The amended Telecommunications Act entered into force this month. The new Act should lower the switching thresholds for consumers and small enterprises and allows the Netherlands Authority for Consumers and Markets (“ACM”) to regulate access to cable networks. In the past, providers of telecommunications services that did not have their own network were dependent on KPN and VodafoneZiggo in offering their services. The new Act appears to be a step in the right direction to ensure access to the cable. In this blog we address the background and details of the new Act and make a number of comments.
Background
The bill in question is based on the European Electronic Communications Code (the “EECC”). That 2018 Directive creates a legal framework to ensure freedom to provide electronic communications networks and services. The EECC replaces the Access Directive, the Authorisation Directive, the Framework Directive and the Universal Service Directive, and provides a general regulatory framework for the telecommunications sector.
At the end of 2019, the Dutch Lower House submitted a bill to amend the Telecommunications Act. The Upper House adopted the bill on 9 June 2020. The change in the law allows ACM to regulate access to the telecom market, which should stimulate competition and reduce prices.
The recently adopted bill addresses only three subjects of the EECC:
- access regulation and barriers to replication;
- lower switching thresholds: and
- geographical survey of the reach of electronic communications networks.
A separate bill has been submitted regarding these three subjects, because measures in those fields had long been called for. The Lower House had already submitted several motions for that purpose. Moreover, these three subjects can be regulated relatively quickly and easily. A different implementation bill was submitted for the other subjects addressed in the EECC, whose preparation requires more time. But the fact that only a limited number of subjects will be prioritised has also been criticised: that course of events is allegedly detrimental to the consistency of the regulations and puts pressure on the rate of the overall integration.
The bills were positively received by small providers that do not have a fixed network. They are pleased that ACM will be able to take additional measures if they are denied access. ACM itself also seems pleased with the new instruments at its disposal. Earlier attempts of ACM to demand access for alternative providers failed before the Trade and Industry Appeals Tribunal (“CBb”); see also our earlier blog. The CBb found that it had not been established that KPN and VodafoneZiggo had significant market power (“SMP”), which meant that they could not be obligated to grant open access to their networks. After the annulment of the Wholesale Fixed Access Market Analysis Decision, VodafoneZiggo withdrew its access offer, even though new market players showed an interest in it. After the Lower House’s decision, State Secretary Keijzer for Economic Affairs and Climate (the “State Secretary”) drew attention to the importance of nevertheless making it possible for ACM as soon as possible to regulate access to Dutch telecommunication networks, which was therefore done.
Access regulation in the case of barriers to replication
The first subject regulated in the new Act is access regulation in the case of barriers to replication. In the Netherlands, only KPN and VodafoneZiggo own a cable network with nationwide coverage. The installation of a local loop that connects end users to the network is particularly costly. The installation of a new network (“replication”) is therefore difficult and economically inefficient. Providers of telecom services that do not have their own network are therefore dependent on KPN and VodafoneZiggo in providing their services.
The bill will give ACM an instrument to regulate access to a cable network. Until recently, access regulation was possible only if the owner of the network had SMP. According to the CBb, however, VodafoneZiggo and KPN do not have SMP. The new Act now allows ACM upon reasonable request to obligate KPN and VodafoneZiggo to grant access to their cables and related facilities. ACM may also impose obligations ex officio. Those obligations may relate to the rates and conditions that KPN and Vodafone Ziggo may impose on parties that request access, such as the obligation to allow the installation of equipment. For a request to be considered “reasonable”, it must be clear whether the applicant actually needs the network elements in order to provide its services. It is also relevant whether the applicant has already made realistic attempts to gain access on a voluntary basis by means of negotiations. It is then up to ACM to consider all the relevant circumstances. An access obligation must be necessary and proportionate. That must be determined in each individual case. The future will show how ACM implements these standards in practice.
ACM has not yet stated whether it will actually regulate access to the cable network. The legislature has emphasised that ACM, if it wishes to regulate access, must in any event take the following into account:
- Replication must be economically inefficient.
- Access regulation must be proportionate in terms of the provider’s costs of granting access and the applicant’s costs of itself replicating the network. ACM must also take into account access that is already voluntarily granted, as well as the conditions on which that access is granted.
- The promotion of competition and the stimulation of investments in the network must be weighed: obligatory access may remove the incentive to make long-term investments in the network.
In May 2019, the State Secretary requested ACM to carry out a feasibility test regarding the bill. ACM subsequently stated that the bill was feasible, but requested the State Secretary to include the possibility in the new Act of imposing a higher penalty (of 10% rather than 1% of the annual turnover) on companies that refuse to grant access despite being ordered to do so by ACM. That possibility has indeed been included in the new Act.
Lower switching thresholds
The bill should furthermore remove the thresholds for subscribers who wish to switch to a different provider. Consumers increasingly opt for a combination of Internet, television and telephony. That offers advantages, but also leads to higher switching thresholds. Apart from the rules on number portability and contractual issues, the possibility of easily switching is currently largely based on self-regulation. The State Secretary asked ACM also to carry out a feasibility test regarding the lowering of switching thresholds. ACM found the new Act to be enforceable and emphasises that the current self-regulation does not always have the desired effect. Consumers regularly report problems when switching to a different telecom provider. The bill is intended to give consumers more confidence in the switching process.
The new Act provides that when a consumer or small enterprise wishes to switch Internet provider, the transferring provider and the receiving provider must jointly ensure the continuity of the Internet where possible. The receiving provider must, for instance, make the switching consumer the offer of terminating the contract with his or her former provider.
Geographical survey of the reach of electronic communications networks
Finally, the bill gives the Minister of Economic Affairs and Climate the authority to demand information from providers of electronic communications services and networks regarding the current and future reach of their fixed and mobile networks. That geographical survey will allow ACM to investigate, for instance, the mobile network coverage and the capacity of the networks per household. This provision is intended to contribute to the target set by the government of ensuring that all Dutch citizens have access to 100 Mb/s broadband by 2023. That target has been recorded in the Connectivity Action Plan. A geographical survey may clarify the status of the current speeds.
The future will have to show how ACM is organising its enforcement practice and what regulations it will introduce. It is also not yet clear how standards such as proportionality and necessity will be specifically implemented. That will depend in part on the requests that ACM receives. But the new Act does appear to be a step in the right direction to enable small providers that do not have their own network to provide their services.
