OPTA encourages investments in fiber networks and stimulates competition

Start of consultations on policy rules governing access tariffs for fiber networks

OPTA, the Independent Post and Telecommunications Authority of the Netherlands, has announced draft policy rules governing tariffs for access to fiber networks from KPN-Reggefiber. Together with Reggefiber, KPN is planning to install a fiber networks. Fiber networks make it possible to offer broadband services (such as HDTV) which are impossible to provide through existing copper lines. The draft policy rules which OPTA has drawn up seek to strike a balance between promoting competition and encouraging innovation. Efficient investments in fiber networks are urged, so as to enable competitors to utilise it to reach end users based on predetermined tariffs. OPTA has drawn up these rules to offer long-term regulatory certainty to both KPN and Reggefiber, on the one hand, and those parties who wish to use this network, on the other. OPTA is the first regulatory authority in Europe to encourage efficient investments in a new generation of communications networks in this manner. Market parties and other stakeholders have until 8 December to respond to the draft, following which OPTA will approve the final policy rules.

Chris Fonteijn, the chairman of the OPTA Commission has responded as follows: "With these policy rules we think that we have struck a healthy balance between access tariffs which are low enough to facilitate entry by competitors but high enough to encourage efficient investments in fiber networks in the Netherlands. This will make it possible for Dutch individuals and businesses to enjoy fast fiber connections in the future, which may offer an abundant choice of affordable services thanks to healthy competition. The public will benefit most from this. I expect to receive many responses to our consultations in view of the great importance of these principles for the future development of electronic communications markets in the Netherlands."

Price cap on tariffs
At the core of the policy rules is a price cap on access tariffs established by OPTA. This price cap provides for a maximum tariff for access for entrants to the new fiber network. Also, the price cap gives a long term certainty for investments in fiber networks. Besides that, the price cap yields the returns needed for an investment of this size. To ensure KPN-Reggefiber do not make excessive earnings on the access tariff, OPTA assesses the price cap every three years. In case of excessive earnings, competitors pay excessive tariffs and therefore OPTA will lower the price cap.

Process to date
In regard to KPNs “ALL IP” program OPTA has stated before that it encourages investments in new generation networks as long as access to those networks for competitors is provided. Taking the significant importance of these investments into account, OPTA has sped up the formulation of the draft policy rules. The Netherlands Competition Authority (NMa) will be considering these draft policy rules as part of its input for its assessment of the joint venture involving KPN and Reggefiber, which it has since announced. OPTA will be advising NMa with regard to this matter in its capacity as the sector-specific regulator.

Subsequent steps
The market parties have until 8 December to respond to the draft policy rules. OPTA is seeking to announce the final version of these policy rules simultaneously with that of its market analysis decision on unbundled access at the wholesale level, which is currently being examined by the European Commission. Together with these draft policy rules OPTA will be publishing the concrete tariff proposal for fiber access which KPN and Reggefiber will be presenting in their capacity as the parties that will be building the fiber network. OPTA will assess this proposal in the light of these draft rules and will publish a draft tariff decision on 19 Decembe