SUMMARY NOTIFICATION FORM: RETAIL INTERNET ACCESS MARKET AND RELEVANT

Transcription

1 SUMMARY NOTIFICATION FORM: RETAIL INTERNET ACCESS MARKET AND RELEVANT MARKETS 4 AND 5 1 MARKET DEFINITION 1.1 Affected relevant product/service markets 1 This draft decision, referred to hereafter as Decision BA, deals with three markets: the retail market for internet access and the wholesale markets for physical access to infrastructure and broadband access. Retail market (Decision BA, section 4.3) 2 The retail market for internet access is split into a resident and a business segment and a narrowband and a broadband segment. It comprises: 2.1 all broadband services irrespective of capacity; 2.2 all broadband services offered over a fixed network irrespective of the underlying technology (cable, copper). 3 The retail market does not comprise: 3.1 mobile broadband access; 3.2 wireless access. Market 4 (Decision BA, section 5.3) 4 Market 4 includes: 4.1 shared and fully unbundled access; 4.2 local loop and subloop unbundling. 5 Market 4 does not include: 5.1 cable networks; 5.2 fibre networks; 5.3 bitstream access. Market 5 (Decision BA, section 6.3) 6 Market 5 includes: 6.1 bitstream access with and without voice (similar to shared and fully unbundled access); 6.2 asymmetric and symmetric DSL services; 6.3 ADSL and VDSL services. 7 Market 5 does not include: 7.1 shared and fully unbundled access; 7.2 resale offers; 7.3 leased lines; 7.4 fibre networks; 7.5 cable networks. 1.2 Affected relevant geographic market (Decision BA, sections 4.4, 5,3,2 and 6.3.2) 8 The relevant geographic markets 4 and 5 are national in scope. 1.3 Summary of opinion of national competition authority (Decision BA, section 3.2.2) 9 In general, the national competition authority agrees with the market definitions proposed by BIPT. However, it made some remarks and had some suggestions on: 9.1 the relevance of bundled offers; 9.2 the use of the split of the retail market into a residential and a business segment; 9.3 the exclusion of fibre networks from market 4; and 9.4 the exclusion of cable networks from market Overview of the results of the public consultation (Decision BA, annex 6) 10 Eleven stakeholders sent comments before the expiration of the public consultation deadline (from 21 December 2010 to 18 February 2011), namely (in alphabetical order):

2 Summary notification form: retail internet access market and relevant markets 4 and 5 p. 2/ Alcatel-Lucent; 10.2 Alphanetworks; 10.3 Belgacom; 10.4 Colt; 10.5 Fixed Alternative Carriers; 10.6 KPN; 10.7 Mobistar; 10.8 Platform; 10.9 Scarlet; Telenet; Test-Achats/Testaankoop. 11 The stakeholders had among other things remarks on: 11.1 the necessity to conduct a three criteria test; 11.2 the technological neutrality of the market definition and the use of a modified Greenfield approach; and 11.3 geographical differentiation. 1.5 Deviation from relevant markets listed in the Recommendation 12 Unlike both wholesale markets, the retail market for internet access is not listed in the Commission s Recommendations The market for physical access to network infrastructure corresponds to relevant market 4 in the list of Recommendation 2007 and the market for broadband access to relevant market As the retail market for internet access is not listed and is merely studied to gain an insight into the dynamics of the upstream wholesale markets, no three criteria test or SMP analysis has been carried out. 2 DESIGNATION OF UNDERTAKINGS WITH SMP (MARKETS 4 AND 5) 2.1 The names of the undertakings designated as having significant market power (Decision BA, sections 5.4 and 6.4) Market 4 Market 5 Undertaking designated as having SMP Belgacom Belgacom 2.2 The criteria relied upon (Decision BA, sections 5.4 and 6.4) 14 The following criteria were relied upon: Outcome Criterion Market 4 Market 5 market share 100 % 100 % market concentration: competitors number of control of infrastructure not easy to be duplicated economies of scale economies of scope easy and privileged access to capital markets/financial resources 1 1 legacy network with high sunk costs is difficult to duplicate; increasing line capacity additionally raises costs provision of access is particularly cost effective in densely populated areas high fixed costs favour companies with a large number of customers connections to end-users can be used for different services Belgacom is quoted at the stock market, has a high rating and is no subsidiary of a larger foreign company

3 Summary notification form: retail internet access market and relevant markets 4 and 5 p. 3/6 Outcome Criterion Market 4 Market 5 vertical integration Belgacom is a vertically integrated company providing services at all levels of the value chain switching barriers even if there were alternative providers, switching costs would probably be prohibitive potential competition competition based on unbundled lines in theory possible but unlikely in practice to create a serious threat countervailing buyer power limited due to the lack of alternative providers and credible retaliation threats 2.3 The names of the main undertakings (competitors) present/active in the relevant market (Decision BA, sections and ) Market 4 Market 5 Undertakings present/active in relevant market Belgacom Belgacom 2.4 The market shares of the undertakings mentioned above (Decision BA, sections and ) Market 4 Market 5 Market share of Belgacom 100 % 100 % 2.5 The opinion of the national competition authority (Decision BA, section 3.2.2) 15 The NCA agrees with the SMP assessment done by BIPT. However, it raised some questions about the adequacy of restricting the market to the merchant market. 2.6 The results of the public consultation (Decision BA, annex 6) 16 The stakeholders comments pertained among other things to: 16.1 the incumbent s position on the retail markets in relation to its dominance on the wholesale markets; 16.2 the usefulness of national and international benchmarks as an accurate picture of the real differences between the various offers; 16.3 the restriction of the analysis to the merchant market with the exclusion of self supply; 16.4 the substitutability of VDSL and ADSL; 16.5 market segmentation and the specific needs of business customers. 3 REGULATORY OBLIGATION (DECISION BA, SECTIONS 5.5 AND 6.5) 17 The wholesale markets for unbundled access and broadband access were already regulated ex ante as a consequence of BIPT s Restoration Decision of 2 September 2009 (modifying BIPT s decision of relating to markets 11/2003 and 12/2003). In comparison with this decision, the following obligations are maintained ( ), withdrawn ( ) or newly imposed ( ). Access and interconnection obligations Market 4 5 to give unbundled access to local subloops (VDSL2) to give access to mini-mdfs to give access to VDSL1 bitstream

4 Summary notification form: retail internet access market and relevant markets 4 and 5 p. 4/6 Market 4 5 to provide IP managed connection to give access to specified network elements and/or facilities to provide co-location to provide access to operational support systems to negotiate in good faith not to withdraw access to facilities already granted to provide multicast to provide backhaul by means of GigaEthernet Non-discrimination Transparency to publish a reference offer to publish key performance indicators to provide a fully fledged bitstream access based on Ethernet to give transparency about future network developments to synchronize the launch of new retail and wholesale services Accounting separation Price control and cost accounting obligation not to charge higher than cost oriented prices not to charge prices that lead to a margin squeeze to make available a cost accounting system not to alter tariffs when migrating to NGN/NGA to pay migration costs in case of a LEX closure ahead of time to charge cost oriented prices for WBA VDSL2 18 The obligations concerning access, non-discrimination, and transparency are supplemented by requirements to warrant operational excellence. 3.1 The legal base for the obligations (Decision BA, section 2.7) 19 The obligations are based on the Belgian Electronic Communications Act (BECA) of 13 June The corresponding articles in the Access Directive (AD) are also indicated. BECA European Directives Access and interconnection obligations art. 61, 1-2 art. 12(1)-(2) AD Non-discrimination art. 58 art. 10 AD Transparency including reference offer art. 59 art. 9 AD Accounting separation art. 60 art. 11 AD Price control and cost accounting art. 62 art. 13 AD

5 Summary notification form: retail internet access market and relevant markets 4 and 5 p. 5/6 3.2 Proportionality and justification of the obligations (Decision BA, sections 5.6 and 6.6) 20 Proportionality and justification: Access and interconnection obligations to give access to specified network elements and/or facilities to provide co-location to provide access to operational support systems to negotiate in good faith not to withdraw access to facilities already granted to provide multicast functionality to provide backhaul by means of GigaEthernet Non-discrimination Transparency to publish a reference offer to publish key performance indicators to provide a fully fledged bitstream access based on Ethernet to give transparency about future network developments to synchronize the launch of new retail and wholesale services Accounting separation Price control and cost accounting obligation not to charge higher than cost oriented prices not to charge prices that lead to a margin squeeze to make available a cost accounting system Proportionality and justification necessary to give alternative operators without a ramified network the opportunity to provide services at different levels of the ladder of investment allows for an efficient delivery of services constitutes the only means to a quick and automatized access necessary to avoid lengthy negotiations aimed at delaying the entry of competitors necessary to allow alternative operators to plan alternative solutions and to avoid abuse by incumbent causing serious damage allows alternative operators to provide multiple play takes into account the evolution of the network and gives alternative operators a reasonably small number of collecting points limits the incumbent s possibilities to give a beneficial treatment to its own retail branches hampering competition facilitates negotiations and constitutes a control instrument to check the compliance of the other obligations necessary to prove compliance of nondiscrimination obligation avoids that Belgacom uses a network technology to which its competitors have no access allows an alternative operator to plan sufficiently in advance future network evolutions avoids giving the incumbent a first mover advantage necessary to check the equivalence of the conditions that the incumbent offers its retail branch and those offered to its wholesale customers avoid pricing that would discourage competitors to enter or stay in the market gives an adequate margin to alternative operators necessary to check cost orientation

6 Summary notification form: retail internet access market and relevant markets 4 and 5 p. 6/6 not to alter tariffs when migrating to NGN/NGA to pay migration costs in case of a LEX closure ahead of time to charge cost oriented prices for WBA VDSL2 Proportionality and justification prevents the charging of higher tariffs to alternative operators that could not migrate at the same pace as the incumbent cost compensation in case a LEX is decommissioned is not reasonable provided a five years waiting period is observed, otherwise a partial compensation is due necessary to avoid charging of too high a price; risks associated with VDSL roll-out are not so high as to justify a regulatory holiday 3.3 s not found in the Access Directive 21 All obligations imposed are derived from the Access Directive. 4 COMPLIANCE WITH INTERNATIONAL OBLIGATIONS 4.1 s provided for in Article 8(5) of Access Directive 22 Not applicable. 4.2 Names of the undertakings concerned 23 Not applicable. 4.3 International commitments that need to be respected 24 Not applicable.