These Are The Arguments of Vodafone to Denounce The Fiber of TelefóNica

As we indicated last Monday, Vodafone filed a joint complaint against Telefónica and Jazztel on February 14, 2014 before the National Commission of markets and competition (CNMC) for “restrict, prevent or distort” competition.

Yesterday we had the opportunity to learn more about this denunciation of the hand of Pedro José Peña, Director of legal services at Vodafone. At the meeting he explained the arguments of the complaint and explained the approach of your company to practices which, in his view, are “part of a strategy of exclusion, which aims to keep competitors such as Vodafone out of fiber market in a crucial market”.

Telefónica refuses to negotiate commercial offers

As explained by Mr. Peña, There have been various behaviors that Vodafone has reported to the CNMC. The first of these is the “delay, hinder, impede and make economically inefficient deployment of fiber networks”.

In that sense, they say Vodafone, alleged “Telefónica refusal” to negotiate commercial broadband offers above the 30 Mbps which correspond to the regulated supply forced by the CMT. Regulation, highlights of Vodafone, has become obsolete, become a norm of 2009 that, despite their efforts, is still not checked. Telefónica complies with that regulation and gives access to wholesalers to those broadband lines, but at the moment, there is no current regulation, does the same with 50 and 100 Mbps fiber lines.

José María Marín Quemada, President of the CNMC, said in the past that review that regulation is a priority. The regulation of markets 4 (physical access to networks) and 5 (bitstream, the virtual service) is required, but those statements they have not translated at the moment in a decision a regulatory body that Vodafone was also clear complaints deadlines necessary to take any decision and execute it.

In fact, Mr. Peña stated that “regulation is benign with Telefonica”, and that the international operator has also taken the process of transit that it has done to make the current CNMC former WCL.

When Telefonica began to deploy its fiber network, explained Mr. Peña, Vodafone attempted to negotiate with Telefónica. Vittorio Colao, Chief Executive of the British-based operator, sent a letter to the Chairman of Telefonica, Cesar Alierta, in November 2012 to reach an agreement.

Telephone response was emphatic: Vodafone could now compete with regulated offers (up to 30 MB), and not had interest in reaching an agreement regarding the deployment and management of fibre networks. Vodafone idea was from the start the of the co-investment in fiber networks. Sharing costs and the areas in which implement it and thus further and better between the two companies.

The vertical, also affected

Another aspect in which Telefónica has put according to Vodafone obstacles possible has been the of the vertical infrastructure. Such facilities posed the final stretch of fiber deployments should be again shared the discretion of the company, but in Telefónica were not entirely in agreement.

Indeed, rule obliges the operator who first arrive and open the line must share the last access and the cost is split between those operators who share it. Telefónica tried according to Vodafone of delaying everything (up to 8 months, stated Mr. Peña) an agreement of prices, and in fact when finally reached this agreement, did so at prices that Vodafone considered abusive.

Vodafone signed the initial agreement, but warning at that very moment to Telefonica that would draw the CNMC to fight for a fairer price. and He succeeded, at least in part, When the CNMC intervened and redijo the initial price by 26%.

Thus, while Telefonica called for 158 euros per building, the CNMC established that the cost should be placed in 126 euros. Finally the cost seems to have been established in 104 euros, Although Vodafone claim to this vertical access fits at the real cost, which, according to Mr. Peña, is about 80 euros.

Telefónica chooses its partners carefully

One of the arguments of the complaint of Vodafone focused on the way in which Telefónica is closed to certain negotiations but opens the door to other companies. Happened with Jazztel, Yes it was invited to the co-investment in vertical infrastructure. That, according to Mr. Peña, allows both operators to artificially inflate prices above the market and costs.

Something similar has happened with the agreement with Telstra, of which there were also comments despite not being part of the complaint. Pena described the agreement of Telefonica and Telstra 4G as a “glaring” case of the attitude of Telefónica and of how the company can “fully selective agreements” and unjustifiable.

Mr. Peña also spoke about agreed that also have Telstra and Telefonica in terms of fiber, and It allows Telstra to act as reseller or agent -not as a wholesaler – of the Spanish company. This is another action that was clearly critical of Vodafone.

Vodafone is “dead”, according to Mr. Peña, waiting for the decision of the controller, that it take steps precautionary, and that Telefonica is trying to delay this process as much as possible in order to gain time and also reaching agreements with partners that can not harm your business.

The perplexity in response of Telefónica

Furthermore, Telefónica responded to the complaint by Vodafone with a statement in which claimed to be “perplexed” by the reaction of its competitor, at a time in which, they say, the competence is beyond doubt.

In those declarations the Spanish multinational managers recalled that Telefonica, Orange and Vodafone signed an agreement for the deployment of fiber optic sharing the cost and installation of vertical infrastructure in buildings.

What is what is looking for Vodafone with the complaint?

The denunciation of Vodafone aims to achieve various results. The first and most important, the agreements offer to wholesalers -care, not only to Vodafone – so that they can offer speeds of 50 and 100 Mbps fiber. In that sense the regulator should not only review the existing rules, but it should even establish a compensation in respect of damages.

Although there are countries where there are somewhat similar situations, Mr. Peña highlighted the case of Germany, where O2 and Deutsche Telekom reached an agreement to co-invest in fiber and provide access to that segment to how major providers.

The second of the desired results is the achieve the vertical infrastructure access prices they were aimed at cost, instead of prices which now impose Telefónica and even those who are established by the CNMC.

Update:We have contacted Orange, but the company He has not offered comments on the complaint Vodafone. Perpetrators have referred us to what Santander already commented a few months ago: there are some issues that must be resolved urgently to accelerate and increase the reach is our fiber deployments.
Specifically, prices precautionary share vertical set by the WCL in July they are discriminatory and are far removed from the real costs of extending these vertical we contrasted our own deployments.
It is necessary that we can replicate Telefónica offers while we arrived with our network in the cities where it has already deployed. It is the way of introducing competition in the short term and avoid the market is re-monopolice. For this purpose it is important to raise the limit of 30 Mbps wholesale offerings, in order to have a wholesale offer to 100 Mbps.