Says state intervention to unbundle the last mile 'distorts competition'

October 7, 2004

2 Min Read

BERN, Switzerland -- Swisscom regrets the decision by the National Council to unbundle the "last mile" in the fixed network in a variety of far-reaching forms. In so doing, comprehensive state intervention in the telecoms industry has been put ahead of free competition over infrastructure (as exists for example between Swisscom and the cable network operators). Amendments to the Telecommunications Act will be discussed by the Council of States in the coming months.

There are no pressing reasons to unbundle the local loop, the so-called "last mile". Competition is at play on the Swiss telecoms market. The general public in Switzerland benefits from excellent price-performance compared to other European countries, as a recently-published ICT survey of the telecommunications industry showed. On the broadband Internet market, Switzerland occupies a leading position in Europe in terms of usage, quality and price, factors that benefit outlying regions in particular. This good position is chiefly attributable to stiff competition in the infrastructure area between Swisscom and the cable operators. Given this competitive situation, additional state intervention is not only unnecessary, but damaging because it distorts the market and provides false incentives. The negative consequences of extensive regulation can be seen in the United States, for example. Unbundling would mean that in future Swisscom alone would carry the risk of investing in infrastructure, and could enable "freeloading" competitors who do not invest in infrastructure to profit from officially regulated prices at Swisscom's expense. This would leave Swisscom with less of an incentive to invest.

On October 7, the National Council decided to unbundle the local loops of dominant providers by introducing a variety of access regulations. In addition to completely unbundled (full) access to subscriber lines, access to cabling and the interconnection of leased lines, alternative providers are to be granted fast bit-stream access (for two years) and the option to invoice customers directly. In the run-up to the deliberations by the National Council, Swisscom proposed unbundling the last mile of cooper cabling of individual buildings (full access) as a way of meeting political expectations – even though this ran counter to Swisscom's interests.

By deciding on a far-reaching range of unbundling measures, the National Council has chosen the path of interventionist regulation over gradual incorporation of the telecoms sector into general competition law. It is encouraging that the National Council rejected the Commission's original proposal to extend this regulation to include other technologies such as mobile telephony and wireless broadband networks.

Following approval by the National Council, the amendments will be put to the Council of States in the coming months.

Swisscom AG

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