Marek Piiroja
30.08.2013
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In principle at the moment in Estonia the fibre access
(including prices) is not regulated and by the SMP decision
on 2009 the Elion is just obliged:
to inform other communications providers that use Elion's
copper-based local loops at least 6 months in advance of
any change to fiber-optic cable loops and services based on
fibre.
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In 2013 ECA has conducted on M 4 and M 5 new analysis.
ECA included in the markets the provision of local loops
and sub-loops (including full and shared access) over
copper and fibre.
In both markets, ECA has proposed to use a top down
historical cost – fully distributed cost („TD HC FDC“)
methodology for the calculation of prices for copper access,
fibre acces as well as broadband acces.
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ECA found that the use of a simple TD HC FDC
methodology is sufficient to avoid excessive prices and
price discrimination. This methodology has been used since
2007, with decreasing wholesale copper pair access price as
a result.
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Also, using this cost methodology will allow to cover the
investments made and still make a profit.
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Elion´s proposal - 22 months. The final measure proposed:
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M 4 - Access obligations related to free fibre-optic feeder
segment fibers and shared access to free fibre-optic feeder
segment capacities will have to be met in six (6) and nine (9)
months, respectively, from the moment of entry into force and
delivery of the decision.
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M 5- the obligations concerning broadband access based on
optical cable enter into force 9 (nine) months after the entry
into force and delivery of the decision.
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Telephone conversation with the EK. Benchmarking.
No suitable countries for benchmarking base.
Other EU countries LRIC CC prices are considerably
higher than Estonia prices today.
The impacts of the BU LRIC CC model for Estonia markets:
Increasing copper access prices, which will cause:
 margin squeeze;
 damage end-users ability to get qualitative broadband services.
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 Alternative operators loose interest to rent wholesale
copper lines, which will close LLU service at all.
 Very burdensome remedies to SMP’s operator and
regulator in consideration of market volumes.
 The SMP operator might decrease investments.
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On May 2013 Commission expressed serious doubts the
proposed choice of costing methodology complies with the
policy objectives and regulatory principles, in particular
Article 8 of the Framework Directive.
The Commission considers that the use of historic costs for
the valuation of all assets, can potentially lead to very low
access prices.
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 The decisions on the type of costing methodology to
implement depends largely on national circumstances.
 BEREC does not support the Commission´s view that the
Estonian price level has negative effects on investments
by alternative operators.
 The fact that SMP operator support present cost
methodology, may be part of ECA´s motivation for using
this methodology.
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 BEREC notes that the Commission has previously approved
without comments the use of TD HD FDC in Estonia, and
the methodology has been in use already since 2007 in the
wholesale copper pair-access market.
 BEREC point out that according to point 25 of the NGArecommendation, in force since 2010, the price of access to
the unbundled fibre loop should be cost oriented.
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 BEREC finds it odd that the Commission´s statement differs
from the NGA-recommendation, and instead relies on the draft
Commission recommendation on non-discrimination and
costing methodologies, which was not formally adopted by the
Commission at the time of ECA´s notification.
 BEREC recommends that the ECA adds to its SMP-decision a
more thorough justification / evidence as to why, a TD HC
FDC based costing methodology is to be preferred.
 BEREC does not take a position whether or not using a TD HC
FDC approach is the most appropriate in the given case.
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 The meeting between representatives of the Commission,
BEREC and ECA was held in Tallinn on 27 August.
 The Commission found that we should withdraw the draft
decision or change current HC FDC cost methodology to
CC FDC.
 We need to inform the Commission no later than 13
September of our decision.
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Thank you !
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