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Press release

Telecommunications Act: Council of States differs from National Council

07 June 2005

Swisscom regrets the decision of the Council of States to expand regulations extensively in the telecommunications field. By so doing, the Council has come down in favour of comprehensive state intervention in the telecoms sector and against today's free competition in the infrastructure market. Further regulatory expansion creates legal uncertainty for infrastructure providers and reduces the incentive to invest. The decision by the Council of States differs substantially from the National Council's decision to continue the consultation process on the law, provisionally from September 2005.

There is no need for further expansion of state regulations in the telecoms market: Competition is already in place in the Swiss telecommunications market, and prices are falling. By comparison with other European countries, the Swiss population benefits from a very good price-performance ratio. On the broadband Internet market, Switzerland occupies a leading position in Europe in terms of usage, quality and low prices: factors that benefit outlying regions in particular. More than 40% of households in Switzerland already have fast Internet access via the telephone or cable TV network.

This favourable position is chiefly attributable to stiff competition in the infrastructure area between Swisscom and the cable operators. Even now attractive packages are being offered as alternatives to broadband Internet access over the fixed network, such as access via UMTS mobile communications networks or wireless LANs (hotspots).


State intervention distorts the market - others can jump on the bandwagon

Given this competitive situation, additional state intervention is not only unnecessary but also damaging, since it distorts the market and provides false incentives. The negative consequences of extensive regulation can be seen, for example, in the United States, and have resulted in unbundling being restricted to copper wires only. Unbundling the last mile means that Swisscom bears the sole risk of investing in the infrastructure, whilst competitors can benefit by jumping on the bandwagon. This reduces Swisscom's incentive to invest.

In addition to creating legal uncertainty, an obligation to provide technology-independent access, which according to the Council of States' decision could be expanded on by the federal assembly without resorting to a referendum, would mean that networks which have recently been built or are not yet built could be regulated at any time i.e. these networks would have to be made accessible to third parties under conditions laid down by the state. Fixed networks as well as mobile networks would be affected by this regulation. The result of boundary conditions of this kind is that networks can no longer be amortised at real market conditions.

Third parties favoured by such regulation will also be reluctant to invest since they will be able to use existing networks governed by state regulations. Moreover, the option proposed by the Council of States to introduce investment requirements on fast bit-stream Internet access after a three-year transitional period, will change nothing. During this transitional period, beneficiaries are not obliged to invest in new networks and ? as experience abroad has shown - are unlikely to do so.

The decision of the Council of States differs substantially from the decision of the National Council of 7 October 2004. In order to clear up this difference, the Telecommunications Act will once more be debated by the National Council in September 2005. The revised Telecommunications Act is unlikely to come into force before 2006.

Berne, 7 June 2005


Swisscom AG
Media Relations
3050 Bern