FICORA to reassess SMP regulation and reform pricing assessment

Published 13.09.2012 FICORA will reassess regulation based on significant market power (SMP) and begin to reform the assessment of pricing and its methods. The reassessment is based on the decision of the Supreme Administrative Court (KHO) of 27 July 2012 on Elisa Oyj's pricing of local loops. According to KHO, the calculation method used in the decision FICORA issued in 2010 was not in accordance with the Finnish Communications Market Act. FICORA's estimation of the impacts of KHO's decision on the assessment of the regulation and pricing of SMP is more extensive.

KHO's decision and guidelines have an essential impact on the principles FICORA applies to pricing assessment. KHO's decision stated that the assessment principles applied by FICORA in the case in question violate the Finnish Communications Market Act as far as the assessment of capital costs is concerned.

FICORA abandons current assessment principles - new pricing methods are under development

Due to KHO's decision, FICORA will abandon its pricing assessment principles and will initiate development on a new method for determining the pricing and prices of regulated products.

From the beginning of 2013, FICORA will not apply book value to the pricing assessment of metallic local loops and TV broadcasting services. For now, the assessment of the pricing of regulated SMP products is based on the Communications Market Act, its legislative history, SMP decisions and case law within the sector.

Regulatory changes in the local loop market to be reassessed

KHO's decision impacts FICORA's SMP decisions regarding the local loop market. In the spring of 2012, FICORA released its proposal on the regulatory changes in the local loop market. FICORA suggested that price caps should be set for the eight largest SMP operators. Due to KHO's decision, capital costs based on book values may no longer be the base for setting price caps.

Meanwhile, the European Commission has raised serious doubts about the proposed regulatory changes and demanded stricter regulation in the local loop market. The so-called second phase investigation and the handling of the case at the Commission are still pending, and there are no final decisions on the future pricing obligations. FICORA will notify of the draft decision regarding the local loop market, any amendments made to the decisions and eventual new hearing methods once the authority has issued future regulatory obligations.

KHO's decision (in Finnish)

Further information:

Ms. Asta Sihvonen-Punkka, Director-General, tel. +358 9 6966 401, +358 50 573 9053
Ms. Johanna Juusela, Director, tel. +358 9 6966 878, +358 40 542 7132

Further information:

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