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
3The Telecommunications Business in Switzerland I Liberalization and Regulation
Mobile Wholesale3%
SMS retail1%
IPTV2%
Business network services5%
~11bn CHF/year
Source: Analysys (2014)
Telecommunications Revenues Switzerland 2014
IntroductionCurrent Economic
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%
4The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
5The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
6The Telecommunications Business in Switzerland I Liberalization and Regulation
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)
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
7The Telecommunications Business in Switzerland I Liberalization and Regulation
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)
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
8The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
9The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
2000
Today
10The Telecommunications Business in Switzerland I Liberalization and Regulation
Ownership
0%
20%
40%
60%
80%
100%
120%
Telecommunications, incumbentGovernment ownership 2012 (Europe)
Source: OECD(2013)
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
11The Telecommunications Business in Switzerland I Liberalization and Regulation
Ownership in practice
IntroductionCurrent Economic
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.
12The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
13The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
14The Telecommunications Business in Switzerland I Liberalization and Regulation
Services and bandwidth
MbitsSource: Verizon
2/0.2 Mbits sufficient only for most important services
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
15The Telecommunications Business in Switzerland I Liberalization and Regulation
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?
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
16The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
17The Telecommunications Business in Switzerland I Liberalization and Regulation
3. Art. 11 – the core of Regulation
Only Copper
Only Copper
Copper and Fibre
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
18The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
19The Telecommunications Business in Switzerland I Liberalization and Regulation
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)
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
20The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
21The Telecommunications Business in Switzerland I Liberalization and Regulation
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)
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
22The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
23The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
24The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
25The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
26The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
27The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
28The Telecommunications Business in Switzerland I Liberalization and Regulation
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)
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
29The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
30The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
31The Telecommunications Business in Switzerland I Liberalization and Regulation
Demand of SMEs
• Infras report January 2013 (n=40)
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
32The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
33The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
34The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
35The Telecommunications Business in Switzerland I Liberalization and Regulation
> 50 – 90 %
> 10 – 50 %
> 0 – 10 %
Copper
Coax
atlantebandalarga.ch
Valli Bellinzona
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
36The Telecommunications Business in Switzerland I Liberalization and Regulation
> 90 – 100 %
> 50 – 90 %
> 10 – 50 %
> 0 – 10 %
FTTH
LTE
atlantebandalarga.ch
Valli Bellinzona
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
37The Telecommunications Business in Switzerland I Liberalization and Regulation
> 50 – 90 %
> 10 – 50 %
> 0 – 10 %
≥10M
bits
≥20M
bits
atlantebandalarga.ch
Valli Bellinzona
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
38The Telecommunications Business in Switzerland I Liberalization and Regulation
> 90 – 100 %
> 50 – 90 %
> 10 – 50 %
> 0 – 10 %
≥50M
bits
≥100
Mbits
atlantebandalarga.ch
Valli Bellinzona
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
39The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
40The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
41The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
42The Telecommunications Business in Switzerland I Liberalization and Regulation
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….
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
43The Telecommunications Business in Switzerland I Liberalization and Regulation
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
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
44The Telecommunications Business in Switzerland I Liberalization and Regulation
Questions?
Dr. Roberto Balmer
Ufficio Federale delle comunicazioni
Servizi di telecomunicazione e posta
Zukunftstr. 44
2501 Biel
Svizzera
Tel. +41 58 460 56 43
linkedin.com/in/RobertoBalmer
slideshare.net/RobertoBalmer
amazon.com/author/roberto.balmer
ssrn.com/author=572707
45The Telecommunications Business in Switzerland I Liberalization and Regulation
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».
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
46The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
47The Telecommunications Business in Switzerland I Liberalization and Regulation
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.
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
48The Telecommunications Business in Switzerland I Liberalization and Regulation
Bonus 2 – Leased Lines
IntroductionCurrent Economic
Policy
Changing economic
Policy
Practical case:
Unbundling
Practical case:
Leased lines
49The Telecommunications Business in Switzerland I Liberalization and Regulation
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
50The Telecommunications Business in Switzerland I Liberalization and Regulation
BAKOM ComCom division of tasks
Universal service licence
Competencies Authorities Articles
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
51The Telecommunications Business in Switzerland I Liberalization and Regulation
BAKOM ComCom division of tasks
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
52The Telecommunications Business in Switzerland I Liberalization and Regulation
BAKOM ComCom division of tasks
Telecommunications installations
Competencies Authorities Articles
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
Competencies Authorities Articles
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
Top Related