Controlling Abusive Behaviour In The Roll Out Of Broadband Services On Europe's Telecom Local Loops

Author:Mr Tom Carney
Profession:Dillon Eustace
 
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  1. Introduction

    Access by electronic communications operators to "local

    loops" owned and controlled by national incumbents is

    imperative for the competitive roll out of high-speed broadband

    services in the Member States. Currently across Europe, many

    incumbent network operators are modernizing local loop

    infrastructure to permit and enhance the delivery of high-speed

    broadband services to Europe's citizens.

    Incumbent operators are generally recognized in EU

    regulatory and competition law as dominant holders of essential

    facilities. Under the guise of upgrading its local loop

    infrastructure, a dominant owner should not be allowed to grant

    access to the local loop to its competitors on terms less

    favourable to those it would enjoy itself. A dominant owner of

    an essential facility should not be permitted to

    "improve" its local loop network where current

    electronic communications services offered downstream by

    competitors are made less satisfactory or less attractive.

    Moreover, the modernization of local loops to enable the

    delivery of high-speed broadband services should not serve as a

    justification for causing unreasonable technical interference

    to other services (including voice telephony services) offered

    by competitors.

    Where national authorities, under the EU's legislative

    framework for electronic communications, fail to protect the

    rights guaranteed to competitors and consumers against dominant

    incumbents of local loop facilities, the only recourse of

    injured parties may be to initiate proceedings under Article 82

    of the EC Treaty.

  2. The "local loop" and "broadband"

    defined

    In layman terms, the local loop is described as the

    "last mile" of the fixed line telecommunications

    network that connects regional and national transmission

    systems to the homes of end users. In technology terms the

    local loop is the physical twisted copper pair circuit that

    joins the termination point in the home of the communication

    service user to the electronic communications network.

    Before the modernization and convergence of electronic

    communications systems, the traditional use of the "local

    loop" infrastructure was limited to the conveyance of

    voice telephony services. In Europe's information society,

    broadband roll out requires access to the twisted copper pair

    of the local loop. Use of technology that permits the efficient

    interfacing of twisted copper pair networks and other networks,

    including fibre optic is also essential.

    An appreciation of the legal definitions of "local

    loop" and "broadband services" is essential

    before we can proceed to examine the legal rules applicable to

    the management of competition in those electronic

    communications markets.

    As a matter of EU competition law, the local loop must be

    viewed as an essential network facility necessary for the

    provision of downstream broadband services. The local loop is

    an integral part of the EU's pan-European electronic

    communications network. It is defined in Article 2 of Directive

    2002/19/EC ("the Access Directive") as "the

    physical circuit connecting the network termination point at

    the subscriber's premises to the main distribution frame of

    equivalent facility in the fixed public telephone

    network". A narrower definition is provided in Regulation

    (EC) 2887/2000 on unbundled access to the local loop ("the

    LLU Regulation") where the local loop is defined as

    "the physical twisted metallic pair circuit connecting the

    network termination point at the subscriber's premises to

    the main distribution frame or equivalent facility in the fixed

    public telephone network". Broadband technology can

    support a wide range of frequencies and is used to transmit

    data, voice and video over long distances simultaneously. It is

    a high-speed, high-capacity transmission medium that can carry

    signals from multiple independent carriers. Broadband services

    are delivered on a single coaxial or fibre-optic cable by

    establishing different bandwidth channels. Comparing broadband

    internet access to ordinary dial-up access has been likened to

    the difference between a new sports car and a horse drawn

    carriage.

    To control potential competition abuses by local loop

    incumbents, European lawmakers, national regulatory authorities

    and the courts must keep abreast of technological advances. It

    is accepted that they must pursue policies to encourage the

    roll out of high-speed broadband services to Europe's

    citizens. However, where incumbents of local loop facilities

    give effect to such policies, national regulatory authorities

    in particular must ensure that the competitive behaviour of

    incumbents complies with EU rules to avoid abusive conduct.

  3. Why control abusive conduct on Europe's

    local loops?

    As it is an essential facility, access to local loop

    infrastructure must be managed by national and supra-national

    bodies to ensure effective competition in downstream electronic

    communications service markets.

    Importantly, communications constitutes one of the four

    essential modes or channels that permit trade and discourse

    among members of society. Electronic communications operators

    provide services upon which all economic activity beyond the

    level of self-sufficiency depends. It is a vital connective

    infrastructure upon which, with energy, transportation and our

    system of currency, the EU's economy rests.

    European lawmakers have adopted and implemented rules

    designed to protect competition in the electronic

    communications markets and to ensure that dominant owners of

    essential facilities do not abuse their positions of dominance

    to the detriment of competitors and end users. The rules for

    managing competition in the local loop may be categorized

    having regard to the requirements of both the ex ante

    regulatory framework and the ex post competition

    rules.

    The LLU Regulation itself underlines the need to manage

    competition in the local loop having regard to an ex

    ante legal framework. It recites that the "local

    loop" (insofar as it is a local access network) remains

    one of the least competitive segments of the liberalized

    telecommunications market. At the time of its adoption, its

    drafters were conscious that incumbent network owners for years

    had funded, through state support and/or monopoly rents,

    investment costs for the rollout of their metallic access

    infrastructure. Under exclusive or special privilege granted by

    Member State parliaments or Governments, national incumbents

    established and developed their domestic local loops. As a

    result, new entrants are unable with traditional technologies

    to match the economies of scale and the coverage of dominant

    incumbents in the fixed public telephone network market. To

    ensure a level...

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