Update 29 June 2018: Today, the BIPT, VRM, CSA, and Medienrat published their decisions (French version 1060 pages) on the regulation of Markets 3(a), 3(b) and TV broadcasting. Their decisions contain an English language summary, at pages 30 to 36.
As regards the retail broadband and TV broadcasting markets, the regulators reach the following conclusion:
S8. BIPT concludes that without regulation the retail markets situation would be unsatisfactory for users. There is a serious risk that retail markets become more concentrated. The offers available on the broadband and broadcasting retail markets would be limited to the offers of operators with their own infrastructure (Proximus and the cable operators). In the absence of regulation indeed, these operators would not be encouraged to propose access offers to their competitors (or at least to propose sufficiently attractive offers). Moreover, without regulation, the encouragement to compete on price could be inferior to its current level. As a consequence, the benefit for both residential and professional users – in terms of choice and price – would be limited, while maximum benefit in these domains is one of the major objectives of the regulatory framework.
At the wholesale level, the regulators took a precedent-setting market definition decision, which amounts to separating, on the one hand, the wholesale central access M3(b) provided over Proximus' networks (copper and fibre) - presented as standardised under ITU SG-15, and, on the other hand, the wholesale central access M3(b) provided over Cable-TV networks - presented as CableLabs standardised networks, the conclusion on which is put forward as follows:
S10. The distinction between central access under ITU SG15 standardisation and central access under CableLabs standardisation is due to the use of different protocols. These protocols lead to the absence of substitutability between both products. On the demand side, the migration between products under different types of standardisation generates considerable costs and delays. On the supply side, the provider of a wholesale access to broadband under a particular type of standardisation would not be able to adapt his means of production without facing considerable costs and delays. There is also no sufficient indirect constraint to justify the fact of joining these two products together in the same market. Assuming that an extended market for central access (which would include both the central access products over copper and fibre networks and the central access products over cable) had been defined, there are also sufficient evidential indications to conclude that there would probably be a common dominant position of Proximus and the cable operators on that product market, in each geographical area constituted by the coverage areas of cable operators Brutélé, Nethys and Telenet.
This then feeds into a set of obligations imposed - separately - on Proximus and on each Cable-TV network operator. The core wholesale access remedies are shown in the two tables below (there are further specific non-discrimination, transparency, and related technical remedies).
The tables below summarise the main access and price control obligations respectively imposed upon Proximus and the cable operators.
Please click on the screenshots for better resolution images.
Important details specified by the Belgian regulators are as follows:
S21.2 an obligation to apply fair tariffs for the other wholesale services (over fibre and cable). By “fair”, BIPT means a price which may exceed the costs while keeping a link with costs. In other words, there can be a reasonable margin between the cost of the product and the wholesale price.
S21.3 a cost orientation obligation for the ancillary services (such as collocation and installation fees) of all the SMP operators.
S22. Pending the development of new cost models, BIPT proposes the following:
S22.1 The tariffs of the cable operators’ wholesale services should be brought into line with the wholesale tariffs of Brutélé, as BIPT considers that they do not deviate to far from the best available benchmark;
S22.2 The access tariff to some FTTH profiles should be set at the level of the prices agreed by trade agreement between Proximus and EDPnet.
The European Commission's comments letter on this case, which broadly validates the Belgian regulators' approach, but expresses some critical remarks, will be key in the national appeals process, at the Brussels Court of Appeals. It is therefore also included here: BE-2018-2073_2074_2075 ADOPTED_EN_Redacted
For a discussion of this updated T-REGS news item, please feel free to contact Yves Blondeel.
Update 2 May 2018: The Belgian regulatory authorities have formally notified new proposals to address Markets 3(a), 3(b) and TV broadcast to the European Commission. The proposals are precedent-setting, in particular by defining separate wholesale central access markets for ITU SG15 networks (copper/fibre) and CableLabs networks (cable), and proceeding to find Significant Market Power on both these wholesale central access markets, in effect defining multiple separate Markets 3(b) with 100% market share for the network operators concerned. If these proposals reach a final decision stage, the Belgian wholesale regime for Cable-TV would in part be put on a new regulatory footing, and further tightened in technical and economic terms. The BIPT has issued a press release, which contains a link to the Circabc website containing the full set of notified documents. The full set of documents is also available from T-REGS on request. The European Commission has 30 days to assess this formal notification, and may issue, comments, escalate the notification to second phase assessment, or opt to issue a 'no comments' letter. For a discussion of this updated T-REGS news item, please feel free to contact Yves Blondeel.
Update 1 Sep 2017: The deadline for the BIPT consultation is extended to 29 Sep 2017.
Update 28 July 2017: The BIPT has published an 800+ page consultation document containing draft market analyses of Market 3(a) - wholesale local access at a fixed location, two separate wholesale central access markets 3(b), i.e. one for xDSL/fibre, and another for cable DOCSIS, and the market for television broadcasting. The consultation is open until 15 September 2017. The full text, in French and in Dutch language (and with a short English summary) is available here.
Update 22 February 2016: The Belgian regulatory authorities, acting together as the CRC (Conference of Regulators for the electronic communications sector), adopted their final decisions relating to the revised wholesale charges applicable to resale/access on the Cable-TV networks of Brutélé, Nethys (Voo) and Telenet.
The full text, as published on the BIPT website on 22 February 2016 (in French and in Dutch), is available by clicking here. The new wholesale charge calculator, also available in English, is available here.
Update 11 February 2016: The European Commission has today published its comments letter (formally dated 5 February 2016) on the CRC's notification of proposals to reduce wholesale cable resale/access charges. The European Commission is not escalating the case to second phase, but its comments are highly critical, including wording as follows:
Appropriateness of several assumptions in the proposed methodology
As a result of all of the above, the Commission is concerned that the methodology proposed by CRC does not set an appropriate wholesale access price. Whilst the Commission recognises that the various flaws in the model may in effect counterbalance each other, potentially reducing the overall impact on wholesale prices, the Commission urges CRC nevertheless to re-visit the various parameters of the retailminus methodology set out above (i.e. the valuation of VAS, the setting of the correct minus and the use of a transitory period) in order to ensure that the final measure accurately reflects market circumstances and appropriately sets the correct build-or-buy signals.
Appropriateness and proportionality of the proposed regulatory approach
The Commission is of the view that the market trends witnessed over the past few years may no longer render appropriate at least some of the regulatory constraints imposed on the SMP cable operators, which were justified, predominantly, by the competitive advantage gained through those operators' ability to provide analogue TV. In any case, the current justification for regulatory intervention is based on an outdated market analysis. In light of the above, the Commission questions whether the continued application of regulatory remedies in general, and a retail-minus based price control in particular, remain appropriate, proportionate and objectively justified for the relevant market.
In light of the above, the Commission, urges CRC, to revisit without further delay its general approach to regulation of the market for the delivery of broadcasting signals and access to broadcast networks in Belgium, in order (a) to reassess whether continued regulation of cable access is, indeed, still justified and, (b) should this still be the case, whether an alignment of the current cable access price regulation with the wholesale broadband costing methodology would not be more appropriate.
The full text of the European Commission's comments letter is available by clicking here.
Update 3 September 2015: In May-June 2015, the BIPT, VRM and CSA issued consultation documents containing proposals to reduce wholesale cable resale/access charges. The proposals are to:
1) Proceed to the removal of specific aspects of cable companies’ retail offers from the retail-minus calculation, and
2) Address potentially different downstream/upstream broadband speeds to be offered by takers of cable resale/access.
The proposals are accompanied by a spreadsheet enabling the calculation of future revised retail-minus charges, showing very substantial reductions compared to the charges defined in the regulators’ decisions of 11 December 2013.
The cable companies' responses, as well as Proximus' and Mobistar's responses (Mobistar currently being the only access-taker - having concluded agreements with Telenet and Voo) dated 26 August 2015 and 3 September 2015 are available by clicking here.
Update 18 May 2015: On 13 May 2015, the Brussels Court of Appeal dismissed the other Belgian cable companies' appeals on the substance of the decisions mandating resale/access on cable companies' networks. The full text of the judgment (in French language only), as published on the BIPT's website on 18 May 2015, is available via http://tre.gs/jn.
The issuance of this judgment concludes the Belgian national appeals process on the 1 July 2011 CRC decisions to mandate resale/access on Cable-TV networks.
In the meantime, it is clear that further work on regulation of wholesale charges for of resale/access is ongoing, and that the next round of (three-yearly) market analysis is actively being prepared by the BIPT and by the media regulators.
For a discussion of this repeatedly updated T-REGS news item, which has tracked all major developments on Belgian cable resale/access since the first proposals were put to public consultation in Dec 2010, please contact Yves Blondeel.
Update 13 Nov 2014: On 12 Nov 2014, the Brussels Court of Appeal dismissed Telenet's appeal on the substance of the decisions mandating resale/access on Telenet's cable network. The full text of the judgment (in Dutch language only) is available via http://tre.gs/hz .Equivalent dismissals of other cable company appeals are expected to follow shortly.
Update 28 March 2014: The CSA, the media regulator for the Francophone Community, has specified that companies making use of resale/access on Cable-TV networks will be subject to must-carry obligations for a specific set of TV channels as and when they reach either of two thresholds: 50000 customers in the Francophone Community, or 25% market share within the cable footprint of the cable network they rely upon. The CSA's announcement is available by clicking here (in French only). The TV channels concerned are the Francophone public broadcaster channels (La Une, La Deux, La Trois, TV5), the Flemish public broadcaster channels (Eén, Ketnet/Canvas), and the Germanophone public broadcaster channel (BRF).
Update 12 Dec 2013: Today, the Belgian regulatory authorities, acting together as the CRC (Conference of Regulators for the electronic communications sector), announced their final decisions, relating to the wholesale charges applicable to resale/access on the Cable-TV networks of Brutélé, Coditel (Numéricable), Tecteo and Telenet.
This set of decisions completes a regulatory process which was initiated in 2010, although it remains subject to judicial appeals on the substance.
This T-REGS article tracks (newer to older) the historic public record of this complex regulatory process.
The press release (in French, Dutch, German language) announcing the completion of the regulatory process was made available by each Belgian regulatory authority. The BIPT's announcement is linked here.
A spreadsheet (in English) which computes (and enables computation in the future of) the retail-minus based wholesale charges was made available by the CRC, and is saved and copied here for reference: CRC_RetailMinus_Tariffs_111213_v1.0 (the values in this spreadsheet will evidently evolve over time).
A document (in French and in Dutch) contextualising the wholesale charge calculations on a retail-minus basis has also been made available by the CRC. It is saved and copied here for reference (French version): Communication+calcul+RM+-+F
The full set of decisions relating to the wholesale charges applicable to resale/access on Cable-TV networks, adopted on 11 Dec 2013, and published on 12 Dec 2013, is linked below:
Brussels Capital Region (BIPT) decision: affecting Brutélé, Coditel (Numéricable), Telenet.
Flemish Community (VRM) decision: affecting Telenet, Tecteo, Coditel (Numéricable).
Francophone Community (CSA) decision: affecting Tecto, Coditel (Numéricable), Telenet.
Germanophone Community (Medienrat) decision: affecting Tecteo.
T-REGS Note: The title of this T-REGS article was modified on 14 Dec 2013 to reflect the fact that final decisions were taken by the Belgian regulatory authorities. These decisions are subject to judicial review. The previous title of this article (tracking of this regulatory process was initiated in December 2010) was 'Belgium: Proposals to mandate resale/access on Cable-TV networks'.
Update 25 Nov 2013: The European Commission has published its comments letter on the Belgian CRC's notification of decisions containing the proposed mandated wholesale charges for cable resale/access. Whilst the comments are important, the European Commission has not proceeded to a Second Phase escalation, and hence it is to be expected that the Belgian regulatory authorities will imminently adopt the wholesale charges.
Full text of European Commission comments letter BE-2013-1511 Adopted_EN_fin (English version - French language original is available on request).
Update 10 Oct 2013: Draft decisions containing the proposed mandated wholesale charges for cable resale/access have been notified by the CRC to the European Commission.
The most common proposed one-off bringing into service contributions and non-recurring contributions per activated line are shown (in French - click to enlarge) below (aspects of these contributions are slightly lower for the Brussels Capital Region).
T-REGS Note: These values are higher than those put to national public consultation by the Belgian regulators on 2 April 2013 (shown in earlier updates of this article).
The proposed retail-minus values for the recurring subscription fees are shown (in French - click to enlarge) below.
T-REGS Note: These retail-minus values are lower than those put to public consultation by the Belgian regulators on 2 April 2013 (shown in earlier updates of this article).
The European Commission has one month from the date of notification to express whether it has no comments, comments, or wishes to escalate the notification to Second Phase in accordance with Art. 7a of Directive 2002/21/EC as amended by 2009/140/EC.
For a discussion of this updated T-REGS news item, please feel free to contact Yves Blondeel.
Update 9 Sep 2013: The CRC (Conference of Regulators) has today published its decisions (dated 3 Sep 2013) approving the qualitative aspects of the reference offers of Brutélé, Coditel (Numericable), Tecteo and Telenet, which triggers the formal opportunity for seekers of resale/access on Cable-TV networks to file formal requests (to be satisfied within a 6-month timeframe by the cable companies, with two distinct 'trigger modalities').
Noteworthy elements are the fact that:
- The decisions (e.g. paragraph 34 of Tecteo Francophone Community and paragraph 36 of Telenet Brussels Capital Region) address the European Commission's comments letter dated 8 Aug 2013. In the paragraph concerned, it is stated that the relevant Belgian regulatory authority has already initiated work on the next round of market analysis, and that this work will lead to a public consultation in 2014. T-REGS Note: Article 16.6(a) of the Framework Directive 2002/21/EC, as amended by 2009/140/EC, provides for a 3-year lifecycle from the date of final adoption of measures resulting from a market analysis to the notification of draft measures in the subsequent round of market analysis.
- The decisions (e.g. paragraph 205 of Tecteo Francophone Community and paragraph 241 of Telenet Brussels Capital Region) contain a requirement for the reference offers to enable access seekers to request the resale of 2 supplementary broadband Internet access profiles (downstream/upstream speeds, volumes, etc.) of their own definition, in addition to the possibility to resell 5 existing broadband Internet access profiles (currently commercialised offers of the cable companies to their customers or legacy offers which are still provided by the cable companies to their customers).
A press release (in French, Dutch and German) is available.
The decisions relating to the reference offers of the individual cable companies are listed below.
T-REGS Note: Decisions on the quantitative aspects (i.e. mandated wholesale charges for cable resale/access) have not yet been notified to the European Commission.
Update 12 Aug 2013: The European Commission has published its comments letter on the notification of the draft measures concerning the reference offers for resale/access to Cable-TV networks.
Whilst the case is not escalated to Second Phase, the European Commission's comments are significant, especially with regard to analogue TV. This is the case because the position of the cable companies on the market for retail analogue TV is the cornerstone of the market analysis approach taken by the Belgian regulators. The European Commission's key indications are as follows:
The Commission, therefore, strongly urges CRC to monitor the proportionality of the analogue TV resale obligation, the impact of the present obligation both on the SMP operators and on its beneficiaries as well as their actual (parallel) investments in, and development of digital innovative services and infrastructures. The Commission would also like to urge CRC to withdraw the analogue resale obligation as soon as the market structure has become more prone to competitive dynamics, to ensure that regulatory intervention remains proportionate and the provision of analogue broadcasting in Belgium is not unduly prolonged. Therefore the Commission would like to urge CRC to conduct a new market review as soon as possible.
Full text of the EC comments letter dated 8 Aug 2013, published on 12 Aug 2013: BE-2013-1485 Adopted_EN
Update 15 May 2013: The CRC (Conference of Regulators - which brings together the BIPT, VRM, CSA and Medienrat) has published an indicative timeline for the finalisation of the cable resale/access decisions. This shows that notification to the European Commission is planned for June 2013 (technical aspects) and July/Aug 2013 (wholesale charges), and projected final adoption of the measures is scheduled for Sep 2013 (technical aspects) and Oct 2013 (wholesale charges).
Update 7 May 2013: The CSA (Francophone Community) has today announced that it is extending the deadline for responses to the consultation on wholesale charges for cable resale/access to 27 May 2013. The CSA also held a public hearing on the matter on 2 May 2013. T-REGS attended this hearing, at which speakers from Belgacom, Brutélé, BASE, Mobistar and Tecteo expressed their companies' views, and Test-Achats (a consumer organisation) also communicated its opinion (in favour of cable access/resale as well as access to Belgacom's IPTV platform). Separately, the VRM (Flemish Community) has published its own consultation on the wholesale charges for cable resale/access in the Flemish Community, with a deadline for responses set at 15 June 2013.
Update 2 April 2013: Today, draft decisions determining the wholesale charges for cable resale/access were published, for consultation, by the CSA (Francophone Community) and by the BIPT (Brussels Capital Region), with deadlines for responses on 9 May 2013 and 15 May 2013 respectively. Equivalent VRM (Flemish Community) and Medienrat (Germanophone Community) will be published imminently.
The draft decisions of the different regulatory authorities are essentially identical. The most prominent features of the draft decisions are as follows:
Para 78: One-off wholesale access cost/charge. Cost data provided by Coditel is proposed to be taken as the basis for all Belgian cable companies, on the grounds that this cost data was the lowest, and taking account (among others) of the fact that Coditel's former parent company Numéricâble has experience in making wholesale access available in France and used the same consultant for its costing work as it did in France. Reference is also made to the OPTA Decision in The Netherlands. T-REGS Notes: Numéricâble provides wholesale access in France voluntarily, not as a result of regulatory obligations. The OPTA Decision in The Netherlands was annulled on appeal.
Para 92: One-off wholesale access cost/charge. It is proposed that costs must not be borne by takers of cable resale/access alone, but by all operators on the cable platform (i.e. including each cable company itself).
Para 98/101: One-off wholesale access cost/charge. It is proposed to be set at €1.5m (based on Coditel data) but is to be shared by all operators on the cable platform as per para 92. The implications of this proposal are shown below (including screenshot).
Para 112. One-off wholesale access cost/charge. It is proposed to be allocated entirely to the analogue TV component. T-REGS Note: Analogue TV is the cornerstone (and potential Achilles heel) of the envisaged Belgian cable resale/access obligations.
Para 117. The number of operators over which the one-off wholesale access cost/charge is proposed to be spread is: 3 operators for analogue TV (Belgacom is assumed to be a very likely taker of wholesale analogue TV access, based on Belgacom's statements in its responses to previous public consultations on cable resale/access); 2 operators for digital TV+ broadband Internet access (as per the original CRC Decision on cable resale/access (discussed in previous updates to this T-REGS article), Belgacom is entitled to analogue TV resale but is not entitled to access to the cable digital TV platform and is not entitled to resell cable broadband Internet access).
Para 120. One-off wholesale access cost/charge. The cost is proposed to be recovered over a period of 3 years (up-front fee for an alternative operator achieving cable resale/access + up-front fee per line).
Para 131. The WACC (weighted average cost of capital) is proposed to be set at 10.3% (high end of the considered range).
Para 165. Recurring resale/access charge. The regulators state that application of a pure retail-minus charging method would not allow access seekers/takers to be effective competitors to the cable companies. They propose to include taking account of a profit margin in the retail-minus charging method. The profit margin is proposed to be set at 5% (below the profitability levels shown for the cable companies).
Para 168. Recurring resale/access charge. The retail-minus charge is proposed to be based on CATV company ARPU (average revenue per user) rather than on headline retail prices. This is put forward with the intent of neutralising the effect of temporary promotions, and that fact that a proportion of customers served by cable companies are still on older/more expensive packages which are no longer offered on the retail market, etc.
Para 185. Recurring resale/access charge. The retail-minus level is proposed to be set differently for different cable companies, and differently for stand-alone analogue TV and for bundles; the proposed retail-minus levels range from 20% to 35% (complex matrix across products/bundles/the cable company concerned - this matrix is shown in the screenshots below).
Para 200. If the CATV company provides retail components free of charge to its own retail customers, those same components are proposed to be mandated to be free of charge as well at wholesale resale/access level.
Para 219-220. Summary of proposed one-off and recurring resale/access charges, for each cable company (screenshots from draft CSA decision put to public consultation).
Draft CSA decision (French Community)
Draft BIPT decision (Brussels Capital Region)
For a discussion of this updated T-REGS news item, please feel free to contact Yves Blondeel.
Update 23 Jan 2013: The BIPT has today published its draft decision requiring amendments to Coditel's draft reference offer for cable resale/access. The public consultation is open until 20 Feb 2013. The draft decision contains the same clause on the implementation timeframe as was highlighted in the previous T-REGS update.
Draft BIPT decision on Coditel (Numéricâble) (Brussels Capital Region)
Update 21 Dec 2012: The Belgian regulators (BIPT and the media regulators VRM, CSA and Medienrat) have adopted their draft decisions requiring amendments to the cable network operators' draft reference offers for cable resale/access. Public consultations on these draft decisions are open until 8 Feb 2013 (5 Feb 2013 in the case of the Medienrat). The draft decisions contain a clause on the implementation timeframe, stating that the 6 month timeframe starts from the date of conclusion of a pre-contractual agreement with up-front payment (the amount of the up-front payment will be determined at a later stage), or from the date of a formal contract being signed for cable resale/access. The practical implication of this clause is that the cable network operators do not have to implement wholesale cable access/resale if there is no credible demand from access seekers.
Draft BIPT decision on Telenet (Brussels Capital Region)
Draft BIPT decision on Brutélé (Brussels Capital Region)
Draft VRM decision on Telenet (Flemish Community)
Draft VRM decision on Tecteo (Flemish Community)
Draft CSA decision on Tecteo (Francophone Community)
Draft CSA decision on Brutélé (Francophone Community)
Draft CSA decision on Telenet (Francophone Community)
Draft Medienrat decision on Tecteo (Germanophone Community)
Update 1 Dec 2012: On 30 Nov 2012, the BIPT published the current text of the draft reference offers of Telenet, Brutélé and Coditel (Numéricâble) for cable resale/access. The BIPT is not inviting comments at this stage. The regulatory authorities will subsequently open a public consultation on proposals to approve, and, where applicable, make ex-officio modifications, to the draft reference offers. Each of the cable network operators has included reservations in its draft reference offer, and Coditel indicates that it may shut down analogue cable TV in Brussels, on the grounds of combating piracy of analogue cable TV. None of the cable network operators has included the level of proposed wholesale charges for cable resale/access in its documents at this time. The draft reference offers are available at:
Update 7 Nov 2012: The cable resale/access decisions were appealed by the cable companies, on procedural grounds (accelerated procedure aiming at suspension of the decisions) and on the merits. On 6 Nov 2012, the Brussels Court of Appeal rejected the Brutélé/Tecteo and Numéricâble appeals in accelerated procedure, i.e. the decisions are not suspended. This follows a similar rejection of the Telenet appeal on 4 Sep 2012 by the same Court. The BIPT issued a press release on this development, which can be accessed via http://tre.gs/7b (in French and Dutch). Judgment of the appeals on the merits is expected during 2013.
Update 18 July 2011: The Belgian regulatory authorities have today published their cable access/resale decisions. The decisions are formally dated 1 July 2011 and will become effective on 1 August 2011. The core remedies listed in the EC notification are maintained, i.e. (i) analogue cable TV resale, of which Belgacom can also be a beneficiary; (ii) cable digital TV platform access, from which Belgacom is excluded as a beneficiary; and (iii) cable broadband Internet resale, from which Belgacom is excluded as a beneficiary. An English language press releaseis now available from the BIPT.
The BIPT decision (for Brussels Capital Region) can be accessed here.
The VRM decision (for Flemish Community) can be accessed here.
The CSA decision (for French Community) can be accessed here.
The Medienrat decision (for Germanophone Community) can be accessed here.
Update 23 June 2011: The European Commission has today published the full text of its extensive comments letter on the Belgian regulatory authorities' notification. Whilst the European Commission is not proceeding to a second phase investigation on the market definition or on the SMP assessment, its comments include several invitations to the Belgian authorities to substantiate or better substantiate key aspects of the draft decision. The European Commission also calls into question whether it is opportune for Belgacom to be a potential beneficiary of the analogue cable-tv resale obligation, given Belgacom's presence with an IPTV offer in the geographic footprint of the cable companies.
Update 25 May 2011: The Belgian regulatory authorities have now officially notified the European Commission (under the so-called Article 7 procedure) of revised draft measures. A key change compared to the document that had previously been put to public consultation is that Belgacom (the telecom incumbent operator) is excluded from being a beneficiary of access to the digital television platform of the cable companies and excluded from being a beneficiary of resale of the broadband Internet services of the cable companies. Belgacom would, however, still be entitled to benefit for resale of analogue TV on the cable platforms, if it so wishes.
Update 29 March 2011: The Belgian regulatory authorities have published responses provided by interested parties, or a summary of responses received. These can be accessed directly by clicking on the hyperlinks included hereafter. The BIPT has published 10 non-confidential responses received (it states that it may add further responses once confidentiality issues are resolved), the VRM has published a document describing the 17 responses it received, and the CSA has published 15 responses.
Today, the 3 Belgian regulatory authorities in charge of media (VRM for the Flemish Community, CSA for the French speaking Community, Medienrat for the Germanophone Community), as well as the BIPT (which has been delegated responsibility for the Brussels Region on this specific topic), issued, for public consultation, co-ordinated draft market analysis decisions on the retail markets for the provision of analogue and digital TV signals.
The co-ordinated proposals call for these markets to be geographically defined along the coverage areas of the Cable-TV companies (which is a key structuring element of the decisions), and remedies to be imposed on ALL the Cable-TV companies, which are EACH proposed to be found holding Significant Market Power (SMP) within their respective coverage areas.
This T-REGS news item provides a walkthrough of the main points of the draft analyses, referencing the paragraph numbers used in the draft BIPT decision (we have verified that the VRM's, CSA's and Medienrat's draft decision broadly have the same substance and follow the same template, with adjustments only to reflect the specific authority in charge, and the details of the description of the market situation in the part of Belgium falling within its responsibility).
Product Market Definition
In order to arrive at their co-ordinated relevant product market definitions, the regulatory authorities examined a number of demand-side and supply-side substitution questions. The most salient of these substitution questions led to conclusions as follows:
Analogue TV and digital TV are in the same market:
The authorities found one-way substitution from analogue TV to digital TV (para 96), and highlighted other elements in favour of finding a single market for analogue and digital TV, e.g. retail prices of digital TV are aligned on analogue TV pricing (para 93), the basic groups of channels offered by the providers are very similar (para 90), etc.
Cable TV and xDSL-based IPTV are in the same market:
The authorities found these to be substitutes (para 105), notably on the grounds of the similar nature of the retail offers (para 99), and similar retail prices being practiced by the cable companies (Cable TV) and by Belgacom (IPTV) for the TV offers and for the rent of decoders (para 98).
Satellite TV and DVB-T are NOT in the same market as Cable and xDSL-based IPTV:
The lack of interactivity and lack of on-demand offers on satellite (para 115), the fact that French language and Dutch language must-carry channels are on different satellites (para 108), high up-front costs for end-users and local environmental restrictions on satellite dishes (para 111) and low-take-up (2.23% of all TV usage in Belgium) are invoked to find that satellite TV is not part of the relevant market. The same finding is reached for DVB-T, for which it is invoked that insufficient radio spectrum does not allow offers as diversified as on Cable-TV (para 124), and very low usage (less than 1% of all TV usage in Belgium) justify a finding of non-substitution. Mobile TV and Web-TV (over-the-top) were also considered and were also excluded.
Geographic Market Definition
The regulatory authorities put considerable effort into supporting their proposed conclusion (para 186) that the relevant geographic markets correspond to EACH Cable-TV companies' respective network footprint, which is the key structuring element of the draft market analyses. In doing so, they invoke, and cite, the European Commission's guidelines on market analysis and the assessment of significant market power under the Community regulatory framework, in particular Section 2.2.2 on geographic market definition.
The regulatory authorities conducted chain-substitution analyses (para 158-162), the first analysis essentially revolving around whether a retail price reduction by one cable company (e.g. Telenet) by 10% would affect the pricing behaviour of another cable company (e.g. Tecteo) - (negative conclusion). A second chain-substitution analysis revolves around whether Belgacom IPTV (which has nation-wide retail pricing) affects cable company pricing - e.g. Belgacom responding to a cable company retail price reduction in one area - with nation-wide effect given Belgacom's pricing - triggering changed cable company retail pricing in another area - (negative conclusion). In essence, the regulators indicate their belief that a cable company maintaining a higher price against a marginal loss of customers (to Belgacom IPTV) would be more profitable for the cable company than competing (against Belgacom IPTV) on price.
Other factors invoked are that the offers and prices in Brussels (which has 3 cable companies) vary considerably compared to one-another (para 168) and that A.I.E.S.H., which has not upgraded to digital TV, does not appear to experience competitive pressure to upgrade, despite the availability of Belgacom IPTV in its coverage area and despite the availability of cable digital TV offers in neighbouring areas. Added to this, the point is made that there is no demand and supply substitutability between different geographic areas (para 184).
Given that the retail market for the provision of analogue and digital TV signals is not contained in the European Commission's Recommendation on Relevant Markets Susceptible to Ex-Ante Regulation, the regulatory authorities set out to prove that the Three-Criteria test is fulfilled, and conclude that it is fulfilled (para 360).
Criterion 1 (high and persistent entry barriers): is deemed to be fulfilled (para 349).
Criterion 2 (tendency to effective competition behind the entry barriers): is also deemed to be fulfilled (para 355), notably on the grounds that the cable companies control 70-80% or 80-90% of the market depending on the communes studied (T-REGS Note: this data was verified in all draft decisions).
Criterion 3 (insufficiency of competition law): is also deemed to be fulfilled (para 263, 311, 359).
Significant Market Power (SMP) Assessment
The SMP assessment in the draft decisions focuses on the high retail market share of the cable companies (70-90% as described above), and relies in addition on the other indicators of SMP provided by the EU regulatory framework, many of which are deemed to be fulfilled.
A 'principal failing of competition' (para 371) is observed, with a retail market characterised by essentially 2 players (Cable-TV and Belgacom TV), with occasional challenge by the small DSL player Billi (with 0-5% market share in Brussels and in parts of the French speaking Community). The regulators also indicate that retail prices are higher than would be expected in a competitive market (para 371) and - importantly - that Belgacom TV is not exerting price pressure on cable companies (para 317 and para 353).
Therefore, each individual cable company is found to hold SMP on the relevant market corresponding to its geographic footprint.
Proposed Regulatory Remedies
The regulators put forward 3 key regulatory obligations on the cable companies, with associated supporting elements. These are as follows:
Remedy 1: Wholesale Digital TV Platform Access: cable companies (insofar as they offer Digital TV - not the case for A.I.E.S.H.) are proposed to be required to offer "the sharing of their digital TV signals, permitting the beneficiary to itself manage the conditional access system of its customers as well as its own decoders and human-machine interfaces" (T-REGS paraphrase) - (para 388). This should enable the beneficiary to "freely define its offer of TV channels, i.e. not only to offer channels offered by the SMP operator, but also to add channels that are not offered by the SMP operator - meaning that the beneficiary brings the channels to the digital TV platform of the SMP operator" (T-REGS paraphrase) - (para 389) - subject to the beneficiary having concluded the necessary intellectual property rights agreements (para 390).
In addition, the SMP operators would be subject to internal/external non-discrimination obligations (para 427), the publication of a reference offer (para 407), and costing based on retail-minus, and an obligation not to effect
a margin-squeeze (para 432).
Remedy 2: Analogue TV Resale: cable companiesare proposed to be required to offer analogue TV resale, on the grounds that this is a necessary accompaniment of digital TV in the relevant markets given Belgian market dynamics where analogue and digital TV are offered in parallel by cable companies and widely used by customers (para 452). An essentiality test in this respect is put forward (para 450), and existing wholesale demand for such analogue TV resale is put forward (para 453).
Again, the SMP operators would be subject to internal/external non-discrimination obligations (para 475), the publication of a reference offer, and costing based on retail-minus (with para 482 detailing how to calculate the retail-minus).
Remedy 3: High Speed Internet Resale: cable companies are proposed to be required to offer high speed Internet resale, on the grounds that it is an essential accompaniment to the analogue/digital TV obligations, to achieve the efficiency of the TV remedies (para 510). This is substantiated on the grounds that multi-play bundles are of increasing essentiality, given increased customer take-up of bundles, the emergence of TVs combining TV content and Internet access, the bundling of TV and Internet-transmitted offers by the cable companies (including Telenet's Yelo iPhone/iPad TV streaming offer over WiFi launched last week) - (paras 490, 507-509).
Again, the SMP operators would be subject to internal/external non-discrimination obligations (para 535), the publication of a reference offer, and costing based on retail-minus (with para 541 detailing how to calculate the retail-minus).
T-REGS Note 1: Paragraphs 499 and 498 of the BIPT draft are distinctly unclear. Para 499 stipulates that high speed Internet resale is only to be made available insofar as the beneficiary is including it in a bundle itself, i.e. a bundle with at least one TV offer. No specification is made on whether this is a bundle generated by the access-taker itself or requiring the access-taker to take up both a TV access/resale offer and an Internet resale offer. Para 498 could be interpreted as suggesting than an operator which would not strictly need resale of Internet access to enable it to compete with the cable SMP operators' retail bundle, may not be entitled to receive such Internet
access resale. This is reminiscent of the Netherlands' OPTA decision on analogue Cable-TV resale, which enabled cable companies to reject resale demands from KPN (the incumbent telco) on the grounds that KPN enjoyed sufficient infrastructure (xDSL and DVB-T) to self-provide TV. This OPTA decision was subsequently annulled by the CBB (appeals court) on market definition grounds. Informal indications sought by T-REGS from the BIPT suggest that the Belgian regulatory authorities do NOT intend to restrict beneficiary status (e.g. on the part of Belgacom) of any of the obligations to be imposed on cable companies.
T-REGS Note 2: Each of the 3 remedies sections discussed above provide for a timeframe for implementation, which is (paras 407, 457, 517 of BIPT draft): 6 months from decision - requirement to provide a draft reference
offer, followed by public consultation; 12 months from decision - requirement for final reference offer; 3 months after final reference offer - actual implementation. The implication of this is that the most aggressive timeframe possible would imply that the 4 Belgian regulatory authorities would finalise their decisions in mid-2011, with effective implementation of the remedies adopted by each of the 4 Belgian regulatory authorities 12+3 months later, i.e. by end-2012. In case the European Commission would raise objections on market definition, SMP assessment, and based on the implementation of the 2009 amendments to the EC directives, possibly also on the selection of remedies (Article 7/7a of the revised Framework Directive due to be transposed on 11 May 2011), this case could enter the new Art 7/7a process (see diagram in link), resulting in up to 6 months extra delay, without prejudice to possible/highly likely appeals under national Belgian law.
T-REGS Note 3: Separately, but also on 21 Dec 2010, the BIPT has issued a draft analysis of Market 4 (wholesale (physical) network access) and Market 5 (wholesale broadband access), in which it proposes to carve-out Cable-TV (cable not to be identified as a substitute on these markets) and Fibre (not available and not expected to become available within the timeframe of validity of the review). The BIPT proposes to continue existing regulation, including copper unbundling from the MDF, and enhanced regulation of VDSL2-based wholesale broadband access, including a new regulated multicast capacility to facilitate the provision of IPTV by alternative operators. The obligation on sub-loop unbundling would be phased-out, and the risk-premium on VDSL2 WBA would also be removed.
The full text of the Belgian regulatory authorities' draft decisions on proposed access to Cable TV can be accessed by clicking on the links hereafter:
VRM (Flemish Community) - affecting Telenet, Tecteo and Numericable.
CSA (Francophone Community) - affecting Tecteo, Brutele, A.I.E.S.H. and Telenet.
Medienrat (Germanophone Community) - affecting Tecteo.
BIPT (delegated responsibility for Brussels Capital Region) - affecting Brutele, Numericable and Telenet.
For a discussion of this T-REGS news item, please feel free to contact Yves Blondeel.