IHS Global Insight Perspective | |
Significance | The move follows a recent announcement from the regulator that it was ordering TeliaSonera to cut its fixed-line access prices by up to 10%. |
Implications | The decision is aimed at creating positive environment for investments and competition, as well as at providing more options to Swedish broadband consumers in the future. |
Outlook | The explosion in demand for broadband is driving a fresh wave of regulation across Europe, as alternate providers seek access to high-speed networks. |
The Swedish regulator will force TeliaSonera to open its fibre-optic next-generation network (NGN) to wholesale access for rivals, according to media reports. Regulator the Swedish Post and Telecom Agency (PTS) has decided to expand the incumbent operator's previous obligations to allow full access to its copper infrastructure to include its fibre-to-the-home (FTTH) network.
PTS says its decision is aimed at creating positive environment for investments and competition, as well as at providing more options to Swedish broadband consumers in the future. The regulator has pledged to guarantee TeliaSonera continues to receive fair compensation for access to its FTTH infrastructure, but no details of how this pricing structure will be calculated have been revealed.
Outlook and Implications
- Swedish Drive to Boost Fixed-Line Competition: The decision means TeliaSonera will have to let other operators buy the right to use its access network, part of the network that connects subscribers to their immediate service provider. The move follows an announcement from regulator PTS last month that it was ordering the Swedish former incumbent to cut its fixed-line access prices by up to 10%, saying the reduction is necessary to improve competition in the market (see Sweden: 9 April 2010: TeliaSonera Ordered to Cut Fixed Access Rates by Up to 10%). The head of communications at TeliaSonera's Swedish infrastructure unit, Nina Stridsberg, stated that the company will follow the regulator's ruling in the meantime, although it is likely to launch an appeal against the decision at a later date.
- TeliaSonera's Performance at Home Remains Flat: TeliaSonera is unlikely to welcome the extra regulation, and has recently reported its first-quarter revenues had dropped 3.9% in Swedish kronor terms, although in local-currency terms revenues rose 2.5% on the year, driven by strong performance in its Eurasian markets (see Sweden: 20 April 2010: Local Currency and Domestic Mobile Growth Drive TeliaSonera's Q1 Earnings Up 1.6%). The operator has indicated that its investment level may now be lower than previously projected, with capex as a percentage of revenue in 2010 now likely to be lower than the originally envisaged 15%; however, the group’s cautiously optimistic forecast for 2010 remains in place (see Sweden: 8 April 2010: TeliaSonera Maintains 2010 Growth Forecast, Accelerates Investment). However, TeliaSonera has seen some early success in its 4G LTE mobile broadband rollout (see Sweden: 3 May 2010: TeliaSonera Releases Survey on LTE User Habits), and expects some major gains from this sector in the Nordics once the technology becomes widely adopted.
- Broadband Demand Drives Further Fixed-Line Regulation in Europe: Following flourishing competition in most of Europe's fixed-line markets, the furious regulation seen 10 years ago to break the dominance of the incumbents has abated somewhat—but the ramping demand for high-speed broadband services has seen a fresh wave of directives. In neighbouring Finland, the regulator has launched an investigation into incumbent Elisa's broadband network wholesale access fees, in an effort to prevent key market players from monopolising prices, following a request by TeliaSonera (see Finland: 6 May 2010: Finnish Regulator Launches Probe Into Elisa Broadband Wholesale Pricing), while in Germany, the alternates are similarly calling for a drop in access fees (see Germany: 7 April 2010: Vodafone Germany Calls for Cut in VDSL Access Fees). The explosion in demand for broadband is driving a fresh wave of regulation across Europe, as alternate providers seek access to high-speed networks.