Dutch regulator struggles to control dominance

The Dutch telecoms regulator OPTA has long been at loggerheads with the European Commission, trying to regulate what it sees as market dominance by the cable operators. The EC sees no need for regulation of the cable industry.

Cable industry representatives speaking at the Dutch national conference Kabel in de 21e Eeuw were pleased with the EC’s support. They stressed that the regulator should simply keep out, and not interfere in a dynamic market, rapidly bringing new services to consumers, fired on by competition. All looking though rose tinted spectacles that the regulator, in their view, should try on for size.

“We see no transfer behaviour [among consumers]. Our prognoses from two years ago have come true,” OPTA chairman Chris Fonteijn responded to the traditional industry criticism.  Casting the accusations of being too gloomy aside, he set the criteria as “to what extent do these developments translate into competition and pricing. That isn’t gloominess, but reality. Both in retail and wholesale markets there are positions of dominance” Fonteijn told the conference.

The Dutch cable market is highly consolidated, UPC and, Essent Kabelcom, Casema, and Multikabel, the three operators merging under Zesko Holding control television distribution to around 80-85% of Dutch TV households. Fonteijn doesn’t expect to see any major change anytime soon “the position of the cable companies remains strong. There’s little change [in this]. IPTV is still limited and does not yet provide a proper alternative. DVB-T is rising, but remains a niche product. And satellite does not provide a mainstream alternative”, said the regulator.

Faced with this market dominance the regulator sees a need to regulate the ‘television retail market’, however it is increasingly lacking the means to regulate retail markets, and the cable market in particular.

“The European Commission will release its decision on recommended [for regulation] markets before the summer. Retail markets will likely all be eliminated [from that list]”, Fonteijn said, explaining that this will put more stringent tests on regulators, making it harder to get EU approval for any regulations, such as price restrictions, national regulators might impose on operators.

Last year’s guideline already met with a ‘serious doubts letter’ from the EC, but Fonteijn remains committed to defend his ruling. The 2006 regulation just expired, but OPTA postponed making a new one, as the old one, which doesn’t include a price rule, is still being contested by the operators in court. The court is scheduled to rule, on whether the regulator may impose the restrictions it set, on April 18.

Having its jurisdiction to regulate at the retail level largely curtailed, OPTA is looking towards the department of economic affairs to expand its opportunities to regulate at the wholesale level. Fonteijn told the cable operators gathered in Amsterdam that he is particularly looking to regulate resale of the home connection or access line. Must carry should not longer mean the cable operator has the right to control access to the consumer. “Because the consumer has the right to a basic package, doesn’t mean the cable operator has the right to the connection, who offers that [the must carry package] should be irrelevant”. A position welcomed by incumbent Telco KPN’s General Manager Consumer Division Baptiest Coopmans, who repeatedly stressed the fact that his company can not get access to the all important analogue cable line.

A new set of regulations should be available for consultation in the third quarter.