Dutch consultation to introduce symmetric access obligations may affect telecoms providers, owners of wiring and cables and data centers

This consultation is already the second legislative proposal to implement a provision of the Code in the Netherlands, after the consultation of the legislative proposal to implement the geographical survey provision of the Code, which was launched last December. The consultation of this particular legislative proposal is still a prelude to the legislative proposal to the full implementation of the Code. The Ministry explains this standalone consultation by stating that introducing the possibility for symmetrical access regulation has been strongly advocated by the Netherlands during the European negotiation process and that it concerns a new topic. What does the legislative proposal entail and how does it relate to the Code and the legislative implementation proposal still to come? What is the impact for telecoms providers and owners of cables and associated facilities such as data centers?

The legislative proposal: introduction of access regulation

The legislative proposal introduces access regulation regardless of whether there is a party with significant market power (so-called symmetric regulation). Even when several networks are in place, there may still be barriers for providers without their own networks to reach the end-user, according to the Ministry. Therefore it is proposed that the Dutch national regulatory authority, ACM (Authority for Consumers and Markets), will get additional powers to promote competition in case of economical or physical limitations to replicate wires or associated facilities.

Reasonable request

Specifically ACM will be able, upon reasonable request, to mandate access to wiring or associated facilities (i) inside buildings, or (ii) up to the first concentration point, if the concentration point nearest to the network termination point, as determined by ACM, is located outside of the building. ACM must find that replication of the relevant wiring or associated facilities is ineffective or physically impracticable and ACM must take the general objectives of the DTA into account.

Obligation could also apply to owners of wiring or buildings (datacenter)

It is important to note that such obligations may be imposed on providers of electronic communication networks or associated facilities or on owners of wiring or associated facilities that are no providers of electronic communications networks themselves. As a consequence, in the near future an owner of wiring or associated facilities such as buildings could be confronted with access obligations imposed by ACM. Symmetric obligations provide new opportunities for access seekers to deliver electronic communications services to end-users.

More stringent requirements for access on a higher level in the network

ACM will also be able to impose access to the network at a concentration point which is on the one hand as close as possible to the network termination point, and on the other hand - considering the number of connected end-users - enables an effective provider to provide electronic communication services in a commercially viable way. This access obligation may only be imposed on providers of electronic communication networks. Furthermore ACM should take into account obligations that are imposed due to significant market power (asymmetric regulation) and is only allowed to impose this access obligation if it finds that (i) there are high and non-transitory economical or physical barriers to replicate the network or associated facilities, which created (or are expected to create) a market situation with considerable consequences for end-users in terms of choice, price and quality; and (ii) those barriers are insufficiently addressed by access obligations as described in the previous paragraph. If justified from a technical or economic perspective, this access obligation may also include active or virtual access.

Exceptions

This kind of access obligation cannot be imposed, if ACM finds that the provider (i) performs only wholesale activities and complies with the conditions for wholesale-only undertakings as listed in Article 80, first paragraph, of the Code; and (ii) provides access to a very high capacity network under fair and non-discriminatory conditions to providers of electronic communication services and therewith supplies the access-seeker with access to end-users comparable with the access that would otherwise be obliged. This exception is not applicable however, if the network is financed by public means.

This kind of access obligation can also not be imposed if ACM finds that the imposition of access obligations would compromise the economic or financial viability of the deployment of a new network, in particular small local deployment.

Specific access conditions

Access conditions may include specific rules on access to network elements, associated facilities and associated services, publication of information, non-discriminatory conditions and the allocation of costs of access, taking into account the risks to those costs that are linked to the network concerned. Within five years after imposing an access obligation, ACM has to assess the results of the access obligation and has to decide whether to maintain, withdraw or change the access obligation.

A draft measure to impose such an access obligation is subject to national consultation and has to be notified to the European Commission, BEREC and the national regulatory authorities in other EU Member States.

Does the legislative proposal properly implement the Code?

This legislative proposal intends to implement Article 61 (3) of the Code and follows in general terms what is written there. However, we noted some particularities that could give cause for comments.

The legislative proposal sets out that ACM can only mandate access to a concentration point beyond the first concentration point on the basis of a judgement of existence of high and non-transitory economical or physical barriers to replicate the network or associated facilities, which created (or are expected to create) a market situation with considerable consequences for end-users in terms of choice, price and quality.  The legislative proposal lacks proper reference to 'any relevant market analysis' that existing obligations in terms of ensuring interconnection, interoperability and end-to-end connectivity between end users as well as existing ex ante obligations do not sufficiently address high and non-transitory economical or physical barriers as set out in Article 61 (3) of the Code. Therefore the legislative proposal may (unintendedly?) lack proper implementation of Article 61 (3).

Also, questions arise as to the conditions to be considered to justify the imposition of ex ante obligations as set out in the three-criteria-test pursuant to Article 67 of the Code as opposed to the conditions for imposing symmetric access obligations in Article 61 (3).  These need to distinguished, but the explanatory memorandum to the legislative proposal does not contain any clarification of the distinctions.

Does a standalone consultation of this provision make sense?

We question whether it makes sense to isolate the consultation of the implementation of this specific paragraph of the Code from the rest of the Code.

Guidance from BEREC will follow later

Firstly, the Code itself already creates uncertainty since the application of many provisions relies on BEREC guidelines still to come. Relevant criteria for this provision such as the existence of high and non-transitory economical or physical barriers to replication, ineffective or physically impracticable replication will be further elaborated in BEREC guidelines. BEREC will also publish guidelines on the definitions of the network termination point and of very high capacity networks as well as setting out criteria for determining the first concentration or distribution point, the point beyond that first concentration point, which network deployments can be considered new or small and which economic or physical barriers to replication are high and non-transitory. This in itself makes the scope and effects of the legislative proposal quite. However, this is a consequence of the deadlines as set in the Code which makes it unavoidable that the Ministry will need to transpose provisions of the Code before BEREC will have published the relevant guidelines.

It is hard to review the proposal without context

Secondly, what makes it even more difficult to respond to the consultation at this stage, is that it is also not known how the other provisions related to this particular paragraph and sections 4 to 7 of Article 61 of the Code will be implemented.

Not all objectives of the Code are implemented yet

Thirdly, according to the legislative proposal the general objectives of the Dutch Telecommunications Act (DTA) need to be taken into account before imposing a symmetric access obligation. The general objectives in the DTA are a transposition of the general objectives in the previous European regulatory framework of 2009. These are (i) to promote competition, (ii) to contribute to the development to the internal market and (iii) to promote the interests of the EU citizens. The Code adds a new objective which is to promote connectivity and access to, and take-up of, very high capacity networks by all citizens and businesses of the EU. This objective is particularly relevant for the provision in the Code to impose symmetric access obligations. However, the legislative proposal does not contain a reference to this new objective.

It is unclear how this proposal relates to other (ex ante) obligations and criteria

Lastly, the symmetric access provision in the Code is part of the set of tools to ensure adequate access and interconnection, interoperability of services, efficient and sustainable competition, the deployment of very high capacity networks, efficient investment and innovation, that gives the maximum benefit to end-users as set out in Article 61 (1) of the Code. The provision itself already makes it clear that existing access obligations should be taken into account. The Code introduces more regulatory tools. For example, to encourage investment in new very high capacity networks an SMP-provider may be (under certain strict conditions) subject to lighter regulation or even be exempted from SMP regulation. The Code also introduces the possibility to require the sharing of passive infrastructure for services that rely on the use of radio spectrum. All possible tools should be taken into account by the regulator whilst assessing barriers to the access to end-users. And also the market analysis procedure is amended by the Code, such as the obligation to notify draft measures to the European Commission, BEREC and other national regulatory authorities. These examples underline that the particular provision at hand is part of the whole regulatory framework, of which it is not known yet how this will be fully transposed into national legislation.

We feel that any response to the consultation should be accompanied with a general disclaimer respect to the lack of context of the full legislative proposal. We suggest that any changes of the legislative proposal pursuant to the present consultation will be open for re-consultation during the consultative process of the full implementation proposal of the Code in order to allow stakeholders to reassess the impact in the context of the other provisions.