Decision on Retail Access to the Public Telephone Network at a Fixed Location

 
The Malta Communications Authority (MCA) is hereby presenting its final decision on the markets for retail access to the public telephone network provided at a fixed location in Malta

The MCA has carried out a national consultation process during the period running from the 19th September 2014 to the 20th October 2014. The MCA received three responses from GO, Melita and Vodafone. All responses elicited during the consultation process have been taken into account in this final decision.
 
Pursuant to Regulation 7 of the Electronic Communications Networks and Services Regulations (ECNSR), the MCA notified its proposed decision to the EU Commission and the body of European Regulators for Electronic Communications (BEREC) on 21st November 2014.

During the Phase 1 evaluation, on 26th November 2014, the Commission requested additional information to which the MCA responded to such request on 1st December 2014. On the basis of the additional information provided by the MCA and the notification document, on 17th December 2014, the Commission issued its comments letter. In this letter the Commission agreed with the conclusions in the draft decision and had no further comments to make.

The MCA has identified the following relevant markets in accordance with competition law principles:
  • Lower level access to the public telephone network at a fixed location.
  • Higher level access with a maximum of two telephone connections to the public telephone network at a fixed location.
  • Enhanced higher level access with more than two telephone connections to the public telephone network at a fixed location.

In its analysis of the identified markets, the MCA did not identify any significant barriers to market entry that could inhibit effective market competition.  Despite GO enjoying economies of scale and scope, and also being a vertically integrated operator, the MCA concludes that other operators, namely Melita, also enjoy similar conditions and are therefore competing at par with the incumbent, GO. The MCA also concludes that despite the presence of high sunk costs in deploying a new access network, new entry has happened. Moreover, with the emergence of wireless broadband networks, new operators have managed to enter the market and are somewhat posing an indirect constraint.

From a consumer’s perspective, the assessment of countervailing buyer power also shows that through switching, customers can effectively constrain the behaviour of operators in the identified markets. In addition, the MCA notes that with alternative operators joining the fixed access markets, GO consistently lost its market share as users started to switch to these new operators, most especially Melita. Similarly, large business clients enjoy countervailing buyer power in the higher level access markets as operators compete aggressively to provide these clients with a full suite of services. 

At the same time, the MCA notes that even if there were no alternative fixed telephony operators, GO would still be indirectly constrained by mobile voice telephony services and OTT services. 

Based on these findings, the MCA thus concludes that no operator is able to behave independently from the others in the market and therefore no operator holds significant market power in any of the identified markets. In the absence of regulation it would be very unlikely, therefore, for GO to act in an uncompetitive way or increase tariffs of fixed access and/or fixed calls beyond the competitive level without losing customers to Melita or facing a drop in usage to mobile telephony.

Given the finding of no SMP, the MCA notes that regulatory intervention in local markets for retail access to the public telephone network at a fixed location is no longer warranted. Consequently, the MCA is withdrawing the remedies imposed in these markets. This withdrawal shall however be implemented without prejudice to any other general obligations at law or remedies emanating from other market analysis decisions, particularly wholesale obligations which will be dealt with under a separate market review. 
 
MCA Reference: MCA/D/15-2220
Consultation: MCA/C/14-1996

Rate the Page

Was this page useful?