The European Commission is reviewing the Recommendation on relevant product and service markets of 2014 and published a new draft on 25 August 2020. The recommendation constitutes a sort of default set of markets that are susceptible to ex ante regulation; i.e. there is an implicit assumption that the three criteria test is fulfilled.
The proposed list is clearly shorter than the previous one including not more than the following two markets:
- Wholesale local access provided at a fixed location which can be used to provide mass market broadband services (the current market 3A); and
- Wholesale dedicated capacity which is mainly relevant for business use requiring a higher quality of connectivity (the current Market 4).
In comparison to the Recommendation of 2014 market for wholesale central access (Market 3B, i.e. bitstream) as well as markets for fixed and mobile call termination (Markets 1 & 2) are no longer included. In the Commission’s view, these markets no longer meet the three criteria test. However, the reasons are different.
The Commission concludes that the market for wholesale central access (WCA) tends towards effective competition. There are a number of alternative players who offer WCA, including alternative fibre and cable network providers, operators which have developed networks up to local interconnection points, aggregators and intermediaries. It is worth noting that cable network is considered part of the WCA market. While the market is not fully competitive yet, the tendency towards effective competition means that the three criteria are not met. For example, in Finland the Market 3B is being regulated currently, partly because cable networks are not included in the market.
In case of termination markets the reasoning is different. In the Commission’s view, the markets remain monopolistic since every network is a different market and thus every network holder has a market share of 100 %. Further, there is no tendency towards competition. However, due to implementation of the new price control mechanism, EU-wide fixed and mobile voice call termination rates, i.e. Eurorates, pricing power of the network holders is constrained. In other words, while the market remains non-competitive, the outcome is competitive in terms of pricing. (The Finnish telecom watchdog, Ficora (currently Traficom), proposed to lift regulation of fixed termination markets for several years ago but the plan was rejected by the Commission.)
As earlier, NRAs can examine also markets that are not covered by the Recommendation. However, in these cases they need to run the three criteria test and proof that the three criteria are cumulatively met (for example, this is the case in the Finnish broadcasting market). On the other hand, NRAs may choose to deregulate markets listed in the Recommendation if they are sufficiently competitive.
The draft recommendation is currently reviewed by Berec and is expected to come into force in December 2020.