesnetzagentur through the established regulatory process, which has been checked with the European Commission." 

"The German government is therefore of the opinion that paragraph 9a TKG conforms to the EU legal and regulatory framework for electronic communications".

"I regret that Germany has chosen to ignore the Commission's concerns about this new telecom law despite several clear warnings from the Commission," [...] "The granting of regulatory holidays to incumbent operators is an attempt to stifle competition in a crucial sector of the economy, and in violation of the EU telecom rules in place since 2002."