Berne, 25 January 2008
The fixed-line broadband market has experienced a veritable boom in recent years. In the space of only five years, the most commonly used DSL bandwidth of 300 kbps has increased more than ten-fold, the number of end customers three-fold, and DSL service coverage has expanded to more than 98% of accesses in Switzerland. Full unbundled access means that alternative telecoms providers have been able to offer their customers proprietary broadband products such as broadband products or leased lines over Swisscom's copper cable since April 2007.
In the last five years Swisscom has invested more than a billion Swiss francs in building up DSL services. As a result, customers are benefiting from greatly improved performance. Huge effort is currently going into expanding the provision of DSL services that allow a bandwidth of up to 20,000 kbps. By the end of 2008 over 80% of all Swiss households will be able to take advantage of this.
To strengthen the position of Internet service providers, Swisscom has decided to lower its wholesale prices by 10% for accesses and 40% for data volume. This means that from 1 January 2008 (retroactively), the most commonly used access with a data rate of 3,500/300 kbps for downloading and uploading will cost CHF 28 a month. With the greatly reduced price for data volume, Swisscom is responding to the increased Internet usage and new applications of recent years.
Since the beginning of December, Swisscom has been offering its competitors something new: a bit-stream offering for resale - Naked DSL. Based on this, alternative providers can offer integrated bundling of broadband access with Internet telephony (Voice over IP; VoIP) throughout Switzerland. The offer was launched as a pilot project and will be available commercially from 1 April 2008. Eleven Internet service providers have already signed up. The current offer for data rates of 20,000/1,000 kbps and 5,000/1,000 kbps costs the Internet service providers CHF 49 a month and this will be expanded to include the additional offer of data rates of 3,500/300 kbps at a monthly price of CHF 46. By doing this, Swisscom will be meeting the needs of alternative providers.
The bit-stream offering refers to a DSL broadband access without the traditionally coupled fixed-line connection, which makes it interesting for alternative providers because more and more customers are foregoing fixed-line telephony in favour of mobile or IP telephony.
According to the OECD, the Swiss broadband market has a leading position on the international stage. In a comparison of prices in relation to bandwidth, we are among the least expensive 25% of countries worldwide. As far as usage of broadband offerings is concerned, Switzerland even ranks third (DSL and cable networks).
These top rankings are also attributable to the intense level of competition in our country: Switzerland owes its extremely good coverage to the competing infrastructures of Swisscom and various cable network providers. Swisscom has been offering commercial DSL services for resellers (wholesale offerings) throughout the country for many years. Over 20 Internet service providers use these offerings and compete with each other and with Swisscom for services. Broadband business on the fixed networks of Swisscom and the cable operators faces increasing competition from the existing mobile operators. Thanks to HSPA technology, the volume of data traffic on these networks is growing extremely fast.
Swisscom and the other market players need a high level of planning and legal assurance when it comes to setting prices. Swisscom has therefore called on the Federal Office of Communications (Bakom) to invite participants in the unbundling business to sit round the negotiating table and discuss the matter in front of the regulatory authorities. The subject of these negotiations will be the key cost elements (parameters) of the unbundled access. With this step, Swisscom wants to support the implementation of unbundling and achieve a common understanding of the contested parameters by all participants. Planning assurance must be increased and lengthy legal disputes avoided; this would allow customers to also benefit from immediate price reductions. Up to now, the alternative providers have not reimbursed their customers with the retrospective price reductions.
The price of unbundled access is calculated using the legally prescribed LRIC (long run incremental cost) method. This price is strongly influenced by parameters such as the depreciation period. While the Federal Communications Commission (ComCom) set a depreciation period of 20 years in the interconnection proceedings for 2000 to 2003, ComCom is now assuming a 40-year depreciation period for 2004 to 2006. This doubling of the depreciation period has a considerable effect on the calculation of the parameters for the regulated prices and therefore on the prices themselves.