The Economic Analysis Team (EAT) within the Dutch regulatory authority OPTA has published a Policy Note entitled:
“Infrastructure and Services-based Competition in the Broadband Access Market – A scenario for dynamic regulation of access to the fixed network of the incumbent.”
The analyses and conclusions expressed in Economic and Regulatory Policy Notes of the Economic Analysis Team are always accompanied by a cautionary statement that they do not necessarily reflect the opinions of the Commission of OPTA. As such, the opinions of the EAT, do not have a binding legal status.
This latest regulatory policy note makes an analysis of the obligation to provide access to the fixed public telephone network, including for the provision of broadband services.
The document attempts to strike a balance between infrastructure and services-based competition. EAT looks into the possibilities for infrastructure duplication, and entertains the notion that the imposition of obligations should be tied to the ease of reproducing a particular type (or section) of infrastructure. “Types of access that are complementary stimulate rollout. When types of access become each others’ substitutes, this function lessens. In that case, withdrawal of access obligations must be considered,” says the note’s abstract.
T-REGS Commentary: One possible implication is that OPTA might in the future deviate from the European Commission’s Recommendation on Relevant Markets Susceptible to Ex-Ante Regulation, which clearly distinguishes Market 11 (wholesale unbundled access) from Market 12 (wholesale broadband access). There are also possible implications relating to access to cable-tv networks.
To the notion of substitutability, the EAT ties the notion of flexible pricing. “Pricing of the different types of access will have to take their respective relations into account. Some (temporary) types of access will have to incorporate a dynamic investment incentive to prevent impediment of efficient rollout.”
T-REGS Commentary: The ERG Common Position on the approach to appropriate remedies in the new regulatory framework also briefly touches upon dynamic access pricing. The Netherlands is the EU Member State which has pioneered this concept by putting forward a gradual increase of the monthly rental fee for unbundled local loops.
EAT puts forward the following conclusions:
1. The current forms of access to KPN’s network appear to be proportional at present, because they are not substitutes (yet) but complement each other.
2. Local and regional types of access are moving closer to each other. Where two or more types of access are fully substitutable, a number of types of access regulation should be withdrawn. Increasing substitution could lead to the withdrawal of one local and at least one regional type of access.
3. Wholesale Line Rental chiefly promotes services-based competition and should only be made mandatory if it clearly constitutes a step-up to a local roll-out of infrastructure.
4. Services such as VoIP are accelerating developments towards the substitution of local forms of access.
5. The charges for the current types of access to KPN’s network could more closely reflect the relations between them. This would yield more dynamic investment incentives.
The full text of the Policy Note (in English) can be accessed by clicking here.