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Commission opens in-depth investigation of Swedish market for wholesale local access to fibre networks

Today, the European Commission opened an in-depth investigation into the Swedish Telecoms Regulator’s (PTS) analysis of the market for wholesale local access to fibre networks in Sweden.

Sweden is at a very advanced stage of fibre deployment and end-users increasingly demand high-speed broadband connections. In parallel, the importance of the legacy copper network is declining significantly, as consumers relying on fibre-based connections no longer switch back to copper-based connections.

Municipalities have played a key role in the deployment of local fibre networks in Sweden. In this situation, the fibre network reach of incumbent operator Telia differs significantly across the territory of Sweden where it competes with more than 180 local municipal fibre networks.

Due to these competitive developments, the Commission has serious doubts on the definition of the geographic scope of the fibre local access market. PTS defined the geographic market as being national despite observed differences in the connections of operators in different municipalities, and variations of the actual reach of historical operator Telia’s fibre access network across local municipalities. On the national market, Telia is found by PTS to hold significant market power (SMP) based on factors including its market share at national level and the significant gap in terms of national market share between Telia and its competitors. However, the Commission believes that this too broad definition of the geographic bounderies of the market might have led to the wrong finding of the national significant market power by Telia.

The Commission therefore considers that PTS should re-assess the ability of Telia to exercise market power in the light of the correct market definition. The Commission, therefore, initiates the in-depth investigation to verify the appropriateness of the market definition proposed by PTS and subsequently the corresponding SMP finding.

The Commission also commented on the SMP finding of PTS on the market for local access to legacy copper networks, urging PTS to further strengthen, in the final measure, its arguments on Telia’s ability to behave independently of its competitors and ultimately consumers, and to closely monitor developments on this, rapidly shrinking, market and to revisit, in the near future, the need for continuing regulation.


Next Steps

The Commission has two months to discuss the draft measure with PTS, in close cooperation with the Body of European regulators (BEREC). At the end of the Phase II investigation period, the Commission may either lift its reservations or issue a veto decision under Article 7 of the Framework Directive. During this period, PTS will not be able to adopt a final measure regarding the fibre local access market.

Conversely, PTS will be able to adopt a final measure concerning the copper local access market, but it shall take the Commission’s comment into utmost account.

The Commission’s serious doubts letter opening the in-depth investigation is available here.

The Commission invites 3rd parties to submit their observations within 5 working days.

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