Brussels, 5 th March 2010
Telecoms: Commission rules against plans to regulate Internet traffic exchange services in Poland
The European Commission has ruled that Polish telecom regulator Urząd Komunikacji Elektronicznej (UKE) must withdraw its plans to regulate the markets for internet traffic exchange services in Poland. Internet service providers use these data traffic exchange services to connect their customers to the Internet. After a two-month investigation, the Commission has decided that UKE has failed to show that competitive conditions in Poland require the regulation of these markets, which are not regulated elsewhere in the EU. Indeed, internet service providers are able to connect to the Internet not only by using direct interconnection services provided by the Polish incumbent Telekomunikacja Polska "TP" but also by indirect interconnection via other operators. The Commission's view is that Polish consumers already benefit from competitive services without the need of an extra regulatory burden, and prices are falling. Moreover, the Commission considers that if these markets were regulated, it could adversely affect alternative operators offering transit services and discourage them from investment in network infrastructure. The Commission also rejects the way that UKE has defined these IP traffic exchange markets. The Commission decision is based on Article 7 of the Framework Directive of EU telecoms rules (see MEMO/09/539 ).
Digital Agenda Commissioner Neelie Kroes said: "The Commission fully shares the objectives of the Polish regulator in seeking competitive markets, but our assessment is that regulation of these particular markets for Internet traffic exchange services is not necessary to protect consumers or competition. If the market itself is able to provide for fair competition, don't disturb it with unnecessary regulations."
According to EU telecoms rules, Internet service providers must ensure that their customers are connected with content providers and subscribers of other networks. There are two ways to do this: Internet Protocol Peering and Internet Protocol Transit. IP Peering refers to the direct exchange of IP traffic between two interconnected networks. IP Transit means that traffic can be exchanged via a third operator which offers transit services against payment, when a provider is not directly connected to another one.
The Polish regulator has defined two separate markets for IP traffic exchange:
The Commission has decided to rule against UKE's plans to regulate these markets. It has rejected UKE's market definition, and the conclusions based on that definition. The Commission believes that the market for IP traffic exchange is broader, and is open to other providers of transit services, in addition to TP.
The Commission's investigations have established that internet traffic can be conveyed from Polish ISPs to the global internet without using TP's direct interconnection services and without experiencing a serious degradation of the quality of services as alleged by UKE.
The Commission takes the view that TP will be prevented from seriously downgrading the quality of traffic offered to other ISPs since this could result in retaliatory actions and poorer services for TP's own internet subscribers. Such behaviour would not only be unlikely but could also be tackled by antitrust law. The Commission decision also reminded UKE that it failed to provide data on market shares on the transit market and that such data are indispensible for assessing whether a company has significant market-power.
The Commission has therefore concluded that UKE's draft measures to regulate these IP traffic exchange markets do not comply with the policy objectives of EU telecoms rules.
UKE notified its proposed measures to the Commission on 27 November 2009. On 4 January 2010, the Commission informed UKE that it had serious doubts as to the compatibility of the draft measures with EU law (see IP/10/1 ) and began its two month investigation.
The so-called " Article 7 procedure " leaves some scope for regulators to achieve effective competition in their national telecoms markets, while ensuring consistency across the EU, and therefore requires them to notify the Commission of their draft plans. Where plans concern market definitions and analyses of whether operators have significant market power, as in the present case, the Commission can require the regulator to withdraw the measure. Where they concern regulatory measures, the Commission may make comments of which the regulator must take utmost account.
The Commission letter to the Polish regulator will be published at: