EC OKs Luxembourg Plan

BRUSSELS, Belgium -- In a letter sent on 30 October 2006 to the telecom regulator of Luxembourg, Institut Luxembourgeois de Régulation (“ILR”), the European Commission welcomes a regulatory measure proposed by ILR at the end of September that will give new market entrants high-speed access to end-customers (or bit-stream access) via the broadband networks of Luxembourg’s telecom incumbent EPT (Entreprise des Postes et Télécommunications). The Commission welcomes in particular that the remedy proposed requires bitstream access regardless of the technology used by EPT (ADSL2, ADSL2+ and VDSL). Furthermore, the Commission invites the regulator of Luxembourg to ensure that the remedy applied is effective in ensuring competition to the benefit of consumers.

“Opening the broadband market in Luxembourg to more competition will lead to better services and lower internet access prices for consumers”’, commented Information Society and Media Commissioner Viviane Reding. "I however note that the effectiveness of the measures now to be adopted by the regulator in Luxembourg is crucial. While bitstream access will be made available to new market entrants in Internet protocol (IP)-mode now, it may be necessary for ILR, if retail prices remain high, to impose in the future further bitstream access at other levels than IP, taking into account the current demand from competitors for a more flexible wholesale input, which would allow for more differentiated retail products".

On 29 September 2006, the telecom regulator of Luxembourg, ILR, notified to the Commission, in applying EU telecom rules, measures that it intends to impose on EPT on the wholesale broadband market in Luxembourg. EPT is the only supplier in the relevant market thus having 100% market share in the relevant wholesale market. The remedies proposed by ILR will require Luxembourg’s telecom incumbent to open its broadband networks to competitors by allowing them to purchase a high speed access link to the customer premises from EPT with transmission capacity for broadband data in both direction, thus enabling new entrants to offer their own, value-added services to end users. Under the terms proposed by ILR, bitstream access will need to be granted by EPT also to a future VDSL (= very high speed digital subscriber line)-infrastructure.

In its letter under Article 7 of the EU Framework Directive for electronic communications, made public today, the Commission, which supports the measures taken by Luxembourg’s regulator, indicates that the access obligation on ETP should serve to ensure effective competition in the broadband market, so that users derive maximum benefit in terms of choice, price and quality and that efficient investment in infrastructure is encouraged.

If retail prices remain high[1] despite the wholesale measures imposed, ILR should consider imposing access also at other levels than IP.

The objective of access regulation under the EU regulatory framework is to allow new market entrants to offer their services initially via the infrastructures of the incumbent operator. The revenue generated thereby by new market entrants should allow them to progressively “climb the ladder of investment” and finally to invest into their own infrastructure. As soon as there are competing infrastructures, access regulation will be phased out, leaving the market under the control of competition law only.

In its letter to Luxembourg’s regulator, the Commission asks ILR furthermore to ensure standalone bitstream access (the provision of broadband access independent of the obligation to buy a telephone connection from EPT) in the near future to enhance competition on the broadband market in Luxembourg.

European Commission