Brussels calls on telecoms regulator to change Telefónica price proposal

It is not the first time that Brussels has warned the Spanish telecommunications regulator, the CNMC, that its program of regulated prices benefits the leading operator, Telefónica. But the statement released on Monday was clear: the European Commission believes the system Telefónica applies to its rivals for using its broadband network means regulated prices up to 50 percent higher than they would be in an efficient market.

“At the end of a three-month in-depth investigation, the Commission has concluded that CNMC’s proposed measure still lacks transparency and contains an element of arbitrariness,” the commissioner responsible for the digital agenda, Neelie Kroes, said in a statement .

But that was not the only complaint. Kroes and her team also criticized the Spanish regulator for not planning to impose other competition safeguards in relation to another product to which Telefónica has exclusive access: wholesale broadband.

But while the Brussels warning may sound serious, it only affects a small part of the ADSL lines of competitors that use the Telefónica network – the so-called indirect access lines, which make up just 600,000 of the 12 million fixed broadband connections in Spain, the CNMC has confirmed.

Indirect access lines use no type of installation, with the whole service rented from Telefónica. Most companies use disaggregated access, which involves the rental of copper pairs from Telefónica by alternative operators.

What’s more, the Brussels warning is merely a recommendation and not an obligation. The CNMC now has to examine the prices and take a decision.

Brussels first warned the CMT – the predecessor of the CNMC – in June that its plan may not be compatible with EU telecoms rules, as well as being detrimental to competition and not incentivizing investment in high-speed broadband.