Reaching the end of the “last mile”?

Time to unbundle all this? Keystone

The virtual monopoly of Switzerland’s largest telecoms company, Swisscom, on the so-called "last mile" finally looks set to fall.

Following a vote by the House of Representatives to largely end monopoly rights to the last stretch of cable connecting households and exchanges, a Senate committee has also followed suit.

The full Senate is now due to rule on the issue, before the end of the current session of parliament.

Swisscom continues to argue loudly against revision of the federal law on telecommunications, saying that unrestricted access to the last mile would discourage similar major infrastructure investments in future.

The last mile is effectively Swisscom’s last remaining monopoly. All fixed line telecoms customers in Switzerland, regardless of their service provider, still have to pay the company a monthly access charge.

Since liberalisation of the Swiss telecoms sector began in 1998, fixed line prices in particular have dropped significantly.

Fears that liberalisation – and resulting competition – would lead to a “marginalisation” of customers in geographically outlying regions have proved largely unfounded.

However, the prices for fixed line network access have remained largely unchanged for years, with the only real competition coming from TV provider Cablecom, via its cable network.

Partial liberalisation…

In autumn 2004, the House of Representatives voted in favour of opening up the last mile, and thus allowing full competition to penetrate all the way to customers’ living rooms.

In practical terms, this would force Swisscom to offer its competitors access to the final stretch of its traditional copper wire network at “cost-oriented” prices.

A partial exception would be made in the case of broadband connections over the copper wires (so-called bit-stream access).

The House ruled that Swisscom should let customers receive rival services over its network for two years, after which access would no longer be guaranteed.

A spokesman for the Federal Communications Office told swissinfo that it was “difficult to see a business case” based on such a limited period of guaranteed access.

He added that a precondition for any form of direct regulation, including bit-stream access, was a ruling by the Federal Competition Commission that the existing operator enjoyed a “dominant market position”.

Swisscom also opposes the proposals, but for different reasons, saying “over-regulation” could damage the company, the sector and the economy as a whole.

…or the whole hog?

The Senate committee for traffic and communications has now gone a step further – it voted by nine to two in favour of a revised telecommunications law that would include further moves to liberalise bit-stream access.

Under its version of the law, rival providers would have immediate bit-stream access rights to Swisscom’s existing network without the two-year limit.

However, to avoid what economists call the “free rider” problem, new broadband providers would be obliged to prove – following a three-year transition period – that they had made appropriate new infrastructure investments.

The committee also wants parliament, rather than the government, to be responsible in future for approving, rejecting or altering new access forms – a move aimed at allowing more flexibility to react to technological change.

More consumer protection

The committee’s plans have the support of the Federal Office.

Director Martin Dumermuth told the SonntagsZeitung: “Customers in Switzerland pay a lot for broadband access compared with [their counterparts] abroad.

“If we want competition and improved choice everywhere, then we need unbundling [of the last mile] and bit-stream access.”

A further novelty of the new law is the creation of an arbitration commission, which would resolve disputes between customers and service providers.

swissinfo

Key facts

Switzerland’s telecommunications law was first introduced in 1997.
It ended the monopoly of the state-run post and telephone service on telecommunications.
Swisscom is now a listed company, but the government remains its biggest shareholder.
Key rivals include Cablecom (broadband TV and telephony) and Sunrise (fixed and mobile telephony).

In brief

The Senate is due to discuss the federal telecommunications law on June 7, following a House of Representatives decision last autumn.
The main proposed changes involve opening up the “last mile”, as well as consumer and data protection issues.
A Senate committee has proposed changes to the House version, particularly on broadband access rights.