The market for wholesale mobile access is not considered as susceptible for ex-ante regulation at EU level since 2007 and is not regulated in such a way anywhere in the EU. The Commission’s decision means that CTU cannot adopt its draft measure, as notified.
On 29 December 2022, CTU notified to the Commission its draft measure proposing the imposition of wholesale regulation in the mobile access market in the Czech Republic. On 30 January 2023, the Commission informed CTU that it had serious doubts as to the compatibility of the draft measure with EU law and opened an in-depth investigation. On 24 February 2023, the Body of European Regulators for Electronic Communications (BEREC) issued its opinion on the Commission’s serious doubts, in which it fully supported the Commission’s findings. On 24 March 2023, the Commission adopted its final decision and is thereby closing the in-depth investigation. CTU must withdraw its draft measure regarding the wholesale mobile access market.
Wholesale mobile access services
Wholesale mobile access services are services purchased by operators who intend to provide mobile services to retail customers, but do not have their own infrastructure. By acquiring such wholesale inputs, the mobile virtual network operators (MVNOs) can provide their mobile services to end-users, by relying on networks owned by mobile network operators (MNOs). Wholesale mobile access can also be provided to other MNOs, who do not have sufficiently developed infrastructure (usually referred to as national roaming). Such national roaming agreements are usually established through voluntary commercial arrangements or are mandated as pre-conditions under spectrum licences (as is the case in the Czech Republic).
The draft measure
In its notified draft measure, CTU referred to the fact that retail prices for the mobile telecommunications services are particularly high in the Czech Republic. According to CTU, MVNOs are not able to offer competitive services due to allegedly unfavourable wholesale access conditions. Therefore, CTU proposed to designate all three Czech MNOs (i.e. O2, T-Mobile and Vodafone) as having a joint significant market power (“SMP”), and consequently proposed to oblige all three of them to offer a regulated wholesale mobile access to all operators.
The Commission decision
The Commission considers that ex ante regulation based on the joint SMP finding is unjustified, and notes that other regulatory tools, e.g. enforcement of already imposed spectrum related obligations, or enforcement of competition law, have the potential to improve the situation on the market.
Under the 2020 5G auction conditions, the operator O2 is obliged to provide national roaming to the two holders of 5G spectrum i.e. Nordic Telecom and incrate. This obligation to provide access to O2’s network is based on cost-oriented terms and is valid until 2029. Therefore, the Commission considers that it is in the interest of those two operators to enter as quickly as possible, in order to recover their costs and to benefit from conditions under O2's spectrum licence for a longer period. CTU itself considers that the market entry of one of the holders of 5G spectrum, based on regulated terms, as included in the spectrum auction, should take place by the end of 2024. This might have potential to allow those new entrants to effectively compete with the three largest MNOs, both at retail level, as well as for the provision of wholesale access to MVNOs. Furthermore, in case O2 would refuse or delay giving access for unjustified reasons, CTU has the necessary legal instruments to enforce conditions under O2's spectrum licence. Furthermore, O2 cannot prohibit the two entrants to further resale such access to virtual operators.
The Commission therefore considers that the enforcement of already existing spectrum licence conditions should help to bring about positive changes in the retail mobile market in Czechia. The market entry of new mobile operators (Nordic Telecom and incrate), based on the use of the national roaming obligation imposed on O2 and/or through the deployment of their own networks in near future, has the potential to create competitive pressure in the retail and wholesale market.
The CTU proposed full set of ex ante obligations based on the finding of joint dominance between the three MNOs active on the Czech market. However, according to the principles of competition law and the relevant case law, a finding of joint dominance would require meeting a number of strict criteria.
The Commission considers that CTU has not provided sufficient evidence that the criteria which are relevant for establishing joint dominance are met. In particular, the Commission considers that there are significant differences between Czech MNOs, which do not facilitate tacit coordination. First, one operator (O2) is already obliged to grant access to its network, based on its spectrum licence conditions. Furthermore, the different market shares (at wholesale level) and different cost structures of the three main operators (in particular for Vodafone, who, while active on the wholesale market, is not part of the network sharing agreement between T-Mobile and O2/CETIN) further underline this asymmetry. Finally, there are two new (potential) entrants, who already acquired spectrum, and whose entry is further facilitated by existing wholesale access obligations imposed on O2.
Overall, the Commission concluded that the structure of the Czech market does not support conclusions on collective significant market power. To the contrary, in the Czech market there are already favourable conditions for market entry of new mobile operators, who could soon provide their services at the retail and wholesale level. Such new entrant(s) are expected to create additional competitive pressure, at both retail and wholesale level, to the benefit of the Czech consumers.
The Commission’s conclusions were also supported by the Opinion of BEREC (BoR (23) 49) as to Commission’s decision to open Phase 2 investigation. The Commission’s decision will be available online on CIRCABC.