NMa conditionally approves joint venture of KPN and Reggefiber

23 January 2009

Cezanne Philips-Santman

The Netherlands Competition Authority (NMa) has conditionally approved a proposal from Dutch telecom provider KPN and optical-fibre company Reggefiber in which fair access to the planned optical-fibre networks of their intended joint venture is guaranteed. KPN and Reggefiber plan jointly to construct optical-fibre networks in The Netherlands over the next few years. These networks will enable them to offer broadband services that are impossible to offer with existing copper lines.

The joint venture will install fibre networks over the next few years for the Dutch consumer market, known as Fibre to the Home (FttH).  The fibre networks will make it possible to offer broadband services, such as high definition television, that cannot use existing copper networks. KPN and Reggefiber state that this joint venture will make it possible to roll-out a fibre network in The Netherlands.  At the same time, other telecom companies are guaranteed to gain access to the fibre network at reasonable tariffs and in a non-discriminatory way.

Following consultation with interested parties, the NMA has agreed to KPN and Reggefiber’s joint proposal. Competition concerns have been addressed by guaranteeing that other telecom companies will have access to the network in a non-discriminatory way. In addition, maximum monthly rental tariffs for access have been set, and are subject to annual increases in line with inflation.  Additionally, an enforcement procedure has been set up.  If the joint venture does not comply with the conditions, customers who want to access the fibre network can file a complaint with the NMa using this enforcement procedure.

The NMa has closely worked together with the Dutch Independent Regulator of Post and Electronic Communications in The Netherlands (OPTA) in the assessment of this case.  As industry-specific regulator, OPTA has provided the NMa with advice. Additionally, OPTA has drawn up draft policy rules for tariff regulation of unbundled fibre access in consultation with the NMa.  The NMa has used these draft policy rules in its assessment of the joint venture.

KPN intends to take a 41 per cent stake in Reggefiber, a company that constructs and operates optical-fibre networks. Reggefiber will have the remaining 59 per cent share. Reggefiber’s other activities, including its business-market-oriented subsidiary Eurofiber, will remain outside the joint venture. In the long term, KPN has the option of increasing its stake in Reggefiber FttH, provided that the joint venture meets certain targets.