Swiss regulator lowers LLU fees to CHF 18.18 a month

bealtine

Swiss regulator lowers LLU fees to CHF 18.18 a month Wednesday 24 September 2008 | 01:34 PM CET

(18 chf = roughly E11)

The Swiss federal communications commission (ComCom) has reduced the price for unbundling the local loop from CHF 23.50 to CHF 18.18. Swisscom had initially demanded a price of CHF 31.00 from its competitors, after voluntary decreasing the monthly fee from CHF21 to CHF 23.50 in March of this year. ComCom has examined this price by applying the legal guidelines and has come to the conclusion that it is excessive. ComCom is therefore reducing the monthly price for unbundling of a house connection to CHF 18.18 for the year 2008 and CHF 16.92 for 2007. This decision is based on extensive cost analyses and pricing calculations performed by the federal office of communications Bakom. To enable Swisscom's competitors to unbundle subscriber lines, i.e. to operate them themselves, they must be able to obtain access to Swisscom's local exchanges and install their equipment in them (this is known as co-location). Here too, ComCom has reduced prices considerably. In particular, the one-off prices for Swisscom's clarifications and implementation services are being reduced by 55 to 85 percent. At the same time ComCom decided to lower the interconnection fees charged by Swisscom by between 25 and 30 percent.

The cost analysis in the unbundling procedures has shown that Swisscom had assumed too high capital charges, some too foreshortened amortisation periods and inflated construction and operating costs. In relation to interconnection prices, ComCom had already implemented a large part of the adjustments which have now been reaffirmed in its decision on the similar procedures by Colt and Verizon on 14december 2007. Thus in the interconnection procedures, Swisscom again assumed in some cases to short service lifetimes and excessive operating costs. Furthermore, the overhead costs and the weighted average costs of capital were much too high. ComCom has made the corrections in accordance with the legal guidelines and this has resulted in the price reductions which have been decreed. The decreed prices apply to all providers, i.e. even to those who did not complain (the so-called third-party effect). This entitlement exists in law on the basis of the ban on discrimination and does not need to be agreed contractually. The prices will enter into force on expiry of the appeal period of 30 days (from receipt of the decision in writing), in so far as none of the parties to the procedure lodges an appeal with the Federal Administrative Court.

In a first reaction, Swiss alternative fixed network operator Sunrise said it considers the ComCom decision a step in the right direction, but it will continue to push for the unbundling of the last mile at full strength, including pro-ante cost calculation instead retroactively as ComCom does now. As a result of this price decision, Sunrise will stick to its investment policy and continue investing in the last mile. Sunrise’s investment activity has picked up speed: instead of the planned 120 local telephone exchanges, Sunrise has now ordered 153 from Swisscom. The telephone exchanges will be equipped with their own infrastructure and are developed with fibre optic cables. By the end of 2010, 80 percent of all households will have the complete freedom to choose their provider.