WARSAW, Poland -- In a letter dated 13 November 2006, the Commission has informed the Polish telecom regulator, Urząd Regulacji Elektronicznej (UKE) that it seriously doubts that the notified draft measures on Polish retail access markets are compatible with Community law. UKE has so far provided insufficient evidence to support its definition of the markets for fixed telephone network access, says the Commission. It is the first time that a Member State proposes to regulate low speed narrowband and high speed broadband access services together in these retail markets. In the next two months the Commission requires UKE to provide a substantiated market definition backed by evidence.

(17/11/2006) On 13 and 24 October 2006 UKE notified the Commission of its draft measures regarding the Polish markets for access to the fixed public telephone network for residential and non-residential customers. Based on its analysis UKE proposes to include access to broadband services in the market, to designate Telekomunikacja Polska S.A. (TP) as having significant market power and to regulate the market.

Following its preliminary assessment of the notified draft measure, in its letter of 13 November, the Commission informs UKE that it seriously doubts that UKE has defined the relevant markets according to the principles of competition law. In particular, the Commission considers that UKE has not presented sufficient evidence to support its finding that broadband access services are part of the product markets for access to fixed public telephone networks.

The Commission is concerned that UKE's proposed market definition unduly subjects TP's retail broadband access services to regulation and hinders competition in Poland. Such potential overregulation may impede TP's further investment in the roll-out of its broadband network and undermine alternative operators' entry in or expansion on the market.

During the next two months of the so-called "Phase II" procedure, the Commission will call for and assess further market clarifications and data from UKE and the market players. On the basis of the additional data received, the Commission will decide whether the Polish regulator will need to withdraw or whether it can adopt the proposed regulatory measure.

Background

Access to the fixed public telephone network for residential and non-residential customers means a fixed connection to the public telephone network by any customer for making and/or receiving telephone calls and related services such as faxes and dial-up internet. Although broadband connections are also capable of delivering telephone services, customers generally will not switch to a broadband connection for the sole purpose of accessing calls services. Consumers may switch from narrowband to the more expensive broadband connections primarily to access higher speed internet services. The Polish NRA is the first regulator to include broadband access services (i.e. through xDSL) in the so-called access to the fixed telephone network markets without yet providing the necessary supporting evidence.

All Member States (PT, SE, LT, BE, SK, IE, EL, CY, AT, SI, ES, DE, IT, MT, LU, HU, FR, DK, FI, CZ) that so far have notified the retail markets for access to the public telephone network at a fixed location for residential and non-residential customers, found the markets not to be competitive.

The Commission's decision to launch “Phase II”-investigations in the present case is based on Article 7 of the EU Framework Directive for electronic communications (see MEMO/06/59), which requires the Commission to ensure that national regulatory measures do not create a barrier to the single market and are compatible with Community law.

Urząd Regulacji Elektronicznej (UKE)