Friday, December 14, 2007

Belgium - open access to VDSL

Belgacom calls for a halt to discrimination in the broadband market

To offer its customers high-definition television (HDTV), Belgacom has invested several hundred million euro in a new VDSL network. However, based on a questionable interpretation of the regulatory framework, the BIPT wants to oblige Belgacom to open up this new network to its competitors. As long as the regulatory authorities have not conducted a proper analysis of the broadband markets, particularly in Flanders where Telenet is manifestly the dominating operator, Belgacom rejects this new obligation.

On 23 November, the BIPT conveyed to the European Commission its plans to open up Belgacom’s VDSL network to other operators. Based on an erroneous assessment of the balance of powers prevailing on the Belgian electronic communications market, the BIPT is now stepping up the regulatory pressure that is already burdening Belgacom, making its unfair treatment favoring Telenet even more blatant. A recommendation of the Competition Council in 2005 already warned the BIPT against penalizing Belgacom by imposing regulations on its new infrastructure investments.

To introduce competition in the digital television market, Belgacom started investing in optical fiber and VDSL technology in 2003. Belgacom wants to enable its television customers to benefit fully from this technology next year. Thanks to these investments made by Belgacom in its infrastructure (more than EUR 377 million since 2003), more than 60% of Belgian households will be able to enjoy HDTV in the spring of 2008. This network is a viable alternative to the cable TV operators’ near-monopoly of the television market.

Belgacom is now faced with the drastic projects of the BIPT, which involve making all Belgacom’s new infrastructure investments available to other operators who did not take on any industrial risks themselves. Yet the plans of the BIPT completely bypass the cable TV operators, despite the latter’s near-monopoly of television and their commanding 50% of the high-speed connection market in Flanders. If the BIPT follows through with these plans, they will create a paradoxical situation in which Belgacom, in a position to challenge the cable TV operators, would be hamstrung by additional constraints and robbed of its investments, while the cable TV operators would be free to develop their offers further, without any restrictions whatsoever.

To date, when ignoring the existence of cabled networks, the BIPT has invoked European legislation, which would not take into account the specific nature of the Belgian market. According to Belgacom, this interpretation is completely unfounded: newly applied European regulations have recently given national regulators sufficient leeway to take into account local specificities.

Belgacom can therefore not accept that a regulation that is unfair and incompatible with the new European context, forces it alone to bear all the economic and operational constraints of competition in the new broadband networks. Rapid and full development of these networks can only take place if these constraints are shared equally between Belgacom and the cable TV operators in a balanced manner.

Once again, Belgacom appeals to the BIPT to conduct a correct, balanced and serious analysis of the broadband market in Belgium, taking into account the European Commission’s new Recommendation, before deciding whether it is necessary to impose a regulation on Belgacom’s new infrastructures. In short, Belgacom is asking to be treated in the same way as cable TV operators.

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