The European Commission's eCommunications Consultation Task Force (eCCTF) has published two letters (both dated 25 June 2004) relating to notifications made by the U.K. regulatory authority Ofcom and by the Finnish regulatory authority FICORA in the context of Market 12: Wholesale broadband access.
Both letters are precedent-setting.
As regards the U.K., the eCCTF is validating Ofcom's proposal to determine the minimum financial margin between the charges for the regulated wholesale broadband access product (BT DataStream, a form of ATM bitstream access) and the charges for the 'intermediate product' (BT IPStream/BT Central) which Ofcom has chosen not to include in the market definition of wholesale broadband access (a decision which, itself, had earlier been validated by the European Commission). The eCCTF makes clear that it considers the regulation of the financial margin between the two products to represent "further remedies, imposed in relation to the market in which SMP has been found".
As regards Finland, the eCCTF's letter contains substantial criticism of FICORA's proposed market definition (which excludes the link between the customer premises and the DSLAM, although this link is caught by another market review), but the European Commission is not proceeding to a Phase II investigation.
The key points of the eCCTF letter addressed to FICORA are reproduced below:
"By defining the wholesale product in a way that excludes the access link to the customer premises, Ficora’s current market definition constitutes a deviation from the Recommendation. This market definition does not appropriately identify the wholesale product necessary for the provision of broadband services by third parties. Additionally, this market definition raises the question of the terms on which a third party intending to provide retail broadband services is able to acquire the separate local loop product (for example shared access) as opposed to a situation where the local loop product is already included in the wholesale broadband (bitstream) access product.
However, as explained above, since the local loop product is regulated by Ficora’s regulatory measures on the LLU market and the wholesale broadband services markets are proposed to be regulated under the current notification, it is considered at this stage that the availability of “access to data transmission services to be supplied to an end user at a fixed location” in Finland would not be different to a situation where the wholesale broadband access market would be defined in accordance with market 12 of the Recommendation.
The Commission trusts that the combination of regulation of LLU and the wholesale broadband services will provide access seekers with a seamless service both in respect of technology and in respect of the commercial contracts involved. It also needs to be stressed that Ficora will need to examine any changes in the regulatory measures in the LLU markets also in terms of their impact on the market for wholesale broadband services and vice versa.
Prices and conditions: Regulating the wholesale broadband access market in a way which requires a third party to acquire two separate wholesale products may not be the most effective way to promote competition. First, to provide broadband services to end-users, a third party may need to have two separate commercial contracts with the provider of the wholesale products. Secondly, the system of two separate products may have negative effects on transparency and more seriously, may lead to a situation where an efficient provision of retail broadband services is more difficult than in case of a single wholesale broadband access product.
Given the situation described above and in particular the regulatory measures adopted with regard to LLU markets, the Commission is of the view that, in practice, the provision of two separate products instead of one will not lead to any competitive disadvantage for access seekers. Ficora should ensure, however, that the two wholesale products in combination are provided on conditions and at prices which are comparable to a situation where a regulated single wholesale input (e.g. bitstream access) were available."
The letter to FICORA also discusses the treatment of Cable TV networks (and other infrastructures) in the context of wholesale broadband access.
The letters have also been added to the T-REGS repository of eCCTF letters, using .zip archives containing descriptive filenames.
For a discussion of regulatory developments relating to wholesale broadband access, please contact Yves Blondeel.