The Telecommunications Business in Switzerland - Liberalization and Regulation

Bundesamt für Kommunikation

Servizi di telecomunicazione e posta

Ufficio federale delle comunicazioni UFCOM

The Telecommunications Business

in SwitzerlandLiberalization and Regulation

Roberto Balmer

Economic Advisor, UFCOM

Disclaimer: The views presented here are those

of the author and do not reflect those of UFCOM.

University of Lugano

Managerial Economics II

28 April 2015

2The Telecommunications Business in Switzerland I Liberalization and Regulation

Agenda

• Liberalization and Privatization

• The Federal Office of Communications (UFCOM)

• Regulation and the Communications Commission (ComCom)

• Current economic policy (Laws, Ordinances)

• Antitrust case 1: Blocked Sunrise/Orange merger (ComCO)

• Antitrust case 2: FTTH investment cooperations (ComCO)

• Changing economic policy (Laws, Ordinances)

• Bonus – Regulation in practice 1: Unbundling (ComCom)

• Bonus – Regulation in practice 2: Leased Lines (ComCom)

IntroductionCurrent Economic

Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Mobile Wholesale3%

SMS retail1%

IPTV2%

Business network services5%

~11bn CHF/year

Source: Analysys (2014)

Telecommunications Revenues Switzerland 2014


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

Main employers:

Swisscom (BE/ZH): 21'000

Sunrise (ZH): 1'700

Cablecom (ZH): 1'500

Google (ZH): 1’300

Orange (LS/ZH): 900

Mobile

telephony retail

28%

Mobile

broadband retail

14%Fixed broadband

retail

21%

Fixed Telephony

retail (incl. access)

26%


Microeconomic policy basics• 1920-1997:

• The monopolist (one good):

• At p≠MC there’s a welfare loss - «deadweight loss»

• Why are prices not competitive?

- Use of «market power», «dominance» («conduct»)

- for example taxes

• Competitive prices can

- be the result of a free market under competition or

- be set by a regulator (regulated prices)

• So: if possible allow for competition (liberalization)

• But: Unregulated private monopoly may be worse than unregulated public monopoly

• Public firms are not always efficient. Rationale: Liberalize and regulate where necessary.

Source: Tirole, Industrial

Organization, Chap. 1


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Telecoms regulation essentials

• 1920-1997:

• 1992: Initial signs of Liberalization

Other operators than the monopoly state operator (incumbent) are allowed to sell end-

devices like telephones (1992) .

• 1998: Liberalization

Other operators than the incumbent can be awarded concessions and are allowed to

operate and sell telecommunications services like telephony or Internet. First competitors

enter.

• 1998: Privatization

The extent of public ownership (Government) over the incumbent and other firms is

reduced progressively (essentially by selling shares to private investors)

• 1998: Regulation

In different markets it is impossible to sell products without some form of access to the

former monopoly infrastructure (e.g. PTT/Swisscom telephone lines). An independent

Commission is set up to define (regulate) the access conditions (e.g. prices) to such

critical infrastructure if necessary (ComCom). More rules, but less State.


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


UFCOM

• DATEC: 7 federal offices (ministries) including UFCOM

• UFCOM Headquarters: Bienne

• UFCOM Staff: 271, of which 70 lawyers, engineers and economists in the telecoms and

post unit. 5% of Italian mother-tongue.

Department of Environment, Transport, Energy and Communications (DATEC)

Doris Leuthard, PPD

Federal Office of

Energy (UFE)

Federal Office of

Communications

(UFCOM)

Federal Office

for Spatial

Development

Federal Roads

Office USTRA

Federal Office for

the Environment

UFAM

Federal Office of

Transport UFT

Federal Office for

Civil Aviation UFAC

Swiss Government (Federal Council)


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


UFCOMMission statement (following the Telecoms Act):

• “UFCOM guarantees that population and economy are provided with reasonably priced

and high quality offerings. To this end, it promotes effective and sustainable competition.

Where necessary, it ensures a nationwide and affordable universal service.”

• “UFCOM establishes good conditions for the development, deployment and

utilisation of innovative, high quality and competitive technologies and services.”

UFCOMs main tasks in the telecommunications business:

• preparation of decisions and support of the Federal Council and DATEC in particular

regarding changes of laws and decrees

• preparation of decisions and support of the Federal Communications Commission

(ComCom)

• representation of Switzerland in international bodies

other tasks (for full list see backup)

• Information of the public: official telecommunications statistics (Art. 59 LTC)

• Services of the universal service must be of a certain quality throughout the country. The

Federal Council shall decide the quality criteria (Art. 17 LTC)

• The Office shall manage the addressing resources in accordance with international

standards. (Art. 28 LTC)

• Obligation for telecommunications service providers to register (Art. 4 LTC)


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


ComCom

• National Telecoms Regulatory Authority (NRA)

• Commission of 7 members, chaired by Marc Furrer

• Independent specialists nominated by the Federal Council, 4-year terms (renewable)

• Headquarters: Bern

• Staff: 3, mainly administrative. But: ComCom instructs UFCOM to prepare its business and

implement its decisions.

Tasks:

1. Granting licences for the use of radiocommunication frequencies

2. Awarding of universal service licences

3. Regulation: Laying down the access conditions (unbundling, interconnection,

leased lines, etc.) when service providers fail to reach an agreement

• Approval of national numbering plans

• Fixing the terms of application of number portability and carrier selection

• Decisions about supervisory measures and administrative sanctions


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


1.1.1998

Degree of state control

100%

Swisscom: 65%

Cablecom: 32%

Post: 100%

Cablecom: 0%

-35%

-32%

-15%

1.34 bn CHF

(2000)*

2.1 bn CHF

(2006)*

1.25 bn CHF

(2014)*

5.9 bn CHF

(1998)*

Swisscom: 51%

Cablecom: 0%

Post: 100%

*Debt ratio Swiss Confederation (2013): 17.6% of GDP (~100bn CHF)

Privatization


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

2000

Today


Ownership

0%

20%

40%

60%

80%

100%

120%

Telecommunications, incumbentGovernment ownership 2012 (Europe)

Source: OECD(2013)


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Ownership in practice


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

• How does the Confederation steer Swisscom (and Fastweb)?

• Representant of the Government in the Swisscom Board of

Directors (Hans Werder, former Secretary General DATEC;

appointed by the FC)

• Even though the Confederation has the majority stake in

Swisscom, it is committed to not interfere with Swisscom’s

operative decisions.

• But: defines strategic objectives for Swisscom

• E.g. “increase long term value”, “retain market leadership”,

“customer orientation”, etc.

http://www.uvek.admin.ch/org/03940/03942/03944/index.html?lang=de


ComCom: 1. Allocation of Frequency spectrum

1998: “Beauty contest” (period 1998-

2008), spectrum awarded to

Swisscom, Orange, Diax

2008: Extension 2008-2013

2012: Fully transparent “Auction”

(period 2013-2028)- Operators could bid for frequency

segments that fits their plans, “utlity”

for operator increases price.

- Revenues: ~1 bn CHF

2003: “Beauty contest”, spectrum

awarded to Tele2 and In&Phone

X

ComCom


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


ComCom: 2. Universal service

The „universale service“ guarantees that also after liberalisation the whole Swiss

population has access to a defined minimum set of services provided by a

concessionaire (Swisscom). This currently includes:

• A fixed telephone line (for max. 23.45 CHF/month ex. VAT)

• A broadband connection of more than 2’000/200 kbit/s (2015; for max. 55

CHF/month ex. VAT)

• Swisscom was the only firm applying for the concession in 2006 (2008-2017)

and was designated by ComCom. No extra cost involved.

• Bandwidth depends on copper loop length; higher speeds in many cases

possible

• But: Swisscom can use any technology it likes, also mobile or satellite.

0

20

40

60

0 0.5 1 1.5 2 2.5 3

Mb

it/s

(d

ow

nstr

ea

m)

km

ADSLADSL2+VDSL


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Services and bandwidth

MbitsSource: Verizon

2/0.2 Mbits sufficient only for most important services


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Universal service in practice

Issue: Length of the copper line

Practice:

- Check speed

- Inform the concessionaire (Swisscom) of speeds

< 2Mbits (if confirmed in repeated measurments).

Two possibilities:

Technician can fix it

Alternative offer > 2Mbits via mobile or satellite (FUP

15GB/month) is offered by the concessionnaire

Questions?


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://hsi.bluewin.ch/speedtest/?language=IT

https://www.swisscom.ch/de/privatkunden/internet/angebote/grundversorgung.html


ComCom: 3. Regulation

1998:

• Ensuring that other operators can effectively enter the

telecommunications markets.

• Regulating access conditions for essential access products of the

former monopolist. Mostly products necessary to produce telephony

products (e.h. Interconnection between telephony oporators, e.g.

Carrier selection).

1999: First cable based internet offer by Cablecom

2000: First ADSL based Internet offer by Swisscom

2007 New Telecoms Act LTC (Art. 11):

• Ensure access to essential wholesale products also for

broadband & co. necessary to produce telecoms services. E.g.

regulation of unbundled local loop of the incumbent


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


3. Art. 11 – the core of Regulation

Only Copper

Only Copper

Copper and Fibre


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Technology

Manhole

Copper max. 750m

Copper max. 200m

Fibre

Copper

Street

Cabinet

Fiber to the

Curb (FTTC)

VDSLFiber to the

Street (FTTS)

Fiber to the

Building (FTTB)

Fiber to the Home

(FTTH)

ADSL Swisscom Local

Exchange

„Last Mile“, about 1.5km,

regulated unbundling offer, currently 12.20 CHF/month (excluding VAT)

BEP

E.g. Sunrise

in Unbundling

X


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Own infrastructure

(independent access to

final customer)

The Telecoms Business for altnets

Unbundling

LEX

Pure Resale of Swisscom

Products to clients

BBCS/Bitstream

- DSLAM (Schweiz, EU)- parent Node (EU)- distant Node (EU)

Unbundling

Street-Cabinet

Unbundling

Manhole

Unbundling

Building

Necessary access products (copper or fibre) for

alternative operators from access point

Buy leased line

Buy (dark) Fiber

Buy ducts

Own infrastructure

+

Supporting wholesale product for altnets to

reach access point at all

Physical

Network Altnet

Access point

X

Backbone

LEX

Street-

cabinet

Man-

hole

H

B

Pa

rt o

fo

wn

infr

astr

uctu

re(a

ltn

et)

Fibre altnet

Fibre dominant operator

Copper dominant operator (Swisscom)


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Practice: Which products are regulatedProcess of an ex-post regulatory intervention

• Initial offer of the dominant firm

• Negotiations between market paricipants (primacy of negotiations)

• If negotiations break down: Access request to the ComCom

• Consultation of both parties

• If contested: Analysis of dominance (consultation of ComCO):

A. Market Definition

B. Market analysis

• Swisscom today dominant on all important relevant markets

including regulated products in Art. 11 LTC (unbundling, ducts,

interconnection, leased lines)

• Where dominant: Proof of costs

• Assessment and revision of costs by ComCom:

C. ComCom decision on cost-oriented prices


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Dominance? A. Market definition1) Relevant product market (Art. 11 Abs. 3a VKU)

The product market comprises all those goods or services that are regarded as interchangeable by consumers on the one hand and by suppliers on the other hand with regard to their characteristics and intended use.

2) The geographic market (Art. 11 Abs. 3b VKU)

„The geographic market comprises the area in which on the one hand consumers purchase and on the other hand suppliers sell the goods or services that constitute the product market.”

Practice:

Start with smallest possible market

- extend market if consumers – after an increase in price - significantlyswitch to alternative (outside) products

- markets can then be separated if competitive conditions vary a lot (e.g. betweendifferent regions)


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Dominance? B. Market analysis

• Before the introduction of Game Theory (Nash) the simple SCP paradigm has dominated

industrial economics (50s)

• Causality between market structure (e.g. market shares) and market performance (e.g.

profits. prices)

• Bain (1950): Regressions of profits on market structure (more concentration=more profit)

• SCP is outdated. Market structure is not exogenous. Profits hard to measure

• Still, structural parameters (number of operators, market shares, HHI) are important in

market analysis in the sense that a market with many independent competitors is unlikely to

have dominance issues, but a market with few competitors may or may not.

• Also assess entry barriers, cost structures, collusion factors etc.

Source: Davis, Quantitive Techniques for

Competition and Antitrust Analysis, Chap. 6


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


More Economic Policy: ComCOCompetition policy Regulation

red in Switzerland contrary to the EU not the case

Structure Independent Authority (ComCo) Independent Authority, e.g. ComCom

(Telekom), Elcom (Electricity), SKE

(Railways)

Application - Cartels (Art. 5 KG)

- Mergers (Art. 9 KG)

- Abuse of market power (refusal to

supply, diskrimination, excessive prices,

etc.) (Art. 7 KG)

- Subsidies

- Price regulation where dominance persists

(Art. 11 LTC) excluding fibre-based

products

- Retail- and wholesalemarkets

Remedies - Fines (max. 10% of revenues)

- Blocking of a merger (or clearance

subject to obligations)

Choice and Implementation of remedies:

- Access obligation

- Transparency

- Non-discriminatory conditions

- Cost-oriented price regulation (e.g. LRIC)

Timing - ex-post - ex-post (EU: ex-ante)

Frequency - few, targetted interventions - continous interventions

Objective Ensure competition Ensure competition, investment, coverage


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Competition Policy, example 1

Mergers (Art. 9 KG):

• 2010: France Telecom (Orange) wanted to take over

Sunrise

• Currently, no effective mobile regulation. Ensure merger does

not reduce competition.

• ComCO: Merger would lead to “Creation or Strengthening of

Dominant Position“ (CSDP):

- Lead to Duopoly

- Elimination of “Maverick” Sunrise

• Cost synergies: limited (calculations done by UFCOM)

• Merger not cleared by ComCO as negative competitive effects

were expected to be strong and few synergies. No possible

effective obligations identified.

http://www.weko.admin.ch/aktuell/00162/index.html?lang=de&download=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1acy4Zn4Z2qZpnO2Yuq2Z6gpJCDdH9_hGym162epYbg2c_JjKbNoKSn6A--


Competition Policy, example 2NGA cooperations (Art. 5 KG, cartels):

• 2012: “objection proceedings” according to article 5 KG

• E.g. next to standard cooperation clauses for a roll-out

telecommunication networks, horizontal clauses in Swisscom-EWZ,

Swisscom-EWB, etc., e.g.:

• “Layer 1 exclusivity”: i.e. by contract design one of the cooperation

partners is not allowed to sell a particular product to third parties (fibre

unbundling).

• ComCO could not exclude that such a clause could eliminate effective

competition.

• Decision to object some clauses

• If operators are to implement them they could be sanctioned.

• Result: Clauses have been removed but cooperations were not

stopped as threatened.

http://www.weko.admin.ch/dokumentation/00157/index.html?lang=de&download=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1acy4Zn4Z2qZpnO2Yuq2Z6gpJCDdIF_fGym162epYbg2c_JjKbNoKSn6A--


ComCom/UFCOM: 4. Intermediation role

2007 Vote in the City of Zurich: Decision to build a communal FTTH network

(credit of 200m CHF)

2011 “Round Table“ of ComCom with the operators

- Standardisation of FTTH networks and plugs

- Coordination of network roll-out and cooperations (multifibre)

2012/3 UFCOM task force on next generation broadband (NGA)

Coverage perspective

1. Demand side analysis

2. Broadband Map

3. Guidelines for Swiss communes


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


0

20

40

60

80

100

120

2011 2012 2013 2014 2015 2016

Ex

yb

yte

s/

mo

nth

Year

Demand side: Traffic demand increase

Source: Cisco Visual Networking Index


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Residential costomer demand 1/2

World Internet Project, 2011, (n=1104)

• 77 % of the Swiss population uses internet; of which

- nearly all users have a broadband connection at home

- one third has a broadband access at work

- one fourth is online also in mobility

Note: One third uses the home connection for work.

• Average usage:

12 h/week or 100 minuties per day

(60% at home, 35% at work, 5 % in mobility)


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://www.mediachange.ch/media/pdf/publications/Anwendungen_Nutzung.pdf


Residential costomer demand 2/2

Il 96 % degli utenti di Internet utilizza la posta elettronica,

Il 92 % i motori di ricerca,

Il 78 % cerca informazioni relative a prodotti,

Il 75 % cerca notizie,

Il 63 % acquista e paga online,

Il 66 % visita portali video,

Il 54 % ascolta musica,

Il 37 % guarda la TV online in differita e

Il 33 % gioca.

Il 54 % è iscritto a social network,

Il 31 % fruisce della telefonia via Internet,

Il 59 % carica foto,

Il 34 % partecipa a forum di discussione e

Il 14 % carica video propri.


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Why incentivising investment in broadband

- Infrastructure / local development factor

- Every additional 1% of population connected to the internet

increases GDP/capita by 0.1% to 0.15% di (Kretschmer 2011), but

0

5

10

15

20

25

30

35

40

45

Source: OECD

Other Fibre/LAN Cable DSL

OECD Fixed (wired) broadband subscriptions per 100 inhabitants, by technology, June 2012

OECD average


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Demand of SMEs

• Infras report January 2013 (n=40)


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://www.bakom.admin.ch/dokumentation/zahlen/00545/00722/00906/index.html?lang=it&download=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1ah2oZn4Z2qZpnO2Yuq2Z6gpJCDe4N3g2ym162epYbg2c_JjKbNoKSn6A--


Program 2011-2015:

Strategy for an information society

Infrastructure – objectives:

• Creation of open high performance

communication networks for a

competitive information society

• The roll-out of high-speed networks will be

driven by market forces in the first place

• The development of these networks ist

monitored and coordinated

• If necessary new regulatory tools will be

created


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://www.bakom.admin.ch/themen/infosociety/00695/index.html?lang=it


Investment

Limits of profitable investment in FTTH (WIK 2010)

There are natural limits to high speed broadband deployment

Comune di

Bellinzona

Cluster 10 (86%),

Cluster 12 (5%),

Cluster 14 (9%)

Cluster 10: 280-370

connections / km2

Cluster 10 is the last

profibale cluster with

75% market share


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://www.bakom.admin.ch/dokumentation/zahlen/00545/00722/00910/index.html?lang=it


Very high speed broadband coverage

2012

2020

2012

2012

2020

2020

2020

0% 20% 40% 60% 80% 100%

FTTH

FTTS

VDSL

CATV

DOCSIS 3.0

2012 2015LTE

of residental population


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


> 50 – 90 %

> 10 – 50 %

> 0 – 10 %

Copper

Coax

atlantebandalarga.ch

Valli Bellinzona


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://www.atlantebandalarga.ch/


> 90 – 100 %

> 50 – 90 %

> 10 – 50 %

> 0 – 10 %

FTTH

LTE


Valli Bellinzona


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines



> 50 – 90 %

> 10 – 50 %

> 0 – 10 %

≥10M

bits

≥20M

bits


Valli Bellinzona


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines



> 90 – 100 %

> 50 – 90 %

> 10 – 50 %

> 0 – 10 %

≥50M

bits

≥100

Mbits


Valli Bellinzona


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines



Guide to high speed broadband

• Development of a

«guide» for local actors

(Cantons, Communes,

operatores)

• trasparency

• incentivising creation of

high speed networks

• activate local actors


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


UFCOM

Fundamentals of law-making in Switzerland:

1. Constitution - Decision: Parliament (People)

2. Law (bill) – Decision: Parliament (People)

3. Ordinance/Decree – Decision: Federal Council

Political instruments in the Parliament:

• Motion: A motion obliges the Federal Council to submit a draft bill or to take

appropriate measures.

• Postulate: A postulate requires the Federal Council to examine whether it is

appropriate either to submit a draft bill or to take appropriate measures and to

present a report on the subject.

• Interpellation: In the case of an interpellation, the Federal Council is required

to inform the Council about an issue. A debate can be requested on the

response given by the Federal Council.


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Revision of the Telecom Services

Ordinance 2013

- Material initiation (Interpellation 11.3931, Filippo Lombardi, November

2011): “Doesn't the federal council want to adjust to historic prices for

ducts?”

- Answer of the FC: Yes, in the next revision of the ordinance

- UFCOM drafts a proposal for new ordinance articles on this matter

- UFCOM internal consultation

- Consultation of other offices and departments of the Confederation

- Public consultation

- Report on public consultation

- Expertise of ComCO on investment effects (no negative effects)

- Redrafted version (possible additional consultations)

- Decision of the FC; ordinance in force from 1 July 2014

> Later revision of ordinance in 2014 (in force from 1 January 2015) increases universal service

speeds from 1/0.1 to 2/0.2 Mbits.


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://www.admin.ch/ch/d/gg/pc/documents/2224/A_FDV_Revision_Ergebnisbericht_

http://www.weko.admin.ch/dokumentation/00157/index.html?download=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1acy4Zn4Z2qZpnO2Yuq2Z6gpJCDdXt,g2ym162epYbg2c_JjKbNoKSn6A--&lang=de

http://www.bakom.admin.ch/dokumentation/medieninformationen/00471/index.html?lang=en&msg-id=55090


Revision of the Telecoms Act 2014

Much more complicated…

• Parliamentary Commission responsible for Telecommunications

legislation requests a report from the federal council (FC) on whether

the current Telecoms Act needs to be revised and how (Postulates

13.3009, 06.3331, 06.3636 and Motion 06.3306)

• FC describes the current telecoms market in the report 2014.

Supports a revision of the law and presents initial ideas on legislative

revisions it thinks are necessary.

• UFCOM currently drafts a new law and impact assessment

Then

• Internal consultations

• Public consultation

Then the draft bill will go to Parliament for discussion

…. Long process…. To be continued….


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines

http://www.bakom.admin.ch/dokumentation/gesetzgebung/00512/03498/index.html?lang=it


Revision of the Telecoms Act 2014Material summary for changes in the LTC as of the report 2014

1st phase

• International roaming: obligation for mobile operators to provide Local break-out

(enable their customers who travel abroad to use the offerings of locally-based

providers for their mobile data communications)

• International roaming: obligation for mobile operators to offer per second billing

• Ex-ufficio: ablility to step in officially if ComCom observes any behaviour that

obviously contravenes the provisions of telecommunications law (e.g. mobile

termination)

• Access to ducts extended to non-telco providers

• Net neutrality: more transparency

• Consumer protection: effective laws against calls from abroad that use false numbers

("spoofing")

• Ensure that players who market comparable telecoms offerings are subject to

comparable rights and obligations (over-the-top operators)

2nd phase (later)

• Technologic neutrality (i.e. allowing for regulation of modern fibre-based telecoms

networks as well)

Finally, regarding ownership the Confederation majority in Swisscom should be maintained


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Questions?

Dr. Roberto Balmer

Ufficio Federale delle comunicazioni

Servizi di telecomunicazione e posta

Zukunftstr. 44

2501 Biel

Svizzera

Tel. +41 58 460 56 43

[email protected]

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mailto:[email protected]

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Bonus 1 – Unbundling regulation

• August 2007: various access requests regarding unbundling conditions and prices of

Swisscom

• August 2007: Swisscom does not contest dominance in this market; i.e. no market definition

and analysis necessary.

• December 2007: Proof of costs, revision by UFCOM by May 2008

• May 2008: Consultation of price surveillance

• July-August 2008: Final declaration of the parties

• October 2008: Decision by ComCom

14 Months, prices are set then, but compensation will be made late after decision of ComCom.

Problem of «ex-post».


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Bonus 1 – Unbundling prices

• LRIC=Long run incremental costs

• Product: Copper unbundled loop rolled out in ducts in the access network

• Cost-orientation

• Question: Which costs would an efficient operator have to roll-out copper (now fibre) in

this access segment (LEX to the home)?

• Answer: Mostly construction ex-novo of cable ducts and deployment of cables.

• Costs calculated based on Swisscoms proof of costs, where necessary methodological or

efficiency adjustments.


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Bonus 1 – Unbundling prices 2

• The unbundling price was at the first decision 2008 lowered

from 31 to 18.18 CHF/month

• Within two years 56‘843 loops have been unbundled

• In the meantime this number is decreasing (max. reached

was 10% of accesses)!

• Impact of regulation limited.


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Bonus 2 – Leased Lines


Policy

Changing economic

Policy

Practical case:

Unbundling

Practical case:

Leased lines


Division of tasks

Telecommunications services

Competencies Authorities Articles

Obligation for telecommunications

service providers to registerOFCOM Art. 4 LTC

Ban on providing telecommunications

services in SwitzerlandComCom Art. 5 LTC

Access to the resources and services of

dominant suppliers: interconnection

prices and conditions, unbundled

access, high bitrate access, leased

lines, etc.

ComCom (decision)

OFCOM (instruction),

also consultation of

Competition

Commission (ComCo)

Art. 11 and 11a LTC

Regulation of value-added+A28

services and setting of upper price limitsFederal Council Art. 12b LTC

Creation of a conciliation body or the

delegation of this task to a third partyOFCOM Art. 12c LTC

Directory minimum content access ComCom Art. 21 LTC

Obligation to offer interconnection to

guarantee interoperabilityComCom Art. 21a LTC

Obligation to provide leased lines ComCom Art. 21b LTC


BAKOM ComCom division of tasks

Universal service licence


Services forming part of the universal

service: content, quality criteria, upper

price limits.

Federal Council Art. 16 and 17 LTC

Universal service licence: licensing ComCom Art. 14 LTC

Universal service licence: transfer and

modificationComCom Art. 19a LTC

Universal service licence: determining the

location of public call boxesComCom Art. 20 OST

Universal service licence: obligation to

provide the service for locating emergency

calls if there are several universal service

licensees

ComCom Art. 29 OST

Financing the universal service:Federal Council Art. 19 LTC

- Conditions for financial compensationComCom

Art. 24 OST

- Determining financial compensation OFCOM Art. 26 OST

- Management of the financing mechanism



Radiocommunication

Competencies Authorities ArticlesRadio licences awarded via a public

call for tender (GSM, UMTS, BWA,

WLL)

ComCom Art. 24a LTC

Awarding radio licences not for

providing telecommunications

services (amateur radio,

radiocommunications for maritime or

aircraft navigation,

radiocommunications for private

corporate use, etc.)

OFCOMArt. 1 of the

ComCom Decree

Definition of the principles governing

radio licensing wholly or partly for

broadcasting radio and television

programmes

Federal Council Art. 24 LTC

Allocation of frequencies for

broadcasting radio and television

programmes (partly delegated to

OFCOM)

ComCom

Art. 54 LRTV and

Art. 1 of the

ComCom Decree

Management of the frequency

spectrumOFCOM Art. 25 LTC

Approval of the National Frequency

Allocation PlanFederal Council Art. 25 LTC

Setting the licence fee Federal Council Art. 41 LTC

Collecting fees and chargesComCom and

OFCOMArt. 39 and 40 LTC

Licence fee exemption Federal Council Art. 39 LTC



Telecommunications installations


Technical regulations for

telecommunications equipmentFederal Council Art. 31 LTC

Technical standards embodying the

technical regulationsOFCOM Art. 31 LTC

Shared use of equipment OFCOM Art. 36 LTC

Supervision and sanctions


Surveillance authority OFCOM Art. 58 LTC

Surveillance measures OFCOM or ComComArt. 58 LTC and Art.

18 OGC

Administrative sanctions OFCOM or ComCom Art. 60 LTC

The Telecommunications Business in Switzerland - Liberalization and Regulation

Law

Transcript of The Telecommunications Business in Switzerland - Liberalization and Regulation