ANACOM responds to reservations of the European Commission on the regulation of access to fibre

ANACOM's draft decision not to regulate access to MEO's optical fibre network in areas considered non-competitive has caused the European Commission to put forward reservations. ANACOM considers that its decision is the one that best safeguards the interests of the country and of citizens, promoting coverage of the territory by next generation networks1 (NGN) and combating digital exclusion. Portugal is a unique case and an example of success at European level when it comes to the development of NGNs.

In fact, the majority of alternative operator accesses2 are based on own infrastructure; this investment has been possible mainly due to the obligations which ANACOM imposed on MEO, specifically the obligation to grant other operators access to its network of ducts and masts, reducing the costs of high-speed network construction by up to 80%. Portugal was a pioneer in Europe in such regulation, imposing stringent levels of service and access prices which are among the lowest in the EU. These conditions are strengthened in the new measures proposed by ANACOM.

To date, ANACOM has not imposed any obligations of optical fibre network access on MEO or any other operator, while Portugal has been a reference at international level when it comes to investment and competition in next generation networks and has been variously cited as a case of success in this respect. It is also widely recognised, including by the European Commission, that the success of the Portuguese case is partly due to the low cost of NGN deployment, as a result of regulatory measures which, in areas which continue to lack high-speed network coverage, allow all operators to invest in the development of their own infrastructure according to similar conditions.

According to data from IHS/VVA Consulting of June 2015 (report for the European Commission "Europe's Digital Progress Report 2016"3) Portugal has the 3rd highest level of coverage by optical fibre networks in the European Union and the highest anywhere in Western Europe. There has been substantial investment in Portugal by all operators in next generation networks (NGN), which is reflected in high levels of existing coverage by both cable networks and optical fibre networks. Optical fibre network investment by alternative operators in Portugal is the third highest in the EU, while investment by operators in cable networks is the fourth highest. Furthermore, when it comes to NGN penetration in terms of total broadband accesses, Portugal's position is very significant, with more than 60% of broadband connections supported by NGN (versus 35% in the EU overall). The focus of alternative operators on NGN is also reflected in the level of competition seen for this type of access - just 23% of broadband accesses via cable or fibre networks belong to MEO. In Portugal, unlike in most other countries, the NGN with greatest coverage does not belong to the former incumbent (MEO) but to the cable operator. The situation in Portugal is unique, because the size of Vodafone's fibre network is very similar to MEO's. As such, there is no, evidence that the regulatory model followed by ANACOM has caused any damage, either in terms of competition or in terms of investment - indeed any evidence is to the contrary.

As such, it is ANACOM's view that a measure which makes the optical fibre network of MEO subject to regulation is neither proportionate nor justified. This view is also based on the fact that there is equality in the conditions of NGN development, due to the strict regulation of access to ducts and posts (as referred to above), and that MEO's current presence in the areas concerned (which tend to be areas of lower population density) remains very limited at this time.

The European Commission´s reservations with respect to the draft decision adopted by ANACOM in its analysis of markets 3a and 3b (broadband markets) are set out in the notification received today. The EC has doubts about the compatibility of the draft decision with Community law, under the terms of Article 7a of the Directive.

ANACOM will now review the arguments presented by the Commission and will participate in the procedures set out in the Framework Directive for cases of this nature; the next phase involves the adoption of an opinion by BEREC (Body of European Regulators for Electronic Communications).

1 High-speed broadband networks.
2 Operators other than MEO (the incumbent operator).
3 Available at ''Connectivity - Broadband market developments in the EU''