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Brussels, 12 January 2009

Telecoms: Commission approves partial broadband deregulation in Portugal

The Commission today said it approved the Portuguese telecoms regulator's proposal to deregulate some parts of the wholesale broadband market, covering around 61% of all Portuguese broadband lines. The regulator ANACOM's (Autoridade Nacional de Comunicações) proposal is a reasonable move towards better targeted regulation, concentrating on regions where structural competition problems persist. The Commission also called for effective regulation in regions where competition problems persist. With the move towards faster and higher capacity next generation fibre networks underway in Portugal and across the EU, the Commission highlighted the importance of alternative operators having access to new fibre technologies.

"ANACOM's proposal to deregulate parts of the Portuguese broadband market proves that effective regulation leads to effective competition, which in turn allows more targeted regulation," said Viviane Reding, EU Telecoms Commissioner. "However, when and where regulation is still needed regulators must make sure it is technology-neutral and gives competitors access to fibre-based products. Keeping European consumers spoilt for internet choice is the key to Europe's broadband strength, so we must maintain our competitive markets as networks allowing a new era of internet services emerge."

Competition Commissioner Neelie Kroes said: "Public authorities need at the same time to avoid over-regulation that could deter investment and to avoid that incumbents unjustifiably leverage their market power. Finding the right balance is particularly necessary in broadband markets, where we have to ensure that investments in new generation networks remain incentivized, resulting in more innovation and better prices for consumers. I am satisfied that ANACOM has taken a balanced approach in this respect."

On 5 January the Commission sent a letter to the Portuguese telecoms regulator ANACOM, approving its planned deregulation of wholesale broadband access markets – where operators allow other operators to offer competing services over their network – in some regions. Since these networks are hugely expensive to replicate, alternative operators that want to offer retail broadband services to consumers usually need access to wholesale broadband ('bitstream access'), together with access to the local loop (the wires or radio links carrying fixed phone lines). EU telecoms rules require national regulators to ensure incumbents provide access to their networks, so that consumers can choose between broadband providers and benefit from a competitive market that brings better services and prices.

On 4 December 2008, ANACOM notified the Commission of its proposal to deregulate part of the wholesale broadband access market in Portugal. This proposal concerns areas where there are at least three operators and a high number of households with access to the cable network, mainly densely populated urban areas like Lisbon or Porto. Regulation making sure that new entrants can compete will be maintained in all other areas.

ANACOM justifies deregulation with criteria developed by other national regulators and the Commission in similar cases (IP/08/232), including detailed information on economic indicators like market shares, prices and operators' commercial strategies.

The roll out of fibre networks could change the broadband market's competitive landscape. With a consultation on next generation access networks ongoing in Portugal, the Commission's letter emphasised the need for appropriate access obligations on fibre in markets for local loop unbundling and wholesale broadband access. In regions that still have competition problems, competitors and new entrants must have access to wholesale inputs so they can provide retail services in competition with the incumbent.

Following the Commission's response, ANACOM can implement its proposed regulatory measures taking its comments into account.


Under EU telecoms rules, national regulators marking a market as not effectively competitive must identify operators with significant market power and impose appropriate regulatory obligations (MEMO/07/457)., Two wholesale broadband markets ("market 4" and "market 5") in particular warrant this kind of ex-ante regulation, under a Commission Recommendation on relevant markets (IP/07/1678).

Regulators are required to notify the Commission and other regulators of their proposals under a consultation mechanism provided by the Framework Directive of the EU telecoms rules (the Article 7 procedure). These can comment on the regulator's draft measures. The Commission may also, following in-depth investigation, ask the regulator to withdraw a draft measure if it does not comply with EU law.

On the "Article 7" procedure:

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