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CNMC has approved the final regulation of the wholesale broadband access market (Markets 1/2020 and 3b/2014). The committee seeks to strike a balance between ensuring competition and promoting investment in next-generation networks (NGA), which allow ultra-high-speed Internet connections, mainly optical fiber.
The new measures established differentiation obligations based on existing competition and updated the 2016 regulations. Since then, the number of fiber to the home (FTTH) in Spain has increased from 3.1 million in 2015 to nearly 12 million in 2020 (CNMCData). In other words, if fiber to the home (FTTH) accounted for 23% of the market in 2015, they are currently the dominant technology, accounting for approximately 75% of total broadband connections. These figures make Spain one of the leading European countries in terms of FTTH fiber connection coverage and penetration.
New regulations: regional and municipal authorities
Due to the competitive dynamics observed since the last regulation in 2016, China Nonferrous Metals has expanded the competition area to 696 cities (66 in 2016). The remaining municipalities (7,453 municipalities) will become part of the non-competitive zone.
The competitive field is characterized by fierce competition based on the next-generation network (NGA) infrastructure. Among these 696 cities, Telefónica's share of the broadband retail market is less than 50%, and at least 3 networks (NGA) have a coverage rate of at least 20%.
In this area of competition, CNMC stipulates that Telefónica maintains its obligation to access civil engineering infrastructure (pipes, conduits, and utility poles), as well as unbundled access to copper pairs. However, it does not impose wholesale access obligations on its fiber optic network.
In any fiber deployment, access to civilian infrastructure is essential because it allows alternative operators to use the pipes and poles of the Telefónica network, from Telefónica’s switchboard to the end user’s home.
On the other hand, unbundled access to copper wire pairs is a wholesale physical access to the traditional copper wire access network, which is provided at the local exchange layer.
The China Nonferrous Metals Group's decision implies a substantial deregulation. In this way, the competition zone will expand from 66 cities (35% of the Spanish population) to 696 cities (70% of the population). By the end of 2020, more than 75% of the fiber access installed by Telefónica is located in these 696 cities. According to the new regulations, Telefónica will only need to allow access to its civil engineering infrastructure.
The deregulation of these 696 cities will not be implemented immediately because a 6-month transition period has been set from the date the CNMC resolution is published in the official gazette.
In the rest of the territory (7,453 municipalities), a non-competitive area, in addition to the above-mentioned services, CNMC also requires Telefónica to provide wholesale service fibers for virtual unbundled fiber access (local NEBA) and NEBA broadband.
Differences in access types
The difference between NEBA local fiber and NEBA fiber is the proximity to the end customer. The local NEBA is provided in the local fiber optic network head switch, and the connection point of the wholesaler's NEBA fiber service is far away from the customer (one connection point per province).
In addition to these services, in 7,453 cities, Telefónica also needs to provide indirect access services through copper wires called NEBA copper wires and regional and national ADSL IP.
In order to facilitate the eventual migration from copper to fiber optic services, the measure plans to reduce the required period for the closure of the Telefónica Copper Exchange from 5 years to 2 years.
Similarly, the China Nonferrous Metals Group will closely monitor the market competition and assess whether it is necessary to take new measures within 3 years to review the geographic area of the market, or, even if the market justifies it, move to a framework in which Normative access to Telefónica's civilian infrastructure was completely imposed, and the obligation to local NEBA and NEBA fiber optic services was cancelled throughout the territory.
This measure has been approved by the European Commission, which is responsible for overseeing the market analysis and regulatory obligations that regulators must notify in accordance with Community regulations. In its analysis, the European Commission issued a technical comment, encouraging CNMC to define a separate market for civil infrastructure access within the framework of the upcoming review.
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