080702 llu pubhear

Slide1: 

The principle of non-discrimination in the ADSL market LLU Hearing, European Commission, 8 July 2002 Javier Valiente, EuroISPA

The ADSL Market : 

The ADSL Market ADSL Penetration in the EU

The ADSL Market : 

The ADSL Market Distribution of the ADSL wholesale market

The ADSL Market : 

The ADSL Market Distribution of the ADSL retail market Source: EuroISPA, OFTEL (April 2002)

Current Discriminatory Practices: 

Current Discriminatory Practices Control of the Local Loop Lack of access to the local loop: very limited number of MDFs offering LLU Unjustifiable delays on LLU negotiations with incumbents: RUOs insufficiently detailed about network information and collocation details High price and delays for local loop unbundling and collocation “Price squeeze” for new entrants: high pricing of the xDSL wholesale product and/or low retail prices of the fixed incumbent for the same service (Belgium, France, Italy, Portugal, Spain and UK)

Current Discriminatory Practices: 

Current Discriminatory Practices Control of the essential facilities: Discriminatory terms of provision: delays on installation, resolution of technical problems and lines closure (Belgium, Portugal, i.e. Spain: incumbents average waiting days for ADSL installation: 10-15 days; Competitors: 30-45 days) Access denial: based on technical reasons not applying when access is requested through the incumbent´s ISP (Germany, Spain…) Services of inferior quality: reliability and repair concerns Difficulties for massive migrations: from the incumbent to another operator

Current Discriminatory Practices: 

Current Discriminatory Practices Other discriminatory practices: Provision of ADSL to the retail market by incumbents was authorised in Spain and UK: Competition Authorities did not authorise this in other EU countries (i.e. France) Better contractual provisions for Incumbent´s ISPs: lack of transparency in wholesale contracts for indirect ADSL Crossed subsidies amongst companies of the incumbent Incumbents´ use of competitors´clients contact details with commercial purposes in the retail market Use of fixed telephony clients´ data for the promotion of ADSL services (I.e.: ADSL publicity with phone bills) Configuration of modems: incumbents´ control

Market effects of discrimination: 

Market effects of discrimination Effects on current competition Serious implications on new entrants´ business strategies and financial performances: postponement of operators entrance to the broadband access services market (Belgium, Germany, Italy, Netherlands, Spain) Set up of ADSL market monopolies or oligopolies in many EU countries (Germany, Italy, Spain) Non compliance of Service Level Agreements: lack of control over incumbents´ SLAs by ADSL providers. ADSL service quality in danger: no incentives to improve the performance of a monopolist service Creation of a climate of legal and business uncertainty

Market effects of discrimination: 

Market effects of discrimination Long term effects Reduced investment on infrastructures: short term ROI Delays of investment on other broadband technologies (HDSL, Wireless..….) ADSL is becoming the key to the future control of broadband development New technologies (xDSL,Wi-fi) under incumbents´ control Captive clients: multimedia contents´ supply only provided to own ADSL access clients Lack of choice for end users: lack of different offers

Possible remedies: 

Possible remedies Regulatory measures Very close follow-up of the European Commission and National Regulators in the process of the LLU: EU and NRAs implementation of effective measures to stop abuses of dominant position by incumbents National Regulators and Competition Authorities effective surveillance of ADSL access conditions: installation delays, capacity to inspect incumbents´ offices, access denial Proportionate sanctions by NRAs to stop anti-competitive practices of incumbents

Possible remedies: 

Possible remedies Regulatory measures Major changes and harmonization across Europe in the interconnection models on ADSL: each country offers at the moment different business models on WholeSales and Interconnection scenarios.   Transparent wholesale contracting: to avoid unfair competition and better conditions to incumbents´ group of companies Standardisation on configuration of modems: clear public guidelines on the specification of modems and their compatibility with incumbents´ equipment

Possible remedies: 

Possible remedies Structural measures Not allowance or suspension of incumbents´ direct supply to the ADSL retail market - unfair competition: at least until the opening of the Local Loop is finalised (Spain and UK) Structural separation of incumbents´ ISPs from the incumbents group: in order to allow real competition and control crossed subsidies, lack of transparency in contracts and predatory prices through anti-competitive promotions When necessary, legal limitation on the total ADSL market share of the incumbent: in most EU countries they control over 80% of the current ADSL market (Germany, Spain, UK)