Page 25 - Lawtext Utility Law Review Journal Sample

172 16[2006/2007]4 ULR EUROPEAN CURRENT SURVEY

European Commission concludes that The European Commission has concluded that the way in which UK property tax on
BT and Kingston have received no aid telecommunications infrastructure, as applied to BT and Kingston Communications in
through UK property tax England and Wales, does not constitute an illegal State Aid. The Commission has, therefore,
(IP/06/1363) 12 October 2006 closed its formal investigation. In particular, the Commission’s investigation concluded that
the so-called ‘business rates’ tax is levied on telecommunications infrastructure belonging
to BT and Kingston in a way that does not give them a lower tax burden than that of their
competitors and thus does not result in State Aid in favour of BT and Kingston. Following
a complaint from one of BT’s competitors, the Commission opened a formal investigation
in January 2005 to determine whether the application of different valuation methods
resulted in a disproportionate tax burden for some companies competing in the market
for electronic communications services, and whether it favoured BT and Kingston. The
application of a special valuation method to them was justified by the specific nature of
their networks, which are essentially local access networks. Furthermore, the Commission
could not find any evidence that the application of this specific valuation method to BT and
Kingston had resulted in an undervaluation of their networks with respect to those of
their competitors.

Broadband markets in Luxembourg The European Commission welcomed a regulatory measure proposed by the national
will be further opened to competition regulatory authority of Luxembourg, the Institut Luxembourgeois de Régulation (‘ILR’), to
(IP/06/1504) 3 November 2006 give new market entrants high-speed access to end-customers (or bit-stream access) via
the broadband networks of Luxembourg’s telecom incumbent, EPT. The Commission in
particular welcomed the fact that the remedy proposed requires bitstream access regardless
of the technology used by EPT (ADSL2, ADSL2+ and VDSL). Furthermore, the Commission
invited the ILR to ensure that the remedy applied is effective in ensuring competition to
the benefit of consumers. Finally, the Commission asked the ILR to ensure the availability
in the near future of stand-alone bitstream access (the provision of broadband access
independent of the obligation to buy a telephone connection from EPT) to enhance
competition on the broadband market in Luxembourg.

German regulator promises deeper The German regulator Bundesnetzagentur (‘BNetzA’) has informed the Commission that
analysis of the wholesale leased lines it will continue assessing the German wholesale leased lines markets. BNetzA now plans
markets to seek additional data and to further analyse recent market developments, in particular
(IP/06/1524) 8 November 2006 relating to new technologies for providing wholesale leased lines in Germany. On 29 August
2006, BNetzA notified the Commission of a draft decision on the markets for wholesale
leased lines, that is, dedicated unmanaged connections between two points for the
transmission of voice and data, which are used by carriers to provide retail leased lines
mainly for business clients. The Commission expressed ‘serious doubts’ as to the
compatibility of the notified draft Decision with Community law. In particular, the
Commission was not convinced that the evidence for the proposed market definition
(which identified market segments according to bandwidth up to and including and above
2Mbit/s) and for the finding on significant market power (SMP) was sufficient.

European Commission asks Ofcom to The European Commission sent a letter the UK Office of Communications (‘Ofcom’)
exclude inflated 3G auction costs in expressing concerns as to how wholesale tariffs, charged by five UK mobile operators for
termination rates for mobile phone terminating calls to their customers, have been assessed. In the Commission’s view, Ofcom’s
operators proposed tariffs keep termination values higher than necessary due to 3G spectrum cost
(IP/06/1628) 27 November 2006 valuations, which risk overestimating costs. The measures proposed follow Ofcom’s 2003
market review, where the 2G/3G operators O2, Orange, T-Mobile and Vodafone, and the
3G operator Hutchison 3G were already found to have significant market power on their
respective networks. The 2G/3G-operators were subject to price regulation until the end
of March 2007. Ofcom’s proposed remedies require UK mobile operators to implement
cost-oriented tariffs for terminating calls on their networks. The Commission considered
that the current Ofcom proposal would be detrimental to fair competition in the UK
mobile market and would lead to higher consumer prices for consumers; so accordingly it
asked Ofcom to reconsider the valuations.

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