Dutch govt targets wholesale access for all fixed networks in EU reform

Thursday 10 December 2015 | 13:17 CET | Background

The European Commission has started work on reforming the EU telecom regulatory framework. It's expected to make its first legislative proposals in mid-2016. The Dutch government, which will take over the EU presidency in the first half of 2016, has called for a stronger requirement for wholesale network access, for all types of networks. All fixed as well as mobile networks should be open to competition in order to achieve the greater goal of fast, reliable connectivity, at the lowest possible cost. 

Most important is that the new framework is future-proof, according to the Dutch minister of economic affairs, Henk Kamp, in a statement ahead of the next meeting of EU telecom ministers. Broadband demand is growing quickly, while the market dynamics are changing due to consolidation, the rise of multi-play packages and OTT services. The new rules should also help avoid fragmentation and help businesses with pan-European ambitions to grow. At the same time, the framework must take into account different rates of development in each country and market in the EU.


Access to all networks

According to the Dutch government, network access will be an important theme in the reform. The current regulation can be improved and simplified in several areas. At the moment, its focus is on markets with one dominant player and providing access to the incumbent operator’s network. This makes it less suitable for regulating markets with two networks with different technical characteristics, the Dutch minister said.

Competition between network operators and the parties on their networks contributes to investment and quality improvements, Kamp said. To achieve this, regulation needs to be based more on the competitive situation on retail markets, and the latter should determine when and how to regulate, according to the Dutch minister. Access regulation must also be more flexible, so that regulators facing joint dominance have room to regulate technically different networks.

The problem is the burden of proof for determining joint dominance. Even in situations where joint dominance cannot be proven or is rejected by a judge, a form of access regulation should still be possible, according to the Dutch government.

The policy view also takes into account the trends of consolidation and convergence on European markets. While the number of networks may be shrinking due to the M&A underway, convergence is making access to both fixed and mobile networks all the more important for service providers. 

Mandatory wholesale offer

The Dutch propose that in addition to the current wholesale access regime based on determining a dominant market player, a general requirement to negotiate wholesale access be imposed on the entire market. Network operators would be required to respond to any reasonable request for access and negotiate an agreement under reasonable terms. This follows the current methods for providing access to physical infrastructure or sharing antenna sites and network facilities.

Given the economic scale required to build a fixed network, which limits the number of potential market entrants, a requirement to negotiate wholesale access should apply for all fixed operators. The Dutch government is also open to extending the requirement to mobile network operators.

If market players are not able to reach agreement on network access, the regulator should be given powers to act as arbiter. The Dutch government also supports a stronger role for organisations in which member states play a role, such as Berec and the spectrum group RSPG.

The approach above is based on the hope that regulation of cable networks will become possible. This is something long sought by The Hague; in 2013 the parliament tried to pass legislation but this was overturned by the EC as current EU law says only an independent regulator can impose wholesale access obligations. Kamp has said repeatedly that regulating the dominant cable operator Ziggo is not possible with the current rules. As the idea is to base regulation on retail markets, in principle a regulator could also find that regulation is not needed. However, the Dutch government’s proposal is based more on a type of automatic right to wholesale access on fixed networks, under its repeated premise that ‘two is not enough’.

The Dutch government will elaborate on its view in the coming months in talks with the European Commission and other stakeholders, in anticipation of a proposal from Brussels. While the Netherlands cannot set the agenda entirely during its EU presidency, the economic affairs ministry said it hopes to play the role of an ‘honest broker’, that brings together similar-minded parties.

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