The Notification of Market 11
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NOTIFICATION OF MARKET ANALYSIS – Summary Form MARKET 2 Wholesale voice call termination on individual mobile networks SECTION 1 - Market definition 1.1. The affected relevant product/service market. The market is defined as wholesale voice call termination on individual mobile networks, former market No 7 of Recommendation of 2007. It was analysed in 2013 (CZ/2013/1531). CTU launched a new analysis of this market with regard to the voluntary separation of the SMP undertaking – O2 Czech Republic a.s., into two legal entities – a new entity named Česká Telekomunikační Infrastruktura a.s. – CETIN and O2 Czech Republic a.s. The new entity CETIN was registered in the Register of Companies of Czech Republic on 1 June 2015 and is operating on the market as a provider of termination services at a fixed location instead of the O2 Czech Republic a.s. The O2 Czech Republic a.s. as an owner of frequency allocations and mobile exchanges, provides a public mobile communications network as well as mobile termination services which belongs to this relevant market. Is this market mentioned in the recommendation on relevant markets? Yes 1.2. The affected relevant geographic market. The relevant geographic market is the whole territory of the Czech Republic. 1.3. A brief summary of the opinion of the National Competition Authority. NCA in its letter of 12 January 2016 has some comments in relation to a need to impose symmetrically all remedies (incl. also accounting separation) to all SMP operators (incl. Air Telecom a.s.), to a need to properly assess impact of OTT services and to a need to keep accounting separation in pure BU-LRIC methodology in order make accounting separation connected MTR calculation. The opinion of the NCA is attached to this notification. 1.4. A brief overview of the results of the public consultation. The amended draft market analysis was submitted for public consultation on CTU’s web pages from 24 September 2015 to 24 October 2015. The three main operators, O2 Czech Republic a.s., T-Mobile Czech Republic a.s. and Vodafone Czech Republic a.s. submitted comments relating to OTT services. Their demand to include all OTT services (those provided over public internet) within the product market definition was not accepted by CTU because these OTT services don’t fulfil the qualities of publicly available telephone services and thus, these services can´t be considered as substitutes. Besides, it is evident that the total number of minutes terminated in public mobile networks is growing steadily and it does not indicate a strong competition and substitution effect by OTT services. Next comment related to imposition of all remedies (incl. also accounting separation) symmetrically to all SMP operators (incl. Air Telecom a.s.). CTU did not accept this comment and stated, that 100% market share of each SMP operator do not automatically imply the conclusion about the need to impose the same remedies to each SMP operator as the market share is only the one of the criteria when assessing the level of competition (assessing whether there is SMP operator or not) on the market. In case of Air Telecom a.s. CTU took into account its small market share on the whole market of call termination in mobile networks, overall size of the undertaking, its unique mobile technology (CDMA) that would not be used for MTR calculation purposes and proportionality of such obligation considering its potential use when imposing obligations related to price regulation (i.e. when calculating cost-oriented price for termination). 1.5. The difference of defined relevant market from market listed in the Recommendation on relevant markets, main reasons and three main criteria. Not applicable. The relevant market corresponds to Market 2 listed in the Recommendation on relevant markets EC/710/2014. SECTION 2 – Designation of undertakings with significant market 2.1. The name(s) of the undertaking(s) designated as having individually or jointly significant market power. Each of the following 4 providers of call termination is designated as having individually significant market power in its own network: O2 Czech Republic a.s., be located Praha 4 - Michle, Za Brumlovkou 266/2, PSČ 14022, IČO: 30 60193336, 31 T-Mobile Czech Republic a.s., be located Praha 4 - Chodov, Tomíčkova 2144/1, PSČ 14800, 32 IČO: 64949681, 33 Vodafone Czech Republic a.s., be located Praha 5 - Stodůlky, náměstí Junkových 2808/2, PSČ 34 15500, IČO: 25788001; 35 Air Telecom a.s., be located Praha 9 - Libeň, Českomoravská 2408/1a, PSČ 19000, IČO: 36 24262137. The name(s) of the undertaking(s) which is (are) considered to no longer have significant market power. Not applicable. 2.2. The criteria relied upon for deciding to designate or not an undertaking as having individually or jointly with others significant market power. According to out methodology on defining relevant markets, analysing relevant markets, assessing significant market power and setting remedies in the area of electronic communications in the Czech Republic, when assessing whether an undertaking has significant market power on this market, the CTU evaluated particularly the following criteria: Market share a market share size b market share change over time Criteria characterising the undertaking a overall size of the undertaking b prices and revenues Criteria characterising the customers and the competition on the relevant market Criteria related to characteristics of competitors in the relevant market 2.3. The name of the main undertakings (competitors) present/active in the relevant market. The undertakings active in the relevant market are listed in section 2.1 of this summary notification form. 2.4. The market shares of the undertakings mentioned above and the basis of their calculation. All undertakings have a market share of 100 % on their own respective networks. Evaluation of this criterion indicates that there is existence of significant market power of O2 Czech Republic a.s., T-Mobile Czech Republic a.s., Vodafone Czech Republic a.s. and Air Telecom a.s. 2.5. The opinion of the National Competition Authority. The opinion of the NCA is attached to this notification. Full settlement of this opinion by the CTU can be found in the section D of the market analysis. 2.6. The results of the public consultation to date on the proposed designation(s) as undertaking(s) having significant market power. The amended draft market analysis was submitted for public consultation on CTU’s web pages from 24 September 2015 to 24 October 2015. The opinion of the NCA and the settlement of comments raised within the public consultation are attached to this notification. SECTION 3 – Regulatory obligations 3.1. The legal basis for the obligations to be imposed, maintained, amended or withdrawn (Articles 9 to 13 of Directive 2002/19/EC (Access Directive) The Act on Electronic Communications No.127/2005 Coll. (hereinafter only “Act”) Section 51 Paragraph (5). Remedies imposed on O2 Czech Republic a.s., T-Mobile Czech Republic a.s. Vodafone Czech Republic a.s. and Air telecom a.s.: Transparency – Article 9 of the Access Directive (Section 82 of the Act) • Obligation to publish information relating to the interconnection of networks for call termination service including financial information, contractual terms and conditions, technical specifications, network characteristics and prices. Non-discrimination – Article 10 of the Access Directive (Section 81 of the Act) Obligation to apply of equivalent conditions in equivalent circumstances to other undertakings. Obligation to provide services and information to others under the same conditions and of the same quality as it provides for its own services. Access to specific network elements and associated facilities – Article 12 of the Access Directive (Section 84 of the Act) Obligation to meet reasonable demands of another providers to connect networks or network elements for call termination service, Obligation to meet reasonable demands of another providers to use and have access to its own associated facilities for call termination service. CTU imposed the above mentioned obligations by REM/7/06.2014-93, REM/7/06.2014-94, REM/7/06.2014-95 and REM/7/06.2014-96. Obligations related to price regulation – Article 13 of the Access Directive (Section 56 and Section 57 of the Act) • Obligation related to price regulation that negotiated prices for connection don’t exceed a set maximum prices. CTU imposed decisions that came into force on 27 June 2014 - CEN/7/06.2014-97, CEN/7/06.2014-98, CEN/7/06.2014-99 and CEN/7/06.2014-100. Remedies imposed on O2 Czech Republic a.s., T-Mobile Czech Republic a.s. and Vodafone Czech Republic a.s.: Accounting separation – Article 11 of the Access Directive (Section 86 of the Act) Obligation to keep evidence of costs and revenues separately due to prove non-cross financing within the negotiation of prices on retail and wholesale levels, Obligation to accessible evidence to verify costs and revenues for individual services. 3.2. The reasons for which the imposition, maintenance or amendment of obligations on undertakings is considered proportional and justified. The market analysis proved that there are potential market obstacles to effective competition: denial of access or interconnection to other providers, discriminatory behaviour or withholding of information, price discrimination and charging unfair prices for termination. The main aim of these regulatory obligations is to ensure connection with the networks of mobile undertakings and to prevent from unreasonably high prices on related retail market. CTU will apply price regulation only for termination of calls originated from EHP countries. The calls originated outside EHP will not be regulated (as even now they are not regulated) and it allows negotiating more symmetrical prices on wholesale termination market towards countries outside EHP.