The European Commission has called on the Polish telecoms regulator to amend or withdraw its proposal to give alternative operators only limited access to Telekomunikacja Polska’s fibre networks.
Negative effect on competition
The Polish telecoms regulator UKE had proposed not to regulate prices alternative operators pay for wholesale broadband access to Telekomunikacja Polska’s fibre-to-the-home (FTTH) network.
This would mean that the wholesale access prices would be set by Telekomunikacja Polska, which would, so claimed UKE, give an incentive to the company to further roll out FTTH networks.
However, Brussels now let Poland know that it believes such pricing freedom could have a negative effect on competition and the future development of fibre networks, and thus limit offers available to consumers and businesses.
The Commission’s Recommendation on Next Generation Access Networks states that a telecom regulator should only lift cost-orientated access pricing when functional separation (operationally separate business entities) or other strict non-discrimination rules have ensured equivalence of access for alternative operators.
The European Commission thus called on UKE to either mandate cost-orientated access to FTTH or instead impose rigorous non-discriminatory access to the incumbent’s network.
The decision comes after a three month investigation in cooperation with BEREC, the body of European Telecoms Regulators.
Lenient regulatory approach so far failed to deliver
“The reaction of the Commission is understandable.“ says Dr Boštjan Makarovič, Apahia’s Chief Consultant.
“There is more to the issue than the compliance with NGA Recommendation. The price would have to be set at a level that would at the same time serve as an investment incentive i.e. cover costs and generate profits, yet still enable competitors’ efficient market entry i.e. not result in margin squeeze. If regulators allow the incumbents to make this type of calculations themselves, they should at least be able to verify them by means of their own models. Moreover, this ‘lenient’ regulatory approach so far failed to deliver in terms of FTTH coverage in Poland and there is no reason to believe it suddenly would. One should further note that, before making such bold decisions with the motive of boosting investment, the regulators should consider various factors, including the revenues from copper.”