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Fixed infrastructure and access

As customer demand for ubiquitous data and content grows rapidly over the coming years, the most successful communications providers will be the ones who can provide seamless high speed connectivity at home, at work, at play, and anywhere in between.

This will require the integration of multiple technologies – 3G, 4G, WiFi, cable and fibre – into a single network offering the best, uninterrupted experience – what we call “unified communications”.

As this demand for unified communications and data grows, we are increasing our access to next-generation fixed line infrastructure through a combination of wholesale agreements, self-build programmes and targeted acquisitions. However, access to fibre controlled by fixed line incumbents remains a bottleneck that is impeding competition and causing consumer harm.

In today’s communications sector, fixed infrastructure is critical to enable competition in fixed broadband services, IPTV, and services to business. Competition in mobile is also increasingly linked to competitive conditions in fixed through converged offers and the increased use of mobile data which requires high-bandwidth fibre backhaul.

Europe’s fixed line incumbent operators who started life as state monopolies are well positioned to meet this demand as in most countries they own a mobile network as well as being the dominant next-generation access fixed network provider. In addition, these incumbents are able to use their fibre networks to carry traffic from their mobile base stations back to the core network, a growing need for all mobile operators as 4G/LTE traffic grows in line with consumer demand for high-speed services.

National regulatory authorities are tasked with ensuring that operators can get fair and non-discriminatory access to fibre networks so that consumers can benefit from competition in both the mobile and fixed broadband markets. The European Commission has issued a recommendation on non-discrimination and costing methodologies which national regulatory authorities should take into account. Despite this, very little progress has been made in unblocking this bottleneck and, after more than 20 years of liberalisation, incumbent operators still dominate the cashflow that is generated by the industry.

Research commissioned by Vodafone in 2014 found that wholesale access for mobile backhaul is not always made available, or is extremely expensive, and national regulatory authorities across Europe have adopted disparate regulatory approaches.

As a result, European consumers are being affected by a deterioration of competition. Only a new policy approach that directly addresses the bottlenecks impeding competition and causing consumer harm will result in a competitive and properly functioning market.

The existing regulatory regime needs to be reformed to encourage investment by a variety of market participants, not just incumbents, to ensure sustainable competition and thereby less reliance on regulation over time. This can be achieved with the right mix of regulated access products and a consistent and robust approach to equivalence to ensure non-discriminatory access.