Tying of Broadband Internet Access and Pay-TV

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Tying of Broadband Internet Access and Pay-TV Public Document INV 009 - Tying of Broadband Internet Access and pay-TV Report of the Executive Director 03/09/2012 © Competition Commission of Mauritius 2012 INV 009 – Tying of Broadband Internet Access and pay-TV 2 Table of Contents List of Abbreviations..........................................................................................................................................3 List of Tables and Figures .................................................................................................................................4 List of Annexes....................................................................................................................................................6 1. Summary ...............................................................................................................................................................7 2. Background...........................................................................................................................................................9 3. Legal Background..............................................................................................................................................17 4. Broadband Internet Access............................................................................................................................28 5. Pay-TV .................................................................................................................................................................32 6. Market definition...............................................................................................................................................37 7. Assessment of facts..........................................................................................................................................59 8. Findings of CCM in the Provisional Report................................................................................................83 9. Undertakings offered by MT..........................................................................................................................84 10. Conclusion – recommendation to Commission .......................................................................................87 11. Next Steps..........................................................................................................................................................88 Appendix.............................................................................................................................................................89 Glossary ..............................................................................................................................................................95 Annexes ..............................................................................................................................................................98 [Public Document]– COMPETITION COMMISSION OF MAURITIUS INV 009 – Tying of Broadband Internet Access and pay-TV 3 List of Abbreviations 3G – 3rd generation mobile telecommunications ADSL – Asymmetrical Digital Subscriber Line ARPU – Average Revenue per User CDMA20001XEV-DO - Code Division Multiple Access Evolution Data Optimised FTTH – Fiber To The Home GB – Data unit standing for gigabits GBps - Data rate unit expressed in number of gigabits per second (1,000 megabits per second) GPRS - General packet radio service HDTV – High-Definition Television HSDPA - High-Speed Downlink Packet Access ICT - Information and Communications Technologies IP - Internel Protocol IPLC - International Private Leased Circuit IPTV - Internet Protocol Television IPVPN - Internet Protocol Virtual Private Network ISP - Internet ServIce Provider Kbit/s – Data rate unit expressed in number of kilobits per second MB – Data unit standing for megabits MBps – Data rate unit expressed in number of megabits per second (1,000 kilobits per second) MMDS - Multichannel Multipoint Distribution Service [Public Document]– COMPETITION COMMISSION OF MAURITIUS INV 009 – Tying of Broadband Internet Access and pay-TV 4 PSTN - Public Switched Telephone Network TNT - Television Numerique Terrestre, refers to Digital Terrestrial TV (DTTV) VoD - Video on Demand WAN - Wide Area Network WAP – Wireless Application Protocol WiMAX - Worldwide Interoperability for Microwave Access List of Tables and Figures Table/Figure Description Page Number MT’s Corporate Structure (as at Figure 1 9 May 2011) Overview of provision of Figure 2 broadband internet access 28 infrastructure in Mauritius Costs for pay-TV as incurred by Table 1 35 one local satellite pay-TV operator Functional Dimension of Figure 3 39 Broadband Access market Market shares for pay-TV operators in the market for the Table 2 56 retail supply of pay-TV in Mauritius Graphical distribution of pay-TV Figure 4 content per Category/Theme 57 across operators Market shares for pay-TV operators in the market for the Table 3 58 retail supply of Premium content pay-TV in Mauritius [Public Document]– COMPETITION COMMISSION OF MAURITIUS INV 009 – Tying of Broadband Internet Access and pay-TV 5 Progression in number of Figure 5 [] subscribers on My.T and Home 65 ADSL for period 2008 - 2011 Market share for the different pay-TV operators in the market Figure 6 [] 73 for the retail supply of pay-TV in Mauritius Progression in number of pay-TV subscribers for market for retail Figure 7 [] supply of Premium content pay-TV 74 in Mauritius for period 2007 - 2011 Summary of CCM’s conclusions on monthly rate Table 4 75 expenditure/saving faced by customers Tariffs for ADSL offers from MT Table 5 89 (previous and current) Tariffs for My.T offers (previous Table 6 90 and current) Progression in Home ADSL Figure 8 [] 91 subscriber base of MT Progression in My.T subscriber Figure 9 [] 91 base List of channels offered by pay-TV Table 7 92 operators (per Category/Theme) [Public Document]– COMPETITION COMMISSION OF MAURITIUS INV 009 – Tying of Broadband Internet Access and pay-TV 6 List of Annexes Annex Description Page Number [] Notice of start of Investigation [] MT’s submissions on the [] [] Provisional Report III Undertakings offered by MT 99 [Public Document]– COMPETITION COMMISSION OF MAURITIUS INV 009 – Tying of Broadband Internet Access and pay-TV 7 1. Summary 1.1 On 21st February 2011, the Executive Director of the Competition Commission (the ‘CCM’) started an investigation under Section 51 of the Competition Act 2007 (the ‘Act’) into Mauritius Telecom Ltd’s (hereinafter ‘MT’) offering and pricing of My.T and the allegation that MT was compelling users to subscribe to bundled offers while leveraging its market power in one market to gain market share in other markets (‘this Investigation’). Such practices could have been in breach of Section 46(2)(a) of the Act which came into force on the 25th November 2009. 1.2 In the course of this Investigation and as part of its information gathering process, the CCM conducted factual meetings with and obtained, through the issuance of Information Request Orders (‘IROs’) under Section 52(1)(b) of the Act, written submissions, from the main party1 to this Investigation – MT, and auxiliary parties2 namely, other Internet Service Providers and pay-TV operators. 1.3 Following the Statement of Issues (the ‘SoI’) dated 27th September 2011, the CCM proceeded with further information gathering and communicated its provisional findings by way of a provisional report to MT on 22nd May 2012. MT submitted its comments on the provisional findings on 22nd June 2012 while requesting for a meeting with the CCM. 1.4 In the course of an initial formal meeting with the CCM on 30th July 2012, MT stated its intention to offer undertakings to the Commission. A second meeting was conducted with the main party on 3rd August 2012 to discuss the terms of such undertakings and same were communicated to the CCM on 6th August 2012. 1.5 This report is issued in pursuance of Section 63 of the Act, which provides that the Commission may, after having taken cognizance of the report of the Executive Director on the matter, determine a case on the basis of an undertaking if it considers that the undertaking satisfactorily addresses all the concerns it has about any prevention, restriction, distortion or substantial lessening of competition. Should the Commissioners indeed conclude that the undertakings proposed by MT resolve the concerns of this investigation, they may accept them and publish them in the form of a decision of the Commission which shall be binding on MT. 1.6 The report of the CCM (this ‘Report’) lays out the Executive Director’s concerns which have arisen during this Investigation before assessing the undertakings offered in light of those concerns. Those concerns were that MT might have been abusing its monopoly situation in 1 Rule 2 of the Competition Commission Rules of Procedure 2009 (the ‘Rules of Procedure’) defines ‘main party’ as the party who is subject of an investigation. 2 Rule 2 of the Rules of Procedure defines ‘auxiliary party’ as a party who has an interest in the matter and has provided evidence to the Commission or to the Executive Director and includes a complainant. [Public Document]– COMPETITION COMMISSION OF MAURITIUS INV 009 – Tying of Broadband Internet Access and pay-TV 8 tying products, for defined categories of users, and making use of a horizontal leveraging of its market power in the retail residential fixed-line broadband internet access market into
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