BEREC publishes its Opinion on the draft Gigabit Recommendation

05 May 2023

National regulatory authorities (NRAs) will need sufficient time to adjust their regulatory framework and, therefore, the draft Gigabit Recommendation must foresee an appropriate transitional period before its complete application. This is one of the essential concerns that BEREC shared in its newly published Opinion on the draft Gigabit Recommendation
In its Opinion, BEREC experts imply that at least all the formally open proceedings will be finished based on the Next Generation access networks (NGA) and the Non-discrimination and costing methodologies (NDCM) Recommendations. The NGA and NDCM cover different aspects of access regulation in respect of obligations that NRAs should or should not impose on operators identified as having significant market power (SMP) on the broadband markets.

BEREC’s concerns and suggestions
With a view to improving the draft Recommendation, the BEREC experts raised some of their concerns, and provided comments and proposals for amendments to the draft Recommendation in the Opinion. 

BEREC expresses its appreciation for the European Commission’s work in promoting gigabit connectivity – a cornerstone of the EU Digital Strategy and one of the European Electronic Communications Code’s (EECC) objectives. BEREC notes that the draft Recommendation should take into account all other objectives of Art. 3 of the Code, namely, the promotion of sustainable competition, the contribution to the development of the internal market and the protection of the interests of end-users. BEREC points out that some terms of the draft Gigabit Recommendation do not seem to be fully in line with the provisions of the EECC, and this puts at risk the delicate balance achieved in the Code.
BEREC takes therefore the view that the highly detailed provisions of the draft Gigabit Recommendation risk unduly limiting the discretion given to NRAs under the Code. 

Generally, BEREC is concerned that the draft Gigabit Recommendation lowers the bar for an effective retail price constraint to an extent that risks a premature deregulation where regulation is still required.

With regard to the section of “Adequately rewarding the investment risk”, BEREC urges the Commission to clearly separate the two issues of dealing with the temporary increase of inflation when calculating the weighted average cost of capital (WACC) and estimating a very high capacity networks (VHCN) risk premium for new investment network projects. 

Draft Gigabit Recommendation
On 23 February 2023, the European Commission presented a set of documents to make Gigabit connectivity available to all citizens and businesses across the EU by 2030, including its draft Gigabit Recommendation. When adopted, the document will guide the NRAs on the conditions of access to telecom networks of SMP operators to accelerate the rollout of Gigabit networks. In line with the Code, BEREC, based on its expertise and regulatory experience, shall provide its input to the draft document.