Brussels, 26 November 2013
European Commission formally requests the Austrian regulator to amend or withdraw its proposal for broadband wholesale access regulation
The European Commission has formally requested the Austrian telecoms regulator (TKK) to withdraw or amend its proposal for regulating broadband wholesale access, including the fees which the dominant operator, A1TA, can charge other operators who want to sell broadband services based on A1TA's network.
The Commission first warned TKK in July (see IP/13/748) that its planned measure may not be compatible with EU telecoms rules, as it threatens to impede efficient investment in broadband and could also create artificial barriers in the internal market. TKK's own cost model results in an average cost-oriented rate of €15,34 per month for unbundled access to the copper loop, well above the EU average of €8-10. However, in response to the retail price competition in Austria between broadband services provided on the basis of A1TA's network, cable TV networks and mobile networks, TKK envisages to apply a price of €5.87 per month for wholesale access to A1TA's network. This price cap results from a so-called "margin squeeze" test rather than the assessment of underlying costs.
At the end of a three month in-depth investigation, the Commission remains convinced that TKK's measure is likely to be detrimental to efficient investment by the incumbent and by alternative operators and not in line with EU law: it does not provide the regulated operator with a reasonable return on investment, and nor does it give an appropriate price signal for alternative infrastructure investments. The Commission recommends TKK also to assess whether the amended regulation should better reflect the difference in the competitive environment for business and residential broadband products. In particular, the competition in Austria between different broadband platforms may lead TKK to the conclusion that the residential retail market is in fact competitive and that wholesale regulation is therefore no longer needed.
The Commission now requires the Austrian regulator to withdraw or amend its proposal in order to bring it in line with EU telecoms rules. Should TKK fail to follow the Commission's recommendation, the Commission will consider any appropriate legal steps.
European Commission Vice President Neelie Kroes said: "Regulation which does not allow the regulated operator a return on investment will certainly not help deliver modern networks to EU citizens. Regulation needs to be proportionate and sustainable while ensuring that both regulated and alternative operators have the right incentives to invest in new technology".
Any new measure should also take account of the Commission's Recommendation on non-discrimination and costing methodologies to promote competition and enhance the broadband investment environment (see IP/13/828 and MEMO/13/779). This provides regulators with clear guidance as to the costs calculation to follow when setting regulated access prices. TKK's current cost model, which results in a cost calculation of €15.34 per month for unbundled access to A1TA's copper network, does not take into account all of this guidance.
This is the tenth time that the Commission has issued a recommendation under Article 7a of the Telecoms Directive (MEMO/10/226).
EU telecoms rules require Member States to promote competition and the interests of consumers in the EU, as well as the development of the Single Market.
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 the Commission has concerns as to the compatibility of the proposed regulatory obligations with EU law, it can open an in-depth, or so-called Phase II, investigation, under the powers of Article 7a of the Framework Directive. It then has three months to discuss with the relevant regulator, in close cooperation with BEREC, how to amend its proposal in order to make it compliant with EU law. If, at the end of this investigation, divergences in the regulatory approaches of national regulators for remedies persist, the Commission may adopt further harmonisation measures, in which the Commission can require the national regulator in question to amend or withdraw its proposed measure.
The Commission's letter sent to the Austrian regulator will be published at:
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