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Telecoms: Commission seeks more evidence for decision on proposed Finnish broadband deregulation

European Commission - IP/09/11   07/01/2009

Other available languages: FR DE SV FI

IP/09/11

Brussels, 7 January 2009

Telecoms: Commission seeks more evidence for decision on proposed Finnish broadband deregulation

The European Commission has informed the Finnish telecoms regulator, Viestintävirasto or FICORA (Finnish Communications Regulatory Authority), of its serious doubts over the compatibility with EU law of its draft regulatory measures on the Finnish wholesale broadband access market. Finland's regulator has not provided enough evidence to justify the deregulation of access to the incumbent operators' broadband networks it proposes, namely that certain geographic markets ready for deregulation show different competitive conditions from the rest of the country. The Commission now has until 5 March 2009 to decide whether the regulator can adopt its proposed measures. The regulator may not adopt the measures until the Commission approves them.

Competition Commissioner Neelie Kroes said: "FICORA's proposal to deregulate the bitstream access market in certain areas of the country is not supported by robust evidence demonstrating that competitive conditions in these areas are really different from those in the rest of Finland, where regulation will stay in place. By opening an in-depth investigation, we would like to make sure that Finnish consumers are not faced with a non-competitive broadband market that remains unregulated".

"I welcome geographic segmentation and the deregulation of areas where competition can deliver consumer benefits by itself," said Viviane Reding, the EU Telecoms Commissioner. "But deregulation must be based on a solid market evidence if it is not to jeopardise a level playing field for all operators. That is why I am looking to FICORA to provide us with crystal clear evidence on these points in the coming weeks."

On 5 January 2009, the Commission sent FICORA, the Finnish telecoms regulator, a letter expressing serious doubts about its proposals to deregulate part of the wholesale broadband access market in Finland, notified to the Commission on 5 December 2008. FICORA wants to keep regulation in place for the operating areas of most incumbent operators while lifting regulation from a number of densely populated municipalities. These municipalities account for around 35% of all wholesale broadband accesses in Finland.

The Commission is particularly concerned that under-regulation of the incumbent operators in Finland's market for wholesale broadband access services may impede alternative operators from competing effectively with the relevant incumbent local operators in the key market of broadband services.

The Commission's doubts mainly stem from the lack of market evidence supporting FICORA's identification of the municipalities set for wholesale broadband deregulation as distinct geographic markets. It considers that FICORA's notification did not provide evidence of differences in structural and behavioural market conditions between the municipalities concerned and the surrounding areas. The Commission's letter also indicated doubts about the criteria used to assess significant market power ("SMP") and the SMP analysis carried out by FICORA. It stated that this assessment should be based on more than theoretical considerations, especially evidence on real market trends and operators' behaviour. This information has significant bearing on the best approach to ensure competition: in some of the areas that would be affected by the proposed deregulation, the incumbent operator's market share is expected to go up to as much as 81%, which could limit the consumer's ability to change operator and benefit from cheaper and more quality services.

The Commission's letter raised further doubts that FICORA's criteria for justifying deregulation are different from those used by other European telecom regulators in similar cases.

FICORA's notification to the Commission also covered 26 other operating areas where FICORA proposes to keep regulation in place for local incumbents. For these areas the Commission only issued comments.

Over the next two months the Commission will call for and assess further market clarifications and data from FICORA and the market players.

Background

National regulators are required to notify their regulatory proposals to the Commission and other regulators under a consultation mechanism provided by the Framework Directive of the EU telecoms rules (the so-called Article 7 procedure). The Commission and other regulators may make comments on notified draft measures to the regulator concerned. The Commission may also, following an in-depth investigation, ask the regulator to withdraw a proposed measure if it does not comply with EU law.

More information on the so-called "Article 7" procedure can be found at:

http://ec.europa.eu/information_society/policy/ecomm/implementation_enforcement/article_7/index_en.htm

See also MEMO/07/457 and IP/07/1678.


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