EC rules against CTU’s plans to regulate broadband network access

15 Aug 2012

The European Commission (EC) has ordered the Czech telecoms watchdog, the Czech Telecommunication Office (CTU), to withdraw its plan to include wholesale broadband services based on cable and Wi-Fi access platforms into its definition of the ‘wholesale broadband access market’ segment. The EC’s veto decision, adopted on Monday, considers that the Czech regulator has failed to prove to its satisfaction that cable and Wi-Fi access platforms – over which no wholesale offers exist – would be adequate alternatives to the prevalent access technologies in the Republic’s wholesale market (i.e. those based on copper and fibre). Further, the Commission says it also does not accept the CTU’s definition of a ‘geographic market’, based on its wholesale broadband product market definition, and has called on the CTU to withdraw its proposal to regulate broadband networks access at this time. The decision will result, in some cases, in the removal of obligations (including those for wholesale broadband access), on the Czech incumbent Telefonica O2 CR. However, the EC has pledged to ‘protect consumers against a likelihood of paying higher prices for higher speed internet connections’, and has not ruled out the possibility of using geographically differentiated remedies in future – subject to the CTU producing ‘a revised analysis based on a new product and geographic market definition’.

Commenting on the decision, Neelie Kroes, European Commission vice president responsible for the digital agenda, said: ‘The current evidence does not justify the Czech regulatory authority’s plans, but I am confident that a revised analysis could allow for geographical differentiation of remedies.’

In May this year the EC received a draft decision from the CTU concerning the market for wholesale broadband access, which is considered a key access pathway for alternative operators to provide broadband internet access to Czech end users. According to the watchdog’s market assessment, the high speed internet segment currently includes access provided on copper (DSL), fibre, cable and Wi-Fi platforms. The regulator proposed to divide the country into two geographic markets: Segment A, where at least three competing infrastructures are currently present; and Segment B, covering the rest of the Republic. The CTU’s review found that as Telefonica O2 CR only had significant market power (SMP) in Segment B, it would impose no regulation on broadband access on the incumbent in Segment A. However, the EC was concerned that the watchdog’s proposed remedies do not include cost orientation and do not clearly include all of Telefonica’s fibre-optic lines. The Commission duly started an in-depth investigation under Articles 7 and 7a of the EU Telecoms Directive on 11 June 2012, which has now been closed by a veto decision. The Commission’s letter sent to the Czech regulator will be published at:

https://circabc.europa.eu/w/browse/0fc4cbf9-3412-45fe-84bb-e6d7ba2f010e

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