Brussels, 12 March 2009
The European Commission has endorsed, in a letter published today, the Danish telecoms regulator's (NITA) proposal to oblige the largest cable operator in Denmark to open wholesale access to its cable broadband network to competitors. The Commission recognised that Denmark is in a unique situation because the Danish incumbent telecoms operator, TDC, controls both the telecoms network and large parts of the cable network. Extending obligations already existing for the telecoms network to TDC's cable network should help to maintain the ability of alternative operators to compete effectively with TDC in the broadband market by enabling them to access high bandwidth wholesale products, even if such products are not available over the telecoms network.
"I entirely share the Danish telecoms regulator's concern that in the absence of cable regulation in Denmark, alternative operators might be hindered in their ability to offer high capacity internet services to their customers," said Viviane Reding, the EU Telecoms Commissioner. "In today's Europe, with an increasing demand for high speed broadband access services we cannot take the risk that alternative operators are foreclosed from this important market segment. This is why the Commission endorses NITA's proposal to extend wholesale broadband access regulation to cable in Denmark."
Competition Commissioner Neelie Kroes said: "Regulatory measures need to be effective. Therefore I trust that NITA will ensure that the new regulation of access to cable will allow alternative network operators and ISPs to actually compete on the highly dynamic retail broadband market by providing high-speed internet services, enabling better quality of service and more choice for consumers. "
In Europe, national regulators ensure that incumbent operators provide wholesale access to their broadband internet networks in order to promote competition in the provision of broadband internet access services. Regulation is generally limited to their telecoms networks (so called xDSL (Digital Subscriber Line) networks). However, in Denmark, the largest cable TV network is also controlled by the incumbent telecoms operator, TDC. In July 2008 TDC held 58% of market for retail broadband services. Alternative operators using TDC's copper network together accounted for less than 20% of the market, while companies operating on other infrastructures possessed slightly more than 20%.
In a substantial part of Denmark, the two infrastructures capable of providing broadband internet access services, which would otherwise compete with each other for consumers, are under the control of TDC. Due to these specific national circumstances, in the absence of cable regulation TDC would have the ability and incentives to circumvent existing rules on providing wholesale access to broadband which are currently limited to broadband over the fixed phone network (DSL). NITA's proposal to require TDC to allow other operators to access its cable network to provide services should enable alternative operators to continue competing with TDC, to the ultimate benefit of consumers.
While leaving open the question of whether or not cable is part of the same wholesale broadband access market as xDSL, the Commission acknowledges that the exceptional circumstances unique to the Danish broadband access market require an adequate regulatory intervention. Therefore, the Commission approved NITA's proposal to extend wholesale broadband access regulation to TDC's cable network. At the same time, the Commission asked the Danish regulator to ensure that this obligation is put in place effectively, by analysing the costs of such regulation, allowing TDC to cover relevant costs, and making sure that regulated cable access wholesale prices are set at a reasonable level for alternative operators. The Commission also asked NITA to monitor the development of retail competition and the deployment of ultra-fast fibre access networks with a view to imposing appropriate remedies on fibre access products, should TDC launch fibre based retail product offerings on a larger scale.
On 23 December 2008, as required by EU law, NITA notified the Commission of its draft decision on the market for wholesale broadband access services in Denmark.
The Danish broadband internet access market is unique in the EU because in a substantial part of the country both the networks capable of providing high speed internet services are controlled by the same operator, TDC.
The Danish regulator, NITA found that this situation creates biased incentives for TDC to invest only in one of those networks and to circumvent wholesale broadband access regulation limited to the DSL network only. Alternative operators dependent on TDC's DSL network risk being unable to compete with TDC's very high bandwidth products provided over cable. NITA also found that at wholesale level these networks belong to the same relevant market and imposed remedies on TDC requiring it to provide access to both of its networks. Although the Commission was not convinced that these two networks were indeed part of the same relevant market, it concurred with NITA with regard to the competitive concerns identified. Therefore, the Commission did not object to NITA's proposal to extend regulation also to TDC's cable network.
The letter from the Commission to the Danish regulator, NITA, was sent under the "Article 7 procedure", foreseen in the Framework Directive of the EU's Telecoms rules (MEMO/08/620). This procedure leaves considerable scope to national telecoms regulators on how to achieve effective competition, but requires them to notify draft regulatory measures to the Commission. Where these measures concern market definitions and analyses of whether operators have significant market power, the Commission has the possibility to require the regulator to withdraw the measure. Where the measures concern regulatory remedies, the Commission may make comments which the national telecoms regulator should take into utmost account; a proposal to enhance the Commission's oversight over remedies is still pending in the legislative procedure with the European Parliament and the Council (IP/07/1677). The measure notified by the Danish regulator concerns the second round market review of wholesale broadband access services in Denmark.
The Commission's letter will be made available at: