Brussels, 12 March 2018: Last week, the European Commission issued a draft compromise proposal text on article 74 of the European Electronic Communications Code, which is being currently negotiated between the Council and the European Parliament.

This article aims at setting down the rules for co-investment schemes between the telecom operator having significant market power (SMP) and other operators.

On several occasions, ECTA has previously flagged the potentially anti-competitive effects of this article.

The text now proposed by the European Commission in response to the Council’s inappropriate deregulation proposal exceeds our worst nightmares: Not only does the draft extend deregulation well beyond co-investment by including simple commercial offers, but its aim seems to be to establish an overall passport for regulatory holidays that will irrecoverably damage competition and hence investment.

 It is not acceptable that an operator having significant market power should be deregulated solely based on a simple commercial offer to provide access to alternative operators. National regulatory authorities (NRAs) should not only continue to dispose of a full toolbox of remedies to impose on SMP operators, but they should also be clearly incentivised at safeguarding the benefits achieved with telecom liberalisation.

Should the Commission’s proposal be approved as such, this would mean the simple end of the SMP regime as it is applied under the current regulatory framework.

Since telecommunications markets in the EU were liberalised 20 years ago, competitors’ experience has shown many times that commercial agreements never delivered and that regulatory intervention was always needed in order to protect and promote effective and sustainable competition on the market.

End users, consumers and businesses alike will be the most hit by a certain connectivity price hike following the end of regulation and the reduction of choice in the market.

In addition, where deregulation allows an incumbent in a large Member State to re-monopolise the market, this might induce a domino effect creating unprecedented distortion of competition not only within that Member State, but also between Members States: Where the newly deregulated national champion will tend to aggressively acquire other incumbents that would not have been deregulated in other Member States, he may leverage his newfound strength onto these markets. Hence, this would trigger a downwards spiral of deregulation all across Europe.

ECTA believes that the current SMP regime is a necessary and efficient safeguard of competition and must not be weakened at any cost. Correspondingly, NRAs need to be able to intervene and choose from a full toolbox of remedies when they identify market failures.

Furthermore, the newly proposed text does not solve the issue of asset ownership in new very high capacity infrastructures built under a co-investment scheme. This is an issue that urgently needs a solution as, otherwise, the alternative operators will invest at lost funds to the sole benefit of the SMP operator.

For all those reasons, ECTA is convinced this is not a suitable text and it goes way too far beyond the initial Commissions proposal. ECTA calls on the co-legislators to renegotiate the text with a vision of maintaining and protecting effective and sustainable competition on the market in a manner that is inclusive for all players.

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ECTA members are united in their belief that competition is the best driver of efficient investments and the greatest enabler of innovation, choice and benefits for citizens and businesses, as well as for the European economy overall. This is the key message that ECTA and its members promote in the discussions about a European Electronic Communications Code.

For ECTA’s first analysis of the draft Code, please click here.

For ECTA’s position on the original draft report of the European Parliament’s Committee on Industry, Research and Energy (ITRE) on the proposed Code, please click here.

For further information on the contents of this press release and ECTA’s positions, contact:

Luc Hindryckx, Executive Director, +32 (0)2 290 0102

Follow ECTA’s latest views and activities on the Code and other subjects at:  @twECTA

ECTA, the European Competitive Telecommunications Association (www.ectaportal.com), is the pan-European pro-competitive trade association that represents more than 100 of the leading challenger telecoms operators across Europe. For nearly two decades, ECTA has been supporting the regulatory and commercial interests of telecoms operators, ISPs & equipment manufacturers in pursuit of a fair regulatory environment that allows all electronic communications providers to compete on level terms. Our members have been and are the leading innovators in Internet services, broadband, business communications, entertainment and mobile.