The Commission has issued a recommendation asking the Portuguese telecoms regulator (ANACOM) to grant regulated access to the fibre lines of MEO (Portugal's incumbent telecoms operator), in less densely populated parts of the country where there is little prospect of alternative infrastructure deployment and in the absence of commercial access or co-investment offers that would permit sustainable competition in such areas.

The European Commission has issued a recommendation concluding that ANACOM's proposal is not compliant with EU law, following a three-month in-depth investigation. The Commission requests ANACOM to impose on MEO an obligation to provide access to the unbundled fibre line as well as to bitstream over fibre in at least some parts of the areas which ANACOM considered to be non-competitive at retail level; in particular in remote or rural areas, where competitive NGA deployment is very unlikely.

ANACOM should consider whether to grant MEO a degree of pricing flexibility for the fibre access product in line with the Commission Recommendation on Non-discrimination and Costing using MEO's own commercial offer as a basis for the regulated access product. ANACOM could by way of regulation adjust the commercial and technical characteristics of MEO's commercial offer, and foster an agreement between operators for accessing MEO's fibre in such non-competitive areas.

In its draft decision, ANACOM conducted an analysis of the retail and wholesale markets for broadband services. It found that MEO has significant market power (SMP) at wholesale level nationwide on the local access markets, and in areas where infrastructure competition has not yet developed on the central access market for broadband (covering all technologies: copper, fibre and cable).

Under the EU Framework and Access Directives, telecoms regulators can impose remedies on SMP operators in order to allow alternative operators to deploy their own infrastructure more easily so that consumers can benefit from more competitive prices. These remedies typically include the obligation to provide access for alternative operators to the network of the incumbent.

ANACOM found that the Portuguese territory can be split into two separate geographic retail markets: "competitive" parishes (mostly urban areas where alternative operators are present with significant coverage of next generation networks and/or a limited market share by MEO) and "non-competitive" parishes (some urban or predominantly urban, but mostly rural, where MEO is by far the strongest provider of broadband services).

ANACOM proposes to require MEO to grant alternative operators nationwide access to its copper network, ducts and poles (or dark fibre where there is no space in the ducts and poles). It also proposes to require MEO to offer bitstream services over its copper network in the non-competitive areas. However, despite the growing competitive significance of fibre (30% of Portuguese subscribers have tariff plans providing 100 Mbps or more); ANACOM does not intend to regulate access to MEO's fibre network.

The Commission has acknowledged that in the more competitive urban areas, the regulated access to MEO's ducts has greatly facilitated the deployment of alternative fibre networks, and thus also indirectly favoured efficient co-investment by alternative operators with MEO. The Commission has not criticised the non-regulation of MEO's fibre in these areas.

ANACOM submitted additional information pointing towards some of the non-competitive areas being prospectively competitive. The Commission recognises that a more dynamic assessment of likely infrastructure competition, a consideration of wholesale offers by publicly supported networks, any new co-investment offer by MEO covering parts of the non-competitive areas, as well as the growing number of offers based on fixed LTE, can play a role in revising the geographic scope of access remedies, leading to a potentially smaller non-competitive area. The Commission will examine constructively any such revised approach if notified by ANACOM.

However, on the basis of the evidence provided to date, the Commission believes that ANACOM's intention not to regulate access to MEO's fibre network in those more rural parts of the non-competitive areas defined by ANACOM, where there are limits to the economic feasibility and likelihood of competitive NGA deployment and where there is no alternative wholesale access to NGA permitting sustainable competition, is contrary to the provisions of EU telecoms rules. ANACOM has not provided a sufficient justification as to why not regulating fibre access would foster a sustainable competitive market at retail level and represent an acceptable balance between the objectives of competition and efficient investment in end-users' interest.

The Commission's request follows a three month investigation, during which BEREC, the body of European Telecoms Regulators, expressed its strong support for the Commission's position. The Commission now requests ANACOM to withdraw or amend its proposal within one month so that access regulation in the Portuguese broadband markets is in line with EU telecom rules. If ANACOM does not amend or withdraw its draft measure accordingly, in the absence of a valid reasoned justification, the Commission could reserve its right to assess whether to consider other legal measures available.

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