access price to the copper local loop and investments in fibre
In accordance with its Digital Agenda for Europe, the Commission has set itself the objective of guiding National Regulatory Authorities (NRAs) and to harmonising the process they should follow when choosing a cost methodology for calculating the prices of network access.
The Commission plans to issue a Recommendation on this topic. The objective would be twofold: to stimulate investment while ensuring competition. The issue is important and the outcome may determine the success of the transition from copper to very high speed fibre networks, all over Europe.
The European Commission carried out a public consultation between October and November 2011 on the best cost methodology to calculate the wholesale prices for access networks, in particular for the pricing of the copper ‘local loop unbundling’ service. The questionnaire also enquired about incentives for investment in next generation fibre access networks (NGAN).
The consultation is based on the Commission claim that NRAs use different cost methodologies, leading to a variation in key access prices which harms the internal market and investment in NGANs.
However, the Body of European Regulators for Electronic Communications (BEREC) provides an assessment that cannot be reconciled with the Commission’s picture of divergent NRA approaches to cost methodologies. According to the BEREC, the degree of harmonisation is high and accommodates the use of parameters that reflect national circumstances.
Orange position
Orange France Telecom Group fully shares the aims of the Commission’s Digital Agenda for Europe and has committed itself to a programme that will provide almost 60 per cent of French households with access to fibre to the home (FTTH) by 2020. Orange answered the Commission’s questionnaire from the combined point of view of an incumbent operator in France and Poland – and as an alternative provider elsewhere.
As observed by BEREC, cost methodologies and regulated prices are already well harmonised across the EU, after taking into account local factors. Therefore the need for further harmonisation is not self-evident.
Orange believes that the policies aimed at artificially moving customers to fibre networks are most likely to degrade fibre profitability. A mandatory migration to FTTH would prevent investors from getting the higher revenues needed to sustain FTTH investment, increase the overall migration costs for the end-user and delay the geographical extension of FTTH by diverting resources away from investment.
To conclude, Orange would not recommend adding to existing uncertainty by manipulating the cost of copper prices. To encourage fibre investment, stability in copper prices and in the current national implementation of copper cost methodology are essential. Policies aimed at artificially moving customers to fibre networks are most likely to degrade the fibre business case. Conversely, demand stimulation could actually improve network development.
The European Commission carried out a public consultation between October and November 2011 on the best cost methodology to calculate the wholesale prices for access networks, in particular for the pricing of the copper ‘local loop unbundling’ service. The questionnaire also enquired about incentives for investment in next generation fibre access networks (NGAN).
The consultation is based on the Commission claim that NRAs use different cost methodologies, leading to a variation in key access prices which harms the internal market and investment in NGANs.
However, the Body of European Regulators for Electronic Communications (BEREC) provides an assessment that cannot be reconciled with the Commission’s picture of divergent NRA approaches to cost methodologies. According to the BEREC, the degree of harmonisation is high and accommodates the use of parameters that reflect national circumstances.
Orange position
Orange France Telecom Group fully shares the aims of the Commission’s Digital Agenda for Europe and has committed itself to a programme that will provide almost 60 per cent of French households with access to fibre to the home (FTTH) by 2020. Orange answered the Commission’s questionnaire from the combined point of view of an incumbent operator in France and Poland – and as an alternative provider elsewhere.As observed by BEREC, cost methodologies and regulated prices are already well harmonised across the EU, after taking into account local factors. Therefore the need for further harmonisation is not self-evident.Orange believes that the policies aimed at artificially moving customers to fibre networks are most likely to degrade fibre profitability. A mandatory migration to FTTH would prevent investors from getting the higher revenues needed to sustain FTTH investment, increase the overall migration costs for the end-user and delay the geographical extension of FTTH by diverting resources away from investment.To conclude, Orange would not recommend adding to existing uncertainty by manipulating the cost of copper prices. To encourage fibre investment, stability in copper prices and in the current national implementation of copper cost methodology are essential. Policies aimed at artificially moving customers to fibre networks are most likely to degrade the fibre business case. Conversely, demand stimulation could actually improve network development.last update March 15, 2012
Orange’s Response to the public consultation by the European Commission on costing methodologies for key wholesale access prices in electronic communications (401.71 KB)© France Telecom - Orange 2012
