BEREC Opinion on Phase II investigation pursuant to Article 32 of Directive (EU) 2018/1972: Cases CZ/2022/2372 and 2373 - Wholesale local access provided at a fixed location in the Czech Republic, Wholesale central access provided at a fixed location for mass-market products in the Czech Republic

On 10 May 2022, the European Commission (EC) registered two notifications, under Article 32 of Directive (EU) 2018/1972 (the Code), from the Czech national regulatory authority (NRA), Český telekomunikační úřad (ČTÚ), concerning the market for wholesale local access provided at a fixed location and market for wholesale central access provided at a fixed location for mass-market products.

In its draft decision, ČTÚ defines the market for wholesale local access at a fixed location and the market for wholesale central access provided at a fixed location for mass-market products as including all those technologies it identifies at the retail level, including services over xDSL, fibre, cable, wireless technologies and fixed LTE. The geographic market segmentation in these wholesale markets follows the analysis from the retail market, where ČTÚ identifies 5,859 geographic units that are competitive (Segment A) and 510 geographic units that are non-competitive (Segment B).

On the basis of the so called three criteria test,  ČTÚ concludes that Segment B of the wholesale local access market is susceptible to ex-ante regulation, whereas the wholesale central access market is tending towards effective competition and no ex-ante regulation is required. In the wholesale local access market, ČTÚ concludes that the areas belonging to Segment A are competitive. In Segment B, ČTÚ identifies CETIN with significant market power (SMP) in 308 geographic units and seven other operators as having SMP in a further 66 geographic units, out of the total of 510 units deemed as non-competitive based on the analysis at retail level. ČTÚ subsequently concludes that geographic units of Segment B where SMP has been found are susceptible to ex-ante regulation. By contrast, in the areas circumscribed to Segment B where no SMP was identified, no regulatory obligations are proposed, accompanied by the withdrawal of remedies in the areas where regulation was previously imposed.

ČTÚ proposes to impose a series of regulatory obligations on CETIN, including access to copper and fibre loops and sub-loops – or virtual unbundled access to the local loop (VULA) if physical unbundling is not feasible, transparency, non-discrimination, accounting separation and price control. ČTÚ also proposes to impose a general non-discrimination obligation on the seven other operators to be designated with SMP.

The Commission sent a request for information to ČTÚ on 18 May 2022 and received a reply from ČTÚ on 23 May 2022. Further exchanges of information followed subsequently.

On 8 June 2022, the Commission sent a serious doubts letter opening a phase II investigation pursuant to Article 32 of the Code. The Commission’s serious doubts concern ČTÚ’s proposed geographic market definition and SMP assessment in the case of alternative operators with a local presence, as well as the three criteria test on the market for wholesale central access provided at fixed location for mass market products. Since the draft measures would create a barrier to the internal market, the Commission expressed serious doubts as to their compatibility with Union law.

BEREC is of the opinion that the Commission’s serious doubts are partially justified with regard to the lack of sufficient evidence supporting the delineation of local geographic markets and the insufficient evidence supporting the SMP designation of alternative operators with a local presence. BEREC is of the opinion that the Commission’s serious doubts are justified with regard to the application of the three criteria test in Segment B of the wholesale central access market. Therefore, BEREC’s overall conclusion is that the Commission’s serious doubts regarding the draft decision of the Czech national regulatory authority, ČTÚ, as expressed in the Commission’s letter, dated 8 June 2022, are partially justified.