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Brussels, 18 June 2010

Telecoms: Commission accepts virtual unbundling of networks in Austria as temporary measure; criticises local access market definition

The European Commission has decided to accept a proposal of the Austrian telecoms regulator, Rundfunk und Telekom Regulierungs GmbH (RTR), to oblige Telekom Austria to provide 'virtual' access to its network to alternative operators via a virtual unbundling access product (vULL). This solution will, in the short term, encourage competition on the Austrian telecoms market by making it easier for other companies to offer their services. However, the Commission underlined that this should only be a transitional measure. Moreover, the Commission criticised the Austrian telecoms regulator for basing its analysis of the market for access to the local loop on an outdated market definition, which excludes the fastest type of network - optical fibre. In the medium to long term, the Commission fears that RTR's decision to exclude fibre will create obstacles to competition. It has therefore asked RTR to reconsider the market definition at the earliest opportunity and to ensure full fibre unbundling of the network of Telekom Austria (TA) as soon as this is technically and economically possible.

Commission Vice President for the Digital Agenda Neelie Kroes said: "For now, I accept the proposal of the Austrian regulator to ensure the virtual unbundling of the incumbent's network. However, this is not a long term replacement for physical fibre unbundling, which should be introduced as soon as possible. I therefore call upon RTR to improve its analysis at the earliest opportunity, and ensure that regulation is consistent and predictable, encouraging investment initiatives and protecting consumers."

The Commission's decision concerns an analysis by RTR of the market for wholesale physical network infrastructure access, also known as access to the local loop or local access. Access to the unbundled local loop is a way for alternative operators to enter the retail market, by mainly relying on their own infrastructure.

The Commission has accepted RTR's proposal because it is a step forward that will allow alternative operators to access the local loop even where access is based on fibre technology. However, the Commission has re-emphasised that telecoms regulators should oblige dominant operators to give unbundled access to their fibre loop irrespective of the network architecture they use. While the Commission agrees that vULL has many features which make it functionally similar to physical local loop unbundling, such a remedy should only be temporary. It should be replaced by full fibre unbundling as soon as it is technically and economically feasible. In this way, alternative operators will have full and direct control over the end-user and provide high quality services at competitive prices.

In 2008, when RTR informed the Commission about its market definition for the product market, it excluded optical fibre lines. The Commission asked the regulator to re-evaluate this market definition at a later stage. However, RTR has continued to rely on its previous findings and repeatedly excluded fibre from its definition of the local access market.

In May 2010, RTR informed the Commission that it planned to require Telekom Austria to use a virtual unbundling access product (vULL), to ensure alternative operators access to the incumbent's network.


Earlier this year, the UK was the first national telecoms regulator in the EU to propose a practical solution to ensure access to 'point to multi-point' fibre infrastructures, including VDSL (Very High Speed Digital Subscriber Line) and G-PON (Gigabit Passive Optical Network (IP/10/654). These technologies are used in many Member States where fibre networks are deployed. A single fibre line is shared between several end users and cannot be easily unbundled at the point where alternative operators can access the infrastructure. So far, unbundling of such fibre infrastructures has been considered very costly and difficult to implement from a technical point of view. The UK therefore chose the virtual unbundled local access product (VULA) which was accepted by the Commission, given the specific circumstances of the case.

The "Article 7 procedure" under the EU telecoms rules requires regulators to notify the Commission of their draft regulatory plans and so allows regulators to achieve effective competition in their national telecoms markets, while ensuring consistency across the EU (see MEMO/10/226).

For more information on Article 7 procedures:

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