VodafoneZiggo had the first hearing of its legal appeal against the wholesale cable regulation in the Netherlands on 12 July. A ruling from the court - the outcome of which is difficult to predict - is expected by 04 October. If the ACM wins and the regulation is upheld, a new analysis of the wholesale tariffs will be needed, as the current rates are not attractive enough for potential takers.
The regulation stems from the creation of VodafoneZiggo. A series of mergers led to a convergent operator that can challenge incumbent KPN in terms of networks, coverage and market share. Similar companies means similar regulation. While the operators prefer deregulation, "two is not enough" for the ACM and it found together KPN and VodafoneZiggo have joint dominance in the market. The new wholesale cable offer was presented at the end of 2018, and interested providers (T-Mobile, YouCa, likely also Caiway and business providers) can use the offer as the basis for negotiating with VZ. This has yet to lead to any commercial offer.
Current wholesale offer unworkable
The court hearing focused mainly on the joint dominance concept, the eventual need for regulation, the coherence with EU rules, etc. It's clear though that there's more to it than this. The current wholesale offer, with the prices quoted, will not lead to a newcomer on the cable market. The wholesale price for a connection with 500/40 Mbps and TV is EUR 47.60 per month (excluding VAT and rights). With small fibre operators (Netrebel, Jonaz, Tweak etc.) already offering gigabit speeds for less than EUR 40 per month, no operator can compete with these cable rates.
Furthermore, the ACM made the mistake of not requiring VZ to offer a broadband-only wholesale service; VZ said this was technically not possible, as it cannot separate the TV signal. This seems like a weak argument, as the TV signal could be encrypted. This is also a problem for the broadcasters interested in offering an OTT service in combination with broadband only - something that could drive the move to cord cutting.
Price check needed
We won't dare to predict what the court says about the regulation. But if the corporate appeals court does side with the ACM, that's not the end of the story - more work is needed. Potential newcomers on the cable network will ask the ACM to look at the tariffs. This already happened in Belgium after the first round of regulation proved insufficient and has led to lower wholesale cable prices there. Given the time it takes to implement such decisions, open cable is not close on the horizon for the Netherlands, but it will continue to hang over the market.
