Response to the qualitative questionnaire 2016 – review of the broadband and broadcasting market
25 August 2016
Table of Content
1 Executive summary ...... 6 2 Introduction...... 9 2.1 Reading guide ...... 9 2.2 EU legal framework ...... 10 2.2.1 Recommendation on Relevant Markets ...... 10 2.2.2 Competition law principles forming a (methodological) basis for defining relevant markets and establishing SMP ...... 10 2.3 Regulation in Belgium ...... 12 2.3.1 Belgian framework...... 12 2.3.2 The Regulation of Cable operators in Belgium ...... 13 3 Replies to the questionnaire...... 15 3.1 Networks and technologies ...... 15 3.1.1 Mobile broadband technologies ...... 15 3.1.2 Fixed broadband technologies ...... 18 3.1.3 Digitalisation of broadcasting ...... 19 3.1.4 OTT services ...... 21 3.1.5 Convergence ...... 23 3.1.6 The digital dividend ...... 24 3.2 Market dynamics ...... 26 3.2.1 Dynamics of the retail markets ...... 26 3.2.2 Market players ...... 28 3.2.3 Broadband penetration ...... 30 3.2.4 Evolution pricing ...... 34 3.2.5 Evolution of market shares ...... 36 3.2.6 Competition trends in the broadcasting (TV) market ...... 38 3.3 Retail markets (a greenfield analysis) ...... 49 3.3.1 Broadband ...... 49 3.3.2 Broadcasting ...... 59 3.3.3 bundles ...... 91 3.4 Wholesale markets ...... 94
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3.4.1 Unbundling ...... 94 3.4.2 Bitstream and WBA ...... 99 3.4.3 Wholesale cable access ...... 104 3.5 SMP assessment ...... 107 3.5.1 Unbundling ...... 107 3.5.2 Bitstream and WBA ...... 107 3.6 Need of and applicability of regulatory remedies ...... 111 3.6.1 Promotion of investment ...... 111 3.6.2 Access to DSL (Unbundling and Bitstream) ...... 113 3.6.3 Access to cable ...... 115 3.6.4 Relation between non-discrimination obligation and access pricing controls ... 116 4 Bibliography ...... 119118
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Table of Figures
Figure 1: Competition law substitution methodology ...... 11 Figure 2: Growth mobile data ...... 16 Figure 3: World active connected devices by type ...... 16 Figure 4: Belgian mobile broadband penetration and 4G coverage compared to EU ...... 17 Figure 5: Growth of mobile broadband in Belgium ...... 18 Figure 6: Households with Internet access (2015) ...... 19 Figure 7: Fixed broadband coverage: Overall vs. NGA (2015) ...... 19 Figure 8: TV connections by technology ...... 20 Figure 9: EU average television viewing times, 2009-2014 – total population and young people ...... 21 Figure 10: Time spent watching video, per user, per day in the United States in 2012 and 2020 ...... 22 Figure 11: Investments is key for making the digital economy flourish ...... 23 Figure 12: Value chain for online services ...... 25 Figure 13: Potential winners and losers from OTT ...... 25 Figure 14: Turnover retail mobile communications, fixed communications and broadcasting ...... 27 Figure 15: Pricing evolution ...... 27 Figure 16 : Share telecommunications in household budget ...... 28 Figure 17 : Share bundles including mobile in total number of bundles ...... 30 Figure 18: Fixed broadband subscribers by headline speed ...... 30 Figure 19: Fast broadband household penetration ...... 31 Figure 20: Next generation access ...... 31 Figure 21: Digital Economy and Society Index (DESI), Connectivity, 2016 ...... 32 Figure 22: Latency of cable technology during peak periods by country ...... 33 Figure 23: Actual upload speed of cable technology as a percentage of advertised speed during peak periods, by country ...... 33 Figure 24: Monthly triple play bundle – BE and neighbouring countries, August 2015 ...... 34 Figure 25: Fixed broadband retail prices (EUR PPP) – standalone offers at EU level, October 2015 .... 35 Figure 26: OECD fixed broadband basket high use >25/30 Mbit/s USD PPP ...... 35 Figure 27: Respective shares xDSL and Cable ...... 36 Figure 28: Market revenues 2015 ...... 37 Figure 29: Proximus tv’ continued progression in the tv market ...... 37 Figure 30: Bundles and switching providers - Belgium ...... 38 Figure 31: Main factors considered when subscribing to internet ...... 39 Figure 32: Have you or someone in your household changed service provider to the following services? 40 Figure 33: Why do consumers decide not changing bundle provider ...... 41 Figure 34: Share of households with a smart TV connected to the internet in Belgium from 2006 to 2015, by region ...... 46 Figure 35: Recent OTT offers in Belgium ...... 47 Figure 36: Share of TV channel editors in the average viewing time in 2014 (Frenchspeaking area) .... 48 Figure 37: Share of Flemish TV channels in the average viewing time in 2014 (total population) ...... 48 Figure 38: Substitution analysis broadband services ...... 50 Figure 39: Bandwidth consumed by pixel resolution and type of MPEG-4 compression ...... 52 Figure 40: Mobile-only share of BB households and evolution in BE ...... 53 Figure 41: Mobile broadband take-Up (2015) ...... 55 Figure 42: Geographic definition of the market ...... 55 Figure 43: Increase in broadband speed between 2008 and 2013 ...... 57 Figure 44: Geographic availability of fixed broadband of 30 Mbit/s ...... 58 Figure 45: turnover fixed retail business segment (mio euros 2015) ...... 59 4 Private and Confidential
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Figure 46: Broadcasting substitution tests ...... 60 Figure 47: Connecting extra televisions via ATV (without any extra costs) is not the main driver to choose for Telenet or VOO ...... 62 Figure 48: Penetration tablets and smartphones in Flanders ...... 63 Figure 49: The TV- tablet – smartphone – PC convergence product of Proximus ...... 64 Figure 50: Cross-border flow of audio-visual content and services ...... 67 Figure 51: Viewing time in The Netherlands ...... 68 Figure 52: Over the last 12 months how frequently have you used the internet to access and download audio-visual content, excluding sports ...... 69 Figure 53: Forecasted growth pay TV vs. SVOD ...... 70 Figure 54: Geographic definition of broadcasting markets ...... 70 Figure 55: Evaluation of TV Offers ...... 72 Figure 56: Evolution price basic subscriptions and copy rights, Excl. VAT ...... 73 Figure 57: Sample Proximus offers ...... 74 Figure 58: Triple play price comparison ...... 75 Figure 59: Triple play price comparison (1) - 2015 ...... 75 Figure 60: Triple play price comparison (2) ...... 76 Figure 61: Perception difference quality telenet – proximus ...... 76 Figure 62: The german free to air (public) tv channels that can be watched on DVB-T in the border area 78 Figure 63: Content in other languages ...... 79 Figure 64: Share of muslims by areas ...... 80 Figure 65: Broadcasting SMP analyis ...... 80 Figure 66: CRC three criteria test ...... 84 Figure 67: Decrease subscriber base cable operators ...... 86 Figure 68: Liberty global net customer losses (in 000) ...... 86 Figure 69: TV Subscribers loss has started to deteriorate ...... 87 Figure 70: wich provider do atv subscribers who intend to switch prefer ...... 88 Figure 71: Churn rate according to the type of household ...... 89 Figure 72: Have you or someone in your household changed service provider to the following services? 90 Figure 73: Criteria to assess existence of bundle market ...... 91 Figure 74: The relevance of bundles to the market ...... 93 Figure 75: The respective bundle strategies reflect different approaches ...... 94 Figure 76: Unbundling substitution analysis ...... 95 Figure 77: Volume wholesale access sold by Proximus ...... 96 Figure 78: Geographic analysis market for unbundling ...... 98 Figure 79: Bitstream and WBA substitution analysis ...... 100 Figure 80: Wholesale Bitstream offers ...... 102 Figure 81: WBA geographic market definition ...... 106 Figure 82: Unbundling SMP assessment ...... 107 Figure 83: Bitstream and WBA SMP analysis ...... 107 Figure 84: Offers with minimum 30 Mbps and 50 Gb 2014 and 2016 ...... 110 Figure 85: Offers with minimum 50 Mbps and 50 Gb 2014 and 2016 ...... 110 Figure 86: Offers with minimum 100 Mbps and 100 Gb 2014 and 2016 ...... 110 Figure 87: Unbundling remedies ...... 113 Figure 88: Bitstream and WBA remedies ...... 113
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Response to the qualitative questionnaire 2016 – review of the broadband and broadcasting markets
1 Executive summary Cable Belgium is delighted to submit this response to the qualitative questions posed by the Belgian sector regulators in support of a review of the markets for broadband and broadcasting services. In this document, we set out the joint response to new questions asked on behalf of our members Telenet, SFR, Nethys and Brutélé1. The different cable operators have a number of issues in common which deserve to be presented jointly. At the same time, some divergence of views may subsist among Belgian cable operators on distinct issues. The views set out in this document should therefore not be interpreted as fully reflecting the position of each Belgian cable operator regarding every single matter discussed in this document.
Cable Belgium seeks to promote healthy competition and the delivery of benefits to end-users by advocating a framework conducive to sustainable investment. A review of the current regulatory access obligations on broadband and television networks is a crucial moment in the evolution of the market. Maintaining outdated rules could stifle further innovation and investment in the sector and harm consumer interest for many years. The new qualitative questionnaire from the Belgian regulators is an excellent opportunity to take stock of the main market evolutions and consumption trends since the 2011 Decisions: Fixed-mobile convergence. First, we observe a strong development of wireless communications and fixed-mobile convergence. We expect that wireless communications will gain further importance in the years to come, and will put additional competitive pressure on fixed broadband offers. Fixed-wireless broadband substitution has already started in the segment of consumers who do not require data hungry applications. However, Belgian mobile operators fail to exploit this potential aggressively due to the guaranteed regulated access to fixed networks. The mandated access to cable network and the discounts granted by the regulator on the access price is taking away Orange’s incentives to innovate in terms of fixed-mobile substitution solutions. The lack of incentive to innovate and make full use of mobile networks, resulting from the availability of cheap access to cable, is one of the reasons why mobile penetration rates in Belgium are falling behind in comparison to European peers. Fundamental changes in the TV distribution model. Second, the traditional TV distribution model is changing due to the entry of so-called over-the-top players, i.e. content aggregators that make their content available via the internet and apps. OTT providers such as Stievie, Netflix, and Videoland (and soon Amazon Prime) will profoundly change the way Belgian viewers consume audio-visual content and bypass the current intermediary role played by platform operators between TV channels and the viewer. Moreover, strong differences in audio-visual consumption between generations is observed, with consumption of linear TV by young people being significantly lower (almost non-existent) than that observed among older generations. Going forward this will drive a structural change in viewing behaviour towards on-demand services. This change in viewing behaviour needs to be placed in the context of multi-homing where viewers do not need to end current subscriptions in order to obtain another subscription. These dynamics lead to lower entry barriers and changes to the competitive game in broadcasting and are highly
1 Nethys and Brutélé are separate legal entities that operate different networks, together commercializing the brand VOO. Where the name "VOO" is used in graphs in this document, it is only because the graph concerned aggregates data from both operators BRUTÉLÉ and NETHYS.
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relevant for this market review. Moreover, in the context of multi-homing, market shares should no longer be based on a share of subscriptions, but rather on shares of ‘viewing time’. Technological convergence. Third, technological convergence of broadband and broadcasting services has reached a new stage with multiple platforms used to provide both competing and supplementary services, driven by important changes in retail demand for interactive and on- demand services. The use of IP for fixed, mobile and OTT services drives further integration of service offerings with traditional voice, broadband and content services all supported by the same Internet Protocol. This gives rise to further development of bundles of services to end-users and provides opportunities for new business models entering the market.
These evolutions have important implications for regulators: first, the three criteria test is not passed in the broadcasting market; second, existing regulatory measures are counter-productive to address the emerging digital divide; third, ex ante regulation of broadband can be reduced (removed) in the consumer broadband segment, but should be maintained for business broadband. We elaborate on this below: The three criteria test is not passed in the broadcasting market. Since the 2011 Decisions, the broadcasting market is experiencing a tremendous metamorphosis, driven by IP convergence. The number of analogue cable subscribers has dramatically decreased and pricing for TV broadcasting services by cable operators is subject to competitive pressures from Proximus and its maverick brand, Scarlet, satellite broadcasting as well as from new parties entering the market on the basis of OTT business models. In most areas of Belgium, consumers have a choice between Proximus, a cable operator and satellite providers for their TV services. Belgian consumers therefore enjoy much more choice and competition for their custom compared with the vast majority of EU member states. The EU did not include the broadcasting market in its Commission’s Markets Recommendation and the requirement for ex ante regulation therefore needs to be substantiated through the three criteria test, to ensure regulatory intervention is proportionate and justified. Today, with the market structure tending towards effective competition, the broadcasting market would not pass the three criteria test set out in the EU regulatory framework. Existing regulatory measures are counter-productive to address the emerging digital divide. Since the 2011 Decisions, the speed of internet access has increased substantially for the overwhelming majority of the Belgian population. However, a number of municipalities, in particular in Wallonia, do not benefit from that progress, partly due to access obligations in the broadcasting market. This should be taken into account in the choice of remedies applied in these regions or, alternatively, in the geographic definition of the market. Today, access obligations imposed on the existing network operators act as a barrier to invest in these low population density areas. Because of the lower population density, the deployment of higher speed broadband networks is less likely to be profitable, and access obligations (entitling competitors to make use of that investment at regulated terms without assuming any of the associated investment risks) serve only to make such investments riskier and therefore less likely. Stimulating investments in such areas to ensure NGA networks are available to all is the key policy challenge of this review. In the consumer broadband segment, ex ante regulation can be reduced. Since the 2011 Decisions, the Belgian communications industry has further consolidated. Competition on the Belgian broadband and TV broadcasting markets mainly occurs between DSL and cable- platforms and intra-platform competition on the respective networks is marginal. In July 2015, alternative operators had a market share of 6% on DSL against 94% for the incumbent. The 7 Private and Confidential
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market share of the incumbent on the overall retail broadband market was 49% on the same date. However, inter-platform competition between the incumbent and the cable operators is strong, as reflected by the commercial promotions offered on both sides and the resulting high switching rates. Consumers benefit in terms of affordable (bundles of) services of very high quality. In view of the competitive dynamics on the broadband market for consumers, wholesale regulation could likely be reduced. Ex ante regulation in the business broadband segment remains needed. The competitive situation in the business segment for broadband services differs substantially from the situation in the consumer segment. The network coverage of cable operators has traditionally focused on residential areas and coverage of cable networks to business customers is therefore less well developed, even in cable footprint areas. In addition, individual cable operators lack national coverage to compete effectively in the key multi-site (VPN) segment. In the absence of regulating access to DSL and increasingly FttH/B, the cable operators are seriously handicapped in serving business users who require higher quality connectivity services and redundancy. In the absence of regulating DSL and Fibre access, these business users would remain stuck with a quasi- monopoly of Proximus.
Finally, the questions posed by the CRC form the starting point of our analysis. However, contrary to the request by the CRC, the order in which this document answers the questions has been changed slightly. A first reason is that the numbering of the questionnaires published by the BIPT and those published by the CSA, VRM and Medienrat do not correspond from question 45 onwards (this document takes the numbering of the BIPT as a starting point). A second reason is that the order of questions posed by the CRC deviates from the commonly followed structure of analysis in Article 7 procedures (starting with a greenfield analysis of the retail markets, followed by an SMP assessment in wholesale markets). Section 2.3 provides a reading guide and clear overview of where (in which section) to find answers to each question. The Belgian cable operators are looking forward to the review of the framework and will be available to support the CRC with all the data and expert input required to modernize the current rules and prepare for a vibrant, competitive and converged digital society for all.
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2 Introduction 2.1 Reading guide The Belgian Telecom and Media regulators - together CRC - are planning to review the wholesale broadband markets (local loop unbundling and broadband access) and the retail broadcasting markets in Belgium. On 17 June 2016, the competent regulators published a questionnaire on the evolution of the broadband and television distribution industries. The replies to the qualitative questionnaire should allow the CRC to assess in a balanced manner the options to (de)regulate the various markets concerned. Structure of the document This document follows as much as possible a structure that is commonly followed in Article 7 procedures (see also the study by the European Commission Future electronic communications markets subject to ex-ante regulation, SMART 2012/007). After describing the regulatory context (section 2.1 and 2.2), this document follows with a description of observed technological and market trends (section 3.1 and 3.2). Next, section 3.3 follows with a greenfield analysis (or a modified greenfield analysis when appropriate) of retail markets defining the relevant market and describing the competitive situation (and identifying potential competition problems) that would prevail in the absence of regulation. Section 3.4 then proceeds with an analysis of wholesale market corresponding to those retail markets characterised by potential competition problems, followed by section 3.5 with an assessment of SMP in those wholesale markets. Finally, section 3.6 discusses the need and proportionality of remedies. Context of the qualitative questionnaire from the Belgian NRAs The questions posed by the CRC form the starting point of our analysis. However, contrary to the explicit request by the CRC, this document has slightly changed the order in which this document answers the questions. A first reason is that the numbering of the questionnaires published by the BIPT and those published by the CSA, VRM and Medienrat does not correspond from question 45 onwards (this document takes the numbering of the BIPT as a starting point). A second reason is that order of questions slightly deviates from the commonly followed structure of analysis in Article 7 procedures (as described above). The table below provides an overview of where to find the answer to each question.
Questions Sections 1 to 4 3.1 24 to 35 3.2 5 to 9 3.3.1. 11 to 18 3.3.2.1 60 to 61 3.3.2.2 19 3.3.3 37 to 41 3.4.1 42 to 49 3.4.2 50, 51, 52, 57, 58, 62 3.4.3 63-66 3.5 67, 68, 70, 77, 78, 79, 86, 87, 90, 91 3.6 Note: if a question number does not appear in this table, it is not answered.
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2.2 EU legal framework The EU Regulatory Framework for electronic communications was introduced in 2002. It aims to establish a harmonised regulatory framework for networks and services across the Union. The European regulatory framework follows competition law principles and imposes regulated access only to facilities of operators holding Significant Market Power (SMP) in relevant markets. In order to secure some degree of uniformity across the EU, Article 15(1) of the Framework Directive requires the Commission to adopt and regularly review a Recommendation on Relevant Product and Service Markets, identifying those product and service markets within the electronic communications sector, whose characteristics may be such as to justify the imposition of regulatory obligations set out in the specific Directives. National Regulatory Authorities (NRAs) are required to conduct ex ante market reviews of those markets identified in the Recommendation. NRAs are required to define relevant markets appropriate to national circumstances in accordance with competition law principles, but, in doing so, must take the utmost account of the Recommendation.
2.2.1 Recommendation on Relevant Markets The Commission adopted the first Recommendation on 11 February 2003, the second, reviewed Recommendation on 17 December 2007 i and the third on 9 October 2014 ii . The successive recommendations continue to list wholesale broadband markets, be it with slightly varying delineations: physical and bitstream access (since 2014 respectively Wholesale local access provided at a fixed location and wholesale central access provided at a fixed location for mass-market products) and Leased lines and Business Grade Bitstream (since 2014 Wholesale central access for high-quality business grade products provided at a fixed location).
The list of 2003 included the market for ‘broadcasting transmission services, to deliver broadcast content to end users’ (market 18). However, the 2007 list did not carry over this market. Since then the Commission does no longer consider that broadcasting markets in the EU present characteristics deemed to justify imposing regulatory obligations on the providers of these services. In the updated Recommendation on Relevant Markets of 2014 (C(2014) 7174 final), the Commission reconfirms its earlier conclusion that broadcasting is no longer a market that is susceptible to ex ante regulation.
The fact that a product market is not included in the list does not preclude NRAs to regulate these markets. However, when NRAs intend to regulate an additional electronic communications market, the NRA must always carry out the three criteria test. Markets not identified in the Commission list may only be regulated if the following three cumulative criteria are met (): The presence of high and non-transitory barriers to entry; The market structure does not tend towards effective competition; and Competition law alone is insufficient to address the identified market failure(s) adequately.
2.2.2 Competition law principles forming a (methodological) basis for defining relevant markets and establishing SMP NRAs must carry out an analysis of the relevant markets in accordance with the principles of competition law, as specified in the Commission Notice on Market Definitioniii and the SMP Guidelinesiv. NRAs must
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first delineate the retail markets concerned over the time horizon considered, taking into account demand- side and supply-side substitutability from the end-user’s perspective. Substitution may come from both actual competitors providing competing offers in the relevant product market and from entrants who are likely to enter the market in the case of a small but non-transitory price increase of the incumbents' offer on that marketv. Two services are considered part of the same market as soon as there is either supply or demand substitution. A fortiori, if there is both supply and demand substitution, both services will be part of the same market. The substitutability test can be summarized as follows.
FIGURE 1: COMPETITION LAW SUBSTITUTION METHODOLOGY
SUBSTITUTION ASSESSMENT Findings Demand side Yes No No substitutability between A and B Supply side substitutability - Yes No between A and B Conclusion Yes Yes No
The competition law principles also apply to the definition of the relevant geographic market. The relevant geographic market comprises an area in which the undertakings concerned are involved in the supply and demand of the relevant products or services. In addition, in this area the conditions of competition are similar or sufficiently homogeneous and the area can be distinguished from neighbouring areas where the prevailing conditions of competition are appreciably different vi. The starting point is the scope of the potential SMP operator's network. In a second stage, it is assessed whether that potential SMP operator acts uniformly across its network area or whether it faces appreciably different conditions of competition to a degree that its activities are constrained in some areas but not in others. NRAs should look at the number and size of potential competitors, distribution of market shares, price differences or variation in prices across geographies, and other related competitive aspects, which may result from relevant competitive variations between geographic areas (nature of demand, differences in commercial offers, marketing strategies etc.). When looking into supply-side substitutability, NRAs should take into account any existing legal or regulatory requirements (other than previously imposed requirements following a previous market analysis decision), which could prevent a timely entry into the relevant market.
When assessing whether or not competitive conditions in different areas are similar or sufficiently homogenous, i.e. when delineating the geographic boundaries of a relevant market, recourse should be made to the same principles as for the delineation of the relevant product market, in particular competitive constraints such as demand-side and supply-side substitution.
Having defined retail markets, the corresponding wholesale markets are then identified, also taking into account demand-side and supply- side substitutability of products from the perspective of an operator that wishes to compete in supplying services to end-users. The market to be analysed first is the one that is most upstream from the retail market in question in the vertical supply chain, including in particular the regulated access products, mandated under the previous market reviews. NRAs should then conduct a gradual analysis of the markets that are downstream from the most upstream markets, until the analysis reaches the retail market(s). 11 Private and Confidential
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2.3 Regulation in Belgium 2.3.1 Belgian framework Belgium was late in implementing its first market reviews under the 2003 Markets Recommendation. The first review2 of the access regulation in the market for wholesale physical network infrastructure access at a fixed location (WPNIA) and wholesale broadband access (WBA)3 took place only in 2007 and 2009. The Belgian national regulatory authority, the Belgian Institute for Postal Services and Telecommunications (IBPT), defined geographical markets national in scope, excluded fibre-based access from the relevant WPNIA product market and cable-based access from both product markets, and imposed the full set of remedies on Belgacom. However, the IBPT's decision was annulled by the Belgian Court of Appeal on 7 May 2009, for insufficient justification. The IBPT thereupon issued a new decision with retroactive effect. In 2010-2011, the Conference of Electronic Communications Sector Regulators (CRC)4 held the second review of the markets for wholesale physical network infrastructure access at a fixed location and for wholesale broadband access in Belgium. The CRC identified three5 product markets that must be regulated: The market for Wholesale Physical Network Infrastructure Access (WPNIA – market 4 in the list of the EU Commission 2007 Recommendation); The market for Wholesale Broadband Access (WBA – market 5 in the list of the EU Commission 2007 Recommendation); and Retail delivery of broadcasting signals and access to broadcast networks (not in the list of any of the successive EU Commission Recommendations on relevant markets).
The main elements of the access regime were set in a series of decisions adopted July 2011. However, Proximus successfully challenged the CRC Decision on the analysis of the broadband internet markets, which was annulled on 3 December 2014. The CRC eventually adopted a ‘renewal’ decision on 18 December 2014, that was again annulled on 29 June 2016 by the Brussels Court of Appealvii. The Court also reinstated the regulatory regime that had been established in 2009.
2 Notified under cases BE/2007/0735-36, SG-Greffe (2008) D/200001. These notifications were amended by a subsequent notification, assessed under case BE/2008/0801, which aimed at addressing the problems raised by the planned replacement of the incumbent's ATM/xDSL network by a next generation network (NGN)/NGA (VDSL) network. This measure only concerns remedies. 3 At the time listed as markets 11 and 12 of the Commission Recommendation 2003/311/EC of 11 February 2003 on relevant product and services markets within the electronic communications sector susceptible for ex ante regulation in accordance with the Framework Directive, OJ L 114, 8.5.2003, p. 45 and identified as the markets for wholesale unbundled access (including shared access) to metallic loops and sub-loops for the purpose of providing broadband and voice services and wholesale broadband access. 4 In Belgium, competencies related to electronic communications are shared between the Federal State and the Communities. The CRC was established by the 2006 Cooperation Agreement as the body for cooperation between IBPT (Federal State), Conseil Supérieur de l'Audiovisuel (CSA – French speaking Community), Vlaamse Regulator voor de Media (VRM – Flemish Community) and the Medienrat (German speaking Community). 5 The first two, corresponding to markets 4 and 5 of the Commission Recommendation 2007/879/EC of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (the Recommendation), OJ L 344, 28.12.2007, p. 65.
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As regards regulated access to the cable TV platform, it took until the end of 2013 before all access conditions were finalisedviii and until 2016 for the final tariff elements to be determinedix.
2.3.2 The Regulation of Cable operators in Belgium The competent NRAs6 adopted their decisions imposing access to the cable networks on 1 July 2011 and became effective on 1 August 2011. An important element of these decisions is the definition of the Relevant Market. The regulated markets are geographically defined along the coverage areas (footprint) of the individual cable operators in Belgium: Telenet in parts of the bilingual region of Brussels-Capital, in nearly all of the Dutch-speaking region of Belgium, and in one commune of the French-speaking region of Belgium;
Brutélé in parts of the bilingual region of Brussels-Capital and in some parts of the French-speaking region of Belgium; Numéricable in parts of the bilingual region Brussels-Capital and very limitedly the Dutch-speaking region of Belgium; Tecteo, in the major part of the French-speaking region, in the German-speaking region and in one commune in the Dutch-speaking region; and AIESH in the French-speaking region of Belgium.
Each individual cable operator is found holding Significant Market Power (SMP) within its footprint, and is subject to the following obligations7:
i. analogue cable TV resale, of which Proximus can also be a beneficiary, but the latter eventually declined making use of this possibility; ii. cable digital TV platform access, from which Proximus was excluded as a beneficiary; and
iii. cable broadband Internet resale, from which Proximus was excluded as a beneficiary. This resale offer is not comparable to parallel wholesale broadband market access remedies imposed on Proximus (LLU or bitstream).
These decisions provided that all three regulated access products would be subject to a retail-minus price-cap regulation, the exact method of which would be made subject to an implementation decision at a later stage. The decisions also imposed non-discrimination and transparency obligations with regard to the provision of the regulated access products, including the publication of a reference offer and key performance indicators. The decisions relating to the wholesale charges applicable to resale/access on Cable-TV networks, were adopted on 11 Dec 2013 and complemented, as mentioned in section 2.1.1, by further implementing
6 four regulators have competences in the regulation of the retail market for the delivery of broadcasting signals and access to broadcasting networks, each of them for a specific part of the national territory (linguistic territory), i.e. the Belgian Institute for Postal services and Telecommunication (BIPT) for the bilingual region Brussels-Capital; the Conseil supérieur de l'audiovisuel (CSA) for the French linguistic region; The Vlaamse regulator voor de media (VRM) for the Dutch linguistic region and the Medienrat for the German linguistic region. 7 Obligations ii and iii are not imposed on AIESH that had not yet upgraded its analogue networks.
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decisions, the last of which was adopted on 19 February 2016. The access conditions to the network of SFR are not yet fully determined. The 2013 Decisions relate to the competences of the following Belgian Communities (or federal authority) and concern the cable operators: Flemish Community: in which jurisdiction Telenet, Tecteo (now, Nethys) and Coditel (now SFR) operate. The regulator concerned is the ‘Vlaamse Regulator voor de Media’ (VRM); French-speaking Community: in which jurisdiction Tecteo (now, Nethys), Brutélé, Coditel (now SFR), AIESH (now SFR) and Telenet operate. The regulator is the Conseil Supérieur de l’audivisuel (CSA). German-speaking Community in which jurisdiction Tecteo (now, Nethys) operates. The regulator concerned is the Medienrat. Brussels Capital Region in the territory of which Brutélé, Coditel (SFR) and Telenet operate. The regulator concerned is the BIPT.
Since the 2011 market reviews, two regulated players changed names. First, TECTEO the public inter- municipal company from Liège, was restructured into a holding company PUBLIFIN in 2014. Its cable networks were transferred into a new company, NETHYS SA, of which part of the stock could be sold to private shareholders. Second, CODITEL, already owned by Numéricable in 2011, changed its name into SFR on 15 February 2016. In 2012, Numéricable had taken over the inter-municipal company AIESH, which was also rebranded SFR. In 2015, Numéricable had also taken over Wolu TV, which until then was operated by TELENET for digital services.
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3 Replies to the questionnaire 3.1 Networks and technologies
1. Wat zijn volgens u de verwachte of voorzienbare technologische ontwikkelingen op het gebied van de elektronische communicatie (in het bijzonder breedband en omroep)?
High-speed mobile broadband coverage is increasing and provides competition for fixed broadband services, broadband being a continuum of services including 4G, DSL, HFC and fibre. However, mobile operators fail to exploit this fully inter alia due to the guaranteed regulated access to cable networks. Mandated cable access, combined with generous access conditions, have taken away the incentives of Orange to innovate on its mobile network. This lack of incentive to innovate and to make full use of mobile networks resulting from the availability of cheap cable access, is one of the reasons that mobile penetration rates in Belgium are lagging in comparison to European peer countries. Technological advances in DSL technology, DOCSIS and 4G have led to a market in which consumers can choose between different operators, each operating their own network. Fixed wireless in-house connectivity (WIFI), along with growing capacity of broadcasting networks, a growing share of (U)HDTV, and a growing uptake of audio-visual OTT services has induced a fundamental change in the way people consume audio-visual content; away from linear analogue TV towards digital and OTT streaming of linear and on-demand content. IP driven convergence gives rise to a diversity of competing service offerings, ranging from rich suites of bundled services (typically offered by ISPs) to stand-alone offers focussing on optimised and personalised user-experience (typically offered by OTTs).
3.1.1 Mobile broadband technologies Since the last market review, we observe a strong development of wireless communications and we can expect that wireless communications will gain further importance in the years to come, since we observe a strong increase in demand for spectrum8. In particular, there is a growing spectrum demand for both mobile and Wi-Fi, mainly driven by the growth in the use of audio-visual services on tablets, smartphones and other devicesx as consumers increasingly require seamless connectivity. The importance of these devices in the change in consumer behaviour globally is illustrated in the below two Figures.
The firstxi Figure shows the forecasted increase in the share of mobile data in total IP-traffic. The second Figure shows the increasing reliance on smartphones, in particular to gain access to content on the Internet. By contrast, more traditional Internet access devices like PCs are projected to show very limited growth.
8 For more detail see Analysys (2013): Spectrum policy – Analysis of technology trends future needs and demand for spectrum in line with Art. 9 of the RSPP, FINAL Report, A study prepared for the European Commission DG Communications Networks, Content & Technology, page 76 ff., available at https://ec.europa.eu/digital-single-market/news/final-report-analysis-technology- trends-future-needs-and-demand-spectrum-line-art-9-rspp
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FIGURE 2: GROWTH MOBILE DATA
FIGURE 3: WORLD ACTIVE CONNECTED DEVICES BY TYPE
Source: “Learning to fly in a perfect storm, how a media and technology tornado urges European media to innovate”, IHS technology, December 2015.
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At this point, we would like to highlight technological developments for two applications: Wireless broadband access: LTE Advanced will offer higher speeds and better quality of service to mobile customers, as well as a wider range of services, thus encouraging greater data consumption. There is a strong demand for spectrum for launching and expanding LTE/LTE Advanced networks. Belgium's attractiveness versus other regions, in particular for e-commercexii and more generally its competitiveness versus other regions in export terms is critically dependant on affordable mobile Internet through smartphones and tablets. Fixed Links: The increasing demand for bandwidth is leading to the migration to higher frequency links (over 6 GHz) that offer greater capacity. The ongoing growth in mobile data traffic will drive an increase in both the number of mobile base stations and the traffic per base station in the short, medium and long term. This also translates into a growing need for high-bandwidth backhaul wireless links (as a complement to fibre-based links) from base stations to transport networks.
Since the 4G licences (800 mHz) were awarded in November 2013 to Belgacom, Base and Mobistar, 4G coverage has expanded at a rapid pace. With the vast majority of the Belgian population now having access to 4G/LTE mobile servicesxiii, the finalization of 4G coverage across Belgium has lowered the barrier to enter the broadband market using mobile devices considerably. However, the lack of aggressive fixed-mobile broadband offers in Belgium is likely partly due to the regulated access to fixed networks combined with the low access tariffs under the February 2016 CRC tariff decision, guaranteed to mobile operators which takes away their incentive to compete with fixed broadband services on the basis of mobile connectivity.
FIGURE 4: BELGIAN MOBILE BROADBAND PENETRATION AND 4G COVERAGE COMPARED TO EU
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Despite remaining below the EU average, mobile broadband coverage continues to increase in Belgium and should be taken into account in the coming market review. xiv FIGURE 5: GROWTH OF MOBILE BROADBAND IN BELGIUM
The rise in the use of fixed-wireless technologies (like WIFI) facilitates a fundamental change in content viewing behaviour by consumers. Amongst the most important developments in the market is therefore the launch of television services available on PC, tablet and/or smartphone (RTBF Auvio, Stievie, YouTube, Netflix, TV Vlaanderen LiveTV, VTM online etc.). These services all make use of mobile and WiFi technologies to ensure the end-user has mobile access to audio-visual content. We elaborate on this below while discussing broadcasting technologies.
3.1.2 Fixed broadband technologies Continuous advances in fixed and mobile network technologies (Docsis 3.1, FTTH, VDSL, 4G etc.) facilitate increasing capacity demand from end-users to support access to content, cloud storage, data exchange, etc. Based on the EC Scorecard, Belgium ranks in 6th place in the EU in terms of households with Internet access and 2nd in terms of NGA broadband coverage, with 99% coverage reported in 2015. Not only is NGA widely available, the vast majority of users can choose between multiple networks to provide broadband services including from cable operators, Proximus and the mobile 4G networks.
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FIGURE 6: HOUSEHOLDS WITH INTERNET ACCESS (2015)
xv FIGURE 7: FIXED BROADBAND COVERAGE: OVERALL VS. NGA (2015)
3.1.3 Digitalisation of broadcasting As noted above, content viewing behaviour by consumers is changing fundamentally, away from linear analogue TV towards digital and OTT streaming of linear and on-demand content. The digitalisation
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of viewing behaviour becomes clear from Figure 8Figure 8, which shows that analogue-only connections have declined from 2.3 million to 681k subscribers between 2009 and 2014 (a cumulative average growth rate or CAGR of -21.6%), with digital-only connections increasing from 641k to 1.3 million. Analogue-only subscribers now make up only around 15% of TV subscribers.
xvi FIGURE 8: TV CONNECTIONS BY TECHNOLOGY
Drivers behind this trend are: Increased use of tablets for second screens facilitated by WIFI and other mobile technologies linked among other to the success of catch-up/replay TV; A multiplication in the number of digital linear TV channels, and Reduction of the number of analogue TV channels necessary to expand the available transmission capacity for internet services and digital channels; which allowed for marginalizing analogue due to a migration towards high-definition and prospectively ultra-high-definition television channels (HDTV/UHDTV)9. Offerings of multiple set-top boxes (STBs)10, allowing multi-screening of both linear and on- demand content services, takes away the advantage of ATV for multiple TVset viewing;
9 Linear channels are increasingly simulcast in high-definition (HDTV). Moreover, ultra-high-definition (UHDTV) is currently launched, which multiplies the number of pixels by 4. See Analysys Mason, New service developments in the broadcast sector and their implications for network infrastructure, Study for Ofcom, 2015, p. 2. 10 . Prox: http://www.proximus.be/nl/id_cr_connecttv/particulieren/producten/toestellen/toestellen-voor-internet-en-tv.html https://www.proximus.com/nl/news/belgacom-lanceert-de-v5-mini-decoder# TV Vlaanderen:https://www.tv-vlaanderen.be/klantenservice/detailpage/?faqid=255
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3.1.4 OTT services The biggest challenge to both the cable operators and the new IP-TV providers comes from the growth of online services provided ‘over the top’ of the public internet, which compete11 with traditional linear TV services for the users’ media consumption time12. Because of the extensive reach of NGA networks in Belgium, OTT providers can reach the vast majority of households with their services. The take up of OTT services is primarily noticeable among young people which translates in an overall decrease in viewing time and declining TV consumption of young adults (see Figure 9Figure 9), who are migrating to OTT platforms.
FIGURE 9: EU AVERAGE TELEVISION VIEWING TIMES, 2009-2014 – TOTAL POPULATION AND YOUNG PEOPLE
Source: European Audiovisual Observatory on the basis of data from Eurodata TV Worldwide (drawn from Agnes Schneeberger, Origin and availability of television services in the European Union, European Audiovisual Observatory, November 2015. P. 71)
OTT video, especially media, is a competitive force on the broadcasting marketxvii. The below Figure shows the immense impact OTT video is projected to have on viewing habits, with OTT video projected to replace linear pay TV as the dominant platform to watch videos in the USA by 2020. OTT therefore adds considerable competitive pressure on traditional TV services. At the same time, “video traffic is bandwidth intensive and quality of service (QoS) sensitive” xviii and is therefore considered the main driver for congestion problems.
11 The Brussels Court of Appeal confirmed the finding stating “De factor OTT (online televisie) ten slotte heeft wel zijn belang als ontwikkeling, maar behoort volgens de analyse per 1 juli 2011 niet tot de relevante markt. De commerciële toepassingen ervan hebben tijdens de reguleringsperiode ook geen omvang van betekenis gekregen: één ervan is stopgezet (Nomade) en een ander (Steevie) is tegen de geplande datum van december 2013 niet gestart. Die aanbiedingen houden voor de gegadigde trouwens ook een factor van onzekerheid in wegens de afhankelijkheid van een internetabonnement en de kosten verbonden aan maximaal toegelaten data verbruik bij dat abonnement”, point 105,p.61. 12 Online services may include linear, scheduled streaming services as well as non-linear, on-demand services such as catch-up TV services, other video on-demand services and user-generated content.
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FIGURE 10: TIME SPENT WATCHING VIDEO, PER USER, PER DAY IN THE UNITED STATES IN 2012 AND 2020
Source: Alcatel-Lucent Bell Labs, 2012 (taken from: Video Shakes up the IP Edge. A Bell Labs Study on Rising Video Demand and its Impact on Broadband IP Networks. Strategic White Paper, 2012).
The emergence of OTT providers, combined with the increased use of mobile platforms to watch content are changing the traditional broadcasting market in a fundamental way. This is borne out by recent research by ACG research, stating: “Increasing video demand is a factor to be considered in general, and specifically for mobile applications. With LTE, mobile video will work better than ever; the ‘joyn’ initiative already integrates mobile video communication. If telco operators manage to meet the capacity challenge associated with the large data amounts associated with video transfer, for example through offloading solutions (…), it need not be a hurdle for mobile OTT video use. However, it is unclear how operators will deal with capacity.xix”
The key to addressing this evolution is to facilitate continued investments in both fixed and mobile NGA networks to ensure higher speeds and capacities for consumers are supported. Belgium is ahead of the rest of the EU on this measure, and the future regulatory framework should ensure this continues to be the case.
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13 FIGURE 11: INVESTMENTS IS KEY FOR MAKING THE DIGITAL ECONOMY FLOURISH
3.1.5 Convergence As can be seen from the above examples, the market for broadband and broadcasting services are characterised by strong technological convergence of multiple platforms used to provide a multitude of supplementary services. This network and technology evolution is, of course, driven by important changes in retail demand for interactive and on-demand services, requiring further digitalisation and capacity improvements. The use of IP for fixed, mobile and OTT services drives further integration of service offerings with traditional voice, broadband and content services all supported by the same Internet Protocol. Overall, this enhances efficient use of scarce resources and gives rise to further development of bundles of services. While ISPs are competing amongst each other based on ever-richer bundles of services, they simultaneously experience competition from OTTs that enter the market with dedicated stand-alone offers focussing on an optimised and personalised user-experience.
13 Source: financial reporting, Telenet analysis
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3.1.6 The digital dividend The capacity demand of analogue channels on coax cable is relatively high. However, as observed above, the actual use of analogue services is declining in favour of digital. This means that the capacity that is currently being used for analogue channels can be used more efficiently for delivering digital channels and improvements of broadband services. This gives rise to a potential ‘digital dividend’ in the coming years with a “switch-off” of analogue services now a realistic and much needed prospect, taking into account the ever growing demand for capacity14.
4. Op welke manier kunnen deze technologische ontwikkelingen invloed hebben op de concurrentie, de definitie van de markten, de marktmacht, de behoefte aan en de doeltreffendheid van eventuele correctiemaatregelen?
The traditional TV screen loses its role as the unique platform to access audiovisual content in favour of tablets and other mobile devices, which make use of Internet navigation and search facilities to find audiovisual content on the internet more easily. In turn, these facilities are leading to an ever-increasing choice of content in linear and non-linear form, competing for viewers over the public internet, including internet content provided by broadcasters supplementing their offers with linear and non-linear TV (catch-up TV and other video on-demand content). Because of the extensive reach of NGA networks in Belgium, the vast majority of households now has a choice of content unheard of since the invention of the audiovisual media. This evolution will increasingly put pressure on the revenue stream of the cable operators.
As set out in the reply to Question 1, the traditional TV screen is losing its role as the unique platform to access audiovisual content. End-users nowadays use a variety of other devices, including tablets and smartphones for streaming audiovisual media services (‘second screen’). The different value chain for audiovisual media services differs strongly from the old ‘traditional’ TV value chain. The value chain for online services comprises:
Content production Content publishing Video hosting and platform (open online sharing platforms for user-generated content such as YouTube and DailyMotion) Internet access, Search and navigation, and Viewing by the end-user on a device.
14 http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/vni-hyperconnectivity-wp.html
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FIGURE 12: VALUE CHAIN FOR ONLINE SERVICES
Source: ERGA report on material jurisdiction in a converged environment, ERGA 2015 (12), 18th December 2015
The emergence of this value chain for online services has resulted in a number of developments directly impacting on traditional linear TV services. For example, usage of on-demand video (YouTube, short video clips, movies, TV series and programs) is steadily rising. According to a survey of viewers in selected European and non-European countries, the percentage of people watching on-demand video rose to more than 50% in 2015.xx In turn, while scheduled TV remains important for many households, because of its access to premium viewing and live content, ease of viewing and social aspects, the percentage of people that watch linear TV at least once a day is steadily declining and has now fallen below 60%. The impact of OTT on voice and text services is illustrative of what might happen in broadcasting over the next 3 to 5 years. A recent analysis of the OTT voice/text market by the EC (forthcoming) shows that OTT contests the traditional position of telecom operators, with providers like WhatsApp and Skype providing considerable pricing pressure on traditional voice and messaging services. Similarly, OTT providers will contest the positions of broadcasters. There is also an impact on the provision of bundles: “The increased use of services offered by OTT providers (…) break the link between network access and service provision, and users relying on OTT services would usually have no real incentive to subscribe to a bundled plan as broadband access alone may suffice for the delivery of the required service bouquet.”xxi
The above developments affect competition in the market in a number of ways. OTT services may have started out as supplementary to traditional linear TV services, but, as viewing habits change, they are becoming substitutes. This has already happened in the segments for watching movies, videos and TV series. A similar process will likely happen across fixed and mobile platforms. This will put pressure on the traditional ‘silo’ approach of defining markets. Because technological convergence and changing viewing habits drive fundamental changes in the supply chain, the market is displaying nascent characteristics that require lighter-touch regulatory intervention, if needed at all. Financial analysts are forecasting a negative impact of 7 to 9% on the valuation of cable operators . Regulators should not ignore such forecasts when making future oriented market assessments. OTT has already and important impact on cable and regulation would mean an additional negative impact.
Figure 13: Potential winners and losers from OTTxxii
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3.2 Market dynamics
24. Kunt u een beschrijving geven van uw perceptie van de dynamiek van de Belgische retailmarkten voor breedband en omroep? Wat is uw mening over de evolutie van de penetratie, de prijzen en de variëteit van de aangeboden diensten? Wat zijn volgens u de voornaamste kenmerken van de Belgische retailmarkten voor breedband en omroep in vergelijking met andere West-Europese landen? Beschikt u over gegevens om uw vergelijkingen te onderbouwen?
The Belgian broadband competition is predominantly infrastructure-based: contrary to most other EU countries, in Belgium competition came from the cable TV operators. Today, consumers tend to limit their spending in the sector.
Belgium scores high in terms of fixed broadband penetration and quality of the available offers.
Pricing comparisons with neighboring countries reflect the higher cost structure of the sector resulting in particular from the limited size of the Belgian operators, different cultures and languages, etc.
3.2.1 Dynamics of the retail markets Despite the growth of fixed broadband lines, the highest turnover is still generated in the mobile communications markets, while broadcasting remains the smallest market. The figures below indicate that the turnover of the sector is nonetheless stagnating due to, among other, a strong pressure on pricing, which does not follow the rate of inflation over time, and a decrease in the share of income spend on telecommunication services. Room for entry in the Belgian broadband market therefore appears limited.
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FIGURE 14: TURNOVER RETAIL MOBILE COMMUNICATIONS, FIXED COMMUNICATIONS AND xxiii BROADCASTING
15 FIGURE 15: PRICING EVOLUTION
160,00 All-items HICP 150,00 Food and non-alcoholic beverages 140,00 Alcoholic beverages, tobacco and narcotics 130,00 Clothing and footwear
120,00 Housing, water, electricity, gas and other fuels Furnishings, household equipment and 110,00 routine household maintenance Health 100,00 Transport 90,00 Telephone and telefax services 80,00 Recreation and culture 70,00 Education
60,00 Restaurants and hotels Miscellaneous goods and services
In addition, Belgian consumers limit their spending on telecommunications.
15 http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=prc_hicp_midx&lang=en
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FIGURE 16 : SHARE TELECOMMUNICATIONS IN HOUSEHOLD BUDGET16
1,15 Food and non-alcoholic beverages
1,10 Alcoholic beverages, tobacco and narcotics Clothing and footwear 1,05 Housing, water, electricity, gas and other 1,00 fuels Furnishings, household equipment and routine household maintenance 0,95 Health
0,90 Transport
0,85 Telephone and telefax services Recreation and culture 0,80 200620072008200920102011201220132014 Education
3.2.2 Market players Contrary to most other EU countries, in Belgium new entrants making use of regulated access products could not achieve more than 10% market share in the residential retail broadband. Competition came mostly from the cable TV operators 17.
In its 2011 review, the CRC therefore considered that, absent regulation at the wholesale level, these new entrants making use of regulated access products (also referred to as ‘other licensed operators’) would risk disappearing or would at least risk being deprived of the possibility to constrain the ability of both Proximus and the cable operators to maintain high prices18. The CRC noted in addition the erosion of the
16 http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do 17 Bouckaert, J., Van Dijk, T., and Verboven, F., 2010. “Access regulation, competition, and broadband penetration: An international study”,Telecommunications Policy, 34, 661-671) conclude that inter-platform competition (between DSL, cable modem and fibre) is the main driver of fixed broadband penetration. They use a panel dataset of 20 OECD countries from the period 2003 to 2008 to estimate the effect of regulation and competition on the size of penetration levels. Pereira, P. and Ribeiro, T., 2010. “The impact on broadband access to the Internet of the dual ownership of telephone and cable networks”, International Journal of Industrial Organisations, 29, 283–293.comes to a similar conclusion based on the study of competition between DSL and cable operators in Portugal. They find that inter-platform competition increases the diffusion of broadband. 18 See p.97, point 283: “De benchmarks van de Europese Commissie betreffende de kosten van de breedbandinternettoegang hebben de nadruk gelegd op het hoge niveau van de Belgische tarieven in vergelijking met diegene die in de andere Europese landen zijn vastgesteld. Ter illustratie: in het rapport "Broadband Internet Access Cost Second Half 2009" van de Europese Commissie wordt België systematisch gekenmerkt door mediane tarieven die tot de hoogste behoren binnen de Unie (…), point 284: “Deze analyse is bevestigd door een vergelijking die in oktober 2009 is gemaakt door de OESO, die België bij de landen rangschikte waar de gemiddelde prijs per theoretische Mbps het hoogst is”, point 287: “De maandelijkse prijzen van de voornaamste aanbiedingen die een downloadsnelheid mogelijk maken van 8 tot en met 20 Mbps blijven in België echter aanzienlijk hoger dan in de buurlanden”, point 288: “ Eenzelfde vaststelling kan worden gedaan voor de aanbiedingen met een downloadsnelheid tussen 20 en 50 Mbps. Uit de vergelijking van de maandelijkse prijzen van de voornaamste aanbiedingen blijkt dat de maandelijkse prijs van de Belgische aanbiedingen beduidend hoger kan liggen dan die van de kwalitatief vergelijkbare aanbiedingen in de buurlanden” and point 290: “(..) concluderen ook een reeks enquêtes of artikelen gepubliceerd door de consumentenvereniging Test-Aankoop dat het prijsniveau dat in België wordt vastgesteld, hoger is dan dat in andere Europese landen”.
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market shares of the access based operators19 and attributed their loss of market share to the fact that these operators were not in a position to offer triple play products, while competition was fought mostly on bundles20. The result was that prices in Belgium remained higher than those in neighbouring countries. In addition, the increase in broadband penetration in Belgium was slower than in other EU countries. The CRC concluded that broadband competition was not yet sufficiently developed and could not deliver prices and conditions to the end-users similar to those available in neighbouring countries21.
However, despite an ephemeral trial to launch a triple play offer, based on a commercially agreed wholesale product from Proximus, Base decided to exit the broadband market in 2015 (allegedly because of content cost that made their business case difficult and because of operational problems with their outsourcing partner), while Mobistar had already exited the market in September 2013 22.
Orange Belgium sought regulated access to the cable and opted for such access most likely to avoid operational problems that Mobistar encountered with Proximus until September 2013 when Mobistar was making use of the wholesale BROBA offers to provide retail internet access services. Mobistar, contrary to Base, had also not been able to reach a satisfactory commercial wholesale agreement with Proximus. The remaining access based operators are not interested in offering TV and prefer using Proximus only for providing retail internet services. Instead of improving the operational conditions of the regulated Proximus broadband offers, that would benefit all current and potential OLOs, the current mandated access to the cable is designed for only one beneficiary. The question arises whether making use of the market review procedure under the EU Regulatory Framework to impose remedies designed intuitu personae for a single beneficiary company corresponds to the ratio legis of that procedure or whether possible conflicts between mobile and cable operators, in particular when both need access to the network(s) of the other, should rather be dealt with in the framework of dispute settlement procedures. In any case, the current mandated access to cable at regulated tariffs in favour of Orange, one of the three leading operators in Belgium, while no equivalent regulated MVNO access obligation is imposed on Orange, places Orange Belgium in a more favourable position than much smaller fixed-only contenders. The current access obligation therefore distorts competition between the latter and Orange Belgium as regards triple and quadruple play offers, including a mobile component, which are increasingly appealing the Belgian consumers. Recent BIPT figures show precisely the growing share of bundles including mobile in the total number of bundles (from 22 in 2014 to 25% in 2015).
19 See p. 85, point 262 “Deze evolutie wijst op het moeilijke concurentieklimaat waarmee de alternative operatoren worden geconfronteerd”. 20 See p.86, point 266 “Uit het BIPT-marktonderzoek 2010 blijkt dat er verschillende motieven zijn om voor een bepaalde breedbandinternetoperator te kiezen. Het kunnen aankopen van meerdere producten bij dezelfde operator blijkt de voornaamste reden te zijn” and point 295: “Het verlies van marktaandeel van de OLO’s kan toegeschreven worden aan de sterke tendens naar het gelijktijdige aankopen van meerdere producten bij breedbandinternet, waaronder digitale televisie, bij dezelfde operator (zogenaamde ‘multiple play’-aanbiedingen)”. 21 See page 103, points 296-297. 22 Brutélé et Tecteo rightly noted in their 2014 reply to the qualitative questionnaire that this exit from the fixed market might be due to a lack of focus: “Mobistar dispose de moyens financiers bien plus importants que Brutélé et Tecteo, même réunis et aurait pu consacrer davantage son budget marketing aux services fixes en profitant notamment de sa base de 5 millions de clients mobiles. Très peu de consommateurs connaissaient l'existence des services fixes de Mobistar. Il est temps de réaliser que les “maux de Mobistar” ne sont pas dus uniquement à Belgacom et aux câblos-opérateurs » p. 15.
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23 FIGURE 17 : SHARE BUNDLES INCLUDING MOBILE IN TOTAL NUMBER OF BUNDLES
3.2.3 Broadband penetration According to the BIPTxxiv, the number of fixed broadband lines in Belgium passed the milestone of 4 million lines for the first time in 2014, bringing Belgium to the 6th place in the EU ranking of December 2014, with 34.7 fixed broadband lines with an advertised speed above 30 Mbps per 100 inhabitants. By the end of 2015, 77% of the total number of fixed broadband lines had an advertised download speed of over 30 Mbps. More than half of the homes (60%) already subscribe to fast broadband (at least 30 Mbps). Coverage of next generation access (NGA) technologies continued to increase and reached 98.9% by July 2015 (86.4% for the rural areas) xxv. Coverage and quality in Belgium are better according to the OECD, the market prices in Belgium for this segment were lower than in the Netherlands and Germany, while slightly higher than in France.
FIGURE 18: FIXED BROADBAND SUBSCRIBERS BY HEADLINE SPEED
Above 144 Kbps and below 30 Mbps 100%
80%
60%
40%
20%
0% BE BG CZ DK DE EE EL ES FR HR IE IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU Source: Communications Committee
Moreover, the penetration and take-up of fixed broadband with an advertised speed of over 30 Mbps in Belgium isxxvi significantly better than in neighbouring Member States.
23 BIPT, jaarverslag 2015, p.39.
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FIGURE 19: FAST BROADBAND HOUSEHOLD PENETRATION
Fast broadband (at least 30Mbps) household penetration, July 2015 70% 60% 50% 40% 30% 20% 10% 0% HR EL IT CY FR AT SI PL FI ES DE EE EU SK CZ BG UK DK IE HU PT LT LV LU RO SE MT NL BE Source: Communications Committee
FIGURE 20: NEXT GENERATION ACCESS
Next generation access (FTTP, VDSL and Docsis 3.0 cable) coverage, June 2015 100% Total 80%
60%
40%
20%
0% EL IT FR HR PL SK EU RO BG CZ FI SE ES HU SI NO IE DE CY EE AT UK LV IS PT DK LU LT NL BE MT Source: IHS and VVA
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24 FIGURE 21: DIGITAL ECONOMY AND SOCIETY INDEX (DESI), CONNECTIVITY, 2016
1a Fixed Broadband 1b Mobile Broadband 80 1c Speed 1d Affordability 70 60 50 40 30 20 10
0
FI IT
IE SI
LT
LV PL EL
NL LU PT AT
BE SE CZ EE ES FR SK
DK UK DE CY
MT HU HR
BG
NO RO EU28
According to the Commission, for connectivity “the highest score was registered by the Netherlands followed by Belgium” and “NGA subscriptions are particularly advanced in Belgium, Romania, the Netherlands and Lithuania”xxvii.
Cable operators have been investing heavily. The quality of the Belgian cable networks is better than that of their counterparts in other Member States.
24 Source: European Commission, Digital Agenda Scoreboard. The Connectivity dimension looks at both the demand and the supply side of fixed and mobile broadband. Under fixed broadband the Scoreboard assesses the availability as well as the take-up of basic and high-speed next-generation access (NGA) broadband and also considers the affordability of retail offers. On mobile broadband, the availability of radio spectrum and the take-up of mobile broadband are included
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xxviii FIGURE 22: LATENCY OF CABLE TECHNOLOGY DURING PEAK PERIODS BY COUNTRY
FIGURE 23: ACTUAL UPLOAD SPEED OF CABLE TECHNOLOGY AS A PERCENTAGE OF ADVERTISED SPEED DURING PEAK PERIODS, BY COUNTRYxxix
On the other hand, cable networks in less dense areas of Belgium have not yet been upgraded to offer internet services. Cable access regulation and/or cost of infrastructure vs density of the area prevented Nethys to continue the necessary investment to upgrade the network to allow for bidirectional signals, which is required to offer internet service. This representsxxx +/- [15%]25 of the houses passed in the
25 Confidential data received from Nethys provided for the CRC only. Should be blacked out when published or quoted by the regulators.
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Nethys footprint 26 . Geographically it represents a high number of municipalities (+123 out of 589 Belgian municipalities) because of the low density of the regions. 3.2.4 Evolution pricing As promoted by Article 21(1) Universal Service Directive, comparable information on broadband (and bundles) is provided in Belgium by both the NRA 27 and private organisations xxxi like the consumer association Test Aankoop and the specialized company Astelxxxii. Test Aankoop regularly complains28 that prices are increasing. However, the most recent price comparisons, published by the Belgian Economics ministryxxxiii, shows that price differences with the Netherlands are negligible.
FIGURE 24: MONTHLY TRIPLE PLAY BUNDLE – BE AND NEIGHBOURING COUNTRIES, AUGUST 2015xxxiv Ranking Monthly cost in € (weighted average) User profile BE BE DE FR LU NL UK 1 basic (<30 Mbs) - - 2 30-100 Mbs + TV + Fixed telephony 5 55.09 53.19 35.27 71.51 53.62 42.81 3 30-100 Mbs + TV + Fixed telephony (25 5 62.25 57.31 36.82 76.22 63.27 54.35 calls) 4 30-100 Mbs + TV + Fixed telephony (70 4 66.65 59,69 39,91 81.64 67.48 60.48 calls) 5 ≥ 100 Mbps + TV + 4 63.93 59.25 36.82 76.07 56.00 Fixed telephony 6 ≥ 100 Mbps + TV + 4 68.95 63.38 39.09 80.75 65.65 Fixed telephony (25 calls) 7 ≥ 100 Mbps + TV + 4 74.76 65.75 39.09 86.03 69.86 Fixed telephony (70 calls)
Comparisons with Germany and France on the other hand are less straightforward given that differences as regards availability of the service and between published and effective speed are not taken into account in the comparison. OECD and other benchmarks confirmed the average position held by Belgium as regards pricing.
The possible impact of the re-entry in 2016 of Mobistar (now Orange) that is taking advantage of regulated access to the cable networks, cannot yet be forecast. But even without this re-entry, it appears that Belgian end-users are not worse off than those of neighbouring countries, on the contrary. Also taking into account the quality elements highlighted above.
26 See also Tectéo – Brutélé 2014 reply to qualitative questionnaire, p. 9. «Le frein des investissements consentis par Tecteo dans la mise en place de la bidirectionnalité illustre concrètement les dommages causés par la régulation visant à ouvrir le câble». 27 www.bestetarief.be 28 “Het is een gekende strategie: de operatoren doen hun klanten prijsverhogingen slikken met het argument dat ze hiervoor hogere internetsnelheden en quota krijgen. Op basis daarvan beweren ze dat hun packs goedkoper worden”, Telecom packages worden steeds duurder, 14 July 2015. Available on https://www.test- aankoop.be/action/pers%20informatie/persberichten/2015/prijsverhoging-telecom#
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FIGURE 25: FIXED BROADBAND RETAIL PRICES (EUR PPP) – STANDALONE OFFERS AT EU LEVEL, OCTOBER 2015
Source: Van Dijk, Broadband Internet 60 12Mbps-30Mbps 30Mbps-100Mbps Access Cost (BIAC) 50 40 30 20 10
0
FI SI
IT
IE
LT
EL
PL
ES SE
EE
SK
LV
CZ
FR PT
CY
BE
LU
AT NL
DE
DK
UK
HR
BG
RO
HU MT
EU28
In any case, competition is not the only determinant of end-user prices. The impact of the limited size of the country (reducing possibilities of economies of scale), cultural and linguistic diversity which are likely to increase marketing costs, the fragmentation of the market, the increase of fixed costs linked to new digital applications etc. determine likely more the level of end-user prices in Belgium.
Figure 26: OECD fixed broadband basket high use >25/30 Mbit/s USD PPPxxxv
25. Beschrijf uw perceptie van de intensiteit van de concurrentie op de retailmarkten voor breedband en omroep en de ontwikkeling van die markten in de voorbije jaren.
the number of ‘net adds’ does not reflect the level of competition and churn. Given that the Belgian law allows subscribers to switch operators after 6 months (the EU maximum duration of 35 Private and Confidential
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initial contract periods is 24 months), subscribers of bundles that left for another provider can come back nearly as fast as they left their previous operator.
Churn is significant, showing the existence of competition on the retail broadcast market.
Other indicators should also be used to gauge the level of competition, such as the level of promotions. However, in this regard, the law of 2011, which allows subscribers to cancel their subscription after six months, likely dissuades promotional conditions that cannot be depreciated in the short term.
3.2.5 Evolution of market shares In 2015, Proximus increased its broadband market share (in terms of number of connections) to 46%, partly thanks to subscribers taken over from Base’s SNOW service when the latter ceased operating29. The remaining xDSL access based operators had a share of nearly 3%. On the other hand, cable operators achieved market shares of more than 39% for Telenet, nearly 8% for Nethys, 3% for Brutélé and 1% for SFR. Competition is strong competition as reflected by a churn rate of more than 14% on the residential market – i.e. one out seven households switching provider every year.
FIGURE 27: RESPECTIVE SHARES XDSL AND CABLE
100% 90% 80% 52% 51% 50% 49% 49% 49% 49% 70% 60% 50% xDSL 40% Cable 30% 48% 49% 50% 51% 51% 51% 51% 20% 10% 0% 2009 2010 2011 2012 2013 2014 2015
The market share of Proximus remains significant on the retail market, reflecting the effectiveness of the incumbent to resist innovative offers from the cable operators. Central in Proximus’ strategy is the offer of bundles, with recently a focus on its mobile service promoted as the best network in Belgium. Therefore, the market power of Proximus is best reflected by, on the one hand, its combined share in the total of mobile, fixed voice and broadband and television turnover sketched out in figure 29 and, on
29 Source data : BIPT, Statistisch verslag, Situatie markt elektronische communicatie, Jaar 2015, p.22.
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the other, its continued gains in the TV market at the expense of the cable operators, reflected in Figure 30.
FIGURE 28: MARKET REVENUES 2015
FIGURE 29: PROXIMUS TV’ CONTINUED PROGRESSION IN THE TV MARKET
3.000.000CONFIDENTIAL
2.500.000CONFIDENTIAL
2.000.000CONFIDENTIAL
1.500.000CONFIDENTIAL
1.000.000CONFIDENTIAL
CONFIDENTIAL 500.000
- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Telenet Proximus Nethys + Brutélé SFR
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3.2.6 Competition trends in the broadcasting (TV) market The above graphic illustrates the role of broadcasting in the competitive process. Twenty years ago, there were only two markets: video and fixed voice, the markets in the middle of the graphic. Mobile communications developed from the end of the 1990, while broadband emerged in the middle of the last decade. All market players at the time – the incumbent fixed voice operator, the mobile operator and the cable operator – sought to conquer the new broadband market. To fight back the successful inroads of the cable operators in the new broadband market, Proximus TV was launched, allowing the fixed telephony incumbent to take over former cable clients. As shown by the graphic, the strategy was successful and today, Proximus serves one third of the television subscribers. Revenues in the video market are far lower than in the fixed broadband market.
Churn Competition in Belgium is focused on bundles, which constitute a higher proportion of the market than on average in the EU. As reflected by table 31 in reply to question 17, operators are making substantial promotional offers on the pricing of their bundles to attract new customers. Churn in Belgium remains below the EU average, but is still substantial.
xxxvi FIGURE 30: BUNDLES AND SWITCHING PROVIDERS - BELGIUM
9% churn per year is considerable and shows the strong bundle competition in Belgium. Belgian consumers are more price sensitive than the EU average. On the other hand, a reason to remain with one’s current operator may be due to the level of customer service provided. Belgian consumers cite consumer service as the second criterion for the choice of their internet provider.
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xxxvii FIGURE 31: MAIN FACTORS CONSIDERED WHEN SUBSCRIBING TO INTERNET
90 80 70 60 50 40 30 20 10 0 speed data cap price customer cost CPE installation service cost
EU BE FR NL
29. Wat is de impact van multiple-play aanbiedingen op de Belgische breedband- en omroepmarkten? Kunt u uw antwoord documenteren door bijvoorbeeld het volgende te verstrekken:
- klantenenquête of ander bewijs die/dat wijst op de impact of het belang van multiple-play aanbiedingen waarin tv vervat is, op de retail breedbandmarkt; - klantenenquête of ander bewijs die/dat wijst op de impact of het belang van multiple-play aanbiedingen waarin mobiele breedband vervat is, op de retailmarkt voor (vaste) breedband; - kwantitatieve gegevens over de impact van bundels op het niveau van "customer churn" (gegevens die idealiter opgesplitst zijn over de verschillende gewesten in België en/of over meerdere jaren)
Cable Belgium did not commission any consumer survey on the impact of bundles on the retail market. There is no evidence of a link between bundles and lower churn in Belgium, if one discards anecdotal data linked to the migration from stand-alone to bundle consumption in the last years (induced by attractive discounts). Factors like price/quality ratio and consumer service are likely the main explanations of the level of churn. Conclusions of international literature on bundling and churn are not necessarily applicable to Belgium.
In its 2015 merger decision xxxviii , the Commission mentions that several respondents to its market investigation alleged that “the increase in multiple play packages results in a ‘lock’ on the retail market”. The Commission itself also estimated that subscribers with multiple packages would be less likely to churn. The Commission’s conclusion is likely based on anecdotal statistics, reflecting the migration of the Belgian end-users from single play products to bundles. Actually, the Eurobarometer survey shows that bundle subscribers are more prone to change provider than stand-alone TV subscribers:
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“Switching service provider appears to be more common for newer services such as bundles (45%), mobile phone (44%) and Internet (43%). Almost four in ten (37%) say someone in their household has switched fixed telephone provider. Respondents are least likely to say that someone in their household has changed television provider (26%)” xxxix . The higher mobile churn compared to fixed 30 could be explained by the same reason.
FIGURE 32: HAVE YOU OR SOMEONE IN YOUR HOUSEHOLD CHANGED SERVICE PROVIDER TO THE FOLLOWING SERVICES?
In Belgium, churn is promoted by the telecom law of 2012 that allows consumers to cancel, in writing and with 30 days’ advance notice, any subscription (television, broadband, telephony) without penalties from the seventh month onwards after the agreement was entered into. The lower churn of triple play in comparison to double play will certainly be related to the higher price discount on triple play bundles in comparison to double play bundles. However, the lower churn in comparison with neighboring countries may also be a consequence of the fact that consumers are satisfied with the service they receive. In this regard, the latest Eurobarometer shows that while on average in the EU, 12 % of the bundle subscribers considered switching but decided not to do so because they were satisfied with the service they currently received, this percentage jumps to 16 % for Belgium, while it is only 6% in France (probably due to differences in terms of internet speed between Belgium and France). Differences in consumer perception, may also explain significant differences between the churn of the various Belgian cable operators (see reply to question 17).
30 Trends, Pourquoi Base se retire du marché de la TV, 17/12/14. « Difficile de convaincre le consommateur belge de changer ses habitudes (…) la simple idée de devoir prendre un rendez-vous avec un installateur, de changer de décodeur et d'habitudes de visionnage télévisuel, le consommateur s'est avéré extrêmement réticent. Un sondage récent réalisé par l'IBPT, le régulateur du secteur télécoms, met en lumière cette réticence : à peine 16 % des personnes interrogées ont changé d'opérateur fixe au cours des trois dernières années. Par comparaison, 30 % des personnes interrogées ont changé d'opérateur mobile. Le double ! Il faut dire que changer d'opérateur mobile ne nécessite qu'un simple changement de carte SIM ». Available on : http://trends.levif.be/economie/high-tech/numerik/pourquoi-base-se-retire-du-marche-de-la-tv/article-normal-358069.html
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FIGURE 33: WHY DO CONSUMERS DECIDE NOT CHANGING BUNDLE PROVIDERxl
3 2 3
16
71
Never considered yes but satisfied no competitor no beteter price/quality offer found bound by contract received better conditions from own provider steps to switch are not clear do not want to lose address/content too much efforts fear temporary loss service other
International literature identified links between bundles and lower churn. For example, the OECD notes that “home monitoring and management services [which range from energy consumption services, video storage, night camera, alerts, automatic system checks, live video and two-communications with the customer’s premises, and so forth] are an example of how communication providers can leverage their access infrastructure and direct billing relationship with customers to provide new services, which in turn can increase customer fidelity and reduce churn”xli. However, Belgian operators do not yet offer home monitoring and management services as part of their main bundles. Findings of OECD studies can therefore not be extrapolated to Belgium. At the same time, as in the USA, the bundle strategy pursued by the operators was aimed at mitigating demand contraction in voice telephony and cable television where “bundling may help firms slow down contracting markets. (…) triple-play bundling appears to help mitigate demand contractions in both wired telephone and cable television”31. J. Calzada and F. Martinez found that “(m)arket and technological concentration (HHIOper and HHIPlat) are negatively associated with the probability of bundling. This suggests that bundling is used by operators to attract consumers in competitive markets, whereas in more concentrated markets operators prefer to sell additional services separately” xlii . This finding suggests that bundling does not limit competition, but is rather an indicator of competition.
30. Denkt u dat er een risico is dat u of andere operatoren de markt zouden moeten verlaten als het niet mogelijk is om multiple-play met daarin tv-diensten aan te bieden? Leg uit.
31 “We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.” J. Prince and S. Greenstein, Does Service Bundling Reduce Churn? April 2013, p. 30.
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While Proximus and Telenet own both a fixed and a mobile infrastructure, the third leading player, Orange (formerly Mobistar) has only a mobile network. However, the ability of integrated fixed- mobile operators to leverage their market strength on fixed products to squeeze Orange out of the mobile market seems limited, if not inexistent.
In the Telenet-Base merger of this year, the EU Commission found that the merged entity would not be able to leverage its market position in cable TV and broadband into the mobile market at the expense of Orange. A similar conclusion would a fortiori be reached in the case of cable operators that have only a fixed network and need themselves to rely on MVNO agreements with mobile operators, giving only a limited margin to these cable operators.
The CRC should proceed with a similar assessment regarding Proximus on the basis of the methodology used by the Commission. It is likely that the CRC conclusion would be the same as that of the EU Commission in the case of the merger.
The CRC should in any case carefully weigh the likely impact of such remedies on the emergence of fixed-mobile competition.
Taking into account the penetration of bundles on the Belgian retail market, the alleged risk of leveraging of market power from one of the markets by bundles on the other markets concerned is a key topic for the revision of the 2011 remedies. The number of players in the sector is limited. More than 90% of the revenues of the sector is generated by three players: Proximus, Telenet (which is integrating Base) and Orange (formerly Mobistar). While Proximus and Telenet own both a fixed and a mobile infrastructure, the third leading player, Orange (formerly Mobistar), has only a mobile network. Orange argues that in order to respond to quadruple play offers from Proximus and, since the merger, from the combined Telenet-Base, it needs access to fixed networks.
However, there seems to be no risk that integrated fixed-mobile operators would leverage32 their market strength on fixed products to squeeze Orange out of the mobile market. The Commission examined whetherxliii: “Telenet's strengthened position in the fixed markets would (…) raise hurdles for mobile (only) players to develop in the fixed services market and offer fixed-mobile bundles. Telenet's increased ability to sell both fixed and mobile services would also allow it to leverage its position in fixed services to the mobile services market. More specifically, the proposed transaction would allow the merged entity to convert BASE customers into fixed-mobile customers. The merged entity
32 “When services A and B are often consumed together, the firm may be able to leverage its market power by offering pure bundles of A and B or deeply discounted mixed bundles. If consumers tend to consume the two services together, and the firm offers bundles of A and B at attractive prices, consumers may be less likely to purchase B on a standalone basis. This could result in the firm excluding potential rivals from the market for service B, potentially even where the foreclosed firms are more efficient at providing that service”. BEREC report on impact of bundled offers in retail and wholesale market definition, December 2010, BoR (10) 64, p.11, point 70.
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would do so by using the high profits Telenet obtains in the fixed market (TV fixed internet) to cross- subsidise its mobile offers”33. The conclusion of the Commission was that “it is unlikely that an increased opportunity for the merged entity to sell fixed-mobile bundles to a limited number of mobile subscribers would foreclose the merged entity's competitors and result in them exiting the market or losing the ability to compete effectively. Mobistar is, even after the proposed transaction, the second largest mobile operator by revenue, after Proximus. It is controlled by a large telecommunications group and has significant financial resources. It is unlikely that the merged entity's increased opportunity to sell bundles to a limited number of subscribers would make Mobistar lose so much market share that it would have to exit the market or lose its ability or incentive to compete.”. This finding is in sharp contrast with the justification provided in the 2011 Decisions to impose access to the cable networks. Consistent with its finding in the merger case, the EU Commission has also expressed reservations regarding the design of the access remedies imposed under the 2011 Decisions on the cable operators in favour of Orange: “whilst Mobistar has not successfully entered the market for TV broadcasting – it has a well-developed retail distribution network and a large customer base for mobile services in Belgium, which in combination is likely to reduce entry barriers in adjacent markets. In addition, since Mobistar is part of a larger pan-European group, it is difficult to see that it would have particular difficulties in accessing the capital needed to facilitate market entrance, further questioning the merit of such market entry assistance. It appears, thus, questionable to the Commission that the market entry assistance is appropriate and objectively justified”34. Pursuant to Article 8(4) of the Access Directive all obligations imposed by NRAs shall be based on the nature of the problem identified, proportionate and justified in the light of the objectives laid down in Article 8 of the Framework Directive. The mere risk that the competitive situation of a mobile operator would become less easy, is not sufficient to justify intrusive access obligations on other operators. In Case DK/2010/1099, in the context of the review of the market for wholesale broadband access, the Danish NRA proposed in 2010 to impose “on the SMP operator an extended access obligation, i.e. to give access to additional functionalities such as multicasting, which allows IPTV. This obligation was intended to enable alternative operators to replicate the bundled retail services of the incumbent. The Commission stated that it is possible that the market for wholesale broadband access develops in such a way that a TV offering becomes indispensable to effectively compete at retail level, in which case such a remedy may be justified. In other words, alternative operators should only be aided by regulation to replicate bundled offers, if their ability to compete at retail level critically depends on it”xliv. Before imposing any remedy in favour of Orange, the CRC should demonstrate that Orange’s ‘ability to compete at retail level critically depends’ on such remedies. As highlighted in the replies to questions 5, the likelihood that this could be the case will continue to decrease given the increasing possibilities of mobile networks to offer fixed-mobile substitution products. At the same time, the CRC should take into account the fact that the ‘ability to compete at retail level’ of the cable operators Nethys, Brutélé and SFR ‘critically depends’ on obtaining wholesale access to mobile networks, so that these cable operators can make retail offers susceptible to respond to quadruple play offers from Proximus. In the past, it has sometimes been difficult for these operators to obtain the
33 Statement made in reply to the Commission’s questionnaire to competitors Q1 of 17 August 2015, question 63.1 in merger Case M.7637 Liberty Global / BASE Belgium, quoted on p. 78 of the decision. 34 C(2016) 795 final, Commissions Comments letter in Case BE/2016/1829, C(2013) 7694 final, (Retail markets for the delivery of broadcasting signals and access to broadcast networks in Belgium – Remedies), 5/2/2016, p. 8. The Commission also notes that “on the basis of the information available, Mobistar would be the only potentially interested beneficiary of the regulated cable offers”, p.6.
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conditions sought after because they are significantly smaller operators than Orange Belgium (at the time Mobistar)35. It is unfair and market distorting for the CRC to require cable operators to offer access at low, regulated tariffs to Orange, third leading operator in Belgium, while no equivalent regulated MVNO access obligation is imposed on Orange. By doing so, the regulator is placing Orange Belgium in a more favourable position than much smaller fixed-only contenders in the competition for the favours of end- users seeking triple and quadruple play offers, including a mobile component. As a matter of fact, the only operator that announced envisaging leaving the Belgian market and looking for an acquirer for its network and consumer basis is SFRxlv, one of the cable operators regulated to allow Orange making triple play offer so that Orange would not be forced exiting the Belgian market. In any case, the NRAs should examine 36 the impact of the current remedies on competition and consumer’s welfare in the retail mobile market. As mentioned in the reply to question 5 above, this impact is more than likely negative. If Orange were a mere mobile-only operator, it would likely be more aggressive in proposing fixed-mobile substitution products to the Belgian consumers. A recent report by Tefficientxlvi shows that Finland reached in the first half of 2015 an average data- usage of 4.3 GB per month per any SIM, making Finland the world leader. The explanation is that “43% of the Finnish SIMs had unlimited data in June 2015: Monetisation in Finland is effectively based on throughput tiers and not on volume”37. While operators like Swisscom and “3” in the UK and Austria offer unlimited options, Orange does not 38. The possibility that this is due to the regulatory situation in Belgium should not be discounted.
32. Wat zijn de voornaamste punten (beschikbaarheid van Wholesale aanbiedingen, onderhandelingsrechten, ...) die de mogelijkheid om tv-diensten op de retailmarkt aan te bieden, kunnen vergemakkelijken / belemmeren? A major cost to provide broadcasting services is the acquisition of content rights in order to include TV channels on one’s platform. ‘Must-have’ TV channels in particular can impose very onerous conditions on new platforms that cannot (yet) provide the perspective of increasing significantly the audience of these TV channels. The delays in the launch of SNOW’s offer by Base and part of the reasons to exit the market are likely linked to the negotiation with TV channels. If the policy makers want to foster entry of new TV broadcasting platforms it will not be sufficient to regulate network operators. The NRA should also be granted the power to settle disputes regarding the right to retransmit TV content and to set the financial conditions on FRAND basis.
A major limitation of the competitive assessment of the broadcasting market in 2011 was that it did not assess the competitive dynamics on the market for the wholesale supply of free-to-air (FTA)/basic pay TV
35 For example, the smallest of the cable operators, SFR, wich reported only 4000 mobile customers at the time, had eventually to end its MVNO agreement with Mobistar: see HLN, Mobistar verliest Numericable-contract aan Base, 4 November 2014 available on http://www.nieuwsblad.be/cnt/dmf20141104_01358088 and Tarificawireless, Numericable Switches MVNO to BASE, availeble on: http://tarificawirelesstoday.blogspot.be/2014/11/numericable-switches-mvno-to-base.html 36 Under Article 8(5)(c) of the Framework Directive, NRAs must promote “where appropriate, infrastructure-based competition”. 37 Idem p.2. 38 Except the “Internet Everywhere Unlimited” subscription, but which states that after 5Gb the speed will be reduced: see https://www.orange.be/fr/independants/produits-et-services/internet-everywhere/internet-everywhere
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channels, which is upstream to the market for the retail provision of TV services to end users. TV broadcasters license their TV channels as an input to TV distributors, such as the cable operators or Proximus TV, who then include them as part of their retail offer to end users. A number of TV channels can be categorised as a ‘must have’ for a TV distributor in Belgium, or at least, important for viewers, with some variation between the Dutch-speaking, the French-speaking39 and the German-speaking parts of Belgium. TV distributors are however in a weak negotiating position with right holders. TV distributors cannot afford black outs and are under certain obligations to distribute TV channels integrally. The mechanism introduced by Article 9 of the Satellite and Cable Directive protects TV distributors against damage claims by right holders when they have concluded contracts with collecting societies. However, not all right holders are represented by a collecting society. The preferred option for TV distributors is that the TV channels that are distributed would themselves clear distribution rights in advance40 so that they can offer their programs to the TV operator as a ‘clean product’xlvii, but this is not accepted by all TV channels. Article 11 of the Satellite and Cable Directivexlviii has established a system of voluntary dispute settlement between TV distributors and right holders, in the case they cannot come to an agreement. However, the Directive does not set deadlines, taking away the effectiveness of this remedy41. The unbalanced negotiation power of TV distributors and right-holders make consolidation of the TV distribution market necessary. Where, from the residential consumer point of view, the limited choice of TV distributors can be seen as a problem, it is for the moment the only solution at the wholesale level, to rebalance the TV distributor’s bargaining power vis-à-vis the right-holders42. If the Belgian government wants to increase the number of TV operators on its territory, a first step should be to set up a binding arbitration as in Germany. The CRC could for example be granted43 the power to settle disputes, within short deadlines, in case of disagreement between TV platforms and right holders on terms and conditions for the distribution of protected content.
33. Zou de beschikbaarheid van tv-toestellen met "OTT" en internetaansluiting u kunnen helpen om een tv-bundel aan te bieden en/of de lancering van innoverende aanbiedingen vergemakkelijken, en zo de marktdynamiek kunnen beïnvloeden? This question is likely not addressed to the current Belgian cable operators.
39 In areas with a significant number of inhabitants of Morrocan origin, like the Brussels area, more Morrocan TV channels can be categorized as must have than in other areas. For example, Proximus TV includes 3 Morrocan TV channels in its Brussels offer against two in Flanders and Wallonia. See http://www.proximus.be/en/id_cr_tvsub/personal/products/television/proximus-tv- subscription.html 40 This formula is however rejected by many TV channels. See for example EBU, Cable Retransmission Of Broadcasts - A study on the effectiveness of the management and clearance of cable retransmission rights, 14/11/2007, p. “The proposal by cable operators that broadcasters should be obliged to acquire and manage all cable retransmission rights on behalf of the cable operator is unacceptable for broadcasters and would create higher transaction and administration costs”, executive summary, p. iii. 41 Moreover, “according to some [service providers (including cable operators)] it is not always clear which rights are managed by [collective management organisations] and which by broadcasters”. Synopsis Report on the Responses to the Public Consultation on the Review of the Satellite and Cable Directive, 04/05/2016, p.5. availble on: https://ec.europa.eu/digital-single- market/en/news/full-report-public-consultation-review-eu-satellite-and-cable-directive 42 In Bulgaria, the TV channel TV7 cancelled the retransmission of its TV channels TV7 and Super7 on the satellite platform Bulsatcom on 12 January 2013 to put the TV distributor under pressure to accept its terms and conditions. Bulsatcom had refused an increase of the rights, arguing that the payment of the rights already amounted to 35% of its turnover. See TV7 спира сигнала към ”Булсатком” on http://dnes.dir.bg/news/btv-tv7-bulsatkom-12788366 43 Currently, Article 5 Access Directive only provides for a dispute settlement procedure regarding access to electronic communications networks and ignores the symmetric issue of access to content. Reason is that the Access Directive has been drafted before the multiplication of TV distribution platforms.
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Smart TVs enabled for accessing OTT will, beyond any doubt, facilitate entry to the TV broadcasting market. OTT TV services are made possible by the increased availability of smart television sets connected to the internet (or to WIFI). There are likely more smart TVs sold than actually connected to the internet, but the trend is clear: the share of households connecting their smart TV to the internet is growing44.
FIGURE 34: SHARE OF HOUSEHOLDS WITH A SMART TV CONNECTED TO THE INTERNET IN BELGIUM FROM 2006 TO 2015, BY REGIONxlix
An example of an OTT service is ‘Knippr’, a service launched by T-Mobile in the Netherlands l . A subscription to Knippr costs €10.99 a month for the basic package, consisting of the twelve main Dutch public and private channels. These are the channels from NPO, RTL Nederland and SBS Broadcasting, all available in HD. Additional channels are available on an a la carte basis, costing between €0.65 and €1.49 a month for each channel. Knippr is compatible with Chromecast and Apple TV 4, while an app for tablet and smartphone was made available.
34. Wat is volgens u de impact van OTT-diensten op lineaire televisiediensten (bijv. Stievie) en op niet lineaire televisiediensten (bijv. Netflix)? Non-linear OTT audio-visual content is forecasted by the BCG, as mentioned in reply to question 16, to grow and reduce linear cable TV or IP TV subscriptions in Belgium. OTT will no longer be predominantly used for ‘catch up’ viewing after scheduled broadcasting, but increasingly respond to the demand for SVoD. On-demand content is increasingly watched following links shared via Facebook and other social platforms. The only limitation to the further growth of this new way of selecting audio-visual content is that most content is not available for free. Once a paying streaming-platform equivalent to iTunes for
44 According to IHS Screen Digest smart TV penetration in Belgium in 2014 was of 23 % of the households which is higher than the data provided by Statista.
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music will emerge for audio-visual content, non-linear viewing will become a substitute for linear viewing, the same way as streaming became a substitute for radio listening. On the other hand, the broad availability of OTT content reduces the willingness to pay for linear television services.
The impact of paid-for OTT, such as Netflix is to date lower in Belgium than in the Netherlands, given that according to Eurobarometerli only 14% of the households in Belgium used a paid service for accessing movies or documentaries against 24% in the Netherlands. Netflix was introduced in Belgium in September 2014, one year later than in the Netherlands. But since then, the penetration of paid for OTT movies and documentaries is growing in Belgium. And this is likely to continue since a growing share of the Flemish viewers watches television in a delayed manner45 and likely also of the French and German- speaking communities in Belgium. In parallel, free of charge non-linear OTT viewing is also likely to affect the growth perspectives of the Belgian TV distributors. As mentioned in the reply to question 14, if the main TV channels can build a direct relationship with their viewers via apps, like Stievie or Auvio, a substantial number of subscribers could consider cancelling their cable or IP-TV subscription or in the multi-homing context, or not take a second subscription for second homes. In any case, OTT will have an impact on the willingness to pay for cable46 and IPTV.
FIGURE 35: RECENT OTT OFFERS IN BELGIUM
This competitive constraint is real because audience figures are concentrated on a limited number of TV channels, of which the editors launched their own OTT app. For example, in the French speaking part of Belgium, 80% of the audience went to the Belgian and French public television, RTBF, RTL and the
45 « 60 procent van de Vlamingen verklaart dagelijks naar live televisie te kijken, 40 procent van de Vlamingen doet dat dus niet (meer). Bij mensen jonger dan 30 is uitgesteld kijken zelfs iets populairder dan live kijken: respectievelijk 61 procent van de jongeren zegt het dagelijks te doen. Wie toegang heeft tot Netflix is beduidend minder geneigd om dagelijks nog live televisie te kijken”. Netflix groeit: 600.000 gebruikers in Vlaanderen, http://netflixinbelgie.be/netflix-groeit-600-000-gebruikers-in-vlaanderen/. No comparable figures were published for the Frenchspeaking part of Belgium. 46 For example in Denmark, YouSee, the cable subsidiary of the TDC group, « flagged its ability to raise pricing has reduced due to OTT” and “YouSee ARPU has also weakened as customers buy smaller TV bundles”, European Cable, What risk from OTT and the skinny bundle, 4 September 2015, p.33.
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French TF1 and France Television Group lii. In the Dutch speaking part of the country, 72% of the audience is, on average, going to two groups: the public television and Medialaanliii.
FIGURE 36: SHARE OF TV CHANNEL EDITORS IN THE AVERAGE VIEWING TIME IN 2014 (FRENCHSPEAKING AREA)
FIGURE 37: SHARE OF FLEMISH TV CHANNELS IN THE AVERAGE VIEWING TIME IN 2014 (TOTAL POPULATION)
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In April 2016, Facebook, rolled out a Live feature that will allow all of its users to film videos and broadcast them to the rest of the world. In the USA, the add-on service includes a guide divided into such categories as TV & Movies and U.S. News, ready for the time when such content will be widely available via its platform. Thanks to its metrics on user preferences, Facebook will offer a more accurate picture of public demand to production companies than the cable operators or Proximus that only have limited knowledge of the preferences of their customers. Moreover users could be seduced away from set-top boxes by the easy convenience of having all the TV they could want in exactly the same place as their cherished social media accounts. And “the social element” involved could be the biggest pull for viewers and production companies alike, since the public knowledge that your friends or followers are going to be watching a particular show on social media may be all the advertising this show ever needs”liv. On the other hand, a giant like Facebook would likely not face the same difficulties to convince TV channels to be included in their offer as new Belgian platforms.
35. Vindt u dat de huidige situatie op de retailmarkt(en) ertoe leidt dat de eindgebruiker benadeeld wordt? Indien ja, op welk niveau (bijvoorbeeld in termen van keuze, prijs, kwaliteit)? Hoe ziet u de evolutie in de toekomst?
No. We elaborate on this in the greenfield analysis of retail markets below.
3.3 Retail markets (a greenfield analysis)
3.3.1 Broadband
3.3.1.1 Relevant markets Product markets In 2011, the CRC analysed substitutability for several products and concluded that there were two markets as follows: The retail market for broadband internet access at a fixed location on a technology-neutral basis (with the exclusion of WiFi) and of all speeds, for private use. The retail market for broadband internet access at a fixed location on a technology-neutral basis (with the exclusion of WiFi) of all speeds for business use.
This conclusion was reached on the basis of the following substitution analysis.
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FIGURE 38: SUBSTITUTION ANALYSIS BROADBAND SERVICES
Beschouwde producten Substitueerbaarheid? Diensten inzake breedbandtoegang voor de particuliere clientèle en voor de niet-particuliere clientèle
Toegangsdiensten met lage snelheid en breedbandtoegangsdiensten
Diensten voor vaste breedbandtoegang en diensten voor mobiele breedbandtoegang
Diensten voor vaste breedbandtoegang en diensten voor breedbandtoegang via wifi-hotspot
Diensten voor vaste breedband die gebruikmaken van verschillende technologieën: xDSL, kabel, glasvezel en radio
Breedbandtoegangsdiensten met verschillende snelheid, waaronder de diensten voor toegang met zeer grote breedbandcapaciteit op basis van Next Generation Access “NGA” (VDSL, Eurodocsis 3, FTTH).
5. Vindt u dat deze conclusies nog altijd geldig zijn? Om welke redenen?
Mobile broadband offers already provide a competitive constraint on lower priced fixed broadband offers;
Substitution between fixed internet access and mobile internet access is obvious in certain parts of the Belgian territory where a significant share of the population has no access to fixed broadband with speeds of 1 Mbits or above; i.e. in 102 of the 589 Belgian communes (17%);
A forward-looking ‘modified greenfield’ approach should take into account the incentives of Orange to launch aggressive fixed-mobile substitution offers to compete with Proximus and the cable operators, in the absence of access remedies;
A forward-looking assessment would likely lead to the conclusion that, contrary to 2011, there is fixed-mobile broadband substitution today, which will become even more profound by 2020.
Mobile broadband offers are an essential part for providing business services and it is critical that the regulators also consider this aspect in their assessment.
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In 2011, an important reason for the CRC to consider that fixed and mobile internet access constituted different markets47 were the substantial retail price differences between fixed and mobile broadband services.
In the beginning of this year, Orange launched its ‘Easy Internet@Home’ data offer priced at €15/month. This offer is cheaper in absolute terms than all fixed internet access offers available in Belgium. With a relatively low data cap, the Orange’s Easy Internet @Home offer provides a cheaper alternative for users requiring broadband for other than bandwidth hungry video applications48, such as video streaming. According to usage estimations provided on Netflix’s Help page49, 15 GB would currently allow 15 hours 50 video streaming. However, more advanced standards such as High Efficiency Video Coding (HEVC) are being developed. HEVC would reduce the bandwidth requirements for HD by two-thirds as illustrated below. Moreover, HEVC is expected to be a key feature of 4K TV and, as can be seen below, can enable broadcast of 4K channels (2160p) at 8–20Mbit/s.
47 In case M 7637 Liberty Global/Base Belgium the European Commission dit also take the view, in its forwardlooking assessment, that fixed and mobile constiuted separate markets. Available on http://ec.europa.eu/competition/mergers/cases/decisions/m7637_1290_3.pdf 48 Dries Cludts, Getest: 4G-thuisinternet van Mobistar, 28 October 2015 “Dit is geen product voor wie veel streamt, downloadt of gamet, zoveel is wel duidelijk. Ook voor families waar elk gezinslid online gaat met één of meer toestellen, schiet Easy Internet @Home wellicht tekort. Ik kan me echter ook heel wat situaties voorstellen waarin deze 4G-router wel het overwegen waard is. Omdat je alleen een stopcontact en 4G-dekking nodig hebt, kan je de router gemakkelijk overal mee naartoe nemen. (…)Ook voor lichte gebruikers, zoals senioren, is het een voordelige oplossing die hun in staat stelt om wat te surfen en e-mailen, zonder veel geld kwijt te zijn aan de installatie van ADSL- of kabelinternet en een bijhorend abonnement”. available on: http://www.zdnet.be/nieuws/173397/getest-4g-thuisinternet-van-mobistar/ 49 Watching movies or TV shows on Netflix uses about 1 GB of data per hour for each stream of standard definition video, and up to 3 GB per hour for each stream of HD video. Other sources provide lower figures but with warnings. 50 Other sources provide lower data usage, but also with reserves on their accuracy: see https://www.broadbandchoices.co.uk/guides/broadband/guide-to-internet-data-usage Activity Data consumption
One hour of web browsing 10 - 25MB Download a document 2MB One hour of Facebook 20MB Download a music track 4MB Stream 30 minutes of YouTube 175MB Download a non-HD film 700MB Download an HD film 4GB Stream one hour of non-HD video 250MB Stream one hour of HD video 2GB Stream one hour of music or radio 150MB
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lv FIGURE 39: BANDWIDTH CONSUMED BY PIXEL RESOLUTION AND TYPE OF MPEG-4 COMPRESSION
SD HD 4K 8K 50 45 40
35 720
30 1080
-
- SD
25
HD HD HD HD 20
Bandwidth (Mbit/s) Bandwidth 15 10 5 0 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 Vertical pixels
AVC (low) AVC (high) HEVC (low) HEVC (high)
Mobile substitution for fixed is increasing. In Europe “the proportion of households that are mobile only (predominantly via smartphones and Wi-Fi tethering) has grown in recent years. In some countries substitution of mobile for fixed is outstripping broadband market growth, with fixed broadband access declining”51. According to recent Eurobarometer figures52, in Belgium more than 10% of households with internet access are mobile-only. Moreover, this group is increasingly important – in 2011 the EU average provided by Eurobarometer was just 6%.
51 Robert Kenny & Brian Williamson, Proportionate regulation of wholesale local access, Chambers Communications, May 2016, p.28. 52 Special Eurobarometer 438, D46_QA1a - Household Internet access.
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53 FIGURE 40: MOBILE-ONLY SHARE OF BB HOUSEHOLDS AND EVOLUTION IN BE
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
SI FI
IT IE
LT EL
PL
ES SE
EE
SK
LV
FR CZ
PT
CY
BE
LU
AT NL
DE
DK
UK
HR
BG
RO HU MT
For some there is an obvious financial incentive to switch from ADSL to mobile only, and as mobile speeds and traffic allowances continue to rapidly increase, this may tip an increasing number of households in this direction. Adoption of fixed access, and the business case for fixed access upgrades, are therefore increasingly dependent on service-price differentiation in order to attract price sensitive customer segments.
The CRC conclusion of 2011 that fixed and mobile were not substitutes on the retail market should be revisited taking into account that it cannot be decided only on the basis of a superficial comparison of current prices of fixed and mobile broadband offers in Belgium. The CRC needs to take a prospective view on developments in the coming three to five-year regulatory window.
The Belgian NRA itself acknowledged lvi that in 102 of the 589 Belgian communes (17%), mobile broadband and, in theory, satellite broadband are already a substitute for fixed broadband to which part of the population of these communes has no accesslvii.
The absence of fixed broadband coverage is due to objective factors, and in particular because the investments required to upgrade the fixed network(s) in these areas are high and expected returns low or negative, taking into account the low population densities in these areas. Because of these objective factors, the area concerned would, according to the EU Commission’s methodology, qualify for being designated as a distinct geographic area and, in any case, for differentiated remedies. The intensive work performed by the BIPT to map fixed and mobile broadband coverage in Belgium per municipality and subdivisions of municipalities would in this regard provide a good starting point to delineate the areas concerned.
53 Sources: EC, Eurobarometer 438 : E-Communications and the Digital Single Market, October 2015, quoted in; Communications Chambers analysis, May 2016, p. 22 and EC, Eurobarometer 438 : E-Communications and the Digital Single Market, October 2015, summary Belgium, p.2,
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More importantly, when assessing the future trend of fixed-mobile broadband substitution, the NRA should not start from the existing situation, but from a (modified) greenfield perspective. In other words, the NRA should explore how mobile broadband offers are likely to evolve in the next three to five years in Belgium, in the absence of regulated access to wholesale fixed broadband. The question that the NRA needs to answer is how the main beneficiary of the current regulatory remedies, i.e. Orange Belgium, would compete with the fixed broadband offers of Proximus and the cable operators in the absence of access remedies (counterfactual method). The NRA should acknowledge that the availability of these regulatory remedies constitutes a strong disincentive for this mobile-operator to target the fixed broadband segment aggressively with (cheaper) fixed-mobile substitution offers. As long as an operator can offer both mobile and fixed internet, it will likely view them as complements, not as substitutes54. Orange Belgium is thus in a particularly comfortable position: it is able to offer fixed services at low, regulated tariffs (decreased in 2016) without having to develop mobile broadband on its own mobile network. In comparison, fixed-only operators (such as Nethys, Brutélé or SFR) have to offer access to their network at regulated tariffs to Orange Belgium while they have to negotiate access to mobile networks at commercial conditions (and accept the conditions that mobile operators are ready to offer) in order to be able to include mobile telephony and data in their bundles. Orange Belgium’s announcement that it will not sell more than 10K subscriptions of its Easy Internet@Home’ product is a good illustration of Orange’s reduced interest in actively promoting fixed to mobile substitution55.
Third, and linked to the previous point, because the NRA must also integrate potential entry into its forward-looking assessment, it should be stressed that Orange has the means to launch fixed-mobile substitution products, as evidenced by its Easy Internet@Home’ product. The Commission also noted that “since Mobistar is part of a larger pan-European group, it is difficult to see that it would have particular difficulties in accessing the capital needed to facilitate market entrance”lviii.
In assessing the counterfactuals, the CRC should also reflect whether, in the absence of regulated access to fixed broadband, guaranteed to mobile operators, the comment by the Commission in the DESI scorecard for Belgium of early 2016, that “(Belgium) needs to further increase the uptake of mobile broadband as mobile devices are becoming an essential gateway for consumers to communicate, work and shop in the digital economy”lix, would have been made or whether Mobistar/Orange would have launched more aggressive offers than Easy Internet@Home.
54 The Commission notes that “(h)aving lost Telenet as a wholesale customer ([…], Table 3), Mobistar would need to compete actively to replace the lost revenue stream”. Liberty Global-Base merger decision, p.71. 55 « if fixed and mobile services were viewed as substitutes they would not be offered in one package” ECTA’s response to BEREC consultation on the draft BEREC Report on impact of fixed-mobile substitution in market definition, p.1. available on: http://ectaportal.com/en/upload/File/Position_Papers_2012/ECTA_response_BEREC_FMS_report_FINAL_CLEAN.pdf
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FIGURE 41: MOBILE BROADBAND TAKE-UP (2015)
6. Vindt u dat de substitueerbaarheidsanalyses ook uitgevoerd zouden moeten worden met andere producten dan die welke in de vorige tabel opgesomd zijn? Indien ja, welke? Om welke redenen?
No.
7. Vindt u in het licht van de nieuwe definitie door de Europese Commissie van de relevante wholesalemarkten die in aanmerking komen om ex ante gereguleerd te worden, dat er andere retailmarkten gedefinieerd en geanalyseerd moeten worden?
No. For this reason, question 10 is not included in this submission.
Geographic definition of the market In its decision of 1 July 2011 CRC concluded that a detailed geographic definition of retail markets was not needed to allow for an analysis of upstream wholesale markets. The CRC did mention the following elements:
FIGURE 42: GEOGRAPHIC DEFINITION OF THE MARKET het voorkomen van een aantal regionale verschillen, met name wat bepaalde marktaandelen betreft
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het feit dat de spelers die over een kabelnet beschikken, slechts in bepaalde delen van het nationaal grondgebied bedrijvig waren, in tegenstelling tot de voornaamste DSL-spelers. de afwezigheid van tarifaire differentiatie bij een nationaal opererende aanbieder zoals Proximus de hoge dekkingsgraad van ADSL en VDSL
8. Wat is op basis van de bovenstaande bevindingen uw mening over de geografische omvang van de markt?
As set out in par 1.1.1, when assessing whether or not competitive conditions in different areas are similar or sufficiently homogenous, i.e. when delineating the geographic boundaries of a relevant market, recourse should be made to the same principles as for the delineation of the relevant product market, in particular competitive constraints such as demand-side and supply-side substitution. Having defined retail markets, the corresponding wholesale markets are then identified. Hence, the geographic definition of the retail broadband markets is important for the definition of the geographic scope of the wholesale markets. In particular, delineating a geographic market where residential broadband supply is lagging will determine the corresponding wholesale offers.
9. Vindt u dat er andere relevante criteria bestaan die pleiten voor of tegen een segmentering van de retailmarkt op geografische basis? Merkt u bijvoorbeeld geografische verschillen op het stuk van aanbiedingen (snelheid, dienstkwaliteit, prijs) en intensiteit van de concurrentie?
As mentioned in reply to question 5, in 17% (102 out of 589) of Belgian communes, many inhabitants have no access to internet at speed of 30 Mbt/s. The priority objective of the CRC should be to foster investments in these areas and remove a digital divide;
The work performed by the BIPT to map the fixed broadband coverage should serve as a basis to delineate the Belgian ‘challenge’ areas;
Remedies applied to these areas, if any, should aim to promote the roll out of higher speed internet. Wholesale access remedies should be phased out.
Since the CRC 2011 decisions, the average speed of retail broadband subscriptions in Belgium has dramatically increased.
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lx FIGURE 43: INCREASE IN BROADBAND SPEED BETWEEN 2008 AND 2013
But in a number of Belgian municipalities (+123 out of 589 Belgian municipalities), the investments for the deployment of broadband, and even more for the deployment of broadband with a speed above 30 Mbit/s are not profitable. A potential investor has no realistic prospect that the number of houses passed will translate in sufficient numbers of subscriptions. In the terminology of the EU State aid guidelineslxi, these are called ‘White Areas’lxii.
Moreover, in certain areas cable operators have not yet been able to make their networks bi-directional and compete with the incumbent operator on internet access services and interactive TV services: the so- called ‘Grey Areas’ in the EU State aid terminology. Taking into account these differences in competitive conditions in these areaslxiii, the CRC should56 differentiate remedies applying to these different areas.
The geographic segmentation at retail level would bring about a corresponding differentiation at wholesale level. As the EU Commission acknowledges: “(i)n these so-called "challenge areas" there is a need to reassess sector-specific access regulation. This could include measures focusing more on "competition for the market", i.e. rewarding/providing incentives to the first mover towards very high capacity network provision that might not otherwise be provided, while safeguarding effective competition and end-user interests”lxiv. In particular, in these geographic areas mandatory provision of regulated access should be phased out to increase the investment incentives of the network providers. In areas where, despite the removal of access conditions there would still be no business case to deploy higher speed internet, forms of co-investment and public support should be envisaged. If the CRC would conclude the existence of a nation-wide market, differentiated remedies could be justified for the same reasons.
56 “As will be set out in more detail for individual markets below, although the final SMP analysis will be carried out at wholesale level, the starting point of any geographic analysis should be the competitive conditions at the retail level. As a result, NRAs are expected, where geographically varying competitive conditions suggest a closer look at the possibility to identify sub-national wholesale markets, to look at a number of criteria in order to identify – following a "modified Greenfield approach" – whether, absent regulatory intervention upstream, there is a risk of consumer harm on the retail market due to a lack of competition” Explanatory memorandum to 2014 Market Recommendation, p. 13.
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FIGURE 44: GEOGRAPHIC AVAILABILITY OF FIXED BROADBAND OF 30 MBIT/S
3.3.1.2 Competition issues
In the residential broadband market, competition would be stronger in the absence of regulation as now mobile operators (including MVNOs) would compete more aggressively with Proximus and the cable operators.
While there is strong competition between Proximus, the cable operators and other mobile operator and MVNOs on the retail residential markets, competition is more limited on the business market.
On the business segment, Proximus’ market share dwarves that of competitors.
The lack of competition is reflected in the price levels of business services that cannot be substituted by residential services. A recent study for the BIPT, highlight that for multi-user business, broadband services in Belgium are less competitive than in the other study countries. “When the average of the three cheapest providers is considered, Belgium ranks mid-range, while for the cheapest overall offer, Belgium is the most expensive country. This less favourable position is because, for the multi-user businesses, only business broadband services are considered, and these are generally more expensive in Belgium compared to the other 58 Private and Confidential
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countries”57. The study confirms that, contrary to business services, residential broadband services in Belgium are more competitively priced and hence (much) cheaper than business broadband offers. In the absence of regulation, the residential market would be characterised by even more competition between Proximus, the cable operators and (now) mobile broadband operators, delivering results for the consumers. The situation is however different on the business segment where, in the absence of regulation, operators other than Proximus would have difficulty in serving demand. Even, in the presence of current regulation, the BIPT statistics for 2015 show the Proximus’ market share on that segment still dwarves that of its competitors.
58 FIGURE 45: TURNOVER FIXED RETAIL BUSINESS SEGMENT (MIO EUROS 2015)
3.3.2 Broadcasting
3.3.2.1 Relevant markets
Product Markets In its decisions of 1 July 2011 came to the following conclusions with respect to the definition of the product market for broadcasting services: “Analogue and digital signals, provided over cable and IPTV networks, and received on a fixed location and watched on a TV through a paid-for subscription, with exception of
57 Strategy Analytics, Teligen Tariff & Benchmarking Service, Telecommunications Price Benchmarking: A study into business pricing in Belgium in 2016, June 2016, p. 2. 58 Source: BIPT, statistisch jaarverslag 2015, p. 47.
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broadcasting through satellite, DVB-T, mobile networks or Web-TV, belong to the same product market.”
This conclusion was reached based on the following substitution tests:
FIGURE 46: BROADCASTING SUBSTITUTION TESTS
Beschouwde producten Substitueerbaarheid? betaaltelevisie en gratis televisie
analoge televisie en digitale kabeltelevisie
digitale kabeltelevisie en IPTV
digitale kabeltelevisie en betaaltelevisie via satelliet (SATV)
kabeltelevisieaanbiedingen en DVB-T-aanbiedingen
digitale kabeltelevisie en mobiele-tv-aanbiedingen
digitale kabeltelevisie en web-tv4
11. Vindt u dat die conclusies nog altijd geldig zijn? Om welke redenen?
In 2011, the CRC excluded substitution between on the one hand cable and IP TV offers and satellite television on the other. However, the CRC should take into account the geographic differences in competitive pressure. In certain areas, satellite television is a substantial competitor to cable and IP-TV.
In 2011, the CRC overstated the significance of analogue cable TV. In a forward-looking assessment, analogue TV should no longer be considered relevant.
The EU Commission found that: “in Belgium, at least retail TV services offered over cable and IPTV form part of the same relevant product market”lxv.
The conclusion of the CRC product market assessment of 2011 was more restrictive and failed taking sufficiently into account geographic differences in competitive pressure (see question 15 below). While overall in Flanders and Wallonia cable-satellite TV reception substitution may be too limited59 to pass a SSNIP test, this is not the case in geographic areas with a strong concentration of native speakers of
59 In segments, such as mobile only households, the competitive pressure of satellite is not negligeable. A satellite subscribtion is moreover ‘mobile’ and can be used by campers and in weekendhouses (as far an antenna has been placed). Not fortuitously, TV- Vlaanderen makes promotional offers before the summer holidays. “Nu €10 per maand gedurende 10 maanden *”, see https://www.tv-vlaanderen.be/ [consulted on 27 July 2016].
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languages other than those of the most viewed Belgian TV channels. The product definition should therefore not be concluded in isolation of the determination of the geographic markets. The importance given to analogue cable TV in the framework of the 2011 Decisions is outdated. Since the Decisions, the share of analogue cable TV viewing has decreased by more than 50%lxvi. The decision of Proximus not to make use of the mandated analogue TV resale offer confirms the loss of significance of analogue in the competition for new subscriberslxvii.
12. Bent u van oordeel dat de eindgebruikers het gebruik van een digitale decoder als storend ervaren, zodat aanbieders die een dienst kunnen leveren waarvoor geen aparte decoder nodig is (analogue TV, in het tv- toestel ingebouwde demodulators - DVB-T, DVB-C – niet versleutelde of met een CI+- module decodeerbare signalen) een concurrentievoordeel hebben tegenover de anderen aanbieders?
Whether some providers have a competitive advantage is not relevant in a substitution assessment, as long as differences between the products offered by the respective providers are not substantial enough to alter the outcome of a SSNIP test.
Question 12 does not fit in a substitution-assessment. In a substitution assessment, a question could be whether switching from an analogue cable subscription to a digital IP-TV subscription is dissuaded, and in the relevant case, to what extent, due to the need to subscribe or acquire additional decoders.
Certain users – in particular elderly60 – might be discouraged to switch between operators for such reason. However, it is no longer the case based on a 2013 survey and their numbers, would not be significant enough to lead to the conclusion that cable subscriptions and IP-TV subscriptions are not substitutable in case a SSNIP test would be performed.
60 Certain users would not have switched anyway as they do not compare offers and stick to their habits. On the other hand, the competitive dynamics of a market and in particular market trends are determined by the early adopters. Substitution assessment should therefore as far as possible avoid conclusions being distorted by the presence of high inertia end user segments.
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FIGURE 47: CONNECTING EXTRA TELEVISIONS VIA ATV (WITHOUT ANY EXTRA COSTS) IS NOT THE MAIN 61 DRIVER TO CHOOSE FOR TELENET OR VOO
13. Vindt u of vinden uw (potentiële) klanten dat het gebruik van extra digitale decoders bij het aansluiten van meerdere toestellen te duur uitvalt zodat aanbieders die een dienst kunnen leveren waarbij extra toestellen kunnen worden aangesloten zonder extra decoders te hoeven gebruiken (in het tv- toestel ingebouwde demodulators - analoge DVB-T, DVB-C – niet versleutelde of met een CI+-module decodeerbare signalen) een concurrentievoordeel hebben?
Whether some providers have a competitive advantage is not relevant in a substitution assessment, as long as differences between the products offered by the respective providers are not substantial enough to alter the outcome of a SSNIP test.
Second screens have become pervasive (see also reply to question 14) in Belgium and consumers do not need additional decoders because tablets and smartphones have replaced second and third television sets.
In its comments on the remedies imposed on cable operators and, in particular, of the analogue TV resale obligation, the Commission concluded that “if the vast majority of end-users can watch TV on multiple TV- sets via IPTV and via CATV, then imposing analogue TV resale as a stand-alone obligation for as long as
61 Watching Television, Awareness, usage & perception of different providers, Report prepared for Telenet by Profacts, 31-01-2013
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cable operators provide analogue TV may, potentially, be disproportionate with regard to the objective of evolving to full digital-TV provision” lxviii . Second screens have become pervasive (see also reply to question 14) in Belgium. In Flanders, 58.3 % of the households had already one or more tablets in 2015 (see figure below). No similar statistics are published for Wallonia, but one can expect that the trend is the same. Over the time period concerned by the coming market review, consumers will no longer need additional decoders because tablets and smartphones will have replaced second and third television sets in nearly all households concerned. It would be helpful if the BIPT would consolidate such data and publish similar penetration figures for the whole of Belgium.
FIGURE 48: PENETRATION TABLETS AND SMARTPHONES IN FLANDERSlxix
Subscribers of TV distribution services no longer accept to be constrained watching TV on a television set in a fixed location when they can just watch their favourite soap or news programme on their tablet or
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smartphone anywhere within reach of their WiFi router. These new consumer expectations are fully acknowledged by the commercial communications of the operators. See figures below.
FIGURE 49: THE TV- TABLET – SMARTPHONE – PC CONVERGENCE PRODUCT OF PROXIMUSlxx
14. Wat zijn uw verwachtingen in verband met de toename en het belang van alternatieve manieren van levering van omroepdiensten voor een tweede en/of derde beeldscherm (bijv. laptop, tablet, ...)?
Second and third screen viewing will further increase and replace second television sets before the end of the time period covered by the coming market review.
Moreover, second and third screen viewing threatens the direct relationship between the providers of cable TV distribution or IP-TV and their subscribers.
This market evolution will further reduce the market power of the cable operators during the coming regulatory period.
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In addition to removing the relevance of analogue cable TV (see question 13), second and third screen viewing threatens the direct relationship between the providers of cable TV distribution or IP-TV and their subscribers, and it impacts the relationship between broadcasters and distributors as well. Commercial TV channels see third party streaming apps as a threat: the app-provider can skip the advertisements sold by the TV channel or add the app-provider’s own advertisements62. Commercial broadcasters have therefore launched their own apps to retain control of the advertisement revenues generated by their content63. The spread of the TV channel’s apps in turn constitutes a threat for the current platforms – cable operators and IP-TV providers – who are facing the fact that some viewers would skip the intermediation64 by the platform and go directly to the apps of their favourite TV-channel. This threat is strengthened by the take up of media streaming devices such as Chromecast65 that allow streaming content watched on a smartphone to any large screen TV set over WIFI.
This market evolution will further reduce the market position of the cable operators during the coming regulatory period and should be taken into account in the forward-looking SMP assessment to be performed by the CRC, in case the three-criteria-test would be fulfilled for the broadcasting market.
15. Denkt u dat het gebruik van een satellietschotel een belangrijke hinderpaal zou zijn voor uw klanten? Zijn er in dat verband verschillen tussen het Nederlandstalige, Franstalige en Duitstalige gebied?
Installing a satellite dish (and the cabling) to replace cable TV is more cumbersome than installing a VDSL router and decoder on the PSTN line, if available. However, satellite is available national- wide with stand-alone and bundled offerings at competitive prices66.
However, satellite dishes are already installed on a substantial number of houses. In this case, the switching cost will be small and the households concerned will not be contestable for cable operators or IP TV providers.
62 The UK PSB channel ITV filed judicial procedures against TVCatchup to prevent the latter to retransmit its television broadcasts – See judgment of 7 March 2013 in Case C-607/11, ITV Broadcasting Ltd, EU:C:2013:147 and the subsequent order of Mondy 7 October 2013 of the English High Court of Justice, available on http://presscentre.itvstatic.com/presscentre/sites/presscentre/files/TVCatchup.pdf 63 See Het Laatste Niews, Stievie Free laat je vanaf vandaag gratis tv kijken op computer en tablet, 8/12/15: “De app werkt met korte reclameblokken die niet doorspoelbaar zijn, plus targeted advertising. Dat is reclame die afgestemd is op het profiel van de gebruiker, in een eerste fase op basis van leeftijd en geslacht” 64 « If legacy commercial distributors face the risk of disintermediation, new players have entered the market, and act as “aggregators” of content. The notion of “aggregator” can include the provision of a technical platform to store and retrieve content, which may or may not include a device (or its operating system); the management of advertising, transactional or subscription sales related to the content; the recommendation of content proposed to the user, often supported by algorithms. Within the platforms, specific sections may be managed by “media brands”, which upload their own content and use the tools provided by the platform to promote and monetise it.” European Audiovisual Observatory, On-demand services and the material scope of the AVMS, June 2016, p. 11. 65 Le Soir, Un succès monstrueux pour le Chromecast de Google, 30/1/2015 and La Chromecast cartonne en Flandre, 29/12/2015 «Selon la chaîne VTM, le cadeau de Noël le plus populaire au nord du pays a été la clé HDMI de Google dont le prix a été visiblement décisif. Devant Adele et les gadgets Star Wars”. 66 https://www.tv-vlaanderen.be/tv-internet-telefoon/abonnement/
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Certain segments of the population consider the product characteristics of satellite offers superior to that of the cable TV or IP TV offers and will not consider the switching cost as a barrier. This is particularly the case for native language speakers of languages other than French and Dutch, which are under-represented in the offers of the cable and IP-TV providers.
Satellite is not mentioned in the 2015 ‘statistisch verslag’lxxi from the BIPT, likely because the BIPT has no up to date figures on satellite TV reception. The share of satellite reception remains likely – on average over the whole of Belgium - small (as in the 2011 analysis). However, the Belgian averages do not reflect the attractiveness of satellite TV in areas like the German Speaking Community or municipalities with a strong presence of inhabitants of non-Belgian originlxxii. We refer to our reply to question 18. Installing a satellite antenna or a proxy IP address on a PC may be cumbersome, but will seldom outweigh the desire to watch content that is not included in the cable TV or IP-TV offers available or that is available on satellite free of charge.
In its new assessment, the CRC should investigate in particular the competitive constraint of satellite offers. Satellite is available national-wide with stand-alone and bundled offerings at competitive prices67. The actual take up of the service does not necessarily reflect the competitive constraint, forcing cable operators to adapt their offer in particular in terms of choice. The impact of satellite competition is the most visible regarding the population of non-Belgian origin. A study drafted for the EU Commission in 2013 has highlighted the many flows of cross-border audio-visual content generated by such groups and even assessed the potential demand for intra-European pay-tv services.
67 https://www.tv-vlaanderen.be/tv-internet-telefoon/abonnement/
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68 FIGURE 50: CROSS-BORDER FLOW OF AUDIO-VISUAL CONTENT AND SERVICES
16. Vindt u dat de substitueerbaarheidstests ook zouden moeten slaan op andere producten dan die welke in de vorige tabel opgesomd zijn? Indien ja, welke? Om welke redenen?
We note substitution of traditional linear TV by OTT services.
International data suggests that the younger generation increasingly prefers OTT to linear television.
OTT already constitutes a substitute to cable TV and IP-TV. In a forward-looking assessment this will even be stronger.
68 Idem, p. 51.
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There is a clear trend towards increased substitution of traditional cable television and IP-TV offers by OTT offers (see reply to question 15). International data suggests that the younger generation increasingly prefers OTT to linear television69, which means that the trend is likely to increase over time.
FIGURE 51: VIEWING TIME IN THE NETHERLANDS
Trends in Belgium are likely similar given that streaming behavior of Belgian internet user is not different to that of the Dutch users or the EU average.
69 L’Avenir, Les jeunes ne regardent plus la télé, 4 juiller 2016 ? «Les jeunes ne regardent plus vraiment la télévision, mais des vidéos en ligne qui sont plus courtes et plus axées sur le talent de chaque intervenant , explique Fabienne Fourquet, ancien cadre de la chaîne câblée américaine A&E et de Canal + qui dirige aujourd’hui l’agence 2btube. Ils ne veulent plus devenir stars de cinéma, mais YouTubers. C’est un autre monde». Contra PLUM, Challenges and opportunities of broadcast-broadband convergence and its impact on spectrum and network use, SMART 2013/0014, 2014. “We can see that those in the age range 13 to 19 watch less TV than those in the age range 20 to 34. But we also noted that, by the end of the study, the teenagers at the beginning of the study period are all in the older age range while viewing time for the 20 to 34 age range does not decrease but stays relatively stable. This suggests that cohort effects might have relatively little impact on overall AV consumption patterns”.p. 68.
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FIGURE 52: OVER THE LAST 12 MONTHS HOW FREQUENTLY HAVE YOU USED THE INTERNET TO ACCESS AND DOWNLOAD AUDIO-VISUAL CONTENT, EXCLUDING SPORTSlxxiii
Also in Belgium, OTT on the Android or Apple platforms – in particular apps from TV channels themselves – will increasingly become a substitute for the TV channel aggregation service provided by the cable and IP-TV operators. While the pay TV market in Belgium is saturated, SVoD offers huge growth potential.
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FIGURE 53: FORECASTED GROWTH PAY TV VS. SVODlxxiv
The CRC should take OTT into account in its assessment of the relevant market in the framework of the coming market review. The CRC should also take this development (which constitutes a threat to the TV providers) into account in its assessment whether the three-criteria test is fulfilled. With reference to our reply to question 92, there is strong evidence that the three-criteria test is no longer met.
Geographic market In its decisions of 1 July 2011, the CRC decided on geographic markets corresponding to the coverage areas or footprints of the cable operators, on the basis of the following factors.
FIGURE 54: GEOGRAPHIC DEFINITION OF BROADCASTING MARKETS geen substitutie aan vraag- en aanbodzijde tussen de omroepaanbiedingen van kabelnetwerken vanwege het ontbreken van overlappende verzorgingsgebieden geen aantoonbaar ketensubstitutie-effect tussen kabelnetwerken ondanks de aanwezigheid van een landelijk opererende IPTV-aanbieder Heterogeniteit van de mededingingsvoorwaarden tussen de relevante dekkingsgebieden (heterogeniteit van de marktaandelen, van de technische karakteristieken, van de consumentenvoorkeuren, van de televisieaanbiedingen, van de prijzen, van de wetten en reglementering)
17. Vindt u dat deze conclusies nog altijd geldig zijn? Om welke redenen?
In 2011, the CRC concluded that the geographic market(s) corresponded to the footprint of the various cable operators on the ground that there was no chain substitution between the cable TV offers of the various cable operators.
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The parallelism in the evolution of pricing and product specifications in the respective footprints since then suggests that nation-wide competition by Proximus TV is sufficient to constrain commercial behaviour of cable operators in their respective footprints and that the geographic market should be redefined as being national, without prejudice to the regulatory treatment of the specific areas where competitive constraints and dynamics differ because of the strong presence of satellite TV, such as the German Speaking Community and the Brussels Region.
Findings of absence of competitive constraints by Proximus TV on the pricing of the cable operators were based on inaccurate price evolution comparisons, given that Proximus TV is not offered as a stand-alone product, but as a complement to telephony and/or fixed broadband.
Proximus exercises a nation-wide competitive constraint via its multiple play bundles. Given that 62% of Belgian households subscribe to broadcasting services in bundles (as compared to an EU average of 27%)lxxv, competitive constraints must be assessed starting from the bundle pricing, not from the pricing of the stand-alone broadcasting offers.
“[T]he concept of chains of substitution has to be corroborated by actual evidence, for instance related to price interdependence at the extremes of the chains of substitution, in order to lead to an extension of the relevant market in an individual case”.lxxvi In 2011, CRC found no evidence of chain substitution between the cable operators despite the nationwide presence of Proximus TV. Since then, besides price interdependence examined further below, numerous indicators point towards chain substitution (see Figure 55Figure 55). These indicators, both in terms of specifications and content of offers highlight similarity between the offers of the main cable operators since 2011, as reflected in the following table, which can only be explained by the presence of their nationwide competitor in the market. .
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FIGURE 55: EVALUATION OF TV OFFERS
Product Proximus Telenet VOO (Brutélé and Nethys) Wireless access Proximus Yelo TV – Febr Voomotion – app70 Everywhere 2013lxxviii 2012/201371 2012lxxvii SVOD Movies & Series Rex & Rio - Canal Play 2016lxxxi Passlxxix 2014 2013lxxx Live Football72 Proximus 11 – Sporting Telenet – VOOfoot – 2014 2014 2014 Hot/homespots FON - 2012lxxxii Homespots Wi-free - 2013lxxxvi 2012lxxxiii - Wi- freelxxxivlxxxv Increase download Comfort, Maxi, Whop: 60 to 100 Launch Wahoo speed Intense: 50 to Mbs - Apr. 2015 100M Aug.15 70 Mbs - March 2015 Increase download - Whoppa: from 160 Tattoo: from speed to 200 Mbps - Apr. 150Mbps to 200 2015 Mbps July 16
On the other hand, using the evolution of TV services prices published by the Flemish media regulator as a price comparison basis – as the EU Commission did in its Liberty – De Vijver merger decisionlxxxvii - would be methodologically inappropriate.
70 The CRC acknowledges that the “specificaties van de diensten verschillen van operator tot operator, maar zijn in zijn geheel beschouwde voldoende homogeen” (stressed by Cable Belgium) in haar besluit van 19 februari 2016 betreffende de herziening van de wholesaletarieven voor de diensten voor toegang tot de kabelnetten in het tweetalig gebied brussel-hoofdstad, p. 35 available on: http://www.bipt.be/public/files/nl/21634/Groothandelstarieven%20kabel%202015%20-%20CRC_final_pub_NL.pdf 71 The Android app was made available in 2013. See Le Soir, VOO lance son application Android VOOmotion, 3 Septembre 2013 72 The rights for live football matches of the Jupiler Pro League are since 2014 no longer granted on an exclusive basis.
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FIGURE 56: EVOLUTION PRICE BASIC SUBSCRIPTIONS AND COPY RIGHTS, EXCL. VATlxxxviii
The Commission comments to the graph was “(i) if an undertaking can raise prices without a significant loss of subscribers, this suggests that it has the ‘power to behave to an appreciable extend independently of its competitors and customers’ and therefore has a dominant position”. If Telenet can behave independently from Proximus in Flanders, there can be no chain substitution with the cable TV offerings outside of the footprint of Telenet. A symmetric reasoning could be made regarding the other cable TV operators’ pricing impossibility of constraining Telenet’s pricing.
However, the graphic is misleading because Proximus TV is only available in a bundle and not as a stand-alone service73. Proximus TV is, in reality, an additional service provided to Proximus broadband and telephony subscribers, designed74 to prevent these customers to churn as regards their telephony and broadband subscriptions (stand-alone or double play bundle) to the cable operators75. The fact that Proximus TV is only available in a bundle with services in nationally defined markets provides further support for a national geographic definition of broadcasting services, especially since BIPT found in June 2016 that Proximus is the leading TV and electronic communications operator in Belgium76.
73 The VRM makes an explicit warning to this fundamental difference in a footnote to the graph. 74 «Les opérateurs historiques sont confrontés à la problématique de fidéliser leur clientèle, attirée par les offres des nouveaux concurrents entrés sur un marché libéralisé. Cette fidélisation passe notamment par de nouveaux services, tels que la téléphonie illimitée ou la télévision par Internet. Scott Alcott (responsable lignes fixes chez Belgacom, l'opérateur historique belge) confirme cela: ''Belgacom TV doit surtout servir à la rétention de la clientèle sur la large bande''. X.D., Belgacom TV embellira l'opérationnel du groupe entre 2007 et 2008, L'Echo, samedi 25 février 2006, p11 75 Dominique Leroy, Proximus NV - CE : “Our conversion strategy has continued to pay off. Proximus successfully moved customers to triple and quad-play offers, and ended the quarter with 42% of our households and small offices on triple or quad-play, which is an increase of 3 percentage points year over year”, Thomson Reuters, 30/10/2015. 76 “Proximus reste le leader sur le marché des communications électroniques et de la TV avec une part de marché en termes de chiffre d'affaires avoisinant les 49% ». BIPT, Jaarverslag 2015, p. 12.
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FIGURE 57: SAMPLE PROXIMUS OFFERS
A chain of substitution means that a product at one end of the chain can potentially exert an indirect constraint on one at the other end of the chain. Given that Proximus TV is not offered as a stand-alone service, the presence of a constraint must be assessed on the basis of a comparison of the evolution of the (headline) bundles, not on the basis of the pricing of stand-alone TV subscription, which in Belgium concerns a shrinking share of the viewers77. The evolution of the pricing of triple play bundles does not necessarily evolve symmetrically with the evolution of the pricing of stand-alone TV subscription, because the most profitable triple play component is broadband78.
The pricing evolution from 2014 to 2015 for low usage bundles (i.e. bundles with lower telephony and data allowances) clearly shows a parallel pricing evolution of the cable operators that can only be explained by the nationwide offers of Proximus – which is according to the BIPT the market leader79 - on its nationwide broadband network.
In 2014lxxxix, the pricing of Proximus corresponded to the average of the pricing of bundles by the cable operators.
77 Only 22% of Telenet’s subcribers purchase only one type of service (generally cable television). See Case M.7194, p.80. 78 HLN, Internet is te duur in België, 5/02/14 , “Het duurdere breedbandinternet verklaart ook de beperkte prijsdaling voor bundels of de zogenaamde 'triple play' van internet, vaste telefonie en televisie, die eerder duur blijven. "Als we kunnen werken op de internetprijzen", verwacht de minister een impact op de prijs voor triple play”. 79 BIPT, Situation du marché des communications électroniques, p.11 "Proximus reste le leader sur le marché des communications électroniques et de la TV", and p. 43: "le câble en légère perte de parts de marché sur le marché de la TV numérique").
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FIGURE 58: TRIPLE PLAY PRICE COMPARISON
Between 2014 and 2015, the prices increase, but the patterns remain similar. In 2015, the cable operators’ offers remain within a margin of 4 Euro per month above or belowxc Proximus’ tariffs.
FIGURE 59: TRIPLE PLAY PRICE COMPARISON (1) - 2015
If we take into account promotions, we see that Telenet has narrowed the gap with Proximus, while Nethys and Brutélé (Voo) as well as SFR have slightly increased the gap with Proximus, showing the competitive dynamics of the market.
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FIGURE 60: TRIPLE PLAY PRICE COMPARISON (2)
The difference in pricing between Telenet and, on the other hand, Nethys and Brutélé (Voo) does not suggest a break in the chain but rather delays in the introduction of new product features and variation in content strategies. Telenet, which has a relatively bigger size, has always been faster in innovating, increasing speed and investing in content. Nethys and Brutélé (Voo) and SFR follow most of the time Telenet or Proximus in offering new features which suggests that there is substitution.
xci FIGURE 61: PERCEPTION DIFFERENCE QUALITY TELENET – PROXIMUS
To retain its image of better price/quality option, Proximus needs to continue pricing (nation-wide) below Telenet’s pricing. On the other hand, Telenet’s pricing strategy is constrained by the need to remain within a reasonable margin of Proximus’ pricing, reflecting the premium for its higher speed and richer content, also reflected in higher investments. If the 2011 CRC’s assessment were still valid, Telenet would have no reason not to set the prices of Whop and Whopa higher than justified by this margin in order to increase its ARPU (since the CRC also argued a low demand side price elasticity80). The mere
80 See for example, “De elasticiteit van vraag op de omroepmarkt is relatief laag”, Beslissing van deconferentie van regulatoren voor de elektronische communicatiesector (CRC) van 1 juli 2011 betreffende de analyse van de markt voor televisieomroep in het tweetalig gebied Brussel-Hoofdstad point 657, p. 203.
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fact that Telenet does not proceed in that way shows that Proximus’ (nation-wide) offer constitutes a competitive constraint, sufficient to discipline the cable operators’ pricing behaviour. On the other hand, the pricing of VOO products by Brutélé and Nethys constrains Proximus’ ability to increase prices.
If the 2011 CRC’s assessment were still valid, Brutélé and Nethys would have no reason not to increase the prices of VOO up to the level of Telenet. The mere fact that they do not proceed in that way shows that Proximus’ offer provides a strong competitive constraint, forcing the cable operators to apply lower tariffs, so as to prevent further loss of market share. In addition to Proximus TV, OTT offers, such as Netflix, are now also providing a nationwide pricing constraint on the cable operators.
In view of these nationwide pricing constraints, the finding of the 2011 CRC decision that the geographic dimension of the retail broadcasting market would be limited to the footprint of each cable operator is outdated.
18. Vindt u dat er andere relevante criteria bestaan die pleiten voor of tegen een segmentering van de markt op geografische basis? Geographic segmentation should be based on objective criteria, not on the footprint of the cable operator concerned, which is not a relevant criterion as shown in the reply to question 17. Differences in competitive conditions could plead for a geographic segmentation of the retail broadcasting market. In certain areas, satellite is an even stronger competitor of cable TV networks, because it provides content not available on cable, but of interest to population concerned: in the German-speaking community as well as in areas with a high percentage of immigrants. Geographic segmentation should be based on objective criteria, such as competitive pressure and differences in content offered. In particular, in the German speaking community, DTH satellite reception is pervasive (likely more than 30% of the 33,000 xcii households although no official statistics are available). Moreover, DVB-T reception of the (non-encrypted) German terrestrial network transmitter of Aachen- Stolbergxciii is possible in most of the German speaking area of Belgium, at no cost (beyond the cost of a basic areal).
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FIGURE 62: THE GERMAN FREE TO AIR (PUBLIC) TV CHANNELS THAT CAN BE WATCHED ON DVB-T IN THE BORDER AREA
Proximus seems not to have deployed VDSL in most of the area and is, in any case, not actively marketing Proximus TV via its website to German-speaking customers, likely because the potential gains of such strategy would be limited due to strong DTH (and DVB-T) competition, and possibly also by the availability of German OTT TV channels streaming applications such as Zattooxciv or MagineTvxcv. On the other hand, Nethys has invested in specific German public and commercial TV contentxcvi to attract German-speaking viewers (listed in the below Figure).
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FIGURE 63: CONTENT IN OTHER LANGUAGES
Similarly, stronger competitive constraints from satellite TV broadcasting likely exist81 in the area covering the communes of Brussels, Molenbeek, Schaarbeek, Anderlecht, St Gilles, Koekelberg, Vorst and St Joost where the number of satellite TV users is likely as high as cable users based on observation of the number of satellite dishes in the roofs of these municipalities. A study by Jan Hertogenxcvii relating to the share of Muslims in the Belgian population may be an appropriate proxy to assess the number of foreigners and Belgians from foreign origin who are likely to be more interested in watching satellite TV from their countries of origin via Arabsat or Turksat than subscribing to offers of the cable operators or Proximus.
81 See CRC, Beslissing betreffende de analyse van de markt voor televisieomroep in het tweetalig gebied brussel-hoofdstad, 1 July 2011: «Zo commercialiseert Numericable (…) een triple-playaanbod bestemd voor de Turkse gemeenschap alsook een ander triple-playaanbod voor de Marokkaanse gemeenschap. De samenstelling van deze twee aanbiedingen wordt afgewogen om te beantwoorden aan de verwachtingen van de doelgemeenschappen”, p. 111, point 335.
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FIGURE 64: SHARE OF MUSLIMS BY AREASxcviii
Area Footprint of [%]
Sint-Joost SFR 49,3% Molenbeek SFR 39,3% Schaarbeek Telenet 38,5% Brussels SFR 29,2% Anderlecht SFR 26,7% Sint-Gillis Brutélé 25,4% Koekelberg Telenet 24,8% Vorst Telenet 22%
3.3.2.2 Competition issues In its decisions of 1 July 2011, the CRC decided that cable operators have significant market power on the retail market for broadcasting services, on the basis of the following analysis.
FIGURE 65: BROADCASTING SMP ANALYIS Hoog marktaandeel Controle over niet gemakkelijk te dupliceren infrastructuur Bestaan van belemmeringen voor verandering: mogelijkheid om tegelijk analoge en digitale tv- signalen te verstrekken, kosten van de bijkomende decoders, bepaalde administratieve en technische belemmeringen, gevolgen van de multiple-play aanbiedingen, bestaan van een historisch klantenbestand Schaal- en breedtevoordelen Geen tegenwicht aan de koperszijde een sterk ontwikkeld distributie- en verkoopnetwerk Verticale integratie
60. Vindt u dat deze conclusies nog altijd geldig zijn? Om welke redenen?
The conclusions of the 2011 broadcasting SMP analysis are clearly outdated. With regards to SFR, the Belgian cable network is said to be on sale. Given that Orange, the only access seeker, has the financial resources to acquire the SFR network, there is no barrier to entry for that company in the geographical market concerned. Before making an SMP assessment of the cable operators on the broadcasting market(s), the CRC should first examine whether the retail broadcasting market still fulfils the cumulative three criteria test. The retail broadcast market does not meet the three criteria test.
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In its comments letter C(2011) 4534, the EU Commission inter alia instructed CRC to monitor closely the relevant market and re-assess the developments on the markets in terms of infrastructure and services competition and, if necessary, revise its notified market review without delay. In order to take utmost account of this comment, the CRC, before making an SMP assessment of the cable operators on the broadcasting market(s), should first examine whether the retail broadcasting market still fulfils the three criteria test. We refer elaborate on this below In any case, the conclusions of the 2011 assessment are clearly outdated as regards SFR, of which the controlling shareholder is said to be looking for an acquirer for the cable network and its subscribers (Cfr reply to question 30). Where a network is for sale, it is not possible to argue the existence of high barriers to entry in the geographic market concerned, especially when the only beneficiary of the access obligations has the financial means to acquire the network. As regards, Nethys and Brutélé, their respective market shares show a decline of TV subscriptions, implying a lack of market power. As regards Telenet, the findings of the 2014 merger decision in case M.7194-Liberty Global/Corelio/W&W/De Vijver Media should not prejudge nor influence the coming review. Indeed, while a merger assessment starts from the existing regulatory framework, the current exercise seeks precisely to review the rules in place. For example, the Commission does not question the geographic market definition, among other because specific regulation is imposed in that footprint on Telenet. However, as shown above in reply to question 17, there are strong indications of chain substitution requiring a broader geographic market definition, including at least also the footprint of Brutélé and Nethys. Moreover, the Commission assessment in the 2014 Decision is based, on sometimes outdated data or is not always starting from a forward-looking perspective as required by the SMP guidelines82 or not very thorough. The aim of the assessment was indeed not to assess the market power of Telenet as such but to effect of the merger transaction concerned on the markets affected immediately after the completion of the transaction. In market reviews what needs to be examined in the market power of the operators concerned and its likely evolution over the three to five years of the review period. The table below provides an overview of the indicators used in the Commission assessment and of their relevance in the current exercise.
argument evolution relevance very high market share erosion continues, in particular Market shares as such do not for the smaller cable operators prove dominance Durability of high market share Churn rates recently increased Market power likely to decrease shown by low churn rates (see question 61). Market power strongly in the coming years is likely to diminish as a consequence of reduced willingness to pay consumers, coming from OTT competition (see TeleDenmark experience – quoted in reply to question 34)
82 « 20. In carrying out the market analysis under the terms of Article 16 of the framework Directive, NRAs will conduct a forward looking, structural evaluation of the relevant market, based on existing market conditions. NRAs should determine whether the market is prospectively competitive, and thus whether any lack of effective competition is durable(10), by taking into account expected or foreseeable market developments over the course of a reasonable period. The actual period used should reflect the specific characteristics of the market and the expected timing for the next review of the relevant market by the NRA. NRAs should take past data into account in their analysis when such data are relevant to the developments in that market in the foreseeable future”.
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Sustainability of low churn rates Anecdotic data: current statistics Churn may increase in the because increase share triple reflect one-time migration from coming years. A churn rate play bundles. Triple play stand alone to bundles. There is around 10% would be bundles have a lower churn. no evidence that bundles have substantial. lower churn. Certain cable operators in Belgium have a higher churn on bundles as set out in reply to question 61. ability to increase prices without Pricing data show that Telenet No evidence of ability to price much impact on churn cannot increase prices with independently from competitors more than the perceived and consumers ‘premium’ of its service, while the other cable operators need to apply prices lower than those of Proximus. High barriers to entry for the SFR network said to be for sale Argument partly obsolete as retail provision of TV services Entry by OTT players shown by entry of OTT as Netflix Cable networks offer both digital With the high penetration of Obsolete indicator as shown by and analogue cable TV WIFI homespots and second the Profacts/Telenet survey, screens, analogue does no quoted in reply to question 12. longer provide a competitive advantage. Significant switching costs Costs of new decoder and Multiple play substantially router are often borne by reduces switching cost. Same Proximus in its promotional one time cost, if any, for offers. Eurobarometer does not switching multiple services. identify switching cost as important motive not to switch bundle provider. No countervailing buying power Due to OTT offers, the Limited incidence on market willingness of consumers to pay power for content is decreasing SMP designation Was based on the 2011 Obsolete indicator assessment where analogue TV was still important for second TV sets and bundle competition was not yet so predominant.
Taking into account that SFR, Nethys and Brutélé have a significantly smaller subscriber basis83 than Telenet (see Figure 68 under question 61), the conclusions in this table will apply a fortiori to these operators. In addition, the rationale of the three-criteria test is precisely to prevent that all markets where an operator would be found to be dominant would, for this reason only, be regulated. Finally, the two-sided nature of the broadcasting market must be taken into account. TV distributors are intermediaries between content providers and viewers. Professor Liyang Hou recalls that “the economic model of broadcasting is unique that (…) network operators provide transmission services to content providers, however usually without receiving payment
83 The mere fact that these operators have been losing subscribers consistently over the last years makes it impossible for them “to behave to an appreciable extent independently of [their] competitors,[their] customers and ultimately of the consumers”, which is the definition of the dominance set out by the European Court of Justice in the Hoffmann-La Roche case.
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from the latter. Broadcasting network operators normally transmit media content either for free, or with payment to content providers. A number of NRAs consider it as evidence of countervailing selling power of content providers. In other words, broadcasting network operators cannot act independently of content providers and therefore the second criterion cannot be fulfilled”, even if under competition law the operator could be found dominant on the retail residential market for TV distribution. Professor Hou continues: “Article 31 of the Universal Service Directive requires a specified radio and TV broadcasting channels and services defined according to general interest objectives to be transmitted by undertakings providing broadcasting networks that are used by a significant number of end users as their principle means to receive radio and TV broadcasts. The must-carry obligations largely restrict the ability of broadcasting network operators to act independently of content providers and thus the second criterion is not fulfilled. It should be noted that the argument based on the must carry obligations in practice is only used to cable networks”xcix.
61. Ziet u andere factoren die de marktmacht van de operatoren zouden kunnen beïnvloeden (vergroten of verkleinen)? Indien ja, welke?
Cfr reply to question 1. Because of the extensive reach of NGA networks in Belgium, OTT providers can reach the vast majority of households with their services. The take up of OTT services is primarily noticeable among young people which translates in an overall decrease in viewing time and declining TV consumption of young adults (see Figure 11), who are migrating to OTT platforms. In parallel, market dynamics, even in the absence of sector-specific ex ante regulation may make barriers to entry disappear over time, for example as a result of disruptive technological developments. This occurred with the SMS service, which originally required the control of a mobile (or virtual mobile) network. Today, similar developments are happening in the television sector. Competitive pressures on operators need not necessarily derive from other comparable operators, but may be exercised by undertakings (such as those that are currently referred to as over-the-top players) that, while adopting different business models, are able to supply products that can be regarded as an alternative by end users. “Indeed, in innovation driven markets competitive constraints often come from innovative threats from potential competitors that are not currently in the market, and dynamic or longer-term competition can take place among firms that are, from a static perspective, not necessarily competitors in an existing market”c. This is what we already observe today with OTT offerings. The above arguments form the basis for questioning whether the broadcasting market as such would pass the three criteria test. A key question is whether the three criteria test, justifying the ex-ante regulation of the broadcasting market is still fulfilled. Since the 2011 CRC assessment and the 2014 Commission merger decision, many elements evolved: phasing out of analogue TV subscribers. The qualitative questionnaire does not cover one of the key questions of the revision of the 2011 Decisions, i.e. whether the three criteria test, justifying the ex-ante regulation of the broadcasting market is still fulfilled. The table below summarizes the reasoning of the CRC to show that the three criteria test was fulfilled in 2011.
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FIGURE 66: CRC THREE CRITERIA TEST
The presence of high and non-transitory structural, legal or regulatory barriers to entry Not economically viable to duplicate networks. Cable operators (and Proximus TV) have cross-selling possibilities and multi-play offer capabilities. Cable operators have the competitive advantage of their analogue TV offer; Multicasting obligations in the market for wholesale broadband access not likely sufficient to reduce barriers to entry.
The market structure does not tend towards effective competition within the relevant time horizon, having regard to the state of infrastructure based and other competition behind the barriers to entry Market shares of the cable operators decrease only very slowly. High market shares combined with a relatively weak demand elasticity. Cable operators able to migrate their analogue CATV customers to their own digital platform without entailing certain migration costs. Multiple play offers reduce churn.
Competition law alone is insufficient to adequately address the identified market failure(s)
Competition law only susceptible to achieve infrastructure access in the case of essential facilities (not applicable in the case at hand) and In any case competition law enforcement does not allow price regulation of such access.
Since the market review of 2011, the broadcasting market has significantly evolved. As a consequence, at least the second criterion is no more fulfilled. The second criterion must be distinguished from the SMP assessment. Indeed, a “tendency towards effective competition’ does not necessarily imply that the market will reach the status of effective competition within the period of review. Accordingly, even if an operator with SMP would be found on the broadcasting market – quod non – this finding would not suffice to exclude that the market is is tending towards effective competition. A tendency to effective competition “simply means that there is clear evidence of dynamics in the market within the period of review which indicates that the status of effective competition will be reached in the foreseeable future without ex ante regulation in the market concerned”ci. While it is true that “(t)he simple fact that market shares have begun to decrease in recent years or uncertain technological future developments are in themselves insufficient to find that the market tends towards effective competition”84, in the market at hand, the decrease of market shares of the cable operators go together with other, structural evolutions confirming the tendency to effective competition. For example, the viewing patterns of the younger generations privileging OTT content and the increased share of viewers that are not from Belgian origin and often continue to speak their mother tongue, brings about a pressure on the demand side. This segment is the most likely to switch to OTT applications or to satellite viewing in case of perceived price hikes.
84 SWD p.10.
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Conglomerate effects of integrated operators offering bundles further increase competitive pressure. As shown in reply to question 17, the pricing of triple play offers of Proximus and the increasing possibilities of mobile OTT video content made possible by the improving compression standards85, substantially reduces the cable operators’ margin of maneuver on the market for the delivery of broadcasting signals to behave independently from its consumers. In this regard, the data listed in reply to question 24, market dynamics, show real competition behind the ‘barriers to entry’, on the relevant retail market, enhancing “user and consumer benefits in terms of choice, price and quality by promoting and ensuring effective competition at retail level as well as to promote efficient investment and innovation in new and enhanced infrastructures”. And “in accordance with Directive 2009/140/EC (Better Regulation Directive) the aim is progressively to reduce ex ante sector specific rules as competition in the markets develops and, ultimately, for electronic communications to be governed by competition law only. It is only where consumer harm could be expected in the absence of regulatory intervention that a market should be susceptible to ex ante regulation”cii. In the case of the broadcasting market, no consumer harm can be evidenced. In addition, the first of the three criteria no longer fulfilled. There are no longer barriers to entry regarding the SFR footprint, given that the network and subscriber basis are, according to the press, put for sale and that Orange has the financial means to acquire the company and its approximately 110.000 subscribers. In addition, market entry is today already possible via OTT applications provided over fixed broadband and taking into account the improvement in compression techniques and the further network coverage, it is likely that before the end of the time period covered by the coming review, entry on the market will be also possible via OTT services provided on mobile broadband. The EU Commission, for its market power assessment of Telenet in the Telenet/deVijver merger decision, had taken over and expanded the arguments used by the CRC in 2011 to conclude that the second criterion of the three criteria test was not fulfilled. However, this conclusion of 2011 is likely outdated for the period 2016-2020. We will therefore examine below each of these arguments and show that they are already or will likely not remain valid for the cable operators until the end of the coming review period.
1) market shares that decrease86 The graphic below illustrates the progressive decrease of the subscriber base of the cable operators, mainly to the benefit of Proximus TV (including Scarlet).
85 Seefigure 15 in the reply to question 5. 86 «Hoewel IPTV enig dynamisme op de markt brengt, nemen de hoge marktaandelen van Telenet maar traag af, zoals aangetoond in randnummers 397 en 401. In het algemeen wordt de relevante markt gekenmerkt door een zeer beperkt aantal spelers (Belgacom en Telenet) waarbij Telenet een marktaandeel behoudt rond [70-80]% of meer op korte tot middellange termijn”. Beslissing van de conferentie van regulatoren voor de elektronische communicatiesector (CRC) van 1 juli 2011 betreffende de analyse van de markt voor televisieomroep in het nederlandse taalgebied, p. 133.
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FIGURE 67: DECREASE SUBSCRIBER BASE CABLE OPERATORS
3.000.000CONFIDENTIAL
2.500.000CONFIDENTIAL
2.000.000CONFIDENTIAL
1.500.000CONFIDENTIAL
1.000.000CONFIDENTIAL
CONFIDENTIAL 500.000
- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Telenet Proximus Nethys + Brutélé SFR
The SMP guidelinesciii specify that “a high market share alone is not sufficient to establish the possession of significant market power (dominance)” and that ”fluctuating market shares over time may be indicative of a lack of market power in the relevant market”. In this regard, the SMP guidelines do not require a specific speed and extent of these fluctuations. Different product characteristics – for example between mobile and fixed services - and consumer habits87 vary substantially between Member States and age groups, mean that no general rule can be applied to assess the extent of market share fluctuations in an SMP assessment. However, an international comparison with comparable operators does not support the hypothesis that the market share decrease in Belgium would be significantly lower than in other EU countries, of which none decided to impose regulated access to cable networks.
FIGURE 68: LIBERTY GLOBAL NET CUSTOMER LOSSES (IN 000)
87 “ Difficile de convaincre le consommateur belge de changer ses habitudes (…) à la simple idée de devoir prendre un rendez-vous avec un installateur, de changer de décodeur et d'habitudes de visionnage télévisuel, le consommateur s'est avéré extrêmement réticent. Un sondage récent réalisé par l'IBPT, le régulateur du secteur télécoms, met en lumière cette réticence : à peine 16 % des personnes interrogées ont changé d'opérateur fixe au cours des trois dernières années. Par comparaison, 30 % des personnes interrogées ont changé d'opérateur mobile. Le double ! Il faut dire que changer d'opérateur mobile ne nécessite qu'un simple changement de carte SIM». Pourquoi Base se retire du marché de la TV. (http://trends.levif.be/economie/high- tech/numerik/pourquoi-base-se-retire-du-marche-de-latv/article-normal-358069.html).
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Fact remains that Proximus’ number of TV subscribers is growing continuously at the expense of the share of the cable operators, which contradicts allegations of a dominant position of all cable operators. The graphic below may show that Telenet has better resisted than Nethys and Brutélé to the competitive pressure from Proximus TV. In particular Nethys and Brutélé have lost the most subscribers (probably because Proximus took the advantage of its leading position in mobile, telephony and broadband to migrate more easily its existing mobile and fixed customers to multiple play 3P or 4P including TV and because of the later VOO mobile offer88). The marked and continuing decline of their subscriber numbers highlights evidences their lack of market power. In its 2014 Merger Decision, the Commission noted that Telenet’s churn rates showed a downward trend until Q3 2014. However, since then churn rates increased again, as shown in the graphic below published by Crédit Suisse Researchciv.
FIGURE 69: TV SUBSCRIBERS LOSS HAS STARTED TO DETERIORATE
2) Cable operators able to migrate their analogue CATV customers to their own digital platform This argument was valid in the previous decade. Today, the remaining number of analogue CATV customers is limited and can no more be considered as an element that obstructs competition between Proximus TV and the cable operators. The decision of Proximus not to make use of the analogue TV resale remedy imposed on the cable operators in 2011 confirms that access to the remaining analogue customer base is no more of commercial interest. In addition, a 2013 survey shows that in total, Proximus TV would attract most the Belgian ATV users.
88 Trends-tendances, VOO lance son offre mobile...et s'emmêle les pinceaux, 29/07/13, available on http://trends.levif.be/economie/entreprises/voo-lance-son-offre-mobile-et-s-emmele-les-pinceaux/article-normal-174871.html
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89 FIGURE 70: WICH PROVIDER DO ATV SUBSCRIBERS WHO INTEND TO SWITCH PREFER
Similarly, the argument that since cable networks allow watching both digital and analogue TV, this would make it more difficult for subscribers to switch and more difficult for other TV distributors to enter the market and expand. As mentioned in the reply to questions 13 and 14, this argument is today already obsolete following in particular the pervasive availability of second and third screens.
3) Multiple play offers reduce churn. Multiple play has been the main means by which vibrant competition was introduced since the beginning of the century in the retail broadband market. The offer of IP TV on top of broadband was a strategy by Proximus to counter the inroads of cable operators in the broadband market90. The aim of bundles was and still is to bring over subscribers of single or double play products from the other platform. The commercial strategy of operators to migrate subscribers of stand-alone products to bundles gave the impression91 of a consolidation of the sector around the bundles of both infrastructure competitors.
89 Watching Television, Awareness, usage & perception of different providers, Report prepared for Telenet by Profacts; 31-01-2013, slide 28. 90 « In electronic communications markets, competitive constraints may come from innovative threats from potential competitors that are not currently in the market”, SMP Guidelines, point 80. 91 TEST AANKOOP, “Volgens TestAankoop ontstaat stilaan een duopolie tussen Telenet en Proximus. Mobistar mag op vlak van telefonie wel een grote speler zijn, op de andere vlakken (televisie, internet. enz.) speelt het niet mee”, http://beurs.com/2015/04/21/telenet-neemt-base-over-weg-vrije-markt.
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FIGURE 71: CHURN RATE ACCORDING TO THE TYPE OF HOUSEHOLDcv
As a direct consequence, single product churn seems higher in the current statistics than they will be in the longer term, when the major part of the ‘stock’ of single play households will have been migrated to the multiple play bundles. With other words, the current churn figures are no indicator of future consumer behavior. Moreover, the argument that multiple play offers, as such, reduce churn is at odds with findings of Eurobarometer: “Switching service provider appears to be more common for newer services such as bundles (45%), mobile phone (44%) and Internet (43%). Almost four in ten (37%) say someone in their household has switched fixed telephone provider. Respondents are least likely to say that someone in their household has changed television provider (26%)”cvi.
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FIGURE 72: HAVE YOU OR SOMEONE IN YOUR HOUSEHOLD CHANGED SERVICE PROVIDER TO THE FOLLOWING SERVICES?
The Eurobarometer finding is confirmed by the churn figures of certain Belgian cable operators92 showing a higher churn for triple play than for stand-alone services. In Belgium, churn is further facilitated by the law of 1 October 2010 that allows Belgian consumers to cancel in writing and with 30 days’ advance notice, any subscription (television, broadband, telephony) without penalties from the seventh month onwards after the agreement was entered into. There are no means to forecast the future churn figures. However, one thing is certain: triple play will be increasingly under pressure from OTT services, which are making TV distribution redundant as Whatsapp and Viber are doing with telephony and SMS.
4) The ability of cable operators to increase prices without much impact on churn. As highlighted in the reply to question 17, Proximus does not offer a stand-alone IP-TV service. It is therefore not possible to draw any conclusion from correlations between the evolution of the stand-alone prices of cable TV subscription relatively to the ‘price’ of Proximus TV (as reflected in Figure 22), on the one hand, and the churn figures of cable operators, on the other. Moreover, increases of stand-alone subscription rates of cable TV, if any, may seek to induce the subscribers concerned to acquire other services, and in particular a bundle encompassing TV and broadband, by reducing the price difference between the stand alone cable TV subscription and the price of the bundle. The subscribers concerned will then compare the price of such bundles provided by their cable operator to the price of equivalent bundles by Scarlet or Proximus. As mentioned under question 19, competition occurs via offers for bundles, not on stand-alone products. For this reason, comparisons between the price evolution of stand-alone tariffs and churn are not pertinent to assess the level of competition behind the barriers to entry identified by the CRC. In the case of Nethys and Brutélé, the Figures 32-34 in the reply to question17, demonstrate that both cable operators have no margin to increase prices without impact on their churn: the pricing comparison
92 [Nethys and Brutélé] confidential data to be omitted from public version..
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shows that they had to maintain prices below those of Proximus and were, despite this, losing market share to Proximus.
5) High barriers to entry for the retail provision of TV services. As regards the alleged high barriers to entry for the retail provision of TV services as stand-alone offerings, the argument is becoming outdated given that market entry is now possible OTT, based on apps developed for IoS, Android and Windows. See the reply to question 13, 14 and 34. Stievie, Auvio or Turksat show the ease of providing TV services in Belgium. In addition, improvement in compression techniques and the upgrading of the network will further make of videostreaming via mobile broadband an alternative to TV over cable and fixed broadband networks. 5G mobile speeds are totally sufficient for IPTV services.
6) No countervailing buying power. TV providers may have 1.5 million isolated individual subscribers in front of them, but it suffices that an active little group starts using the social media to damage durably the reputation of a company. The assessment of market power needs to take into account the crucial importance of a positive image in this highly concentrated and competitive sector. A recent example was provided by the decision of Proximus to continue broadcasting the Christian TV channel ‘KTO TV’ which it had initially decided to discontinue, after an on-line petition started to gather support93.
3.3.3 bundles In its decisions of 1 July 2011, CRC concluded that, while there was a tendency towards bundled offers ("multiple play"), there appeared no justification to define a separate relevant market for bundles on the basis of competition law principles. The CRC reviewed the following criteria.
FIGURE 73: CRITERIA TO ASSESS EXISTENCE OF BUNDLE MARKET Klanten-specifieke (breedte)voordelen Voordelen betreffende de transactiekosten en andere voordelen voor de consument Overheveling van marktmacht (“hefboomeffect”) Migratiekosten Symmetrie in de marktaandelen
19. Wat is, op basis van de voormelde criteria, uw mening over het eventuele bestaan van een relevante markt voor gebundelde aanbiedingen?
93 Le Soir, KTO TV reste finalement dans l’offre de Proximus TV, 18 April 2016. http://www.lesoir.be/1185063/article/economie/2016-04-18/kto-tv-reste-finalement-dans-l-offre-proximus-tv
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The main motive to subscribe to bundles is the discount that the consumer enjoys when replacing the stand-alone products with a bundle. In determining a bundle market, a SSNIP test needs to show that customers are not willing to switch in case of a 5-10% price increase. Such SSNIP test would fail for bundles. There is no bundle market.
The majority of Belgian consumers buy their services in bundled form. As stated under question 17, the assessment of the competitive dynamics of the markets needs therefore to start from the competition between bundled offers, instead of from stand-alone product offers.
The fact that services are increasingly sold in bundles is not sufficient to prove that bundles constitute a distinct market from the markets of its components, given that stand-alone services can be acquired separately, be it from the same provider 94. In early 2016, the Commission noted therefore in its decision on the Liberty Global Base merger that “on the basis of the evidence before it, the Commission does not consider that a distinct retail market for fixed-mobile multiple play services, separate from the retail markets of each stand-alone service, currently exists in Belgium” 95.
15% of the households subscribe only to one product (telephony, broadband or television) and 11.2% still buys several products separately, for example telephony from Proximus and television from a cable operator. However, the majority of Belgian consumers buy their services in bundled form (35.7% triple play in 2015 and 21.4% double play broadband and TV).
This buying behaviour needs to be reflected in the market reviews, specifically it is necessary to ensure that price comparisons are conducted on bundled pricing, not on the increasingly irrelevant stand-alone prices.
94 E.g. Proximus does not sell its Proximus TV service as a single stand-alone product. 95 Point 98 p. 30.
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cvii FIGURE 74: THE RELEVANCE OF BUNDLES TO THE MARKET
Bundles vs stand-alone 2015 Belgium
stand alone BB + tel BB + TV tel +BB+TV
20. Vindt u dat er andere relevante criteria bestaan die pleiten voor of tegen het bestaan van een relevante markt voor gebundelde aanbiedingen? Indien ja, welke?
No. As referred to in our answer to question 19, showing the existence of a distinct market for bundles will fail. In addition to the fact that the current bundles would be unbundled in the case of SSNIP test In addition, defining relevant bundle markets for a forward looking assessment would not be possible, given the fast evolution of bundles over time, for example with the decreasing of bundles with fixed telephony and the take up of bundles including mobile telephony, and the variation in the composition of bundles offered by the competing operators, which reflects their different commercial strategies.
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96 FIGURE 75: THE RESPECTIVE BUNDLE STRATEGIES REFLECT DIFFERENT APPROACHES
In any case, the marketing of bundles does impact significantly on competition in the markets of stand- alone products, as pointed out previously, given that with a bundle a customer has access to internet, voice and/or TV.
3.4 Wholesale markets
3.4.1 Unbundling
3.4.1.1 Definition product market In its decision of 1 July 2011 CRC came to the following conclusion in relation to product 4[07]:Wholesale market for (physical) shared and fully unbundled network infrastructure access provided through a network connected to the end user by means of copper pairs. This conclusion was reached on the basis of the following substitution analysis:
96 Source = company websites
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FIGURE 76: UNBUNDLING SUBSTITUTION ANALYSIS Beschouwde producten Substitueerbaarheid? Volledig ontbundelde en gedeelde toegang zowel op het aansluitnet als op het subaansluitnet Toegang tot het aansluitnetwerk van het openbaar telefoonnetwerk via koperpaar en kabelnetwerken Toegang tot bitstroom en ontbundelde toegang tot het aansluitnetwerk
37. Vindt u dat deze conclusies nog altijd geldig zijn? Om welke redenen?
The conclusion of the 2011 assessment is still valid today.
Only shared and fully unbundled network infrastructure access are direct substitutes and form part of the same market.
Cable networks share resource in the access networks and do not have the technical capability to replicate a point-to-point unbundled access product.
For market definition purposes, it is the ability to replicate that matters and not whether this is achieved through physical or non-physical access. The distinction between physical and non-physical access is becoming blurred with the emergence of access methods such as VULA in certain Member States (see reply to question 38). The issue is thus whether, for the usage intended, Proximus’ bitstream offers could replace BRUO products.
At first glance, the market data available show that this is not the case. While the number of unbundled lines sold by Proximus decreased by 34% from 2014 to 2015, the number of bitstream lines also decreased. In the absence of evidence provided by customers of Proximus’ BRUO offer, it would appear that bitstream is not a substitute to unbundled access products.
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cviii FIGURE 77: VOLUME WHOLESALE ACCESS SOLD BY PROXIMUS
In view of the Commission’s comments on ACM’s notification of its assessment of the wholesale local access market in the Netherlandscix, the question may arise whether access to cable networks should be included in the market for local access. ACM had taken into account the lack of virtual unbundling products, comparable to unbundled access, currently available on the cable network. ACM had also noted the absence of direct constraints and therefore concluded that access to the cable networks was not part of the same market. The Commission disagreed with the conclusion arguing the indirect constraints that cable products in Market 3b (central access) may exert on Market 3a (local access). The Commission concluded based on a WIK studycx that virtual access on cable is possible and should therefore also look at whether at any time during the relevant regulatory period, a form of LLU access to cable networks could become possible. The Commission’s interpretation of the WIK report is not accurate, as WIK pointed out in a separate comment97. In particular the Commission refers to the below statement by WIK: “DOCSIS (3.0/ 3.1) so far is not intended to support wholesale services in a VULA manner, but may be developed towards such features, if there is demand for it”cxi. This statement, however, does not represent WIK’s overall conclusion on the likelihood and viability of developing a VULA offering during the regulatory period. Rather, it appears that with this statement, WIK intends to avoid precluding the possibility that a VULA type service may be developed in the future, despite the fact that this is unlikely to happen. This follows from WIK’s full report in which it repeats the above statement, but goes on to clarify what it means. In the report, WIK states:
97 WIK-Consult, Response regarding EC CASE NL/2015/1727, Phase II investigation, for ACM, NL, Bad Honnef, 8. May 2015.
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“DOCSIS 3.0 and 3.1 as well as its predecessors so far was not intended to be used for providing wholesale services, especially not in a VULA manner, but may be developed towards such features over time, if there is demand for it.”cxii WIK then goes on to clarify that in the event that such a service would be developed, this is most likely to be done by a new entrant that has the possibility to take the implementation of such a service into account at the outset of the design of a new network and that has sufficient network capacity for additional wholesale customers: “Such wholesale on cable-TV network demand may be caused by new upcoming cable-TV operators seeking to enlarge its customer base above its own directly acquired customers and gaining additional income, knowing that the capacity provided in the network has sufficient space for additional wholesale customers. Such networks may be already designed for adding wholesale services. These network operators may be also open for offering VULA based services and demanding for Cable-TV network equipment supporting it. We are unsure, if there are providers developing into that direction, demanding system support for VULA like services, or if they are satisfied offering bit-stream services only. Offering bit-stream only in any case may be their strategic position”. WIK concludes that VULA will only be developed if there is a demand for it from network operators themselves, but this demand will be very limited, due to the capacity constraints of cable networks: “The demand for VULA support in the DOCSIS platforms will not be stimulated by the regulatory objective to regulate SMP, but by network operators demanding for it. At the moment we observe increasing peak rate offers for IP data communication services by cable-TV service providers, driving the market to higher bandwidth and using the competitive advantage against DSL-based services. This peak rates would be restricted or even reduced when offering additional wholesale services on a spectrum sharing or BSoD approach. Therefore we assume that demand for such services from the cable-TV provider side will be very limited.” WIK further concludes this will remain true after the roll-out of DOCSIS 3.1. Existing operators are most likely to invest in DOCSIS 3.1 to meet future demand of existing customers and are unlikely to have spare capacity to offer wholesale services: “Taking into account that the end-customer demand for data communication will increase also for the cable-TV network operator the migration to DOCSIS 3.1 and the investment required will be decided in order to satisfy their customers’ demand and in order to keep a competitive position with other NGA based operators instead of adding capacity for an additional wholesale business.” In addition, WIK hints at the fact that some operators are already offering bit-stream type services and that this is likely to be more appealing than offering VULA. In ACM’s draft LLU decision, this is confirmed by Tele2 and Euronet who state that third parties would not be interested in a VULA offer on cable as there would be no viable business case. According to ACM, Tele2 has indicated that a positive business case for the roll out to the CMTS locations of cable operators would require the possibility of offering services to both residential and business customers, as business customers give a higher return per connection. However due to the historic background of cable operators there are insufficient business customers connected to give a positive business case for such a roll out. Tele2 has repeated its view that cable should not be considered as part of the LLU market in its motivation to ACM for its request for a new analysis of the television marketcxiii. BEREC shared this view and stressed that consequently the inclusion of the cable networks’ self-supply in the market was not justified as is recommended in the explanatory memorandum to the 2014 Markets recommendation in situations where “alternative providers have difficulty in entering the merchant market readily”cxiv. 97 Private and Confidential
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This conclusion arrived at in the Netherlands would, without any doubt, also apply to Belgium.
38. In de toelichting bij de aanbeveling van 9 oktober 2014 beschouwt de Commissie dat bepaalde producten van virtuele toegang, onder bepaalde voorwaarden, kunnen opgenomen worden in de markt van lokale toegang. Meent u in het bijzonder dat een product van het type VULA (Virtual Local Loop Unbundling) substitueerbaar zou zijn met ontbundelde toegang tot het aansluitnetwerk? Om welke redenen?
Virtual Local Loop Unbundling (VULA) may provide a solution for access to more remote and smaller MDFs where the business case for unbundles access is challenging.
VULA is a product somewhere between unbundled access and bitstream. VULA does not provide access to passive infrastructure but has an active component to provide access to the local loop at another location than the main distribution frame (MDFs) where the loop terminates. By including an active component in the service, the service characteristics are fundamentally different to unbundling, where the access seeker fully controls the end user experience though its own equipment.
However, improving the current features of Proximus’ BROBA offers to increase the control of the service by the access seeker may be necessary to respond better to the needs of business clients. This issue is however without regard to the possible substitution of BRUO products by a possible VULA offer.
39. In de toelichting bij de aanbeveling van 9 oktober 2014 beschouwt de Commissie dat er geen onderbreking is van de substitutieketen tussen de huidige diensten en de diensten verstrekt via glasvezel. Denkt u dat een ontbundelde toegang tot een glasvezelnetwerk de plaats kan innemen van een ontbundelde toegang tot een koperen netwerk? Beschouw de mogelijkheid betreffende substitutie aan de vraag- en de aanbodzijde.
The nature of fibre roll-out requires regulatory intervention, if needed, that is light touch and aims to stimulate investments to prevent the emergence of a digital divide. The regulatory challenge is different to legacy infrastructure, which was already largely in place when telecommunications markets were liberalized and access regulation imposed.
40. Vindt u dat de substitueerbaarheidstests nu ook zouden moeten slaan op andere producten dan die welke in de vorige tabel opgesomd zijn? Indien ja, welke? Om welke redenen? Given the increasing possibilities of fixed-mobile substitution, the CRC should examine the possible substitution of fixed local wholesale broadband access by mobile broadband access.
3.4.1.2 Definition geographic market In its decision of July 2011 CRC decided on a national geographic dimension for the market for unbundled access, on the basis of the following analysis:
FIGURE 78: GEOGRAPHIC ANALYSIS MARKET FOR UNBUNDLING Het voorkomen van een enkele aanbieder, met een nationale dekking.
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Het gebrek aan roll-out (toen en voorzienbaar tijdens de reguleringsperiode) van glasvezel tot bij de abonnees (FTTH). De opvallend zwakke ontwikkeling van de ontbundeling overal in België, met weliswaar regionale varianten. De niet-gedifferentieerde kenmerken en de prijzen van deze diensten binnen het grondgebied. De complexiteit of zelfs onmogelijkheid om een duidelijk afgelijnde onderverdeling te maken die voldoende stabiel is in de tijd tussen de gebieden waarin de ontbundeling daadwerkelijk mogelijk haalbaar is op economisch vlak en de gebieden waar dat niet zo is. Het geografisch gezien relatief brede beroep gedaan op de ontbundeling.
41. Wat is op basis van de bovenstaande criteria uw mening over de geografische omvang van de markt?
The above reasoning still appears valid.
The geographic market should, again, be defined as national.
3.4.2 Bitstream and WBA
3.4.2.1 Definition product market In its decision of 1 July 2011 came to the following conclusion in relation to the relevant product market: “The wholesale market for bitstream access, both with and without voice and based on ADSL, includes SDSL and VDSL, with exception of resale, wholesale leased lines and cable networks.”
This conclusion was based on the following substitution analysis:
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FIGURE 79: BITSTREAM AND WBA SUBSTITUTION ANALYSIS Beschouwde producten Substitueerbaarheid? Toegang tot binair debiet en de aanbiedingen voor ontbundelde toegang tot het aansluitnetwerk Aanbiedingen voor toegang tot binair debiet en doorverkoopaanbiedingen BROBA ADSL-aanbiedingen zonder spraak en BROBA ADSL met spraak Aanbiedingen BROBA ADSL en BROBA SDSL Aanbiedingen voor toegang van BROBA ASDL en WBA VDSL Aanbiedingen WBA VDSL zonder spraak en WBA VDSL
met spraak Aanbiedingen voor toegang tot binair debiet in BROBA SDSL en wholesalehuurlijnen Aanbiedingen voor toegang tot binair debiet BROBA/WBA en de kabelnetten
42. Vindt u dat deze conclusies nog altijd geldig zijn? Om welke redenen?
At wholesale level cable resale is putting pressure on Proximus. Orange switched from DSL to cable
Proximus has intensified the shift from regulated access to their network to commercial deals over the last years, which indicates that cable resale has put a constraint on Proximus.
43. Vindt u het, in het licht van de toelichting bij de aanbeveling van 9 oktober 2014, gepast om twee afzonderlijke wholesalemarkten te definiëren, een voor de breedbandaanbiedingen bestemd voor retailaanbiedingen aan particuliere klanten en een voor breedbandaanbiedingen bestemd voor retailaanbiedingen aan zakelijke klanten? Om welke redenen?
In 2011, the CRC considered that there was substitution between SDSL and other xDSL bitstream, because of supply side substitutability by Proximus.
The finding is likely still valid.
44. Vindt u het gepast om in plaats van een onderscheid bij het definiëren van de markt een onderscheid te maken op het niveau van de remedies waarbij dus voor operatoren in eenzelfde markt afzonderlijke remedies zou opleggen? Wat zouden volgens u de voor- en nadelen van dergelijke aanpak zijn ten opzichte van de aanpak om twee afzonderlijke wholesalemarkten te definiëren?
In 2011, the CRC did not identify separate relevant markets for low-quality WBA and high-quality WBA.
The reasoning, on which this finding was based, seems still valid.
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On the other hand, there is a need to differentiate remedies applicable regarding bitstream products acquired by access seekers for business clients and for residential clients. For this purpose, the type of WBA (ex: shared VLAN or dedicated VLAN) should not be the differentiation criteria given that business clients also make use of shared V-LAN.
Contrary to the Dutch NRA, the CRC did not identify separate relevant markets for low-quality WBA and high-quality98 WBA in 2011. SDSL bitstream used by other operators to provide broadband services to undertakings are in the same market as the asymmetric bitstream product99. The delineation of a single market under the Framework Directive does not prevent NRAs to differentiate remedies on the market to take account of different competitive conditions on the retail market. For example, in Germany BNetzA identified in its review of market 3b, 20 cities where prevailing conditions of competition are appreciably different from the rest of the country.
One of the criteria used by the German NRA was whether the market share of DT was equal to or less than 40%. Similarly, Proximus’ market share on the retail broadband market is below that threshold in significant parts of Belgium. BNetzA applied further criteria and in particular the presence of four providers (DT plus three alternative providers) in the area. Similarly, the CRC could take into account consumer choice. In most Belgian areas, residential end-users have the choice between broadband offers from the cable operator, Proximus, Scarlet, Edpnet and skyDSL.
If it is not unlikely that Proximus would continue providing access, on a commercially negotiated basis, to for example Edpnet and skyDSL, if mandated wholesale access was phased out as regards residential offers on the retail market. Taking into account the strong competition with the cable operators in the retail market, Proximus would have no clear commercial interest in refusing to deal with smaller operators who would help increasing the share of xDSL broadband at the expense of cable broadband. However, this reasoning is not valid for the business segment because of the absence of alternative infrastructure and the very strong dominance of Proximus in the business segment. In the absence of regulated WBA access and pricing Proximus could put its main competitors, WIN and Telenet, out of the business market.
Therefore, alternatively, an obligation to make wholesale broadband access services available could be maintained for the provision of broadband to both residential and business users, but without imposing pricing remedies as regards residential users.
98 The delineation of the two markets is based on the contention ratio. Access products with a contention ration above 1:20 are part of the market of low quality wholesale broadband access (LQ WBA). Products with a contention ratio lower than 1:20 are part of the market for high quality wholesale broadband access and terminating segments of leased lines (HQ WBA/LL). In Belgium, the symmetric bitstream access and leased lines are part of distinct markets. 99 Nethys and Brutélé say: “Tecteo et Brutélé estiment que la définition du marché de gros ne doit pas nécessairement être distincte pour le résidentiel et le non-résidentiel.En revanche, il importe que les remèdes appliqués tiennent compte du fait que les opérateurs offrant un service aux clients non-résidentiels doivent avoir un accès à un service de gros identique sur l'ensemble du territoire belge dans la mesure où la plupart des clients non-résidentiels ont généralement des sites dans différentes régions du pays ». p.32
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45. Zo “ja” op vraag 44 hoe zou u dan het onderscheid maken tussen de twee bitstroomaanbiedingen (bijvoorbeeld ISLA, dedicated VLAN, symmetrische profielen, ...)?
Technical distinctions will likely not prove robust over time.
ISLA appears to be a distinguishing criterion that is both appropriate and operational.
For the clients of Proximus taking regulated bitstream offers focusing on the B2B market, the highest priority is a business grade service level agreement. For this reason, the subscription to the ISLA option seems an appropriate criterion to differentiate wholesale offers for B2C and B2B, than possible distinctions on the basis of technical features, which would not necessarily be future proof. Business clients use also shared V-LAN. Therefore the distinction between shared VLAN or dedicated VLAN would not be an appropriate criterion to distinguish B2C from B2B.
FIGURE 80: WHOLESALE BITSTREAM OFFERS
At the same time, there is room for improvement of the current regulated Proximus ISLA offers100. The Proximus WBA service has been developed by Proximus based on residential market requirements and not by focusing on the business market. Firstly, five interconnect points, which are not redundant between each others, are required to cover the whole of Belgium. In case of one of the five access lines is down, all customers connected via this access line are out of service. The requirement to use five interconnection point is disproportionate for the business segment, given that the data-volume concerned is relatively limited. One national interconnect
100 See position of the Platform referred to in BIPT Decision of 19/11/2015 ‘betreffende de herziening van het besluit van 10 december 2013 (brxx 2012 update)’ available on: http://www.ibpt.be/public/files/nl/21584/2015-11-19_Besluit-BRxx_2012- Update.pdf
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point with a redundant point should be more appropriate for costing and quality reasons to enable alternative business segment operators to be able to compete with Proximus. Secondly, the WBA service does not offer an ‘end to end SLA’ while it is required for business clients who need to have a guarantee of service availability. Today, the Proximus WBA product offers only SLAs per building block (SLA on the end user line, SLA on the access line, …). The current very limited competition can only be improved by the adaptation of the regulated product of Proximus to the requirements of the business segment and the needs of alternative business operators to serve these needs.
46. Zo “ja” op vraag 44 in welke markt zou u de bitstroomaanbiedingen onderbrengen die uiteindelijk bestemd zijn voor kleine bedrijven (zelfstandigen, vrije beroepen en bedrijven met minder dan 10 werknemers)?
See reply to question 45.
47. In de toelichting bij de aanbeveling van 9 oktober 2014 beschouwt de Commissie dat asymmetrische breedbandtoegangsdiensten als substituten kunnen worden beschouwd voor de huurlijnen. Vindt u het toepasselijk - en om welke redenen - om binnen eenzelfde markt de volgende producten te verenigen:
- de wholesalebreedbandaanbiedingen bestemd om retailaanbiedingen te genereren voor de zakelijke markt, - de afgevende segmenten van huurlijnen5, - eventueel andere producten voor connectiviteit bestemd voor de zakelijke markt.
Under the EU Regulatory Framework, market definitions must be based on competition law principles.
As long as there is no direct or indirect substitutability between, for example, SDSL bitstream and terminating segments of leased lines, these wholesale products cannot be part of the same market.
As Nethys and Brutélé suggested in their reply to question 42 of the previous qualitative questionnaire, it would ideally be appropriate to conceive a single product market encompassing all connectivity products. However, under the currently applicable EU Regulatory Framework, market definitions must be based on competition law methodologies. And it is not likely that ADSL bitstream and leased lines would become substitutes in the near future.
Consequently, as long as there is no direct or indirect substitutability between, for example, SDSL bitstream and terminating segments of leased lines in Belgium, these wholesale products cannot be part of the same market.
48. In de toelichting bij de aanbeveling van 9 oktober 2014 beschouwt de Commissie dat er waarschijnlijk een substitutieketen bestaat tussen de breedbandtoegang op basis van DSL en de breedbandtoegang op basis van glasvezel. Denkt u dat een bitstreamtoegang op een glasvezelnetwerk de plaats kan innemen van een bitstreamtoegang op een koperen netwerk? Beschouw de mogelijkheid betreffende substitutie aan de vraag- en de aanbodzijde.
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Bitstream over copper and bitstream over fibre are likely (chain) substitutes, in particular in business areas.
However, in order to incentivize FttH deployment in Belgium, service based competition should not be promoted on FttH connections.
Virtual access remedies on FttH connections should be removed.
Bitstream over copper and bitstream over fibre are likely substitutes, in particular in business areas101. However, their inclusion in the same market does not mean that the same remedy should be imposed on both.
Belgium is lagging in terms of fiber to the home (FttH) deployment. Belgium does not even appear at EU FttH Rankings. One of the reasons is the access regulation imposed on network operators aiming to promote access-based competition. “A comparison with countries such as France, Spain or Portugal, shows that the absence of virtual access remedies incentivizes access seekers to build out their own networks and incumbent telecom operators being confronted with less regulation and more regulatory certainty, to react by building their own FttH networks”cxv. Belgium’s overarching objective should be to create long-term infrastructure based competition, instead of short-term service-based competition. Pursuing this objective implies removing virtual access remedies on FttH connections except for business clients (see reply to question 45) in order to stimulate FttH infrastructure investment. Contrary to the situation of the residential segment, there is no business case for competitors of Proximus in the business segment to deploy fiber in all business areas because of the limited number of addressable customers.
49. Vindt u dat de substitueerbaarheidstest ook zouden moeten slaan op andere producten dan die welke in de vorige tabel opgesomd zijn? Indien ja, welke? Om welke redenen?
No, the table incorporates all substitutes.
3.4.3 Wholesale cable access
50. Meent u dat de wholesaleaanbiedingen opgelegd aan de kabeloperatoren op grond van de analyse van de omroepmarkt deel uit kunnen of moeten maken van dezelfde markt als de bitstream- en WBA- aanbiedingen? Om welke redenen?
101 In business areas, Proximus plans to deploy either VDSL2 or FTTH. The underlying technology used to connect the business premisses concerned should have no bearing on the product definition. See reply to written question Nr 206 - Législature : 54 of “ 21/08/2015, from Mrs Isabelle Poncelet : Je puis (…) vous indiquer que Proximus prévoit de poursuivre le déploiement du haut débit (VDSL2) et a l'intention de couvrir les nouveaux zonings industriels en fibre optique (FTTB) de même que les nouveaux grands zonings résidentiels (en FTTH ou VDSL2) ». available on http://www.lachambre.be/kvvcr/showpage.cfm?section=qrva&language=fr&cfm=qrvaXml.cfm?legislat=54&dossierID=54-b038- 863-0206-2014201504261.xml
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The wholesale broadband remedy imposed on the cable operators is a resale obligation. There are significant differences between the characteristics of the BROBA offers and those of the regulated cable resale. In addition, the resale product cannot be acquired by access-seekers independently from access to the cable TV platform. On the basis of these characteristics there seems to be no supply side or demand side substitutability between bitstream and WBA offers and broadband resale on the cable networks. Broadband resale over cable is limited in service characteristics flexibility compared to bitstream.
51. Bent u van oordeel dat een wholesale breedbandaanbod dat op kabel is gebaseerd en dat gelijkwaardige technische karakteristieken heeft als de BROBA- en WBA- aanbiedingen van Proximus, technisch en economisch haalbaar is? Graag uw antwoord staven met argumenten.
In a cable network all services in the access network (radio, TV, VoD, data, voice) compete for the same bandwidth. Such sharing of resource differs fundamentally from that on Proximus’ network where point-to-point (dedicated) connections are used to connect end-users to the core network. A wholesale broadband product over a cable network would not have the same service characteristics as BROBA and WBA services. A wholesale broadband service over cable with similar technical characteristics as BROBA and WBA offers from Proximus does not exist in Belgium. The regulated broadband resale offer of the cable operators differs significantly from WBA based on DSL (see reply to question 50). Moreover, a wholesale broadband offer based on cable will not have similar technical characteristics to Proximus’ BROBA and WBA offers. The reason is that in a cable network all services in the access network (radio, TV, VoD, data, voice) compete for the same frequency space and thus for bandwidth. This sharing of resource is fundamentally different to the Proximus network where point-to-point (dedicated) connections are used to connect end-users to the core network. In Germany, BNetzA included ‘self-supply’ of HFC (cable) broadband access in the relevant wholesale market for Layer-3 Bitstream access because of indirect constraints (as in Belgium, no direct substitution could be found in Germany) from the broadband offers from the cable operators on the retail levelcxvi. However in several cases, the Commission criticized the inclusion by NRAs of cable in the bitstream market102.
102 E.g. the Commission vetoed the proposals by CTU, the Czech regulator, to include WiFi and cable networks in the wholesale broadband access (WBA) market (market 5/2007) https://circabc.europa.eu/d/a/workspace/SpacesStore/77bc296a-e2d0-49b6- 8524-00b5391af1f6/Copy%20of%20CZ-2012-1322%20Acte_EN%2bdate%2bc_conf.pdf, The Commission also vetoed the proposal by UKE, the Polish regulator, to deregulate wholesale broadband access (WBA) in 11 Polish cities among other because the NRA failed to demonstrate how and to what extent infrastructure competition in the retail market would constrain the incumbent on the wholesale market. https://circabc.europa.eu/sd/d/1cb21dcd-f3b3-4f89-9464-5ce0896f79ba/PL-2012- 1394%20Adopted_EN.pdf. The Commission also challenged the inclusion of cable in the WBA market by the Estonian NRA, both in 2009 and again in 2013. However, because the inclusion of cable in market 5 did not affect the NRA’s conclusions either in terms of the SMP assessment or the remedies to be applied, the Commission did not veto the market assessment.
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52. Denkt u dat overschakelen van een op DSL gebaseerde WBA naar een op kabel gebaseerde wholesaleaanbod (of omgekeerd) technisch en economisch mogelijk is in geval van een kleine, maar significante verhoging van de prijzen?
See answer to question 51. Access seekers would not respond to a SSNIP in a way that makes the price increase unprofitable because of the fundamental differences in product characteristics.
Geographic market definition In its decision of 1 July 2011 the CRC concluded that the market for WBA has a national dimension, on the basis of the following analysis:
FIGURE 81: WBA GEOGRAPHIC MARKET DEFINITION Bestaan van een enkele aanbieder, met een nationale dekking Gebrek aan differentiatie van de karakteristieken en prijzen van deze diensten binnen het grondgebied Indien een alternatief aanbod zou worden gedaan, zouden de alternatieve operatoren als voornaamste concurrent de aanbiedingen van Proximus hebben en zou hun tariefstrategie dus worden bepaald door diens aanbod.
57. Wat is op basis van de bovenstaande criteria uw mening over de geografische omvang van de markt?
The conclusion of the analysis of the geographic dimension of the WBA market is still applicable. 58. Meent u dat de regionale aard van de aanbiedingen die de kabeloperatoren moeten aanbieden in het kader van de omroepmarkt de conclusies betreffende de geografische omvang van de markt kan wijzigen?
The resale offers provided by cable operators do not provide a substitute for WBA services provided by Proximus, primarily because of substantial differences in product characteristics and have thus no bearing on the geographic market definition of WBA.
62. Vindt u dat er andere relevante criteria bestaan die pleiten voor of tegen een segmentering van de markt op geografische basis?
It may be possible to differentiate the market on the basis of network speed (see figure 15 under question 9). For example, bitstream in communes where 30 MBit/s cannot be reached might be seen as not being part of the same geographic market as those where substantially higher speeds can be obtained , because wireless provides an alternative at retail level (and likely at wholesale level as shown by MVNOs active in these areas)cxvii to lower speed fixed broadband access in the residential retail market. However, differentiation of remedies would be more appropriate, given that for the business segment a national solution is required and there is no alternative to Proximus’ bitstream offer. 106 Private and Confidential
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3.5 SMP assessment 3.5.1 Unbundling In its decision of 1 July 2011, CRC decided that Belgacom has significant market power (SMP) in the market for unbundled access, on the basis of the following analysis:
FIGURE 82: UNBUNDLING SMP ASSESSMENT Hoog marktaandeel Aanzienlijke verzonken kosten Schaal- en breedtevoordelen Controle over niet gemakkelijk te dupliceren infrastructuur Gemakkelijke of bevoorrechte toegang tot kapitaalmarkten en tot financiële middelen Verticale integratie Geen tegenwicht aan de koperszijde
63. Vindt u dat deze conclusies nog altijd geldig zijn? Om welke redenen?
These conclusions seem still valid today.
64. Ziet u andere factoren die de marktmacht van de operatoren zouden kunnen beïnvloeden (vergroten of verkleinen)? Indien ja, welke?
There is limited demand for unbundled access services in Belgium. This raises the question whether regulated access in its current form is still proportionate to the problems identified. If the conclusion is that access obligations constitute an undue burden relative to the potential benefits of such access, regulatory obligations may need to be phased out.
3.5.2 Bitstream and WBA In its decision of 1 July 2011 the CRC decided that Belgacom has significant market power (SMP) in the market for bitstream and WBA, on the basis of the following analysis:
FIGURE 83: BITSTREAM AND WBA SMP ANALYSIS Hoog marktaandeel Gebrek aan voldoende indirecte druk Aanzienlijke verzonken kosten Schaal- en breedtevoordelen Controle over niet gemakkelijk te dupliceren infrastructuur
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Gemakkelijke of bevoorrechte toegang tot kapitaalmarkten en tot financiële middelen Verticale integratie Geen tegenwicht aan de koperszijde
65. Vindt u dat deze conclusies nog altijd geldig zijn? Om welke redenen?
The market power of Proximus has likely decreased given (1) the fall in the demand for regulated bitstream access since 2011 and (2) the fact that Proximus offers resale under commercial conditions. The growing pressure at retail level on the residential market from 4G mobile and HFC based broadband is reducing Proximus’ ability to behave independently of competitors and customers on the retail market. On the other hand, operators have no alternative to the Proximus’ network because of the absence of cable networks in business areas and the need for a national solution for the business segment combined with the need for back-up connections for redundancy reasons.
The market power of Proximus has likely decreased given the fall in demand for bitstream access since 2011 and given that Proximus offers resale at commercial conditions103. Moreover, the growing pressure at retail level from 4G mobile and HFC based broadband must be taken into account104. However, Proximus retains market power as regards the provision of broadband access demanded for business retail services. Access seekers such as the cable operators (via WIN in Wallonia)105 but also Edpnet106 or Colt have frequently no alternative to Proximus’network. Cable operators are using Proximus’ wholesale BROBA offer (bitstream) for the main connection to customers because in general the cable operators do not have infrastructure in business sites (historically the cable network were rolled out to provide TV services to residential customers), and also sometimes for a diversified (based on technology) back-up solution to coax-based core products in case cable infrastructure is present (in Flanders or in Wallonia when the business client is located in a residential area). The cable operators are not in a position to cover all business sites in all of their footprint, in Wallonia in particular. Cable operators are dependent on Proximus’ wholesale products to serve the large multi-site (Virtual Private Network or VPN) segment, where customers regularly require several hundreds of connections, with these connections spread across Belgium. Cable operators rely on Proximus’ wholesale BROBA
103 “aanwezigheid van marktmacht op wholesaleniveau (kan) in twijfel worden getrokken, aangezien Belgacom de dag van vandaag wholesalediensten verschaft op een commerciële basis, en gelet op het belang van de mobiele netwerken. Dit leidt tot een competitieve prikkel voor Belgacom. Bijgevolg kan het worden gesteld dat de invloed van haar weliswaar hoge marktaandeel sterk verminderd is” (Telenet’s reply to previous qualitative questionnaire, p.52) 104 « La Belgique fait partie des quelques pays (avec les Pays-Bas, le Danemark,Malte et la Finlande) où les connexions . l’internet fixe haut débit se répartissent en parts plus ou moins égales entre le DSL et le câble. Fin 2015, le DSL représentait 48,7 % des abonnements . la large bande fixe en Belgique. Ce chiffre est en légère augmentation par rapport à juillet 2014 où il était de 48 %. Le câble détenait une partde marché de 51,3 % fin 2015 », Baromètre de la société de l’information (2016), SPF Economie, p. 52. 105 Nethys and Brutélé stress that Proximus is the “seul opérateur disposant d'une couverture de réseau nationale totale lui permettant de fournir ses services, aussi bien dans les zones résidentielles que dans les entreprises et les zonings industriels (ce qui n'est pas du tout le cas du réseau câblé) » p. 38. 106 [to be confirmed by client] Edpnet presents itself as the largest independent Belgian telecom operator and specialised in fixed offers for companies
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offer (bitstream) to ensure national coverage of VPN services can be offered, with bitstream services used both inside and outside cable footprint. Absent remedies in on the wholesale market, cable operators would not be able to compete for tenders in the enterprise market because the limited reach of their networks that often do not cover enterprise locations, would provide a significant barrier to entry in this market segment. Removing regulated access right now would be highly disruptive and undermine regulatory certainty. Cable operators are the main competitors for Proximus in the business segments and a denial of access would significantly reduce its competitors’ ability to provide competitive pressure, leading to higher prices, less choice and less innovation for business customers.
66. Ziet u andere factoren die de marktmacht van de operatoren zouden kunnen beïnvloeden (vergroten of verkleinen)? Indien ja, welke?
One can expect that Proximus would continue providing WBA at negotiated commercial terms in case wholesale remedies are removed in the residential market. The decreasing demand107 for wholesale access products aiming at the residential market reduces the market power of Proximus considerably. Given that Proximus provides commercially negotiated resale, one can expect that Proximus would provide WBA to its remaining clients, like Edp-net, at negotiated commercial terms in case wholesale remedies are removed in the wholesale market. The Belgian retail market is characterized by strong competition between Proximus and the cable operators and pricing comparison show that the pricing levels of bundles in Belgium are similar to those in the Netherlands, despite the difference in number of competitors. The tariffs for stand-alone broadband remained stable between 2014 and 2016 and decreased even for offers with the highest speed (‘patroon 4’). The parallel pricing evolution of the cable operators on that segment confirms the nationwide pricing constraint exercised by Proximus’ retail broadband offers. A more aggressive marketing by Orange of fixed-mobile substitution products like EasyInternet@home, would likely further put the pricing in the segment ‘patroon 2’ under pressure.
107 «La concurrence sur le march. belge de la large bande fixe s’exerce très largement entre les plateformes DSL et c.ble mais très peu au sein de chacune de celles-ci. En effet, au sein de la plateforme DSL, la part de march. de l’opérateur historique était de 93 % en juillet 2015 contre 7 % pour les opérateurs alternatifs. Cette situation est assez singulière au sein de l’UE 28 puisqu’en moyenne, la part de l’opérateur historique sur la marché du DSL y est de 52 % en 2015. A titre d’exemple, cette part n’est que de 73 % aux Pays-Bas alors que ce pays dispose d’une infrastructure câble assez similaire à la nôtre», Baromètre 2014, o.c., p. 56.
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FIGURE 84: OFFERS WITH MINIMUM 30 MBPS AND 50 GB 2014 AND 2016
FIGURE 85: OFFERS WITH MINIMUM 50 MBPS AND 50 GB 2014 AND 2016
FIGURE 86: OFFERS WITH MINIMUM 100 MBPS AND 100 GB 2014 AND 2016
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3.6 Need of and applicability of regulatory remedies 3.6.1 Promotion of investment
67. Indien de analyse van de markten108 zou leiden tot de conclusie dat toegangsverplichtingen moeten worden opgelegd, hoe ziet u dan de tenuitvoerbrenging van het begrip van investeringsladder in het kader van de uitrol van de toegangsnetwerken van de nieuwe generatie? Welke toegangsproducten lijken u het meest geschikt in deze context (toegang tot de fysieke infrastructuur, wholesale broadband, toegang tot het lokale/regionale/nationale niveau, doorverkoopdiensten)?
Telecoms regulation in Europe was introduced to enable the transition to a healthy competitive environment and has relied heavily on the historic incumbent operator providing its competitors with access to its own copper local loop, normally in the form of LLU. With the move to NGA networks the dynamic and viability of this approach is severely challenged both for technical and economic reasons. Not the availability of a ladder of investment, but the absence of virtual access remedies incentivises access seekers to build out their own fibre networks and incumbent telecom operators, being confronted with less regulation and more regulatory certainty, to react by building their own FTTH networks109. Access regulation is only proportional and justified as regards the business segment, which requires the connection of sites dispersed over the whole of Belgium, for which there is no business case to deploy own infrastructure. In the business segment, operators must connect limited number of customers in many distant geographic locations with varying specific individualized requirements. Sites to be connected have sometimes no autonomous decision power. Contracts with operators are decided centrally in another area of Belgium or even in another country, depending on the client. The likelihood for an alternative local operator to sign a deal with several business customers in a specific area are limited, compared to that of Proximus who serves 75 to 95% (depending of the industry sector) of the business segment. Therefore a local alternative operator cannot economically justify to deploy own infrastructure in business areas. For Proximus, the economics are different because, first, deploying fiber in a new business zone is only the extension of its network and, second, because Proximus has the certainty that it will anyway connect most sites located in the business area (controlling 75 to 95% of the business customers) and if not it could gain it through one of its wholesale business customers (all business segment operators being customer of Proximus).
68. Hoe ziet u de investeringsladder in de context van wholesale kabelaanbiedingen? Kunt u uitvoerig antwoorden?
Since LLU is not possible on cable, the ladder of investment does not work on cable investment economics. In addition, taking into account the network convergence and the increasing role of
108 Gelieve te vermelden of u verwijst naar de markten zoals ze momenteel gedefinieerd zijn in de CRC- beslissingen of niet. Kunt u in het laatste geval vermelden welke marktdefinitie u gebruikt? 109 Cfr Telage study quoted in in the reply to question 48.
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OTT in the provision of streamed video content, no operator would conceive deploying cable networks. Today, the question is how to foster the deployment of fibre networks. The recent report by Telage, quoted in the reply to question 48, shows that the objective of fostering fibre deployment is best achieved by removing virtual access remedies on FttH connections (except for business clients for the reasons mentioned in the reply to question 45).
70. Vindt u het passend, evenredig of redelijk dat een operator met een uitgebreid toegangsnetwerk toegang kan krijgen tot het toegangsnetwerk van andere operatoren? Zo ja, onder welke omstandigheden of voorwaarden? Zo niet, waarom?
Requiring the provision of regulated access in favour of the operator of a network with an extensive coverage could stifle network investment and restrict network competition. The absence of controlling an own network in the area concerned, would therefore be an objective and proportional condition to obtain network access. However, a distinction should be made between access aimed at providing services on the residential market and providing retail services on the business market. Access intended for services to the business market can for example be necessary because some access operator do not own infrastructure in the business sites. An operator could also need access for redundancy reasons. Consequently, even an operator with a network with an extensive coverage should be entitled to regulated access, but limited to business areas.
Under the Access Directive, where “obligations are imposed on operators that require them to meet reasonable requests for access to and use of networks elements and associated facilities, such requests should only be refused on the basis of objective criteria such as technical feasibility or the need to maintain network integrity”110. Proximus would have no objective reason to refuse providing its BROBA and WBA wholesale access products to the cable operators or related undertakings to compete in the b2b segment. While cable operators have reasonably developed access networks, these networks are traditionally focused on residential areas and there are significant coverage gaps even ‘in footprint’ where it comes to enterprise sites. There are also a number of factors that are specific to the b2b segment, including:
1. Cable operators do not own infrastructure in most business areas and are depending on the Proximus infrastructure to connect company sites located in these areas. 2. Proximus DSL services are often used for redundancy purposes (i.e. next to coax or fibre as the main access solution) 3. Business customers may demand a DSL solution in certain sites for technical reasons 4. Bitstream is used to provide national coverage; this is particularly important in the multi-site (VPN) segment. For these reasons, in the business segment, Proximus’ wholesale broadband offer must be technology neutral in terms of transport and must include both copper and fiber (FttH/B), or otherwise Proximus will acquire a monopoly in the business segment. For example, already today Proximus refuses frequently to provide a WBA connection to cable operators (and even a wholesale commercial MPLS access) in case
110 Recital 19
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of business sites that are only equipped with fiber and offers itself the service to the retail business customer. In new built business areas, Proximus most of the time deploys only fiber FttH/B (and no more copper). If the wholesale broadband access for the business segment is not regulated. there is a high risk of Proximus leveraging its already strong position in that segment, to further reduce (and even eliminate all) competition in related markets Cable operators would be out of the B2B market segment if they do not have access to Proximus’ regulated wholesale broadband offer. The above factors are nonetheless specific to the b2b segment and do not apply in the B2C segment. In the B2C segment, there is in particular no need for additional connections for redundancy purposes. For this reason, an objective criterion to refuse the provision of mandated access in the B2C segment could be that the access seeker itself has a network in the area concerned. The possible decision of an operator not to upgrade its network in a manner allowing the provision of broadcasting services in that area or to delay investment, is by definition a subjective decision of the operator concerned, not affecting this objective criterion.
3.6.2 Access to DSL (Unbundling and Bitstream) In its decision of 1 July 2011, the CRC applied the following remedies on Belgacom in the market for unbundled access:
FIGURE 87: UNBUNDLING REMEDIES Verrichtingen inzake toegang Non-discriminatie Transparantie, met inbegrip van de publicatie van een referentieaanbod Gescheiden boekhouding Prijscontrole en verplichtingen inzake het kostentoerekeningssysteem
In its decision of 1 July 2011, the CRC applied the following remedies on Belgacom in the market for bitstream and WBA:
FIGURE 88: BITSTREAM AND WBA REMEDIES Toegangsverrichtingen (met inbegrip van de toegang tot een multicastfunctionaliteit of een gelijkwaardig equivalent) Non-discriminatie Transparantie (met inbegrip van de publicatie van een referentieaanbod) Gescheiden boekhouding Prijscontrole en verplichtingen inzake het kostentoerekeningssysteem
77. Denkt u dat de regulering van markt 3a[14] voldoet/zal voldoen om concurrerende multiple- playproducten aan te bieden die IPTV-diensten omvatten in heel België of toch in bepaalde gebieden van België (vermeld in dat geval in welke gebieden)? Kunt u uitvoerig antwoorden?
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In view of the continued decrease of numbers of unbundled lines in Belgium, wholesale local access is clearly no option to allow competitors to provide multiple play services including IP TV.
Since the emergence of OTT provision of TV distribution and the entry into force of the Open Internet Regulation111, mandating access to physical infrastructures of competitors or their wholesale broadband access for the provision of TV services no longer appears proportional (see reply to questions 17 and 34). Such remedies would seem only appropriate for the provision of broadband internet access, allowing consumers the possibility to access the TV content of their choice. Before imposing remedies to enable an operator to provide IPTV services, the CRC should first show that the three criteria test is fulfilled regarding the retail and (or) wholesale TV broadcasting market or that, as in the Danish case mentioned in reply to question 30, the market for wholesale broadband access “develops in such a way that a TV offering becomes indispensable to effectively compete at retail level, in which case such a remedy may be justified. In other words, alternative operators should only be aided by regulation to replicate bundled offers, if their ability to compete at retail level critically depends on it”, which does not seem to be the case in a forward-looking analysis.
78. Proximus heeft in plaats van de multicastfunctionaliteit het delen van zijn IPTV-platform voorgesteld. Daardoor kan er volgens Proximus een efficiënter gebruik gemaakt worden van het netwerk. Dat heeft ook nadelen die beschreven staan in het besluit van 4 januari 2012. Denkt u dat het altijd opportuun zou zijn om de keuze te laten tussen het aanbieden van een multicastdienst en het aanbieden van een gelijkwaardig alternatief voor deze dienst? Beargumenteer uw antwoord. Although this question is likely not addressed to cable operators, Cable Belgium considers the flexibility put forward as a good solution.
79. Kunt u commentaar geven op de operationele / technische / tarifaire voorwaarden van Proximus’ huidige wholesaleaanbiedingen voor bitstreamtoegang? Welke wijzigingen zouden er moeten worden aangebracht om uw dienstenstrategie te ondersteunen en uw vermogen om op de retailmarkt te concurreren te verhogen?
As mentioned in reply to question 45, an adaptation of the technical and operational conditions of WBA is required in order to meet the needs of business clients and to enable alternative operators to replicate Proximus’ offers and remain competitive, in particular in terms of redundancy of interconnect point and in terms of Service Level Agreements (SLAs). The reason is that the current Proximus WBA service has been designed based on residential market requirements and does not respond to business needs.
In terms of pricing, the current conditions are acceptable. The regulated tariffs give a comfortable margin to the alternative operators. These pricing conditions of WBA are one of the factors that in the past
111 Regulation (EU) 2015/2120 of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union, OJ L 310 of 26.11.2015, p.1.
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disincentivized as noted by the EU Commission in its comments in Case BE/2007/0736112 the alternative operators to use the unbundling offers. See also the reply to question 87.
3.6.3 Access to cable
86. Vindt u deze correctiemaatregelen [access to cable platform, resale cable broadband and analogue TV under retail minus pricing] geschikt of vindt u dat sommige verplichtingen ontbreken of andere onnodig zijn?
These obligations are disproportionate, among other taking into account the imbalance in negotiating positions of Orange Belgium and of the cable operators that do not control a mobile network, brought about by these remedies. Access to cable platforms should be left to commercial negotiation. See also reply to question 87.
87. Vindt u retail-minus als prijscontrole geschikt of vindt u dat een andere vorm van prijscontrole (kostenoriëntering, benchmarking) beter geschikt zou zijn? Gelieve uw antwoord te argumenteren en alle documentatie/studies te verschaffen die uw woorden kunnen ondersteunen.
1. Recent Commission interventions confirm the importance NRAs should give to assess infrastructure based investment in exercising their powers and in particular in relation to pricing remedies. The draft Communication regarding the policy actions ‘Towards connectivity for a European Gigabit society’ confirms this general trend and should be taken into account in applying, when relevant, the Commission's recommendations on pricing remedies (including in particular the 2010 NGA Recommendation on regulated access to Next Generation Access Networks (the "2010 Recommendation") and the 2013 Recommendation on consistent non-discriminatory obligations and costing methodologies to promote competition and enhance the broadband investment environment (the "2013 Recommendation"). 2. As regards, broadband pricing, Cable Belgium considers that the Belgian NRAs should consider an approach which distinguishes B2C from B2B access as the infrastructure based competition differs for both segments. For B2C, Belgium has a strong infrastructure competition which, according to the 2013 Recommendations justifies a more flexible approach compared to the traditional cost plus approach which has so far been followed, particularly in relation to the pricing regulation of bitstream access if a cost plus approach is followed for the "copper anchor". The 2013 Recommendation considers the possibility for a withdrawal of cost orientation obligations if the NRA imposes non-discrimination obligations and can demonstrate a “demonstrable retail price constraint”. Such a constraint could stem from passive/virtual forms of access, from a cost oriented copper access product, or from competitive pressure from alternative infrastructures (notably, cable networks). Para. 58 of the 2013 Recommendation adds that “the conditions set out in the points 48-57
112 Telage, Using smart regulation to strengthen belgium’s broadband future (already quoted in the reply to question 48), p. 11.
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should not be seen as the only circumstances under which NRAs can decide not to impose regulated access prices for NGA wholesale inputs. Depending on the demonstration of effective equivalence of access and on competitive conditions, in particular effective infrastructure-based competition, there may be additional scenarios where the imposition of regulated wholesale access prices is not warranted under the Regulatory Framework”. In certain cases, NRAs may opt for EoO (equivalence of output) instead of EoI: “Where EoI is disproportionate, NRAs should ensure that the SMP operator provides the wholesale inputs to access seekers on an ‘equivalence of output’ (EoO) basis” (para. 9). Cable Belgium considers that such an alternative approach should be considered for the pricing remedy of the B2C wholesale broadband services. LLU exists and could be regulated on a cost plus basis and the presence of competing infrastructures (including an ubiquitous cable network, 4G networks and mobile wireless) and competing service competition across the converging IP-based services (OTTs) in a retail competition which prevents excessive pricing and also offers strong competitive pressure on non- price related aspects. 3. As regards broadcasting services, Cable Belgium considers that there is no ground to impose a pricing remedy. The downstream retail market is a services market on which infrastructure based competition and service based competition are particularly strong. The 2010 and 2013 Commission Recommendations are in any event not applicable to this remedy assessment as Belgium is in fact the only country in which the NRA has considered it necessary to regulate these services which should be another reason to urge the NRA to avoid an intrusive regulatory intervention. If the NRA were to consider that a pricing remedy would still be required for the regulation of broadcasting services, Cable Belgium considers that the retail minus approach would be the correct approach and that the reasons invoked in the 2011 decisions to justify this approach (instead of a cost plus approach) still stand and have even gained in importance. The 2011 Decision justified the choice of a retail minus methodology on the basis of three arguments: - The retail minus obligation is a proportionate remedy because retail prices are fixed in a way that does not discourage investments in infrastructure. By leaving the SMP operator only a limited margin, a cost plus approach may discourage infrastructure investments (by discouraging investments by the SMP operator and/or by tilting the “build or buy” incentives of the access beneficiaries towards the “buy” side); - The methodology does not require the NRA to develop a cost model, which would be a long and costly exercise, reducing the administrative burden for the NRA; - The approach ensures that there is no price squeeze with the SMP operator’s retail prices.
A retail minus approach has sometimes been criticized as not guaranteeing wholesale pricing stability. The Belgian NRAs should however be mindful of the fact that the final retail minus tariffs for wholesale access to the cable were only fixed by the Second Retail Minus Decision of 19 February 2016. It would also be contrary to the principles of legal certainty and regulatory stability to now radically change the approach. The two Retail Minus Decisions also already foresee safeguards to prevent pricing instability (e.g. by “freezing” wholesale prices for a year and requiring the SMP operators to notify any retail price changes in advance)
3.6.4 Relation between non-discrimination obligation and access pricing controls
90. Vindt u het passend en evenredig om van SMP-operatoren te verlangen dat ze relevante wholesale- input verstrekken op basis van een gelijkheid van input? Zo ja, waarom en voor welke input? Zo nee, waarom?
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It is not necessary to impose equivalence of input, this would be disproportionate unless serious risks of discriminatory treatment exists. In 2013, the European Commission published its Recommendation C(2013)5761 on consistent non- discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment. This Recommendation focuses on SMP providers and the appropriate means of establishing cost-based access to their networks, including both active and passive infrastructure. Please note this EC Recommendation deals with broadband services, not with broadcasting services. The EC recommends that “a costing methodology should be based on a modern efficient network, reflect the need for stable and predictable wholesale copper access prices over time, which avoid significant fluctuations and shocks, in order to provide a clear framework for investment and be capable of generating cost- oriented wholesale copper access prices serving as an anchor for NGA services, and deal appropriately and consistently with the impact of declining volumes caused by the transition from copper to NGA networks, i.e. avoiding an artificial increase in wholesale copper access prices which would otherwise be observed as a result of customers migrating to the NGA network of the SMP operator.” It identifies key principles as cost recovery, the provision of appropriate “build or buy” price signals, transparency and consistency. The EC concludes that a bottom-up long run increment cost plus a mark-up for common costs (BU LRIC+) methodology best meets these objectives. The Recommendation does not automatically require NRAs to adopt a BU-LRIC+ pricing methodology immediately. A sufficiently long transition period is needed to avoid unnecessary disruption and provide a stable and transparent regulatory approach.
Point 40 of Recommendation C(2013)5761 states that NRAs may not see the need to impose price regulation on NGA networks. This would be acceptable to the European Commission under the condition that three tests are passed:
Equivalence of Input rules are in place - meaning that all relevant services and information supplied to the access seeker are the same, and provided on the same timescales, as to the downstream businesses of the SMP operator. The technical replicability test is passed - the access seeker must be able to replicate the retail offers of the downstream businesses of the SMP operator, based on having timely availability of all wholesale inputs and access to equivalent Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) including: service ordering, service provision, quality of service, fault repairs, network migration. The economic replicability test is passed - the margin between the retail price and the price of regulated wholesale inputs (being the most representative combination of active and passive elements in the time-frame of the analysis) covers the incremental downstream costs (of an operator equally efficient to the SMP operator) plus a reasonable percentage of common costs.
Except in the circumstances described above, the EC requires that the BU-LRIC+ model should be in place by the end of 2016 and the EC should be notified of the costs and resulting access prices that it imposes. Where it comes to broadband access services therefore, there is a link between requiring equivalence of input and the appropriate costing methodology. In our view, the circumstances in Belgium do not require
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equivalence of input to be imposed and the above suggests prices then need to be set on the basis of a BU-LRIC+ model.
91. Voor de NGA-wholesale-inputs beveelt de Europese Commissie in bepaalde omstandigheden aan om een test op economische dupliceerbaarheid uit te voeren in plaats van een verplichting tot kostenbasering op te leggen. Wat is uw oordeel: (… ) 91.2. in verband met bitstream- en WBA-diensten en andere centraal geleverde diensten voor een groot publiek?
See the previous answer. Economic duplicability is one of three tests prescribed by the EC. All three need to be met to avoid a cost orientation obligation on wholesale NGA services in markets 3(a) and 3(b).
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4 Bibliography
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xxii Source Crédit Suisse, European Cable, What risk from OTT and the skinny bundle? 4 September 2015, p. 12. xxiii BIPT, Situatie markt elektronische communicatie, Jaar 2015, Statistisch Verslag, p. 10. xxiv BIPT, Press Release, “Het BIPT publiceert de statistieken van de elektronischecommunicatiesector 2014”, 17 July 2015, available on: http://www.bipt.be/public/pressrelease/nl/103/NL_Persbericht_2015.pdf xxv https://ec.europa.eu/digital-single-market/en/connectivity xxvi B. Moonen, Belgische Telecomprjzen vergelijkbaar met buitenlandse, 22 January 2015 available on https://snap.telenet.be/actueel/artikel/belgische-telecomprijzen-vergelijkbaar-met-buitenlandse xxvii Connectivity Broadband market developments in the EU, Europe's Digital Progress Report 2016, available on http://ec.europa.eu/newsroom/dae/document.cfm?action=display&doc_id=15807 [downloaded on 1 August 2016] xxviii SamKows, Quality of Broadband Services in the EU, October 2014, p.98 xxix Idem, p.93 xxx xxxi La Libre Belgique, “ "Les fournisseurs belges ont peur de la comparaison", 14 novembre 2014. xxxii http://www.astel.be/ xxxiii FOD Economie, Barometer van de informatiemaatschappij (2016), p. 62. xxxiv Source data: BIPT, Vergelijkende studie Prijsniveau Telecomproducten in België, Nederland, Frankrijk, Duitsland, Luxemburg en het Verenigd Koninkrijk [Tarieven van augustus 2015], p. 75 sq. xxxv OECD Digital Economy Outlook 2015, p.117. The OECD graph is based on 2014 data, and uses the price of SNOW in this comparison. xxxvi Source: Special Eurobarometer 438, E-Communications and the Digital Single Market, October 2015, Belgium, p.3. xxxvii Source: Eurobarometer 438, question QA3T - When subscribing to an Internet connection what are the main factors you consider? xxxviii Case M.7194-Liberty Global/ Corelio/ W&W/ De Vijver Media, 24/02/2015, p. 80. xxxix Special Eurobarometer 414, e-communications and telecom single market household survey, June 2014, p.31. xl Source: Eurobarometer 438, Oct 2015, question A10 xli OECD (2015), “Triple and Quadruple Play Bundles of Communication Services”, OECD Science, Technology and Industry Policy Papers, No. 23, OECD Publishing, Paris, p. 36. http://dx.doi.org/10.1787/5js04dp2q1jc-en xlii J. Calzada and F. Martinez, Broadband prices in the European Union: competition and commercial strategies, Research Institute of Applied Economics, Working Paper 2013/09, p.18. xliii M.7637 Liberty Global / BASE Belgium Decision of 04/02/2016, Nr 388 p. 86 xliv BEREC, BoR (10) 64, o.c., p. 24. xlv La Libre, Patrick Drahi met en vente SFR Belgium, 8 July 2016. xlvi Tefficient, Mobile data usage 1H 2015 5 GB per any SIM and month no longer a utopia – if price is right, Industry analysis #1 2016, 21 January 2016
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xlvii M. van Eechoud, Harmonizing European Copyright Law: The Challenges of Better Lawmaking, Kluwer Law International, 2009, p. 122. xlviii Council Directive 93/83 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 6.10.1993, p. 15 xlix Source: http://www.statista.com/statistics/563741/share-of-households-with-a-smart-tv-connected-to- the-internet-in-belgium-by-region/ l Broadband TV News, T-Mobile launches a la carte OTT service, 13 June 2016. http://www.broadbandtvnews.com/2016/06/13/t-mobile-launches-a-la-carte-ott-service/ li Special Eurobarometer 438 question QA6 - Which of the following paid services that you can access via the Internet, have you used? lii Source: CSA http://www.csa.be/pluralisme/audience/secteur/1 liii VRM, Mediaconcentratie in Vlaanderen, Rapport 2015, p. 173. liv Simon Chandler, The future of TV isn't Netflix and Amazon—it's Facebook and Twitter, The Daily Dot, 14 April 2016. Avaible on http://www.dailydot.com/via/future-tv-netflix-amazon-facebook-twitter/ lv Source: Figure 3.5 of Analysys Mason’s report for Ofcom, New service developments in the broadcast sector and their implications for network infrastructure, November 2014, available on: http://stakeholders.ofcom.org.uk/binaries/research/infrastructure/2014/broadcast-dev.pdf lvi See BIPT fixed broadband acces Atlas : http://www.bipt.be/public/pressrelease/fr/113/Communique.pdf lvii Harold Nottet, les oubliés du net, Télémoustique du 14 au 20 mai 2016. lviii EU Commission, comments pursuant to Article 7(3) of Directive 2002/21/EC, Commission comments letter of 5 February2016 concerning Case BE/2016/1829: Retail markets for the delivery of broadcasting signals and access to broadcast networks in Belgium – Remedies p.8. lix DESI, https://ec.europa.eu/digital-single-market/en/scoreboard/belgium lx Arthur D Little, Het Belgische Telecom Landschap, slide 8. Available on http://www.adlittle.be/uploads/tx_extthoughtleadership/ADL_StudyonBelgianTelecomsector_Economy_D utch.pdf lxi Communication de la Commission Lignes directrices de l’UE pour l’application des règles relatives aux aides d’État dans le cadre du déploiement rapide des réseaux de communication à haut débit (2013/C 25/01), beschikbaar op http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:EN:PDF lxii Communication de la Commission Lignes directrices de l’UE pour l’application des règles relatives aux aides d’État dans le cadre du déploiement rapide des réseaux de communication à haut débit (2013/C 25/01), beschikbaar op http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:EN:PDF lxiii BIPT, Dekkingskaarten voor vaste breedbandtoegang, http://www.bipt.be/nl/consumenten/internet/dienstkwaliteit/dekkingskaarten-voor-vaste-breedbandtoegang lxiv EU Commission, Public consultation on the evaluation and the review of the regulatory framework for electronic communications networks and services, 4/12/2015, p. 40. lxv Case M.7637 Liberty Global / BASE Belgium, point 51, p. 17. lxvi Source: BIPT, Situatie van de elektronische communicatiesector in 2014, p. 42. lxvii Le Soir, « Belgacom renonce à la télé analogique », 13 June 2013, www.lesoir.be.
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lxviii Commission Decision concerning Case BE/2016/1829: Retail markets for the delivery of broadcasting signals and access to broadcast networks in Belgium – Remedies, C(2016) 795 final, 5.2.2016, p.3. lxix Source https://www.iminds.be/en/gain-insights/digimeter/2015 lxx Source: Proximus website: http://www.proximus.be/support/en/id_sfaqr_tve_install/personal/support/mobile-applications/proximus-tv- application/getting-started-with-the-proximus-tv-application/how-to-get-tv-on-your-mobil-tablet-or- computer.html lxxi http://www.bipt.be/nl/operatoren/telecom/statistieken/publicaties/situatie-van-de-elektronische- communicatiesector-2015 lxxii Plum, TNS opinion, The economic potential of cross-border pay-to-view and listen audiovisual media services, March 2012, examines potential demand for intra European pay-TV services and therefore underestimates the demand for free to air DTH satellite and online television. lxxiii Source: Flash Eurobarometer 411, Cross-border access to online content, p. 20. lxxiv Source: Boston Consulting Group 2014 lxxv Special Eurobarometer, 438 see note xx lxxvi EU Commission “Notice on the definition of relevant market for the purposes of Community competition law” (97/C 372/03): par. 58 lxxvii Astel, Nouveauté : Belgacom lance l’Internet Partout, 28 March 2012 lxxviii TVvisie, Telenet lanceert nieuwe tv-ervaring met Yelo TV, 21 February 2013, available on: http://www.tvvisie.be/nieuws/belgie/telenet-lanceert-nieuwe-tv-ervaring-met-yelo-tv_57210/ lxxix Le Soir, Belgacom s’attaque à BeTV avec son Movies & Series Pass, 23 April 2014 lxxx Astel, Telenet brengt nieuwe manier van tv kijken met Rex & Rio, 23 September 2013, available on http://www.astel.be/nl/Telenet-brengt-nieuwe-manier-van-tv-kijken-met-Rex-Rio_4341 lxxxi Astel, VOO lance Canal Play en Belgique avec 6.500 titres, 2 May 2016. lxxxii Astel, Déjà 500 000 points d’accès FON Belgacom !, 10 February 2012, available on http://www.astel.be/Deja-500-000-points-d-acces-FON-Belgacom_4111 lxxxiii “Na Belgacom lanceert Telenet eveneens een publiek Wi-Fi netwerk”. Astel, Telenet lanceert Homespots, 14 December 2011. lxxxiv Astel, Telenet et VOO partagent leur réseau Wi-Free, 13 March 2014. Available on: http://www.astel.be/Telenet-et-VOO-partagent-leur-reseau-Wi-Free_4421 lxxxv Astel, Vlaamse steden worden slimmer met Wi-free van Telenet, 10 July 2015. lxxxvi Astel, VOO déploie Wi-Free dans toute la Wallonie, 25 January 2013. lxxxvii Case M.7194-Liberty Global/ Corelio/ W&W/ De Vijver Media, 24/02/2015, p. 80. lxxxviii Source VRM, Mediaconcentratie in Vlaanderen, rapport 2015, p. 239 lxxxix http://www.bipt.be/public/files/nl/21235/Etude_comparaison_nationale_2014_NL.pdf xc Data from http://www.bipt.be/public/files/nl/21951/+2016-05-18_Nationale_vergelijking_NL.pdf xci Internetproviders.be, Telenet vs Proximus, available on: http://www.internetproviders.be/telenet-vs- proximus/
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xcii Source : Ménages selon le régistre national 2011-2015 available on http://statbel.fgov.be/fr/modules/publications/statistiques/population/downloads/menages_selon_le_registr e_national.jsp xciii See Sender Aachen-Stolberg on https://de.wikipedia.org/wiki/Sender_Aachen-Stolberg xciv http://zattoo.com/de/ xcv http://magine.bild.de/ xcvi http://www.voo.be/voo2015/assets/docs/1510-DocChaineWEB-MR.pdf xcvii http://www.dewereldmorgen.be/blog/janhertogen/2014/10/08/moslims-in-belgie-van-63-naar-65-van- de-bevolking xcviii Source of the map: La Libre, Brutélé convoitée par Telenet, 27 Novembre 2013 available on : http://www.lalibre.be/economie/libre-entreprise/brutele-convoitee-par-telenet-529577893570386f7f35cce5 xcix Hou, Liyang, The Application of the Three Criteria Test: An Empirical Research on Media Transmission Markets (April 14, 2009), p.10. Available at SSRN: http://ssrn.com/abstract=1379523 or http://dx.doi.org/10.2139/ssrn.1379523 c S.W.D. p.10. ci idem cii SWD Markets Recommendation p. 19 ciii SMP guidelines, Nr 75. civ Crédit Suisse Research, European Cable: What risk from OTT and the skinny bundle? 4 September 2015, p. 51. Available on https://doc.research-and- analytics.csfb.com/docView?language=ENG&format=PDF&source_id=csplusresearchcp&document_id=8 06754230&serialid=G7a9iL6yAa61%2f2%2bwz815xyfpvxZf%2bpB3JUcbGcwaIWc%3d#view=FitH&toolb ar=1 cv Source: BIPT, Jaarverslag 2015, p. 42. cvi Special Eurobarometer 414, e-communications and telecom single market household survey, June 2014, p.31. cvii Source of the data: EU Commission, Broadband Interent Access Cost (BIAC) 2015, p. 48. cviii Source BIPT, jaarverslag 2015, p.26. cix CASE NL/2015/1727: Wholesale local access provided at a fixed location in the Netherlands, C(2015) 3078 final, 30.4.2015 cx WIK, Options of wholesale access to Cable-TV networks with focus on VULA, 5. February 2015 cxi WIK Consult (2014), ‘Options of wholesale access to Cable-TV networks with focus on VULA’, 9 July 2014, slide 65. cxii WIK Consult (2015), ‘Options of wholesale access to Cable-TV networks with focus on VULA - Summary and additional questions’, 5 February 2015. cxiii https://www.acm.nl/nl/publicaties/publicatie/14047/brief-waarin-tele2-zijn-verzoek-tot-marktanalyse- van-de-retailmarkt-televisie-onderbouwt/ cxiv BEREC Opinion on Case NL/2015/1727 Wholesale local access provided at a fixed location in the Netherlands, BoR (15) 85, 28 May 2015, p. 9. cxv Telage, Using Smart Regulation to Strengthen Belgium’s Broadband Future, February 2016, p.15. cxvi See Commission comments in Case DE/2015/1735, C(2015) 4242 final of 17.6.2015, p 4.
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cxvii Harold Nottet, o.c. «Depuis que je teste JOIN via le 4G, mon débit grimpe jusqu’à 28 Mbit/s (…) Je vais opter pour l’abonnement supérieurqui offre un quota mensuel de 50 gigas et une vitesse jusqu’à 100 Mbit/s (…) j’en aurai pour 72,9 euros par mois. Alosrque je payais presque 20 euros plus cher chez Proxlimus ».
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