Spain's National Markets and Competition regulator, CNMC, has just approved a proposal to update the nation's wholesale fixed broadband rules in a move that looks distinctly favorable for former incumbent Telefónica.
Essentially, the regulator has increased the number of geographical areas where Telefónica will no longer be obliged to allow competitors to access its optical fiber network. Telefónica sub-brand O2 Spain also looks set to benefit since it will be able to remove some geographical restrictions to its plans.
In detail, CNMC said Telefónica will be exempt from offering its competitors wholesale access services to its optical fiber in a total of 696 municipalities, which equates to 70% of the Spanish population – an increase from 66 municipalities or 35% of the population.
The 696 municipalities now fall within the so-called "competitive zone," while the remaining 7,453 municipalities will be part of the "non-competitive zone" and therefore still subject to wholesale access obligations.
For example, in the "non-competitive zone" Telefónica will still be obliged to provide wholesale services for virtual unbundled access to optical fiber (local NEBA) and fiber bitstream (NEBA fiber broadband).
The measure updates regulations from 2016, and is a "consequence of the competitive dynamics observed since the previous regulation," CNMC said.
"Since the last review, a fourth national operator, Masmóvil, has entered the market, providing a nationwide alternative to Telefónica, Orange and Vodafone. Euskaltel, with the launch of its new Virgin brand, and Digi, are other operators that have expanded both their product and geographic availability compared to the 2016 review," the regulator said when it first announced the proposal in November 2020.
Indeed, CNMC data shows that the number of fiber-to-the-home (FTTH) connections in Spain has increased from 3.1 million in 2015 to almost 12 million in 2020. In other words, while FTTH represented 23% of the market in 2015, it is currently the predominant technology with about 75% of total broadband connections, CNMC said.
The regulator noted that Telefónica's share of the broadband retail market is less than 50% in each of the 696 municipalities, and that there are at least three next-generation access networks (NGA) with a minimum coverage of 20%.
At the end of 2020, more than 75% of the fiber accesses installed by Telefónica were located in those 696 municipalities, CNMC added.
It won't be all party, party, party for the former incumbent: It will still have to allow others to access its ducts and poles in the competitive area, even though it is free from wholesale access obligations for its fiber network here.
It will also have to provide local loop unbundling on its copper network. In addition, the deregulation of the 696 municipalities will only be applied after a transitional period of six months.
However, more changes could lie ahead: Within three years, CNMC will assess whether it is necessary to review the areas considered "uncompetitive," or even withdraw the regulation of wholesale access to fiber throughout the territory.
The European Commission has given its blessing to the move, but encouraged the CNMC to define a separate market for access to civil infrastructure such as ducts and poles in the upcoming reviews.
The decision by the CNMC comes amid ongoing speculation that Telefónica is mulling the possibility of selling a minority stake in its Spanish fiber network. Any transaction is said to value the business at around €15 billion (US$17.3 billion) as a standalone entity.
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— Anne Morris, contributing editor, special to Light Reading