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IP/04/1301

Brussels, 26 October 2004

Commission disagrees with Austrian regulator on transit services in the fixed public telephone network

The European Commission has adopted a decision challenging the conclusions of the Austrian regulator, TKK (Telekom-Control-Kommission), to cease regulating wholesale transit services. In particular the Commission did not agree with the proposed market definition.

Competition Commissioner Mario Monti and Enterprise and Information Society Commissioner Olli Rehn commented: "Whilst we welcome signs of growing competition in Austria's wholesale transit market, we are not convinced that there is a sufficient level of competition in this market."

TKK’s draft measure concerns the Austrian market for transit services in the fixed public network. In addition to call origination and call termination, transit services are used to convey calls between telephone exchanges either at a local level or across regions. Telekom Austria is the incumbent operator which owns the traditional nationwide fixed telephony network and offers around 90% of the transit services to alternative network operators. Only a small number of operators currently provide transit services in competition with Telekom Austria, together accounting for the remaining 10% of the market.

Recently, a number of operators have ceased purchasing transit services directly from Telekom Austria and have begun to further roll out their networks and provide these services themselves. TKK regarded these operators to form part of the transit market. In the Commission’s view, however, insufficient evidence was provided as to the ability and willingness of these operators to begin actually supplying the commercial transit market and therefore these operators fall outside the scope of the market under examination. Further, insufficient consideration was given to the possibilities that would be open to operators currently dependent on regulated transit services in the event regulation were lifted, and which have insufficient traffic volumes to justify providing transit services to themselves.

Following its in-depth examination, the Commission therefore disagreed with TKK’s approach to including operators providing transit services for internal purposes in the market definition. In the Commission’s view this would have underestimated Telekom Austria’s market power in particular vis-à-vis operators which cannot self-provide transit as long as they do not have a real commercial alternative.

The Commission’s decision does, however, provide for the re-examination of the market by the regulator.

Under the relevant provisions of the EU regulatory framework, national regulators are required to notify to the Commission national measures that would affect trade between Member States and that are intended to impose or remove regulation on undertakings providing electronic communications networks or services.

The Commission may comment on the draft measures, or, where it disagrees with the conclusion on market definition or the designation of significant market power, may require the regulator to withdraw the draft measure.

Further information:

The decision can be found at:

http://ec.europa.eu/information_society/topics/ecomm/index_en.htm

e-communications website (under "what's new"):

http://ec.europa.eu/information_society/topics/ecomm/index_en.htm

Article 7 Procedures website:

http://ec.europa.eu/information_society/topics/ecomm/highlights/current_spotlights/art_7_task_force/index_en.htm


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