TKK puts draft decision out to consultation: Less regulation on the wholesale broadband market

Press release dated 20 February 2008

In its session on February 18, 2008, the Telekom-Control Commission (TKK) passed a draft decision on the wholesale market for broadband access in the course of its regular market analyses.

As a result, Telekom Austria (TA) is considered to possess significant power on this market and has been subjected to regulatory remedies in order to combat existing competition problems. For the first time, however, the decision also exempts TA from regulation in certain parts of this market.

New: Geography-based distinctions in regulation

In its draft decision, the TKK defines geographical areas to be differentiated according to the intensity of competition:

"Category 1" areas refer to areas of high population density and densely settled areas in which one or more (large) companies ("unbundling partners") generally offer broadband Internet access in addition to TA and a cable network operator, and in which the intensity of competition is relatively high. In these areas, which account for roughly 55% of all fixed-link broadband connections, Telekom Austria will in effect no longer be subject to regulation due to the high level of competitive pressure.

In predominantly thinly settled areas ("Category 2" areas), where TA is often the only operator or only has to compete with one other provider, the competitive pressure is far lower. Telekom Austria thus also possesses significant market power in Category 2 areas, meaning that the company must fulfill the requirements defined in the draft decision and provide competitors with access to its infrastructure, among other requirements.

Specifically, the following regulatory remedies were imposed on TA:

• Access obligation (access to network facilities and functions) – Category 2 areas only
• Non-discrimination obligation, including the obligation to publish a reference offer – Category 2 areas only
• "Retail minus" price regulation – Category 2 areas only
• Accounting separation based on the markets defined in the Telecommunications Markets Ordinance 2003 (TKMVO 2003) – nationwide

The rates and charges for the retail customers of all Internet service providers will remain unregulated.

The draft measures put out to consultation by the TKK reflect economic reality and the European Commission's intention to gradually place ex-ante regulation under the supervision of competition authorities. For RTR, this will mean increased cooperation with Austria's Federal Competition Authority in the future.

RTR's draft decision is currently undergoing public consultation and can be found on the RTR web site at http://www.rtr.at/en/komp/Konsultationen Comments and opinions can be submitted until March 18, 2008. A final decision in this procedure can be expected in March 2008.