ECTA finds incumbent operators in Europe continue to breach regulations, preventing competition in leased line markets

January 9, 2004

3 Min Read

BRUSSELS, Belgium -- The European Commission and national experts are meeting today to try and finalise the details of information that needs to be collected about the interconnect leased line offers of European incumbent operators. Once completed, we believe that this work will show that in many Member States the incumbent operators continue to breach the relevant applicable regulations, effectively preventing the development of competition in the downstream market.

ECTA, the European Competitive Telecommunications Association, today published its own scorecard relating to interconnect leased line products.

Interconnect leased lines are a key wholesale product used by new entrants to combine with their own network assets to build up a retail product which competes with the end to end retail leased lines product offered to end users by the incumbent. Competition in the provision of end to end services is a key to delivering products at a reasonable price to European business users, ensuring their competitiveness on world markets.

The ECTA scorecard looks at the contractual conditions attached to the interconnect leased line product. This shows that a number of incumbents, even where compelled to offer fair prices for interconnect leased lines by their regulator, have contrived to frustrate competition by attaching unfair contract terms.

The findings in summary:

  • In almost all countries, the incumbent has found a way of making the interconnect leased line product an ineffective tool for competition by attaching unfair supply conditions. For example, in Denmark, requests for interconnect leased lines must be forecasted with the incumbent up to one year before they can be used! In many countries, including France and Ireland, the quality of service levels the incumbent provides to new entrants in the interconnect leased line product, are inferior to those offered to its retail customers.

  • In some Member States, including Austria and Germany, the incumbent has still failed to make available an interconnect leased line product at all, despite the fact that such products are covered both by the 1997 Interconnection Directive as well as the new Access and Interconnection Directive.

  • In a number of Member States, including Sweden and Denmark, there is no difference in price between the wholesale product and the retail product, which means either that the retail arm of the incumbent is being cross-subsidised by the wholesale arm and/or that the wholesale arm is overcharging new entrants for the wholesale product. Either way, the effect is to prevent new entrants delivering lower prices to customers.

  • In several Member States, where an interconnect (partial) leased line product is available (e.g. France, Netherlands, Belgium), there is a price squeeze between the prices of retail leased lines and interconnect partial leased line prices.



Roger Wilson, Managing Director of ECTA said "It used to be the case that incumbents engaged in relatively unsophisticated forms of abuse, such as a simple refusal to supply monopoly products to its competitors. While the latter still occurs, under pressure from regulators, incumbents now commit a better class of crime. One could characterise it as comparable to a passage from blue collar to white collar crime. Regulators now need to pay very close attention to quality of service, pricing abuses and constructive refusals to supply, that is where the incumbent uses contractual conditions to make an offer unusable."

Ewan Sutherland, Executive Director of INTUG, which represents business and consumer users, said "Leased lines have been the subject of complaints from INTUG for a quarter of century. At first the issue was just the excessive retail prices of the incumbent operator, later we had to add their treatment of new entrants. Europe needs faster economic growth, that means better use of ICTs, purchased from a competitive market. The supply of leased lines by incumbent operators to new entrants are an essential part of that market. The capacity of incumbent operators to diminish competition is enormous. Here we see further instances of the games played to disadvantage the rest of the economy for their short term gain."

European Competitive Telecommunications Association (ECTA)

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