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IP/09/1414

Brussels, 5 th October 2009

Telecoms: Commission raises serious doubts about Austrian broadband market definition

The European Commission has called on the Austrian telecoms regulator, Rundfunk und Telekom Regulierungs GmbH (RTR), to suspend the adoption of regulatory measures regarding the definition of the Austrian broadband access market, the so call bitstream access market. The Commission has serious doubts as to the compatibility of the provisions defining the Austrian wholesale broadband access market with EU law. In the notification submitted one month ago, RTR has provided insufficient evidence to support its finding that mobile broadband connections can be considered as substitutes to fixed line DSL and cable connections. The Commission also has doubts regarding the scope of RTR's wholesale market definition for bitstream access. The Commission has therefore asked RTR not to adopt the measure until the Commission has taken a final decision on RTR's proposal.

Competition Commissioner Neelie Kroes said : " I appreciate the efforts made by the Austrian Regulator to submit a new definition of the broadband access market. However, to consider that Austrian consumers can easily switch between a DSL, TV or mobile connection to access the internet presumes that the residential broadband market in Austria is already fully competitive. At this stage, the Austrian Regulator has not presented sufficient arguments to endorse such a far-reaching move. Over the next two months, RTR will have the possibility to submit additional evidence to demonstrate that the time is ripe in Austria for a deregulation of this market."

Viviane Reding, the EU Telecoms Commissioner, said: "Market definition is a powerful tool in the EU's Regulatory Framework. It determines whether or not consumers could benefit from regulatory intervention. This is why I want to see convincing evidence before markets are tailored in such a way that regulation is lifted for parts of the broadband markets which are at the heart of the economic future of Europe. The Commission is in particular concerned that the current developments of networks and services towards higher capacities and speeds are adequately taken into account so that monopolistic bottlenecks in the next generation networks are prevented in a timely manner and regulation can ensure where necessary that customers get the best possible offer".

One month ago RTR notified the Commission of its proposal to define the wholesale broadband access market in Austria. In its analysis, RTR identifies at the retail level a broadband access market for residential customers, which it considers to be competitive, mainly based on infrastructure competition between mobile, DSL and cable broadband connections. Furthermore, it defines a distinct retail market for business customers, which RTR considers not to be effectively competitive. RTR argues that regulation at the wholesale level is still needed as regards bitstream access (i.e. access sold by the incumbent and any bitstream provider to an Internet Service Operator) used for the provision of broadband connections to business customers. RTR includes into this market not only bitstream access used on the retail market for business customers, but also external bitstream access for residential customers, claiming that these products are technically identical.

On 5 October, the Commission informed RTR of its concerns regarding the definition of the retail product market for residential customers. RTR has not provided sufficient evidence that fixed line broadband connections (provided over DSL lines or TV cables) and mobile connections are substitutes (i.e. that all three types of broadband connections can be equally used e.g. for downloading music or films or provide sufficiently secure connections for internet banking).

The Commission has also raised doubts about the definition of the relevant wholesale product market as a sufficiently detailed forward-looking analysis of the different wholesale inputs is missing. An incorrect definition of the wholesale broadband access (bitstream) market might lead in the end to insufficient or excessive regulation of the market concerned.

Background

To avoid distortions of competition, broadband is currently regulated in all EU Member States by the national telecoms regulators. Where a national regulator determines that a relevant market is not effectively competitive, it shall identify operators with significant market power and impose appropriate regulatory obligations (see MEMO/08/620 ).

In particular, the two wholesale broadband markets warrant ex-ante regulation, as outlined in the Commission Recommendation on relevant markets (see IP/07/1678 ). NRAs are required to notify their regulatory proposals to the Commission and other national regulators under the consultation mechanism of the Electronic Communications Framework Directive (the so-called Article 7 procedure).

The Commission may make comments on notified draft measures and, after an in-depth investigation, require a regulator to withdraw a proposed measure due to lack of compatibility with EU law.

More information on the Article 7 procedure can be found at:

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


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