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Cable Technology Feature Article

December 08, 2009

Austrian Wireless and Fixed Broadband Declared One Market by EC

By Gary Kim, Contributing Editor

Wireless broadband might not be a functional substitute for fixed broadband access everywhere, but according to the European Commission, that is precisely the case in Austria.
The European Commission, in fact, has formally defined the wholesale broadband access market in Austria as including wireless, and now excludes all “bit stream access” for residential customers from regulation. Bitstream (News - Alert) access is a wholesale technique popular in Europe where a third party can buy bandwidth from an incumbent telecom provider and use it to create a retail service.
Generally speaking, regulators take the step of removing a product from mandatory wholesale regulation only when they see substantial evidence that a product or market is sufficiently competitive that regulated prices are required. That appears to be the EC's clear assessment of the Austrian market.
EC Competition Commissioner Neelie Kroes said that, in Austria, residential users can easily switch between a DSL, cable and mobile connection to access the internet. And that makes them part of a single market.
“This is a situation which is unique across Europe, where normally such advanced offerings of mobile broadband services to residential users cannot be observed,” Viviane Reding, the EU telecoms commissioner, said.
Though initially skeptical of the new definition, the EC was given enough additional documentation by the Austrian regulator, Rundfunk und Telekom Regulierungs GmbH, or “RTR,” to accept the thesis that a single consumer access market now exists.
In November, RTR submitted additional evidence to justify its conclusion that, despite differences in terms of product characteristics, fixed connections and mobile connections are indeed considered substitutable products by Austrian residential customers.
The new EC position applies only to consumer access, not to business products, where the EC says services and products are not fully competitive enough to relax regulatory rules on pricing.
What’s more, the amended wholesale market definition now includes bitstream access for the use of business customers, whereas wholesale bitstream access for residential customers is excluded in order to avoid excessive regulation, as the residential market is already competitive.
The EC also said, though, that the new market conditions might be temporary. Once fiber access networks begin to be available on a wide scale, the EC says it might take another look. Mobile operators may in the future face increased network congestion and mobile broadband offers may also not be able to compete with offers provided via high speed NGA networks as regards bandwidth capacity.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Kelly McGuire