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Study on regulatory incentives for deploying very high capacity networks: Commission’s Access recommendations

The study reports on the application of two recommendations that have been issued by the Commission in the field of access regulation and analyses how the guidance could be adapted and updated in line with the European Electronic Communications Code.

The Next Generation Access (NGA) Recommendation (2010) and the Non-discrimination and Costing Methodologies Recommendation (2013) provided guidance to regulatory authorities (NRAs), with the aim to foster consistency regarding the obligations imposed upon operators holding significant market power (SMP) on a broadband market.

The study reports on the regulatory approaches that have been used by national regulatory authorities (NRAs) in the areas covered by the existing recommendations, the Next Generation Access (NGA) Recommendation (2010) and the Non-discrimination and Costing Methodologies Recommendation (2013) and analyses how the current guidance could be adapted and/or updated in light of the regulatory, technological and economic changes that have occurred in the past years. In particular, the European Electronic Communications Code (EECC), adopted in December 2018 and entered into application in December 2020, introduces important changes in the field of access regulation with the aim to incentivise investments in very high capacity networks while safeguarding competition, for the benefits of consumers.

The study, which is based on surveys of EU NRAs and network operators, interviews, case studies, desk research and workshops with NRAs and with stakeholders, focuses on six key areas: price control obligations, including pricing flexibility for NGA products; non-discrimination obligations; access to civil engineering infrastructures; migration from copper to fibre, the approach towards cooperative arrangements an commercial initiative and the geographic differentiation of remedies.

Results

The results of the study suggest that many aspects of the current Access Recommendations remain fit for purpose, but that further refinement is needed. The study led to recommendations on a number of issues, including but not limited to:

  • the use of pricing flexibility overall;
  • the “copper anchor”;
  • the Economic Replicability Test (ERT);
  • volume discounts and long term pricing;
  • flexibility and measures to protect facilities-based competition;
  • the price band;
  • pricing of SMP civil engineering infrastructure;
  • calculation of the next generation access / VHCN risk premium;
  • choosing between Equivalence of Input (EoI) and Equivalence of Output (EoO);
  • the Technical Replicability Test (TRT);
  • dealing with information asymmetry;
  • effective access to legacy ducts;
  • improving the quality of databases and ordering processes;
  • aligning the successor recommendation with the Broadband Cost Reduction Directive (BCRD);
  • conditions warranting an out-of-cycle review of the SMP obligations;
  • NRA engagement in forming cooperative arrangements;
  • geographically differentiated market definition versus differentiated remedies;
  • the recommended notice period for migration to fibre;
  • possible departure from the principle of cost-orientation for legacy services in the context of migration to fibre-based networks;
  • and the degree to which NRAs should oversee the migration process.

Background

This study constitutes one of the inputs supporting DG Connect in the revision of two recommendations issued by the Commission in the early 2010s, in the field of telecom access recommendations. The information and views set out in this study are those of the authors and do not necessarily reflect the official opinion of the European Commission.

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VHCN study_executive summary_EN
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VHCN study_executive summary_FR
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VHCN study_report
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