EUROPEAN COMMISSION. Comments pursuant to Article 7(3) of Directive 2002/21/EC

Similar documents
EUROPEAN COMMISSION. Comments pursuant to Article 7(3) of Directive 2002/21/EC

EUROPEAN COMMISSION. Dear Mr Michaelides,

EUROPEAN COMMISSION. Case AT/2014/1617: Voice call termination on individual mobile networks in Austria

EUROPEAN COMMISSION. Comments pursuant to Article 7(3) of Directive 2002/21/EC

EUROPEAN COMMISSION. Comments pursuant to Article 7(3) of Directive 2002/21/EC

EUROPEAN COMMISSION. Dear Mr Homann,

Commission decision concerning Case EL/2010/1130: wholesale broadband access - further details of price control remedy

Case SI/2009/0957: Wholesale (physical) network infrastructure access (including shared or fully unbundled access) at a fixed location

EUROPEAN COMMISSION. Commission Decision concerning Case DK/2014/1665: Review of the LRAIC model on the fixed markets in Denmark for the year 2015

Case AT/2009/0970: Wholesale broadband access in Austria. Opening of Phase II investigation pursuant to Article 7(4) of Directive 2002/21/EC 1

Part I PRELIMINARY. Part II MARKET DEFINITION ASSESSING SIGNIFICANT MARKET POWER. Part IV IMPOSITION OF OBLIGATIONS UNDER THE REGULATORY FRAMEWORK

BEREC Opinion. Phase II investigation pursuant to Article 7a of Directive 2002/21/EC as amended by Directive 2009/140/EC:

EUROPEAN COMMISSION. Dear Mr Silicani, Commission decision concerning:

REPUBLIC OF IRAQ COMMUNICATIONS AND MEDIA COMMISSION

EUROPEAN COMMISSION. Commission decision concerning Case FR/2014/1604: Leased lines markets in France

Comments pursuant to Article 7(3) of Directive 2002/21/EC 1

BEREC Opinion on Phase II investigation pursuant to Article 7 of Directive 2002/21/EC as amended by Directive 2009/140/EC: Case NL/2017/1960

EUROPEAN COMMISSION. Commission Decision concerning Case NL/2015/1794: Wholesale local access provided at a fixed location in the Netherlands

Public consultation on the methodology for cost modeling

BEREC Opinion on. Phase II investigation. pursuant to Article 7 of Directive 2002/21/EC as amended by Directive 2009/140/EC: Case NL/2015/1727

Draft Call Termination Regulations Explanatory Note. 05 September 2014

Mobile call termination market review

International Conference: Regulating the Electronic Communications Market, 26 September 27 September 2016, Budva, Montenegro

COMISION DEL MERCADO DE LAS TELECOMUNICACIONES

Market power and market definition in electronic communications

Response to the consultation on the Draft review of the BEREC Common Position on geographical aspects of market analysis (definition and remedies).

Case AT/2009/0970: Wholesale broadband access (WBA) in Austria

Review of fixed call origination and termination markets Call for inputs

ECTA POLICY POSITION

COOPVOCE Response to BoR (14) 172. Questions to stakeholders related to the. BEREC Report on Oligopoly - Analysis and Regulation

Telecommunications Authority of Trinidad and Tobago

SUMMARY NOTIFICATION FORM: RETAIL INTERNET ACCESS MARKET AND RELEVANT

BEREC Opinion on. Phase II investigation. pursuant to Article 7a of Directive 2002/21/EC as amended by Directive 2009/140/EC: Case DE/2014/1642

Price regulation of unbundled broadband services

Wholesale voice call termination on individual mobile networks. Wholesale SMS termination on individual mobile networks

Review of the fixed narrowband services wholesale markets Statement on the markets, market power determinations and remedies including further

Mark Naftel Norton Rose

Do we need ex ante price regulation in a liberalised postal market?

The BEREC Opinion on the draft. methodologies. Dr Iris Henseler-Unger, Vice President BNetzA 8th EETT International Conference Athens, 16/17 May 2013

ERGEG Guidelines for Good Practice on Open Season Procedures (GGPOS) Ref: C06-GWG-29-05c 21 May 2007

Consultation document. 18 th July 2011

BoR (14) 73. BEREC Common Position on geographical aspects of market analysis (definition and remedies)

Market Review: Wholesale High Quality Access at a Fixed Location

COMMISSION OF THE EUROPEAN COMMUNITIES COMMISSION STAFF WORKING DOCUMENT. accompanying the COMMISSION RECOMMENDATION

BEREC Opinion on. Phase II investigation. pursuant to Article 7a of Directive 2002/21/EC as amended by Directive 2009/140/EC: Case DE/2013/1424

This publication may be obtained free of charge, subject to availability of stock, from:

REPORT ON PRICING AND METHODOLOGY FOR CURRENT GENERATION ACCESS SERVICES (MARKET 3b)

Mobile Call Termination Market Review Final Statement

BoR (15) 143. BEREC Report Regulatory Accounting in Practice 2015

BBC response to Ofcom s consultation: Broadcast Transmission Services: a review of the market

Principles of implementation and best practice regarding the application of Retail Minus pricing methodologies IRG (05) 39

BEREC Opinion on. Phase II investigation. pursuant to Article 7a of Directive 2002/21/EC as amended by Directive 2009/140/EC: Case DE/2014/1605

COMMISSION OPINION. of XXX

Annex 1. Analysis of the markets for voice call termination on individual mobile communications networks

Mobile Call Termination Market Review Draft Statement

COMMISSION OPINION. of

Next Generation Access ( NGA ):

COUNCIL OF THE EUROPEAN UNION. Brussels, 20 November /08 Interinstitutional File: 2007/0247 (COD)

EUROPEAN COMMISSION. State aid SA (2017/N) Sweden Tax reductions for pure and high-blended liquid biofuels

Introducing Carrier Selection & Carrier Pre- Selection in Malta

EUROPEAN PARLIAMENT. Session document

Regulatory framework for electronic communications in the European Union. Situation in December 2009

ERG (09) 21. ERG Report on price consistency in upstream broadband markets

Government Gazette Staatskoerant

The opinions expressed in this presentation are the personal views of the author and do not prejudge decisions of the RRT

EUROPEAN COMMISSION DIRECTORATE-GENERAL TAXATION AND CUSTOMS UNION Customs Policy, Legislation, Tariff Customs Legislation INFORMATION DOCUMENT

AUSTRIA INTRODUCTION REGULATORY ENVIRONMENT. Main regulatory developments

Regulation of Broadband access and development of NGA networks in Slovenia

ReSPONSE by Deutsche Telekom. BEREC Public Consultation on the Draft Review of the BEREC Common Position on geographical aspects of market analysis

C 227 A of the European Union

EBA/CP/2016/ December Consultation Paper. Draft Guidelines on supervision of significant branches

COMMISSION STAFF WORKING DOCUMENT

Procurement by Utilities

Liberalization, Investment, and Regulation: The Key Factors for the Development of the Electronic Communications Market

Definition - Markets and Dominance Control

CERRE CENTRE ON REGULATION IN EUROPE

COMMISSION STAFF WORKING PAPER INTERPRETATIVE NOTE ON DIRECTIVE 2009/73/EC CONCERNING COMMON RULES FOR THE INTERNAL MARKET IN NATURAL GAS

Introducing Carrier Selection & Carrier Pre- Selection in Malta

COMMISSION STAFF WORKING PAPER

VIRTUAL UNBUNDLED ACCESS TO FIBRE-TO-THE-HOME: Implementing the VULA Remedy

Annex 5 referred to in Chapter 7. Telecommunications Services. Article 1 Scope

Personal numbering. Review of the 070 number range

CONCEPT PAPER ON CONVERGED LICENSING FRAMEWORK (CLF)

Subject: Comments on the Retail Tariff Notification Framework Documentation

BoR (12) 40. BEREC Report of the Consultation on the draft BEREC report on Co-investment and SMP in NGA networks

2 No GOVERNMENT GAZETTE, 21 DECEMBER 2007 No. CONTENTS INHOUD Page No. Gazette No. GENERAL NOTICE Independent Communications Authority of South

EUROPEAN COMMISSION HEALTH AND CONSUMERS DIRECTORATE-GENERAL

Statement regarding a European single market for electronic communications

COMMISSION OPINION. of

BEREC REPORT ON IMPACT OF FIXED-MOBILE SUBSTITUTION IN MARKET DEFINITION

The Review 2006 of the EU s regulatory framework for electronic communications: Frequently Asked Questions

Broadband Development

New Role and functions of independent energy regulatory authority in EU under the Third Energy Package

AIIP comments on the

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

The 3 rd Postal Directive establishment of an internal postal market

BoR (10) 44 Rev1. BEREC Guidance on functional separation under Articles 13a and 13b of the revised Access Directive and national experiences

Official Journal of the European Union. (Acts whose publication is obligatory)

Electronic Communications and Postal Regulatory Authority Decision No of 14 December 2010

EUROPEAN COMMISSION. State Aid SA (2016/N) Austria Aid to fast broadband infrastructure in rural areas in Niederösterreich

Transcription:

EUROPEAN COMMISSION Brussels, 24.4.2015 C(2015) 2885 final Γραφείο Επιτρόπου Ρυθμίσεως Ηλεκτρονικών Επικοινωνιών Και Ταχυδρομείων (OCECPR) Helioupoleos 12, 1101 Λευκωσία, Cyprus For the attention of: Mr Polis Michaelides Commissioner Fax: +357 226 93 030 Dear Mr Michaelides, Subject: Commission Decision concerning Case CY/2015/1726: Wholesale access and call origination on public mobile telephone networks in Cyprus Comments pursuant to Article 7(3) of Directive 2002/21/EC 1. PROCEDURE On 26 March 2015, the Commission registered a notification from the Cypriot regulatory authority, Γραφείο Επιτρόπου Ρυθμίσεως Ηλεκτρονικών Επικοινωνιών Και Ταχυδρομείων (OCECPR) 1, concerning the market for wholesale access and call origination on public mobile telephone networks 2 in Cyprus. 1 2 Under Article 7 of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive), OJ L 108, 24.4.2002, p. 33, as amended by Directive 2009/140/EC, OJ L 337, 18.12.2009, p. 37, and Regulation (EC) No 544/2009, OJ L 167, 29.6.2009, p. 12 Corresponding to Market 15 of Commission Recommendation 2003/311/EC of 11 February 2003 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with the Framework Directive, OJ L 114, 8.05.2003, p. 45. This market has been removed from the list of the relevant markets that may warrant ex ante regulation which is contained in the currently applicable Commission Recommendation 2014/710/EU of 9 October 2014 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services (Recommendation on Relevant Markets), OJ L 295, 11.10.2014, p. 79. Commission européenne/europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

The national consultation 3 ran from 20 January to 16 February 2015. On 1 April 2015, a request for information (RFI) 4 was sent to OCECPR and a response was received on 6 April 2015. Further information was provided via email and a conference call on 9 April 2015. Pursuant to Article 7(3) of the Framework Directive, national regulatory authorities (NRAs), the Body of European Regulators for Electronic Communications (BEREC) and the Commission may make comments on notified draft measures to the NRA concerned. 2. DESCRIPTION OF THE DRAFT MEASURE 2.1. Background The previous review of this market was notified to and assessed by the Commission under case CY/2009/0877 5. At the time, OCECPR carried out the three criteria test and concluded that the notified market was still susceptible to ex ante regulation. It designated CYTA as having SMP in the relevant market and decided to maintain the following obligations (all imposed in the first round analysis in 2006): (i) provision of access, interconnection and use of specific network facilities, (ii) provision of national roaming, (iii) provision of co-location, (iv) transparency, (v) non-discrimination, (vi) accounting separation and (vii) price control and cost accounting. It also imposed, in addition, (viii) an obligation to provide access to Mobile Virtual Network Operators (MVNOs), Mobile Service Providers (SPs) and Enhanced Mobile Service Providers (ESPs). The second Mobile Network Operator (MNO), 'MTN', entered the market in 2004. In more recent years, two MVNOs, Primetel and Cablenet, and one ESP, Callsat, also entered the market. In 2013, Primetel obtained a mobile telephony license allowing it to deploy and operate a third mobile services network in the country. In March 2015, Primetel concluded a Radio Access Network (RAN) sharing agreement with MTN, which allowed it to offer its services on MTN's 4G (mainly in big cities) and 3G networks (70% geographical coverage), until the deployment of its own network is finalised. 2.2. Market definition As in the 2009 notification, OCECPR concludes that the market covers wholesale access and call origination services provided by MNOs currently operating in Cyprus, including self-supply. At the corresponding retail level, pre-paid and postpaid mobile communications services, mobile access, national and international calls, short messaging services (SMS) and advanced mobile data services are all included in the market. This cluster of services can be offered over 2G, 3G or 4G networks. OCECPR concludes that the market has no other demand- and supply- 3 4 5 In accordance with Article 6 of the Framework Directive. In accordance with Article 5(2) of the Framework Directive. C(2009)1492. 2

side substitutes (following the Hypothetical monopolist test) and that the relevant geographic market is the territory of the Republic of Cyprus. 2.3. The three criteria test As the market for wholesale access and call origination on public mobile telephone networks is no longer listed in the Recommendation on Relevant Markets, OCECPR carries out the three criteria test 6 with regard to the notified market. 2.3.1. The first criterion: high and non-transitory barriers to entry Structural barriers OCECPR explains that, despite the market entry of new mobile operators in recent years, high and non-transitory entry barriers still persist. The main reason for this is that physical infrastructure cannot be easily duplicated and there are high sunk costs associated with the market entry. The ex ante obligations currently imposed on CYTA ensure that alternative operators can access the incumbent's network and offer mobile telephony services using alternative business models - either as MVNOs, SPs or ESPs. These business options enable new entrants to avoid the high sunk costs associated with the deployment of mobile networks. According to OCECPR, the withdrawal of existing regulatory obligations is likely to jeopardise the continued provision of these access services. OCECPR believes that CYTA's incentive not to provide access (in order to maintain its market shares) outweighs the potential income associated with providing access on a commercial basis. Given the consumer trend towards quadruple play bundled offers, CYTA may decide to leverage this advantage by denying mobile network access by a refusal or restriction in the supply of such services or the application of unequal conditions, thereby placing some undertakings, such as Cablenet, in a competitive disadvantage. The regulator points out that, prior to the imposition of specific regulatory obligations on CYTA, both CYTA and MTN refused any applications for wholesale access to their mobile networks. Legal or regulatory barriers OCECPR also identifies restrictions with respect to the limited supply and use of spectrum. That said, in a 2013 application submission procedure for granting a third mobile telephony license, only one MVNO company, 6 In accordance with Point 2 in conjunction with Recital 5 of the Recommendation on Relevant Markets, when identifying markets other than those mentioned in the Annex, national regulatory authorities should ensure that the following three criteria are cumulatively met: (1) there must be high and nontransitory entry barriers, (2) the structure of the market must not tend towards effective competition within the relevant time horizon and (3) the application of competition law alone would not adequately address the market failure(s) concerned. 3

Primetel, expressed its interest and was granted a licence to establish and operate a third mobile telephony services network in Cyprus 7. 2.3.2. The second criterion: no tendency towards effective competition OCECPR explains that CYTA is currently the only wholesale provider of access (it provides access to cable operator Cablenet through its regulated offer). Indeed, MTN's RAN deal with Primetel, involving the sharing of their respective passive networks and active/intelligent equipment, does not involve the sale of minutes to Primetel and is therefore not part of the market under analysis. OCECPR has also explained that, in the past, there was a national roaming agreement between MTN and CYTA which has now expired. At retail level, ten years after MTN's entry, CYTA's retail market share is still high at 65% 8, while MTN's share has stabilised around 30%. Primetel, Cablenet and Callsat enjoy retail market shares of 3.4%, 0.5% and 0.4%, respectively. Nevertheless, OCECPR believes that, once Primetel is able to depend on its own network, the market will have potential for increased competition. Therefore, OCECPR expressed its intention to carry out a new market analysis within two years in order to determine whether the market is moving towards a more competitive structure. 2.3.3. The third criterion: insufficiency of competition law alone OCECPR is of the view that competition law alone is inadequate to promote the development of competition in this market. On the basis of the above considerations, OCECPR concludes that the three criteria test is fulfilled and that the market for wholesale access and call origination on public mobile telephony networks in Cyprus remains susceptible to ex ante regulation. 2.4. Finding of significant market power OCECP designated CYTA with the SMP based on the following criteria: market shares 9, absence of potential competition, absence of countervailing buying power, economies of scale and scope, vertical integration, control of infrastructure not easily duplicated and high barriers to entry. 7 8 9 In this context, Primetel has committed to ensure a geographical coverage of its network of 40% of the national territory within three years and of 65% within five years of the authorization of the spectrum license. A recent consumer survey has shown that many consumers are reluctant to switch from CYTA to alternative operators solely due to habit. The loyalty of CYTA's customers also arises from the fact that, as a traditional provider in Cyprus, CYTA has a fixed network, through which it offers quadruple play bundles, which customers value highly. At wholesale level, CYTA has 100% market share on the merchant market. At retail level, the market shares are the following: CYTA 65.3%, MTN 30.3%, Primetel 3.4%, Cablenet 0.5% and Callsat 0.4% (data referring to December 2014). 4

2.5. Regulatory remedies OCECPR proposes to maintain the following remedies imposed upon CYTA in its previous market review: (i) provision of access, interconnection and use of specific network facilities to all types of mobile operators (including provision of national roaming and co-location), (ii) transparency, (iii) non-discrimination, (iv) accounting separation and (v) price control. As regards to the price control remedy, OCECPR considers that the use of a BU- LRAIC 10 costing model should be imposed on CYTA. This development is particularly relevant given that Callsat, in its response to OCECPR's public consultation, pointed to the presence of a margin squeeze between wholesale and retail rates for MVNOs. The regulator believes that the new BU-LRAIC model will eliminate the inefficiencies of the present model ensuring a sufficient economic margin between wholesale and retail tariffs. 3. COMMENTS The Commission has examined the notification and the additional information provided by the OCECPR and has the following comment: 11 Monitoring of market developments The Commission takes note of the fact that CYTA is currently the only wholesale provider of access and call origination on public mobile telephone networks in Cyprus and its retail market share is high, amounting to 65%. However, the Commission first notes that Primetel's recent entry as a MNO and its access to CYTA's network for the purpose of national roaming can have a significant impact on competitive conditions, apart from the fact that both MTN and Primetel could eventually become providers of wholesale access and call origination services on a commercial basis. Second, the Commission notes that the imposition of a BU-LRAIC costing model (to be notified in 2015) for the calculation of CYTA's regulated rates, which will replace the current Top Down LRIC model, is likely to reduce inefficiencies in the costing model, could facilitate entry and expansion for alternative operators, and boost competition. Third, the migration of mobile users of data-based services and hence the effect of 4G services proposed by MTN and Primetel (and not yet by CYTA) could significantly affect the state of competition on the market. The Commission therefore calls on OCECPR to closely monitor the abovementioned developments and, in light of these, carry out a new market analysis without an undue delay. In this respect, the Commission welcomes OCECPR's 10 11 As concerns the BU-LRAIC model, OCECPR explains that this is currently being developed and will be notified to the Commission before the end of 2015. Until the completion of the model and extraction of results, the wholesale fees for access to CYTA's mobile network will be determined based on the existing costing model - a Top Down LRIC. In accordance with Article 7(3) of the Framework Directive. 5

intention to conduct a new market analysis already within two years from the adoption of the current one. Pursuant to Article 7(7) of the Framework Directive, OCECPR shall take the utmost account of the comments of other NRAs, BEREC and the Commission and may adopt the resulting draft measure; where it does so, shall communicate it to the Commission. The Commission s position on this particular notification is without prejudice to any position it may take vis-à-vis other notified draft measures. Pursuant to Point 15 of Recommendation 2008/850/EC 12 the Commission will publish this document on its website. The Commission does not consider the information contained herein to be confidential. You are invited to inform the Commission 13 within three working days following receipt whether you consider that, in accordance with EU and national rules on business confidentiality, this document contains confidential information which you wish to have deleted prior to such publication. 14 You should give reasons for any such request. Yours sincerely, For the Commission, Robert Madelin Director-General 12 13 14 Commission Recommendation 2008/850/EC of 15 October 2008 on notifications, time limits and consultations provided for in Article 7 of Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services, OJ L 301, 12.11.2008, p. 23. Your request should be sent either by email: CNECT-ARTICLE7@ec.europa.eu or by fax: +32 2 298 87 82. The Commission may inform the public of the result of its assessment before the end of this three-day period. 6