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European Commission

Press release

Brussels, 13 August 2012

Digital Agenda - Commission rules against Czech regulator's plans to regulate access to its broadband networks

The European Commission has ruled that the Czech telecoms regulator (ČTÚ) must withdraw its plans to include wholesale broadband services based on cable and Wi-Fi platforms into its definition of the wholesale broadband access product market.

In its veto decision adopted today, the European Commission considers that ČTÚ failed to provide sufficient evidence that cable and Wi-Fi platforms, over which no wholesale offers exist, would be substitutes of the prevalent copper and fibre technologies on the wholesale market in the current Czech context. The Commission also does not accept ČTÚ's geographic market definition, which is based on its product market definition and results in the finding of two separate geographic markets.

Today's decision means ČTÚ must withdraw its proposed measure, and may not implement its plans, which would result, in some cases, in the lifting of obligations (including wholesale broadband access) on the main Czech telecoms operator Telefónica. This Commission action will protect consumers against a likelihood of paying higher prices for higher speed Internet connections.

The Commission has not, however, ruled out the possibility of geographically differentiated remedies that reflect the different conditions of competition across the Czech market. If ČTÚ wishes to pursue this option, it must produce a revised analysis based on a new product and geographic market definition.

Neelie Kroes, European Commission Vice President responsible for the Digital Agenda, said: "The current evidence does not justify the Czech Regulatory authority's plans, but I am confident that a revised analysis could allow for geographical differentiation of remedies."

Background

On 11 May 2012, the Commission received a draft decision from ČTÚ concerning the market for wholesale broadband access, which is a key access product for alternative operators to provide broadband Internet access to Czech customers. According to ČTÚ's assessment, the market includes access provided on copper, fibre, cable and Wi-Fi platforms. ČTÚ proposed to divide the country into two geographic markets, segment A where at least three competing infrastructures are present and segment B covering all the rest. ČTÚ found Telefónica only to have significant market power in segment B. It proposed to impose no regulation on Telefónica in segment A, and to impose remedies in segment B, but these remedies do not include cost orientation and do not clearly include all of Telefónica's fibre lines.

The Commission's decision to start an in-depth investigation began with a "second phase" procedure under Articles 7 and 7a of the EU Telecoms Directive (MEMO/11/321) on 11 June 2012 (IP/12/588) was closed today by a veto decision.

Article 7 of the Telecoms Framework Directive requires national telecoms regulators to notify the Commission, the Body of European Regulators for Electronic Communications (BEREC) and telecoms regulators in other EU countries, of the measures they plan to introduce to solve market problems. 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.

Useful Links

The Commission's letter sent to the Czech regulator will be published at:

https://circabc.europa.eu/w/browse/0fc4cbf9-3412-45fe-84bb-e6d7ba2f010e

Digital Agenda website

Neelie Kroes' website

Follow Neelie Kroes on Twitter

Contacts :

Ryan Heath (+32 2 296 17 16), Twitter: @ECspokesRyan

Linda Cain (+32 2 299 90 19)


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