A new report carried out by the research and consulting group WIK on the state of play of Next Generation Access (NGA) has found that the target set by Digital Agenda Commissioner Neelie Kroes for 50% of households to use ultra-fast broadband by 2020 may be at risk because fibre networks have not been effectively opened to competition.

The comprehensive study, based on surveys in 17 European countries, found that roll-out of “next generation” vDSL networks to allow higher speeds was now relatively widespread in some countries, but that take-up was poor, with less than 1 in 5 households using the services available. WIK suggests that this could be due to the lack of effective enforcement of the European Commission’s 2010 Recommendation on next generation fibre access, which required dominant firms to open their fibre networks to rivals. 

The findings suggest that rivals have not had equivalent access to the networks of dominant telecoms firms as they have been upgraded, and also that wholesale prices for fibre-based access have only been set in a limited number of cases. This raises the potential for foreclosure of broadband markets in a similar way as occurred when broadband services first became available.

WIK recommends to apply more rigorously the Next Generation Access Recommendation and that the Commission gives clear guidance on pricing rules and non-discrimination in Recommendations under preparation on these subjects.

In previous reports published in 2011, WIK concluded that substantial investment in fibre can only be expected if wholesale charges for copper and fibre networks are structured so as to provide the correct financial incentives. In particular they advocated that the Commission’s forthcoming Recommendation on cost methodologies should address current overcharging for access to legacy copper infrastructure, which artificially inflates the value of legacy assets compared with modern infrastructures. WIK proposed that any excess above the real costs of copper should only be permitted if channelled into open fibre networks in a competitively neutral way.

 “Our current path is leading us towards closed infrastructures, monopoly broadband services and high prices” said Tom Ruhan, Chairman of ECTA. “There is urgent need for policy makers to end subsidies of legacy infrastructure, support open fibre networks and enforce regulation to deliver the competitive high-speed services which consumers deserve,” Tom continued. 

Ulrich Stumpf, Director of WIK said: “Because of the absence of effective wholesale access in NGA, the level of competition in the broadband market that has been achieved by access regulation in the past is effectively at stake.”

Amongst the recommendations made by WIK:

• National telecoms regulators should ensure a more rigorous application of the European Commission’s NGA Recommendation in order to promote competition and penetration of very high speed broadband. Accordingly incumbent operators should be obliged to comply with access, transparency and non-discrimination obligations in the cases foreseen by the NGA Recommendation. 

• European regulators’ group BEREC should provide further guidance to national regulators on technical specifications for access to fibre networks.

• NRAs should ensure that access to next generation networks is provided at cost-based rates except in those cases provided in the NGA Recommendation. 

Background on the NGA Recommendation

The Commission Recommendation of 20 September 2010 on regulated access to Next Generation Access (NGA) networks aims at providing regulatory certainty to telecom operators, ensuring an appropriate balance between the need to encourage investment and the need to safeguard competition. More information on the Recommendation can be found on the Digital Agenda’s Website.