Update 28 August 2006: The European Commission’s letter has now been
published. Pages 3-6 of the letter contain comments on the regulatory
obligations proposed by the German regulatory authority BNetzA.
Key comments by the European Commission in its letter
SG-Greffe(2006)D/204686 include the following:
Scope of the access obligation
The European Commission welcomes that the access obligation
includes bitstream over all variants of infrastructure, including ADSL2,
ADSL2+, SDSL and VDSL “unless they are not substitutes to other bitstream
access products”, and goes on to comment:
this background and in order to provide regulatory certainty the Commission
finds it appropriate for BNetzA to set out explicitly that remedies in the
present case also relate to the VDSL network. In view of the VDSL-based retail
products that DT has recently launched, such an application of remedies should
no longer be postponed.” and […] the Commission has at present no indication
of a lack of substitution between VDSL and other xDSL products, whether at
retail or at wholesale level. It is recalled in particular that a mere upgrade
of an existing service (such as an offering with a higher bandwidth) is not
considered in itself to constitute a new market. The Commission hence considers
that the question about the substitutability between bitstream access to VDSL
connections and other forms of bitstream access should be answered positively
from the outset. Excluding DT’s VDSL-based infrastructure from the access
obligation would jeopardise the effectiveness of that obligation to the
detriment of competition in the downstream market and of the consumer. […]"
Stand alone bitstream access
The letter also reveals that the European Commission asked
BNetzA to confirm whether “stand-alone bitstream access” (i.e. wholesale
“naked-DSL”, the ability to obtain wholesale broadband access without a
requirement for the end-user to have a PSTN/ISDN subscription from Deutsche
Telekom) would be mandated, and that BNetzA replied that this would be
introduced “in parallel with the European harmonised development”.
The European Commission comments on this as follows:
Commission asks BNetzA to impose this remedy without delay in order to enable
competitors to offer broadband connections to end customers without an
obligation to buy a telephone connection from DT. This would stimulate
competition in particular in rural areas less susceptible to local loop
unbundling, where competition on the retail services is particularly weak in Germany. Such
an offer will also provide an adequate means to increase competition in the
retail voice markets via Voice over IP."
Effective price regulation
The European Commission criticises BNetzA’s lack of clarity
in its approach to wholesale charge regulation for bitstream access, rejects
benchmarking as a means to set the wholesale charges, and concludes its
comments on this issue as follows:
the Commission asks BNetzA to impose either retail minus or cost-oriented price
control. If BNetzA chooses cost-orientation, it is invited, in order to
increase transparency, to communicate to the market players a cost model on which
cost-orientation will be based."
The European Commission’s letter also contains information
and comments on the number of points of connection/access (confirmation that
the competitors can freely choose the points and are not obliged to
interconnect at all points) and insists that BNetzA should swiftly notify its
proposals for ATM bitstream access.
T-REGS Note: It will be seen from the citations above
that the European Commission has issued an exceptionally strongly worded
statement. These are comments of which the German regulatory authority ‘shall
take the utmost account’ (article 7.5 of the Framework Directive 2002/21/EC)
but are not directly applicable in the Member State
concerned. BNetzA must now adopt a final decision, and Deutsche Telekom will be
required to publish a reference offer for IP bitstream access within 3 months
from the publication of the final BNetzA decision.
For a discussion of IP bitstream access and issues relating
to VDSL roll-out in Germany,
please contact Yves Blondeel.
(the previous T-REGS news item on this topic - containing links to the European Commission press release and FAQ - remains available)
release and FAQ relating to regulatory obligations ('remedies') for
wholesale IP bitstream access (subset of wholesale broadband access) in
Today's publications, whilst not encompassing the actual letter
addressed to the BNetzA, which will only be published by the European
Commission on 25 Aug 2006, do contain key elements of the European
Commission's eCommunications Consultation Task Force
(eCCTF) precedent-setting letter/decision.
The press release and FAQ provide a preview of the assessment that
has been made by the European Commission of the notification made by
regulatory authority BNetzA, covering, amongst others, the highly
contentious issues of 'naked DSL' and of wholesale access to Deutsche
Telecom's VDSL-based access network (as part of wholesale broadband
access more generally).
T-REGS will report in more detail on this case after the European
Commission or the BNetzA releases the full text of the European
Commission letter on IP bitstream remedies in Germany.