Also in 2017 the telecommunications sector continued to develop in various ways. At the end of the year it was announced, for instance, that T-Mobile would be taking over Tele2. In an earlier blog we already reported that there had been speculation for some time already about the acquisition of Tele2. That acquisition followed the merger between Vodafone and Ziggo, which, together with KPN, gave rise to a power bloc. Although T-Mobile acquired the fixed-line activities of Vodafone (Home) as a result of that acquisition, the planned merger will place T-Mobile and Tele2 in a better position to compete with that power bloc. This applies in particular to the markets for subscriptions which bundle fixed and mobile services (quadruple play bundles). But the acquisition will have to be approved by the European Commission before it can actually take place. That process is expected to be completed in 2018.
Multiband auction
The first effect of the proposed acquisition is nevertheless already apparent in the form of the multiband auction scheduled for Autumn 2019. That will be the first major auction since 2012 in which mobile frequency spectrum is allocated. In the 2012 multiband auction, Tele2 was able to acquire spectrum for the first time, which allowed it to set up its own network as the fourth network provider in the Netherlands. The proposed acquisition will reduce the number of parties which have their own spectrum (and their own network) to three again. It remains to be seen what consequences this will have for the scheduled multiband auction. The first indication that the proposed transaction will affect the auction is apparent from the letter from the State Secretary of Economic Affairs and Climate Policy in response to the announced acquisition of Tele2. In that letter, the State Secretary first of all stated that postponement of the Mobile Communication Memorandum was necessary. The State Secretary furthermore announced that she would assess in the coming period what consequences the current situation will have for the upcoming auction. ACM’s (draft) advice is also relevant in that regard. In its advice, ACM stated that it expects the exit of an MNO (Tele2) to have a negative impact on competition and therefore on the prices of mobile communication services. But that advice dates from before the announcement of the acquisition of Tele2 by T-Mobile. It therefore does not address measures or considerations in response to the acquisition. It does, however, address measures to avoid an imbalanced allocation of spectrum. The proposal is to use spectrum caps for that purpose. In its draft advice, ACM finally concluded that “it is unnecessary and disproportional to take other measures during the auction”. Since T-Mobile’s and Tele2’s announcement dates from after the draft, ACM’s final advice will be awaited with a great deal of interest.
Net neutrality
As we explained in an earlier blog on net neutrality, T-Mobile’s “Data-Free Music” service also drew attention last year. Customers of T-Mobile could purchase this music service without any data being charged. ACM considered that zero rating services are in breach of the Dutch net neutrality rules under the Telecommunications Act, but the District Court of Rotterdam found instead that the Telecommunications Act is in breach of the European Net Neutrality Regulation. The Ministry of Economic Affairs subsequently announced that it was making preparations to remove the zero rating prohibition from the Telecommunications Act. After the Court’s ruling, ACM announced that it would investigate whether the Data-Free Music service was compatible with the European Regulation. ACM has meanwhile concluded that that question must be answered in the affirmative.
Net neutrality is high on the agenda also at an European level. BEREC, for instance, published a study on net neutrality at the end of 2017. In that study it provided practical information, among other things, for national regulatory authorities regarding the application and implementation of the European Net Neutrality Regulation. BEREC has also recently launched a public consultation to evaluate and adjust its guidelines on net neutrality.
Market analyses
ACM’s market analysis decisions and the legal actions taken against several of those decisions have also given rise to various developments. Late last year, for instance, the Trade and Industry Appeals Tribunal (“CBb”) passed its final judgment in the proceedings against ACM’s market analysis decision on fixed and mobile terminating access (FTA-MTA IV). Although the CBb had found a few years ago (FTA-MTA III) that ACM had wrongly set the terminating tariffs on the basis of Pure BULRIC, the CBb ruled last year that ACM has now rightly applied Pure BULRIC. One of the reasons for this was a judgment rendered by the ECJ on the CBb’s request for a preliminary ruling. Even before the CBb’s final judgment was handed down, ACM had already adopted its new FTA-MTA V decision. In that decision ACM again based its tariff obligation on Pure BULRIC. Pure BULRIC would therefore appear to have definitively won the day.
ACM’s upcoming analysis of the market(s) for wholesale fixed access will become particularly interesting. That market analysis is still underway and is expected in the course of this year. ACM apparently intends to designate both Ziggo and KPN as providers with significant market power. ACM may therefore be planning to regulate access to cable again, after several failed attempts in the past.
Click here for an up-to-date summary of the regulation of the telecommunications markets in the Netherlands.
Media regulation
Several interesting developments can be identified in the field of media and content, in particular in the legislative area. On the initiative of former State Secretary for Education Culture and Science, Sander Dekker, a legislative proposal is being prepared to abolish the statutory obligation to offer a standard TV package of at least 30 channels and to replace it with an extension of the "à la carte" regulation (with only 8 channels in the basic TV package). In a letter to the Parliament, Mr Dekker has explained that the objective of the legislative proposal is to accommodate innovations in media services and freedom of choice for consumers. It is apparent from a report by the Commissariaat van de Media (Dutch Media Authority) that if TV à la carte were to become available, consumers would compile smaller TV packages primarily consisting of public “must carry” channels. (Small) commercial broadcasters are therefore complaining that such an à la carte scheme would harm their bargaining position on the market. It remains to be seen whether the legislative proposal will be enacted, since several political parties have expressed concerns about the disadvantages of TV à la carte for consumers and broadcasting organisations.
At an European level, media-related legislation is being proposed and adopted at a high rate. As from 1 April 2018, for instance, the Regulation on cross-border portability of online content services will enter into force. It will allow consumers to gain access at no extra cost to content services that they have purchased in another Member State. Along those lines, the Commission also drafted several legislative proposals aimed at promoting cross-border application of copyrights to audio-visual content. The draft legislation is based on the “country of origin principle”, which means that acquiring copyrights in one Member State suffices to offer content throughout the EU. Similar to the lenghty discussions during the legislative procedure leading up to the Geoblocking Regulation (see this blog), a great deal of resistance is expected from content producers and media companies against such a drastic change in the current copyright regime which is based on territorial exclusivity.
Lastly, attention should be paid this year to the Commission’s reassessment of the acquisition of Ziggo by Liberty Global (UPC). After the annulment of the 2014 approval decision by the General Court on 26 October 2017, the Commission is now faced with the task of again assessing whether Ziggo’s position on the wholesale market for premium sports content (Ziggo Sport) will give rise to competition issues if Ziggo and UPC combine their customer bases on the downstream market.
This blog has been co-written by Mr B. Braeken (who, as of 15 July 2019, no longer works at Maverick Advocaten).
