While preserving the spirit of its last market review, ComReg is proposing deregulation in more than half of the overall leased lines market
Consultation on the state of competition in the wholesale dedicated capacity market
On 27 November 2024, ComReg published a consultation on its latest review of competition in wholesale dedicated capacity (WDC) – Market 2 of the EC’s 2020 Recommendation on relevant markets. WDC (also commonly referred to as wholesale leased lines) is a service typically used by large businesses that involves the supply of symmetric, dedicated data connectivity between fixed locations, with high-quality service level agreements (SLAs). Providers may purchase wholesale leased line services from one another in order to extend their presence into areas where they have no network footprint of their own. WDC services also enable the provision of retail leased line services to medium and large businesses or public sector bodies, whose needs cannot be supported by the residential broadband market. These organisations use retail leased lines to transfer data or use various communications related services (such as cloud computing, data back-up) across their business locations. Under the EC’s Recommendation, WDC is now one of only two markets considered to be susceptible to ex-ante regulation, the other being wholesale local access (WLA).
ComReg finds regulation of copper-based leased lines is no longer justified, while half of fibre-based leased lines will also be deregulated
ComReg’s aim is to ensure access to, and take-up of, high capacity connectivity, in line with the objectives of the European Electronic Communications Code (EECC) and national legislation. In this review, subject to a six-month sunset period, it has proposed to discontinue regulation of copper-based – i.e. low bandwidth traditional interface (LB TI) – leased lines given the low and declining levels of demand for these services. ComReg has therefore defined the product market as the provision of WDC over fibre using modern interfaces, which includes Ethernet, Wavelength Division Multiplexing (WDM) and dark fibre. From a geographic perspective, ComReg has adopted “workplace zones” (WPZs) as the relevant unit of assessment. It has then sought to distinguish between areas where three or more fibre leased line networks are present (typically in urban areas) and areas where there are only one or two networks present (usually more rural areas), and also taken into account the proximity of leased line networks to existing connected premises. ComReg has proposed that regulation is unnecessary in these generally more urban areas (“Zone A”, containing 50.5% of total WPZs), where no undertaking is likely to have significant market power (SMP). However, it has also proposed the need for regulation in the relatively more rural areas (“Zone B”, 49.5% of WPZs) owing to a lack of effective network competition, and that Eir should be designated as having SMP. This partial deregulation reflects the thinking of other regulators in Europe such as the TKK in Austria, which has found that over half of all municipalities in the country no longer require regulation.
Eircom will face a price control obligation in Zone B areas, except where they overlap with the NBP’s rollout
To ensure fair competition, ComReg has proposed that Eircom be subject to a range of SMP obligations in regulated areas (Zone B and the downstream retail leased lines market), with obligations largely similar to those currently imposed following the regulator’s previous market review in 2020. These include:
Access;
Non-discrimination;
Transparency;
Price control and cost accounting;
Accounting separation; and
Statement of compliance (SoC).
With respect to the price control, ComReg proposes to maintain the obligation of cost orientation for modern interface WDC products, services and associated facilities (again aligning with its 2020 decision), except in Zone B areas that overlap with the National Broadband Plan (NBP) deployments, where Eircom will face potentially greater competitive constraints and should not face a price control. The consultation will run until 31 January 2025, after which ComReg will review and take into account all responses it receives, before issuing a final decision in 2025.
