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Italy: Draft legislative amendment enabling ‘functional separation’ as a regulatory obligation Print E-mail
Wednesday, 25 April 2007
Update 2 May 2007: The National Regulatory Authority AGCOM has today issued a major public consultation document (Delibera 208/07/CONS) which covers functional separation (including 13 proposed measures) and next generation access networks.
 
Interested parties are given 60 days to comment on the main body of the consultation (46 pages, available only in Italian) and on an associated study (128 pages, available only in Italian). The accompanying AGCOM press release can be accessed by clicking here.
ImageYesterday, the Italian minister of Communications released the exact wording of the proposed legislative amendment relating to functional separation in the telecommunications sector.

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

1) Impose, on operators declared as having Significant Market Power, where justified and proportionate, an 'atypical obligation', i.e. a regulatory obligation that is not part of the standard menu of regulatory obligations contained in articles 9-13 of the Access and Interconnection Directive 2002/19/EC, and reflected in articles 46-50 of the Italian Code on electronic communications (the 'Codice').

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. 
 
2) As regards the exact scope ('perimeter') of the activity subject to functional separation (the notion of 'access network' is not defined), the implementation details, etc., the procedure is not necessarily foreseen as an obligation of functional separation imposed unilaterally and comprehensively by the regulatory authority. AGCOM would be entitled to accept voluntary commitments, or come to an agreement with the SMP operator. Any outcome of such a procedure would, however, be materialised in an approval decision of AGCOM, and such an AGCOM decision would, in fine, contain obligations 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 .

 
Germany: 2nd round analysis on unbundled access (Market 11), including duct access proposal, etc. Print E-mail
Friday, 13 April 2007

ImageLast 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 .

 
Netherlands: OPTA update on regulation of KPN’s ‘All-IP’ Project and functional separation Print E-mail
Monday, 05 March 2007

ImageLate 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 .

 
Germany: Amendments to Telecommunications Act published - emerging markets clause in effect Print E-mail
Friday, 23 February 2007
Update 26 Feb 2007 (2): Following the European Commission's statement of this morning, the Secretary of State at the German Federal Ministry for Economy, Bernd Pfaffenbach, declared in a press release today that (in his view contrary to Ms. Reding's statements earlier today) paragraph 9a of the Telecommunications Act (TKG) does not provide for a special treatment of DTAG's VDSL and fibre network.
 
A T-REGS translation of key excerpts is provided below: 

"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".


Update 26 Feb 2007 (1): The European Commission announced today that it had decided to initiate 'fast track' infringement proceedings against Germany relating to the 'emerging markets' clause that is now incorporated in the German Telecommunications Act.
 
A letter of formal notice is being addressed to the German authorities, which are given 15 days to respond. The European Commission also stated that it intends to refer the case to the European Court of Justice as soon as possible.
 
The European Commission's press release (the full text in English is available by clicking here) includes citations of Commissioner Viviane Reding, as follows:

"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."

and
 
"The German decision to grant Deutsche Telekom a 'regulatory holiday' is bound to lead to numerous legal disputes at EU and national level," [...] "This is the worst possible signal for investment, as now neither the incumbent nor new market entrants will have legal certainty in Germany. Efficient implementation of EU telecom rules would clearly have been the better way to promote both competition and investment."  
 

ImageToday's German official journal (Bundesgesetzblatt) contains the Act amending the Telecommunications Act. 
 
 
The clauses on 'emerging markets' (see a previous T-REGS news item - with updates - for full details) as well as various other modifications and additions to the existing legislation come into effect tomorrow, i.e. 24 Feb 2007. Article 3 of the Act, which mainly concerns new consumer protection legislation, and which entails new obligations on service providers, comes into effect on 1 Sep 2007.
 
The full text of the amending legislation, the "Gesetz zur Änderung telekommunikationsrechtlicher Vorschriften", is officially dated 18 Feb 2007, and can be accessed (in German only) by clicking here. The corresponding press release of the German Federal Minister Glos can be accessed by clicking here.
 
Sweden: PTS puts forward new broadband strategy, advocates functional separation and fibre access Print E-mail
Friday, 16 February 2007

ImageOn 15 Feb 2007, the Swedish regulatory authority PTS issued a 164-page document (available only in Swedish) containing extensive proposals for a new national broadband strategy. 

The stated aim of PTS is to achieve an increase in the accessibility of broadband infrastructure with the short-term objective of broadband for all households (permanent housing), businesses and public entities no later than 2010 and to promote and protect sustainable retail market competition for broadband services. Broadband is defined in the context of this 2010 target as connections that can be upgraded to a downstream transmission speed of at least 2 Mbit/s. 

Several simultaneous 'policy trajectories' are put forward by PTS to achieve the stated 2010 goals. The first trajectory involves financial and regulatory requirements for government funded infrastructures; the second trajectory addresses regulation of the fixed incumbent operator TeliaSonera's network infrastructure and wholesale activities (including proposals for functional as well as legal separation). The third trajectory focuses on openness and neutrality of (often government-owned or funded) fibre infrastructures. 

T-REGS Note: Sweden is the EU Member State in which widespread local access fibre infrastructure was developed first, often funded and operated by local municipalities or regional governments. Many of these infrastructure projects were started in the early 1990s, and were not notified to the European Commission under State Aid rules. This stands in marked contrast to the situation in many other Member States (recently especially Austria, France, Ireland, The Netherlands, and the UK), where municipal and regional public funding of fibre access projects has come under scrutiny of the European Commission in application of State Aid rules (Article 87 of the EC Treaty). 

An explicit element of PTS' newly proposed policy is to take steps to encourage or ensure that municipal authorities that currently own and operate broadband networks in areas where the commercial roll-out of so-called "future-proof broadband infrastructure" has been carried out, or is possible, should consider disposing of such operations, or alternatively, should take special measures to ensure that competition is not distorted. 

The three 'policy trajectories' put forward by PTS, including potentially substantial regulatory interventions, are as follows:

Read more...
 
Court of First Instance upholds Commission Decision in Wanadoo (France Télécom) case Print E-mail
Tuesday, 30 January 2007
ImageThe Court of First Instance of the European Union (CFI) has today issued its Judgment in Case T-340/03.   
 
 
This is the appeal lodged by France Télécom in 2003 against the European Commission decision of 16 July 2003 (Case COMP/38.233) sanctioning an abuse of dominant position (Article 82 of the Treaty) by Wanadoo Interactive on the retail market for high-speed Internet services for residential customers in France in the period from 1 March 2001 until 15 Oct 2002. Wanadoo Interactive was a subsidiary of France Télécom prior to its subsequent merger with France Télécom.
 
The CFI Judgment upholds the European Commission decision. The CFI also upholds the amount of the fine (€10.35 million).
 
The full text of the Judgment can be accessed by clicking here.
 
A press release accompanying the Judgment can be accessed by clicking here.
 
This CFI Judgment can be appealed at the European Court of Justice.
 
Netherlands: OPTA fundamentally revises its proposed position on KPN’s ‘All-IP’ Project Print E-mail
Wednesday, 24 January 2007
ImageUpdate 26 Jan 2007: OPTA has now released a 57-page 'public version' of the study entitled 'The Business Case for Sub-Loop Unbundling in The Netherlands'. The full text (in English) can be accessed by clicking here.

The Dutch regulatory authority OPTA has today published a letter addressed to market participants, which constitutes a major revision of the approach that OPTA had previously set out in its Position Paper of 3 Oct 2006 (see the T-REGS news item of the same date).

OPTA is essentially abandoning (for the time being) its announced intention to publish policy rules ('beleidsregels') for the phasing out of local loop unbundling from Main Distribution Frames (MDF access).

The motivation that OPTA puts forward for this fundamental revision of the previously announced approach is that OPTA has provisionally concluded that a fully fledged alternative ('volwaardig alternatief') for MDF access cannot be guaranteed in the prevailing circumstances. Alternatives previously examined included sub-loop unbundling from street cabinets, (limited consideration of) backhaul from the street cabinet locations, and wholesale broadband access (including over VDSL2).

Specifically, OPTA states in today's letter that permitting KPN to withdraw MDF access would only be conceivable if market entry possibilities and the continuity of service provision by alternative operators would be sufficiently guaranteed. According to OPTA, the studies conducted, and input received from alternative operators, indicate that it is not sufficiently clear that a fully fledged alternative would be sufficiently guaranteed.

The College (board) of OPTA will now examine 'possible avenues for solutions', including explicitly the possibility of maintaining traditional MDF access for local loop unbundling.

T-REGS Note: Although this is not stated in the OPTA letter, adopting a solution whereby MDF access is maintained whilst KPN would roll out VDSL2 from street cabinets would certainly require the definition of precise rules on spectral interference on the metallic local access network. There are precedents for this in other EU Member States.

In the letter, OPTA announces its intent to involve market participants in its reflections. Subsequently, the College will examine whether the publication of policy rules is opportune, and if so, in what timeframe. OPTA indicates that it expects to be able to provide clarification on its stance by the end of Feb 2007.

One of the key elements that has triggered OPTA's revised position, alongside the market participants' reaction to the consultation, is the study it commissioned on the business case for alternative operators using sub-loop unbundling from street cabinets. OPTA's letter contains a short (2 pages) executive summary of this study (this is the only part of the document that is in English).

Read more...
 
European Union now has 27 Member States Print E-mail
Monday, 01 January 2007
ImageToday, 1 January 2007, the European Union welcomes 2 new Member States: Bulgaria and Romania, bringing the total number of Member States to 27.
 
 
The T-REGS website is adapted, by moving, in our weblink category, the National Regulatory Authorities of Bulgaria and Romania to the EU category to reflect the new European Union.
 
Update 4 Jan 2007: The Romanian regulatory authority ANRC is being replaced by a new National Regulatory Authority for Communications and Information Technology (ANRCTI), under the same leadership and with the same staff.  
 
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