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Press release

Unbundling distorts competition and impedes investment

24 April 2002

In a decision announced today, the Federal Council plans to introduce further regulations at the ordinance level. Accordingly, Swisscom's leased-line offerings will be subject to the interconnection regime and Swisscom will be obliged to unbundle the local loop (Unbundling of the Local Loop, ULL). Swisscom regrets this decision whose impact on the fixed network business is as yet difficult to estimate, and is resolutely against additional regulatory intervention in areas already open to competition.

In Swisscom's opinion, regulation of leased-line offerings and an obligation to unbundle the local loop must be based on a comprehensive and thorough analysis of the Swiss telecommunications market and hence a legal reform which would address all relevant economic and legal aspects. However, since the requisite studies have not yet been conducted, important questions remained unanswered.

Swisscom is resolutely against any such major intervention in its legal status. Moreover, in October 2001 the Federal Court ruled that the applicable telecommunications law provided no basis for an obligation to interconnect leased lines or unbundle the local loop. The regulations proposed by the authorities are effectively akin to expropriation. In the interest of all shareholders Swisscom would be forced to take legal action should decrees such as those now planned be imposed merely as an amendment to the ordinance.


There are important reasons which refute the need for additional regulatory measures:

Swiss leased-line prices have been proven as competitive and rank as average in the European context. In addition, the competitive provisions of the law on cartels and price monitoring already apply unconditionally to the telecommunications sector. Hence there is no need for regulatory provisions in the telecommunications law. Swisscom's leased-line offerings are in competition with those of other providers. A unilateral regulation would put Swisscom at a disadvantage and distort existing competition. 
As far as the "last mile" is concerned, Swisscom's network is already in competition with other infrastructures such as cable networks. This particularly affects broadband services (e.g. high-speed Internet access), which are essential to the development of the information society. In this area, Swisscom's ADSL offerings are in intensive competition with those of cable network operators. Moreover, experience in other countries clearly shows that unbundling is not a viable means of ensuring a better and more economical provision of service. 
An obligation to unbundle would destroy Swisscom's incentive to invest, particularly when regulated prices barely cover costs, if at all. Alternative providers would be able to concentrate their offerings ' based on the Swisscom infrastructure - on large towns and cities and on lucrative business customers, to the detriment of less populated areas. On the other hand, the present solution encourages Swisscom's investment in a modern telecoms infrastructure for rural, peripheral and alpine regions, and thus in general terms boosts the development of the Swiss information society.

Berne, 24 April 2002


Swisscom AG
Media Relations
3050 Bern