The Consultation sets out ComReg’s preliminary views on the wholesale markets for:
- The provision of fixed voice call origination on individual public telephone networks provided at a fixed location (FVCO); and
- The provision of call transit services (Transit).
FVCO is a wholesale service that involves the supply of the switching, routing and conveyance of voice call up to a designated point of handover on a network, which is typically located at a switching point in a telephone exchange. FVCO services are often supplied with an access path (referred to as Fixed Access or FA) over which FVCO is supplied. eircom has been the sole supplier of combined FVCO and FA services through eircom’s Single Billing-Wholesale Line Rental (SB-WLR) product.
Transit is a wholesale service provided to fixed and mobile service providers that involves the switching, routing and conveyance of calls between the point of handover of the FVCO stage of a call up to, but not including the termination stage of a call. The termination stage is typically from the nearest switching point to the called party onwards. There are currently a number of service providers in Ireland who provide Transit, including eircom.
Together the purchase of FVCO and FA, and Transit services enables fixed service providers to offer retail line rental and telephone calls to both commercial and private end-users.
In line with the Framework Directive (Directive 2002/21/EC) and Ireland’s national Framework Regulations (SI 333 of 2011), ComReg is required to define relevant markets, and then analyse and review these relevant markets, at appropriate intervals. In doing so, ComReg is guided, inter alia, by the European Commission’s 2007 Recommendation on Relevant Markets. According to the 2007 Recommendation the Transit market is no longer identified as a Relevant Market susceptible to ex ante regulation at EU level. The FVCO market is not included in the 2007 Recommendation but ComReg considers that applying the so-called “Three Criteria Test” to it, the FVCO market is susceptible to ex ante regulation. The Three Criteria Test looks at (i) the presence of high and non-transitory barriers to entry; (ii) a market structure which does not tend towards effective competition within the relevant time horizon; and (iii) the insufficiency of competition law to adequately address the market failure(s) concerned.
ComReg’s Consultation essentially proposes:
- to continue to regulate the FVCO market, as it considers eircom is likely to have SMP in this market. However, ComReg proposes to move the obligation on eircom to provide Wholesale Line Rental away from ComReg’s decision in the retail market (where the obligation currently resides) and into the FVCO market. This would therefore seek to address competition problems at the most upstream level and allow the potential de-regulation of downstream markets.
Readers of previous eZines will recall ComReg’s proposals in its Supplementary Consultation on the Fixed Voice Access market (which includes managed VoIP) to focus on better regulation by addressing concerns at the wholesale level, and taking a less interventionist approach at the retail level. In the Supplementary Consultation ComReg sought to achieve this by proposing the introduction of margin squeeze tests in the wholesale markets for FVCO and wholesale broadband access (WBA) (see article on “Managed VoIP – making waves in the Fixed Voice Access market” in our January 2014 eZine). ComReg’s view at the time was that effective wholesale remedies might permit the downstream removal of the current net revenue test in the retail FVA market.
- removing Transit from ex ante regulation as ComReg considers the Transit market has the potential to tend towards effective competition over time.
The Consultation forms part of a suite of related consultations ComReg is conducting at the moment in the retail fixed access market. Given the links between these consultations, it is difficult to predict any outcomes at this stage. It will certainly be no easy task taking into account the many competing views and arriving at a suitable compromise for both wholesale and retail levels of the market.