On November 30 2007 Sunrise Communications AG filed a request with the Communication Commission (ComCom) for determination of cost-oriented access charges to cable ducts against Swisscom (Schweiz) AG.
By order dated December 1 2009 ComCom determined among other things the monthly price chargeable by Swisscom for the use of the cable ducts.
Both Swisscom and Sunrise appealed ComCom's decision. For the purpose of this update only the appeal filed by Sunrise is considered. In its appeal Sunrise argued that the cost allocation method applied by ComCom violated the statutory non-discrimination obligation. Swisscom is in a position to use its own infrastructure on terms that are much more favourable to it than those offered to Sunrise, since the incumbent's infrastructure has already been depreciated to a large extent. Sunrise argued that the respective provision in the ordinance which provided for the application of the modern equivalent asset approach (Article 54, Paragraph 2 of the Ordinance) must be applied non-discriminatorily. Therefore, Sunrise argued the depreciation must be deducted from the modern equivalent asset costs.
In its decision of April 8 2011 the Federal Administrative Court(1) rejected Sunrise's appeal and found ComCom's application of gross modern equivalent asset costs to be in line with the historical interpretation of the Telecommunication Act and its ordinance.
Also, the court did not find that Article 11, Paragraph 1 of the act, which sets out the non-discrimination obligation per se, requires the calculation of the net modern equivalent asset costs (ie, after deduction of depreciation) when determining cost-oriented charges, and found that the Federal Council acted within the limits determined by the law and the constitution when promulgating the ordinance. The court conceded that the application of Article 54 of the ordinance may lead to a certain disparity, but held that such disparity was well founded on reasonable grounds, such as infrastructure competition. It is not the court's duty to interfere with the political and legislative process where a large degree of discretion is vested with the council.
Comment
Although the court conceded that the application of the modern equivalent asset approach, as applied by ComCom, leads to a disparity of the costs allocated to alternative providers and the incumbent's actual costs, it did not find itself in a position to reverse ComCom's decision on such grounds.
This is another example of how the legislation constrains the regulator in a rigid, regulatory framework in an environment that is constantly changing.
In today's fast-moving, technological environment, the legislature should have to anticipate new market developments, or at least create a flexible regulatory framework which permits the regulator to adapt quickly to the challenges and opportunities of a new technological environment. It is time to give the regulator such a flexible tool for the benefit of the consumers and competitors as well as the incumbent operator.
For further information on this topic please contact David F Känzig at Thouvenin Rechtsanwälte by telephone (+41 44 421 45 45), fax (+41 44 421 45 00) or email ([email protected]).