Facilities sharing has undoubtedly contributed to the transition to high-speed broadband in Europe. In Lithuania, the early adoption of a facilities-sharing policy has contributed to the country's leading performance in Europe for broadband availability, speed, and 4G coverage. Lithuania used both cross-industry and incumbent-specific obligations to allow competitive fiber access to be extended to a large share of the market. Spain, France, and Portugal have also seen significant uptake of duct access, which has helped drive infrastructure-based competition in NGA broadband.
This "bottom-up" success is reflected in the current draft of the European Electronic Communications Code (EECC). Article 70 of the draft EECC requires regulators considering ex ante regulation to first consider whether access obligations on civil infrastructure such as ducts, poles, and related infrastructure are sufficient to ensure competitive entry into the network infrastructure market. If not, then under Article 71, regulators may impose access obligations on specific network facilities. When imposing access to specific network facilities, regulators should also prioritize remedies at the level of passive network elements (e.g. dark fiber/ copper/ cable terminating segments) over remedies at the active layer (e.g. bitstream).
This approach is almost a complete reversal of the old "ladder of investment" approach. Under the latter approach, access to downstream services was supposed to generate the revenues and profits that would later allow access seekers to "swim upstream" and fund investment in their own physical infrastructure. This is a contrast to what the EECC now proposes: the prioritization of access at the most upstream of upstream markets (civil infrastructure) to promote competition in downstream network and service markets. What has changed?
In the early days of broadband, DSL technology seemed the answer to a prayer. It allowed operators to generate new broadband revenue streams off a legacy infrastructure while meeting new demand for broadband services. In recent years, demand for higher-quality and faster broadband has forced operators to invest more in new fiber infrastructures to improve services – but not enough for many policy-makers. Policy-makers and regulators are seeking ways to encourage this investment more directly. The ladder of investment is too uncertain for this, particularly as it has had limited success as a network investment policy.
The shift to investment promotion is leading regulators to take a more aggressive stance on access to civil infrastructure. In the UK, the facilities-sharing regime has had limited success, with relatively high prices and process limitations, and this has slowed competitive broadband rollout. This has led the regulator, Ofcom, to undertake a review of the regulation of poles and ducts. Ofcom's draft recommendations call for the introduction of a pricing cap on Openreach civil infrastructure access, and proposed changes in the price calculation methodology will also see more costs shared across internal and external uses, resulting in significantly lower regulated prices.
Where there is the perception of market failure – whether through lack of attainment of national broadband plan objectives or high broadband prices relative to other markets – further regulatory intervention of this kind can be expected. And there is no reason to expect that this trend will be confined to Europe.
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