EU Commission expects Finland to apply stricter regulation to the wholesale markets

Published 19.06.2012

On 18 June, the European Commission issued its opinion of the market analyses and draft decisions given by the Finnish Communications Regulatory Authority (FICORA). In the Commission's view, the obligations FICORA has proposed for telecoms operators are not sufficient to remove competitive problems in the wholesale markets. As a result of the opinion, the Commission began a second phase procedure with regard the local loop market and wholesale broadband service market. However, the Commission agreed with the conclusions of the market definitions in FICORA's market analyses and designation of undertakings with significant market power.

In the Commission's opinion, the pricing obligations proposed by FICORA are insufficient in many ways. The Commission expects stricter price regulation for fibre local loops and wholesale broadband products. The Commission will not either approve lighter regulation for wholesale broadband products below 8 Mbit/s.

FICORA agrees with the Commission about the competitive problems in the local loop market and about the need for stricter regulation. However, FICORA's powers are not sufficient to impose the obligations. 'According to the Finnish Communications Market Act, FICORA must first try out whether lighter pricing obligations work and are sufficient. Only after that FICORA may impose stricter obligations, for example pre-determined price caps for fibre-optic connections,' says FICORA Director-General Asta Sihvonen-Punkka. With respect to the wholesale broadband market, FICORA thinks that the stricter pricing regulation required by the Commission is not in proportion to the nature of the competitive problems.

In addition, the Commission disapproves FICORA's proposal on lighter regulation for 19 small telecoms operators. The Commission requests that heavy pricing obligations are imposed on all telecoms operators with significant market power irrespective of the size of the operator or the significance of the problem. According to FICORA, the significance of the 19 local telecoms operators is small with regard to the internal market and trade between Member States. Therefore, draft decisions regarding these operators should not be subject to Commission's opinion. 'It is likely that the Commission is exceeding its powers when it intervenes in the obligations proposed for these operators,' Sihvonen-Punkka maintains. FICORA has complied with the directive and notified the Commission of the draft decisions concerning telecoms operators that are relevant to the internal market. FICORA states that there are eight of these.

The European Commission has no opportunity to request Member States to alter the imposed obligations, but if it wishes, it may delay the issuance of the final decisions. According to the Finnish Communications Market Act, FICORA must delay the issuance of the decisions by three months in case the Commission so requests. In addition, FICORA must in such a case continue preparing the decision in close cooperation with the Commission and the Body of European Regulators for Electronic Communications (BEREC).

The Commission's press release

Further information:

Marja Lehtimäki, Head of Communications Markets Supervision, tel. +358 9 6966 857, +358 50 320 5181 and
Liisa Räsänen, Head of Market Analysis Unit, tel. +358 9 6966 819, +358 40 846 9926

A local loop means a part of a telecommunications network used for providing broadband subscriptions from the telecoms operator's network exchange to end-customers. When a service company, which has sold the subscription, carries out activities outside its own operating area, it must lease part of a local loop from the operating area's telecoms operator. The sound pricing of the local loop market is a prerequisite for telecoms operators to be able to compete in each other's operating areas and thus be able to provide inexpensive broadband services to consumers. Telecoms operators have active devices that steer and manage data transfer in the physical local loop. A wholesale broadband product consists of a local loop and the steering and management of data transfer. When a service company, which has sold the subscription, operates outside its operating area, it leases a wholesale broadband product consisting of a local loop and the steering and management of data transfer. Thus a service company may offer broadband services without it having to bring its own active devices for the steering and management of data transfer.

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