ACM anticipates savings for Dutch households of up to 200 million euros per year because of fiber-optic arrangements
The Netherlands Authority for Consumers and Markets (ACM) has published a draft decision following recent proposals from Dutch telecom operator KPN and fiber-optic company Glaspoort regarding lower tariffs and improved conditions for access to their fiber-optic networks. According to ACM, these commitments may have a significant effect on the market for fixed broadband access. It will lead to more competition on price and download speeds in the market, as a result of which it becomes more appealing for households to opt for faster broadband. ACM estimates that, by 2026, households may save as much as 200 million euros per year. That is why ACM will publish the draft decision for public consultation among market participants.
“The proposed tariff reductions strengthen the competitive positions of access applicants, thereby allowing them to offer more people faster broadband at lower prices. If declared binding, KPN’s and Glaspoort’s commitments will offer market participants clarity and certainty for the next eight years, while also being able to take effect relatively quickly”, says Manon Leijten, Member of the Board of ACM. “That is why we now publish the draft decision for public consultation, and seek the opinions of market participants.”
What was this case about?
ACM has conducted studies into the functioning of the telecom market since 2020, with special attention to other telecom operators’ access to KPN’s fiber-optic network and, later also, to Glaspoort’s network. These two companies have their own fixed fiber-optic networks to which they want to connect up to approximately 80 percent of Dutch households over the next few years. On its fiber-optic network, KPN offers households and businesses many services, including broadband and television services. In most parts of the Netherlands, telecom companies without networks of their own are dependent on access to KPN’s and Glaspoort’s fiber-optic networks in order to be able to compete in this market.
As a result of these studies, ACM has informed KPN and Glaspoort that it does see market concerns as a result of the tariffs and conditions that KPN and Glaspoort use for access to their fiber-optic networks, which reduce the opportunities for other market participants to compete. In order to take away this potential market problem, KPN and Glaspoort have submitted commitments, and have requested ACM to declare these binding.
Background of the draft decision
The commitments of KPN and Glaspoort follow several discussions the operators had with ACM. In those discussions, ACM made it clear to both operators that it can only agree to commitments if these are sufficiently effective, both in the short term and in the long term. ACM expects that the current versions of the commitments for ODF access and VULA FttH allow telecom companies without networks of their own to compete durably on the fiber-optic networks. An ACM analysis has revealed that, from a business perspective, the commitments enable them to offer consumers all download speeds at competitive rates. In that way, they are able to distinguish themselves from the offers of, for example, KPN or VodafoneZiggo. As a result thereof, households will be able to benefit from more competition between telecom operators. This is expected to lead to lower tariffs, a broader selection, and a higher quality of services.
At the same time, ACM finds it relevant that the rollout of fiber-optic by KPN and Glaspoort is not unnecessarily delayed or hindered by uncertainty with regard to access tariffs. ACM considers it of great importance that all households and businesses in the Netherlands have high-quality telecom connections, such as fiber-optic, as soon as possible.
What do the commitments entail?
KPN and Glaspoort have made the following commitments to ACM:
- KPN offers unbundled access (including ODF access) to all addresses within its point-to-point fiber-optic network, while lowering the tariffs across the Netherlands to 16.56 per line (excluding VAT). That is lower than the ODF tariff that had been regulated until 2020.
- KPN offers ODF-backhaul to so-called metro-core network locations. From a business perspective, it is more feasible for access applications to roll out their networks to these larger network locations than to small street cabinets in KPN’s fiber-optic network. The tariffs for this service are similar to the regulated tariffs that had been in effect until 2020.
- KPN offers virtual unbundled access to all addresses within its point-to-multipoint footprint (VULA PON), and also offers virtual unbundled access to certain types of street cabinets within its point-to-point fiber-optic network at significantly reduced tariffs. KPN lowers the most important tariff component (the monthly line tariff) for 100 Mbit/s by over 20 percent compared with current public rates and individual customized contacts. With regard to 1 Gbit/s speeds, KPN lowers this tariff by approximately 50 percent.
- Glaspoort offers virtual unbundled access next to its existing WBT offerings. Glaspoort’s VULA tariffs and conditions are similar to those of KPN, although they are approximately 2.50 euros per month higher because of Glaspoort’s higher roll-out costs in smaller towns and sparsely-populated areas.
The commitments are valid for eight years. KPN and Glaspoort have the right to adjust the tariffs each year based on the consumer price index up to a maximum of two percent. If the inflation in certain years is higher than four percent, KPN and Glaspoort may then add to said maximum of two percent the percentage points above that four-percent threshold. During the eight-year period, market participants have the opportunity to submit any disputes regarding these offers to ACM. Moreover, ACM can enforce KPN’s and Glaspoort’s compliance with these commitments, and, if necessary, may even take enforcement action by imposing fines.
One condition that ACM attaches to its assessment of these commitments is that KPN continues to offer its access offers to the copper network as well as the migration offers to fiber-optic too.
What are the follow-up steps and what does this mean for any possible regulatory regime?
ACM will now publish the draft decision for public consultation for six weeks so that interested parties have the opportunity to share their opinions. ACM will take these opinions of interested parties into account when finalizing the decision. If ACM were to decide to declare the commitments binding, they would enter into force immediately.
In July 2021, ACM announced that its studies have also given sufficient cause to draw up a market analysis decision. ACM subsequently announced that it expected to publish the draft market analysis decision by late March 2022. If ACM were to declare the commitments binding, it may also have consequences for said market analysis, but that still needs to be examined by ACM.
ACM continues to keep a close watch on the high-speed broadband market. In that context, ACM also looks at other telecom operators with broad network coverages, such as VodafoneZiggo and Delta.
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