Broadband pricing comes under scrutiny

The competition commission wants to know if Swisscom's broadband pricing violates cartel legislation Keystone

Switzerland's competition watchdog is to open an investigation into broadband access pricing at telecommunications provider Swisscom.

The former state monopoly, which still controls the so-called “last mile”, is suspected of favouring its Bluewin internet subsidiary over its competitors.

The Federal Competition Commission wants to know if Swisscom has been overcharging these internet service providers who want to provide ADSL – or Asymmetric Digital Subscriber Line – to people’s homes and businesses.

Because of the last mile monopoly, these companies have no choice but to deal with Swisscom. ADSL technology uses normal telephone lines for broadband access.

All fixed-line telecoms customers in Switzerland must pay Swisscom a monthly access fee, regardless of their service provider.

The commission suspects the former state monopoly of abusing its dominant position and violating Switzerland’s cartel law by charging higher wholesale prices and squeezing service providers’ margins.

Swisscom spokesman Sepp Huber said the investigation came as a surprise, adding that the telcoms’ provider charges Bluewin the same rates as it competitors.

“Competition is intense on the Swiss broadband market,” he said. “Around half of all households have ADSL or cable internet connections.”

With around 30 different suppliers of broadband services, prices remain attractive in Switzerland according to Swisscom, a claim providers other than Bluewin refute.

Companies such as Sunrise and VTX say Swisscom connection rates are way above the European norm. VTX, a small provider, reckons that its basic ADSL services don’t break even without extra added-value services.

Precedent

This is not the first time the competition watchdog has investigated Swisscom’s broadband practices. In 2003, it ordered Switzerland’s biggest telecommunications company to stop giving preferential discounts to Bluewin.

At the time, the commission said the discounts were discriminatory and were not economically justified. Bluewin was able to offer cheaper services than its competitors.

The latest investigation comes as Swisscom’s stranglehold on the last mile is being loosened.

The House of Representatives voted last year to end monopoly rights on connections between households and exchanges. A Senate committee has also proposed opening up the last mile to competition.

Swisscom has battled against the revision of the telecommunications law, saying that unrestricted access to the last mile would discourage future investments.

swissinfo with agencies

Key facts

Swisscom results first half 2005:
Earnings: SFr4.9 billion ($3.82 billion).
Employees: 15,307.
Analogic connections: 2.95 million.
ISDN connections: 919,000.
ADSL connections: 948,000.
Bluewin ADSL customers: 490,000.
Mobile phone cutomers: 4.04 million.

In brief

ADSL allows for broadband internet access over normal copper telephone lines.

Swisscom controls the telephone network, forcing other providers to use its services to access customers.

Cable operator Cablecom provides an alternative to Swisscom with its broadband access via its own cable television infrastructure.