Spain’s CNMC looks to remove access obligations on Telefónica, bringing regulation in line with the majority of EU Member States
Market review proposes full deregulation
On 7 February 2024, the Comisión Nacional de los Mercados y la Competencia (CNMC) unveiled proposals to deregulate the wholesale market for access and call origination on fixed networks in Spain. The CNMC is currently undertaking its latest round of market analysis, which outlines the conditions by which alternative operators to Telefónica can access the country’s fixed telephone network. These operators require access to this market in order to provide fixed telephony services through the copper network (bundled with broadband or otherwise) when they do not have direct access to the customer. The CNMC’s previous market review in 2017 determined that former incumbent Telefónica had significant market power (SMP), leading the regulator to act to protect the little over 2% of households in Spain that did not have landline calls bundled with broadband. Telefónica stands to benefit from the move as it is currently obliged to provide wholesale access to alternative operators, with terms set out in a reference offer.
Fixed telephony is considered competitive at both the retail and wholesale levels
The CNMC’s market analysis shows that the number of fixed telephone lines bought with internet services is increasing, while the number of households taking standalone fixed voice services (referred to as “1P lines”) is reducing year-on-year. From a technology perspective, operators that provide landline services packaged with broadband tend to use fibre networks, either those they have deployed themselves or by utilising available wholesale fibre services such as “NEBA local” (virtual unbundled local access provided by Telefónica). Altnets also use their mobile networks to offer 1P lines to their customers via fixed wireless access. Demand for wholesale copper access has therefore been declining, accelerated by Telefónica's copper retirement programme, which is set to be completed in April 2024. At the retail level, the CNMC considers that fixed telephony services are provided under “relatively competitive conditions”, with Telefónica's market share falling by five percentage points (from 46.9% to 41.9%) between 2018 and 2022.
The move would bring Spain into line with most other European countries
In light of these trends, the regulator has concluded that the market tends towards effective competition and is no longer characterised by high barriers to entry, and that the application of sectoral regulation and competition law are sufficient to guarantee that this remains the case in future. The CNMC has therefore proposed to deregulate the market and to lift obligations currently imposed on Telefónica within six months of its final decision. A public consultation will remain open for one month to gauge the opinion of stakeholders, including operators and industry bodies. The regulator’s move to deregulate former Market 2 of the EC’s 2007 Recommendation on electronic communications markets susceptible to ex-ante regulation would bring Spain in line with many of its European peers. Regulators in most EU Member States have now deregulated wholesale fixed call origination since it was removed from the EC’s Recommendation when the list was reviewed in 2014.
