The CNMC scales back fibre access regulation, and allows Telefonica to switch-off its copper network more quickly. Not a surprise, when fibre penetration is so high
A market now abundant with fibre: The Spanish regulator, the CNMC, has approved the review of the wholesale broadband access market, on which it worked for almost a year. The new review replaces the framework last adopted in 2016, and reflects the significant change the Spanish broadband market has seen since. In the last five years, FTTH has grown to dominate the broadband market. In 2015, 23% of connections were full-fibre. By 2020 this had risen to 75%. This makes Spain a leader in Europe both in terms of coverage and penetration of full-fibre.
Fibre access regulation to stay in non-competitive areas: The market has seen significant infrastructure competition. The areas deemed as competitive increased from 66 municipalities in 2016 (35% of the population) to nearly 700 in the new review (70% of the population). Here, Telefonica will only face access remedies for its civil engineering infrastructure (ducts and poles) as well as continued regulation of LLU. In the non-competitive areas, Telefonica will have to provide access to its fibre network in the form of VULA (“NEBA local”) and bitstream (“NEBA fibre”). Prices for fibre access will be regulated ex-post based on economic replicability tests.
A significant boost to Telefonica’s copper switch-off: Another telling sign of the accelerated transition from copper to fibre is the change the CNMC made to the rules to which Telefonica is subject for the switch-off of its copper network. The CNMC is significantly reducing the notice period for Telefonica to close its copper exchanges. Previously, Telefonica had to give five years’ notice when closing exchanges with colocated operators. The notice is now just two years, as the CNMC recognises that five years would have been an obstacle to fibre investment given the current market conditions.
It could be just duct and pole access next time: The CNMC will consider again in three years’ time whether the market warrants a new review – even though the European Electronic Communications Code allows for a five-year timeframe between market reviews. The regulator has already suggested that the next market review could see fibre access obligations falling away across the entire country, and only leave passive infrastructure access remedies in place. Given how competition and investment have developed in the Spanish market, such a scenario doesn’t look too far-fetched.
