The communications commission ComCom has rejected the application from TDC Switzerland AG (formerly diAx) for unbundling of the local loop. Swisscom welcomes this decision which confirms that the prevailing telecommunications ordinance does not provide a basis for the unbundling of services. An unbundling obligation would constitute unnecessary intervention which would distort the market as there is already intense competition between Swisscom and the cable network operators in the broadband services and infrastructure segment. An unbundling obligation would hinder investment which in turn would be damaging to the economy.
On 3 October 2001 the federal court stated clearly in a policy decision that the prevailing telecommunications ordinance lacks a legal basis for an interconnection obligation for leased lines or an unbundling of the local loop. As a result ComCom has rejected the application from the Swisscom competitor for an unbundling of the last mile and hence clearly acknowledges that an unbundling obligation would constitute a serious infringement of Swisscom´s rights, which would require a clear legal basis.
Ever-intensifying competition for high-speed Internet access
ComCom assumes that Swisscom dominates the market and that competition can only be achieved by unbundling the last mile. By making such an assumption, however, ComCom fails to recognise that the Swiss telecommunications market is already exposed to strong competition in fixed-line, mobile and Internet services. Customers benefit nationwide from innovative telecoms services and low prices thanks to modern infrastructures. As far as central broadband services are concerned, which are required for development of the information society, Swisscom with its ADSL offerings faces fierce competition from the cable modem applications of the cable network operators. Swisscom also faces competition from providers who thanks to the non-discriminatory wholesale service (Broadband Connectivity Service), which is based on the Swisscom infrastructure, are able to offer their customers their own broadband services. Moreover, in larger urban areas operators of so-called city networks are active in the corporate customer segment. Further broadband infrastructures are expected to emerge in the near future (WLL, WLAN, UMTS, power line communications, satellite transmission, co-use of existing cable channels as an alternative way of gaining customers, etc.).
Unbundling distorts competition and hinders investment
An unbundling obligation would distort this competition and put Swisscom at an unfair disadvantage. Swisscom objects to arbitrary price-fixing in a competitive environment. The prospect of having to make network infrastructure available to competitors at very low, regulated prices takes away any incentive on the part of Swisscom to invest. This would also remove the incentive of competitors to create their own infrastructures. Experience in other countries has shown that competitors concentrate as "cherry pickers" on the lucrative lines in larger urban areas. Hence, an unbundling obligation would impede essential innovation and expansion of the basic infrastructure and in turn development of the information society. An international comparison shows the same results: in most European countries, where Unbundling of the Local Loop (ULL) has been prescribed legally and tried in practice, experience is disappointing. The demand for the respective unbundling services is concentrated in a few centres and for selected, lucrative end-customers.
Intervention in legal position of Swisscom ? no unbundling by way of a change in the ordinance
Swisscom is clearly against the demand by ComCom for introducing an unbundling obligation through a change in the ordinance: any change in the telecommunications ordinance would have to be based on a sound and comprehensive analysis of the Swiss telecommunications market and take into account all relevant legal and economic factors. Given the importance of the issues at stake rapid action at ordinance level is out of the question. As the general provisions of the law on monopolies and price surveillance also apply to the telecoms sector, elaboration of the sector-specific ruling (e.g. unbundling obligation, regulation of leased lines) is superfluous. Should provisions nevertheless be deemed necessary, they would have to take place at federal law level (Telecommunications Law) and ensure protection of future investments.