KPN must put an end to capacity shortfalls: Its policy is undermining the development of competition in the telecommunications market

KPN must comply with its duty to supply interconnection capacity to its competitors by no later than 1 July. Because of a capacity shortfall in KPN’s network, its competitors’ subscribers frequently have to contend with an engaged signal. This threatens to undermine the development of competition in the telecommunications market. Until 1 July KPN must at any tariff ensure that any scarce capacity which is available is allocated and that the system of allocation is transparent and manageable. KPN is required to report to OPTA in this respect. In the event that KPN fails to fulfil its duty of supply after 1 July, the OPTA Commission will adopt coercive administrative measures and ultimately impose penalties. KPN has itself indicated that it will be able to supply adequate interconnection capacity on 1 July.

In addition, OPTA is demanding that KPN ensure that problems do not also occur in its own network, with the result that its subscribers are no longer accessible or can no longer call. At the end of last year, KPN drew OPTA’s attention to the risk of part of its network failing. Although KPN says that the capacity shortfall in its own network is now under control, OPTA is nevertheless demanding greater certainty in this respect. In view of the seriousness of the risk, OPTA has notified Mr De Vries, the Secretary of State for Transport, Public Works and Water Management.

The reason for the demands made by The OPTA Commission, which have been set out in a formal decision, lie in the findings of studies conducted by the consultancy firms, Stratix and Arthur Andersen, and KPN’s response to them. Even within KPN there are strongly diverging views on the capacity shortfall, its gravity and potential solutions. The OPTA Commission feels that this can be explained by the fact that there are many uncertainties in relation to the development of the telecommunications market and technologies. OPTA is calling for an open debate about the scenarios which play a role when planning investments in the fixed network. KPN will also need to adopt a frank approach in such a debate. The OPTA Commission would therefore like to publish the reports of these studies and the responses to them, unless KPN applies to the courts to have this prohibited.

The OPTA Commission’s concerns about the capacity shortfall are underscored by OECD figures which reveal that a number of other countries (European and otherwise) have invested a great deal more in telecommunications than the Netherlands (see the addendum).