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IP/09/568

Brussels, 14 April 2009

Telecoms: Commission calls on Italian regulator to comply with EU rules before changing access conditions to Telecom Italia's network

The European Commission today asked the Italian telecoms regulator (AGCOM) to notify it of the undertakings offered by Telecom Italia introducing significant changes in its internal organisation in order to ensure fair treatment of competitors. They have already been approved by AGCOM at national level. These undertakings implement an internal re-organisation of Telecom Italia and establish a special mechanism which aims to ensure non-discriminatory access for alternative operators to Telecom Italia's network. They therefore affect the ability of alternative operators to compete with Telecom Italia. Under the EU’s common telecoms rules, AGCOM is obliged to consult the Commission and other national regulators on changes that, like this one, can impact the EU's single telecoms market before implemented. The notification is necessary to achieve transparency at EU level and legal certainty in the regulatory process.

"When a telecoms incumbent separates parts of its business operationally or functionally, in agreement with the national telecoms regulator, this can have important implications for the internal market. Early discussions with the Commission and full notification of the Commission and the 26 national telecoms regulators is of utmost importance for the successful completion of the separation process in the interest of fair competition and consumers", said Viviane Reding, the EU's Telecoms Commissioner. "I welcome that, in spite of some initial difficulties, there is now smooth cooperation between the Commission and AGCOM on this important matter. If done well, in a transparent and pro-competitive manner, Open Access can become a model for other countries. However, I urge the Italian regulator not to implement the remedies related to Open Access before the Commission and other national regulators had the opportunity to look at them in detail, as required by European law. Only where EU rules are fully complied with, will there be legal certainty for all market participants."

Neelie Kroes, the EU's Competition Commissioner, stated: "We need to make sure that Telecom Italia's undertakings, once applied, will indeed improve the competitive situation in the Italian access markets, for the benefit of all market players involved, in particular alternative operators and end-users. Therefore I regret that AGCOM's notification did not include regulatory measures but welcome the clarification that Telecom Italia's undertakings will be notified as part of remedies in the near future. A proper Community consultation will provide transparency and legal certainty, in line with the objective of ensuring a harmonised application of the telecoms regulatory framework. It will also allow the Commission and the other NRAs to comment on the undertakings."

Today, the Commission sent a letter to the Italian telecoms regulator by which it approves, with comments, AGCOM's definition and analysis of the incumbent operator's dominance on the market, in Italy, for consumer access to telephony services and the market for wholesale broadband access (where operators use the incumbents network to inter alia provide their own internet services).

In its letter, the Commission also expressed concern that there were neither regulatory obligations nor a thorough analysis of Telecom Italia's undertakings included in the current analysis of AGCOM. Telecom Italia's undertakings include internal re-organisation and a special mechanism for ensuring non-discriminatory access for alternative operators to access regulated products provided by a voluntarily created business unit, Open Access, separated from other parts of the company. Telecom Italia plans to make these undertakings operational gradually, from April 2009. In the past, such access did not work effectively in Italy and alternative operators found it difficult to compete with Telecom Italia for end customers.

In the Commission's view, the undertakings are related to existing regulatory obligations and thus must be subject to national and EU consultations. EU telecoms rules have the objective of ensuring a harmonised application of the telecoms regulatory framework throughout the EU. The Commission considers that only a complete notification of Telecom Italia's undertakings will allow the Commission and other national regulators to bring about a harmonised approach by providing comments. Such a notification would also provide transparency for third parties, in particular alternative operators, who may be directly affected by the undertakings.

Background:

The Commission response concerns a notification from AGCOM on the markets for access to the public telephone network at a fixed location for residential and non-residential customers, wholesale (physical) network infrastructure access (including shared or fully unbundled access) at a fixed location and wholesale broadband access.

On 11 December 2008, AGCOM approved a number of undertakings made by Telecom Italia, which relate to an internal re-organisation of the company and establish a special mechanism for ensuring non-discriminatory access by alternative operators to access products presently covered by Significant Market Power (SMP) obligations. However, the notification only succinctly refers to the undertakings of Telecom Italia which are annexed to the notification.

Today's letter is sent by the Commission under the "Article 7"-procedure, part of the EU's telecoms rules. This procedure gives national telecoms regulators considerable scope to achieve effective competition, but requires them to notify the Commission of regulatory measures. When these measures concern market definitions and SMP analyses (e.g. when one or more players is dominant), the Commission has the possibility to require the national regulator to withdraw the measure. When the measures concern regulatory remedies, the Commission may make comments which the national telecoms regulator should take into account.

For further information:

The letter sent on 14 April 2009 will be published at the end of this week at:

http://circa.europa.eu/Public/irc/infso/ecctf/library?l=/commissionsdecisions&vm=detailed&sb=Title


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