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Draft BEREC Common Position on Mobile Infrastructure Sharing

Starting: 11 Dec Ending

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Public Consultation for the Common Position on Mobile Infrastructure Sharing

BoR(18) 236

In June 2018, BEREC adopted a report on infrastructure sharing which depicts a picture of different regulation and legal frameworks applicable in European countries, of the existing sharing arrangements, of the benefits and challenges related to such arrangements and of possible evolutions with regards to 5G.
BEREC expended its work on identifying common positions on the subject. The common position consists of:
1) a background section which describes the applicable legal framework and the benefits and drawbacks related to sharing agreements ;
2) a common position section which provides:

        a) common definitions for some types of sharing agreement;

        b) the main objectives to be pursued when considering network sharing agreements;

        c) the parameters to consider when assessing network sharing agreements;

3) an indicative analysis of different types of network sharing, according to the objectives and parameters.

The response to the public consultation will serve as inputs for the finalization of a BEREC common position on mobile infrastructure sharing.

This public consultation will run from 12 December 2018 to 18 January 2019, 17:00 CET.

Enquiries about the consultation, including registration problems with the online platform, should be sent to the following email address: Mobileinfrastructure-Consultation@berec.europa.eu

 

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P20

In very general terms, passive sharing can be applicable to all area types with the following reasons:

a) Passive agreements are less likely to have a negative impact on the differentiation capacity of operators, provided that each of the sharing parties keeps its operational freedom (e.g.: sharing parties should still have the possibility to deploy sites on a stand-alone basis);

b) Passive sharing agreements are likely to facilitate speed of deployment/increased coverage;

c) Passive sharing agreements are likely to facilitate environmental protection, since they allow for an efficient deployment by operators, reducing the number of sites to be deployed;

d) Passive sharing agreements are likely to be cost-effective for operators.

In conclusion, passive infrastructure sharing is encouraged across all the territory as long as there is no negative impact on effective competition.

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4.2 Active Sharing

P21

For active sharing agreements, the feasible level of competition that often relates to the geographic scope of the concerned area is likely to have a great impact, as described in the previous section (see point 2 in section 3.2.2):

a) Areas, where full infrastructure-based competition is reasonably feasible:In these areas, infrastructure-based competition is very likely more beneficial than active sharing. Depending on the specificities of the specific country, the respective competent authority might limit active sharing for MNOs above a certain size. These areas will be very likely in the most densely populated ones.

b) Areas, where the feasibility of infrastructure-based competition is not pre-determined and requires a case-specific assessment: A certain degree of infrastructure-based competition in these areas is appropriate. As a consequence, in these areas, active sharing should be assessed on a case-by-case basis. These areas will be very likely in the moderately populated areas;

c) Area where infrastructure based competition is not reasonably feasible (in particular, least densely-populated areas): In these areas, a minimum level of service quality is infeasible with stand-alone deployments and thus infrastructure-based competition. With regard to coverage objectives, active network sharing might be of particular relevance in isolated territories, where a careful consideration should be given to the sharing conditions in order to enable sharing to include each operator.

However, as described in the previous section (see point 2 in section 3.2.2), within all areas, consideration should be given to non-replicable sites or deployments. In these situations, active sharing could be objectively necessary for competition among MNOs, and competent authorities might – in those specific cases – even mandate active sharing.

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4.3 Spectrum sharing

P22

As mentioned before, spectrum sharing is a form of MOCN sharing where the frequencies of several operators are used. It consists in a common exploitation of frequencies among several operators: the end users of these operators can access the services of their respective MNO through all the frequencies that are shared in the access network.

Such sharing may reduce the differentiation capacity of the sharing parties.

However, in areas where infrastructure competition is not feasible, spectrum pooling could answer to the coverage objective, providing better services with higher bandwidth (bitrate). In line with Article 61.4 of the Code, in case where localized roaming is imposed, the accesses might be required to share the spectrum with the access obligated party.

Thus, spectrum sharing/pooling should be carefully assessed on a case by case basis, for example by taking into account the spectrum portfolio of each operator and whether infrastructure based competition is feasible or not in the area concerned.

Hence, when spectrum sharing conditions are defined by competent authorities, it should be ensured that such conditions:

a) include both technical and operational conditions related to the use of the spectrum, as well as conditions relating to the rights and obligations of the users of shared spectrum;

b) are defined in a fair, transparent and non-discriminatory manner, in accordance with predefined criteria;

c) take into account national specificities that depend on the type of existing spectrum users;

d) take careful consideration of the possibility of effective monitoring and control of the compliance with the conditions for shared use of radio spectrum.

Moreover, in most Member States spectrum sharing (which might require variation of the terms of a licence if not foreseen initially) will require approval by the respective competent authority/NRA.

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4.4 National roaming

P23

The present analysis considers roaming agreement between two competing operators on a market. It excludes MVNO, international roaming and roaming that is mandatory by law to ensure high availability and resilience for public authorities (see 2a in section 4.5 below). Roaming is purely asymmetric since the hosted operator fully depends on the equipment deployed by the host operator and its spectrum.

Roaming is very likely to restrict the differentiation capacity of the roaming operator on several major parameters, such as coverage and quality of service (which are those of the host operator). The conditions applied on the wholesale market on the roaming operator restrict its ability to define its service at the retail level.

In consequence, subject to a case-by-case analysis, roaming is likely to not be in line with the objectives of infrastructure-based competition for the end user’s benefit (including investment, innovation and competition between actors) and efficient spectrum management and usage.

Hence, roaming for an undetermined time period could be envisaged only in those areas where infrastructure based competition is infeasible and where investment incentive is very limited. In particular, roaming could strongly reduce the incentive to invest when central dimensions of competition are affected.

However, roaming could have significant positive effects in some specific cases, such as those detailed in the following point.

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4.5 Other situations where network sharing agreements could be possible, but in duly justified conditions

P24

This section identifies examples of cases that appear to be beyond the scope of the situations defined above, but still be in line with the defined common objectives.

1. Transitory provisions could be envisaged

Large active network sharing agreements could still be compatible with the objectives defined, if they aim at compensating an objective handicap, for example corresponding to a late entry to the market. But by construction, these provisions could only be transitory, and should be phased out with the disappearance of their initial motivation. This is the case of a temporary roaming agreement the latest entrant operator might rely on. That roaming agreement should be clearly limited in time to what is objectively necessary to allow the entrant to invest in its own network.

2. Undetermined in time but targeted provisions could be envisaged

Some specific cases of sharing agreements of an undetermined time period could also be envisaged (excluding passive sharing which in most cases is likely positive even for longer durations) that could still be in line with the common objectives defined above. However, these provisions call for a specific and careful analysis. In some situations, active sharing between the mobile network operators is objectively necessary for ensuring effective competition. In view of the objective necessity, it is necessary to examine whether competitors can replicate the parts of the access network concerned in the foreseeable future in order to be able to exercise a competitive constraint on the market. Additionally, a respective demand for services must exist and the parts of the access network concerned must be essential for the provision of these services.

For instance, the following three potential provisions could be in this case:

a) Specific needs for high availability services

This could be the case to respond to some public authorities needs to benefit from high availability and resilience services, or time critical applications that would require a particular reliability level.

In order to respond to these needs, network sharing could be relevant, but should be limited to a number of users only, and not generalised. These agreements should be assessed on a case-by-case basis, taking into account the impact on infrastructure-based competition.

b) Network sharing for coverage of complex areas

Large network deployment could imply coverage of complex areas, either because of the limited space or because of a particularly difficult access (e.g.: underground transport lines, sport centres, commercial malls…). In these cases, and subject to duly justified technical and economic conditions, a targeted recourse to sharing provisions could be relevant.

c) Network sharing for legacy technology

As new technologies emerge, it is likely (but not certain, in all geographical areas) that legacy technologies (such as 2G, 3G) will be used less frequently in the future by end users and operators. Continued operation of these technologies might, therefore, lead to higher incremental costs while sales volumes decrease. Infrastructure sharing might offer a means of reducing costs for continued operation of these services by individual operators. Similarly, sharing agreements for legacy technologies might allow for more efficient spectrum use, as bands previously allocated to individual operators can be reallocated to new technologies (however, this would require approval from competent authorities/NRAs in many cases due to variations in spectrum licensing conditions).

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Appendix 1 - Role of general competition law

P25

This appendix details some elements and considerations from general competition law which are likely to apply to existing/potential mobile infrastructure sharing agreements.

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A. Role of competition in mobile communications

P26

Competitive pressure from other providers is the central element that drives mobile operators to permanently improve their offers, implement cost savings, make investments and pass on the cost savings and the additional benefit also to consumers. The prospect of protecting or increasing profitable sales by offering customers greater benefit (e.g. by improved coverage) or a better-value offer due to efficiency enhancements drives investments and constitutes a central incentive for the build-up and expansion of mobile communications infrastructure. The larger an operator’s own market share is, the smaller is the incentive to make such investments in order to win additional customers from other competitors. And the lower the competitive pressure of others, the smaller is the incentive to improve the conditions of the existing customers through investments and better offers.

The assessment of competition requires taking into account different time dimensions. These different time dimensions might include:

a) relatively direct and short-term competition in defining a specific offer with regard to price, quality of services, bandwidth, data volume and similar parameters;[20]

b) medium-term decisions, for example, on the expansion of the mobile network or capacity, the increase in the degree of geographic coverage or the improvement of quality (such as increasing bandwidth or reliability); as well as

c) long-term decisions on the entry into a market and the acquisition of spectrum.

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B. The interaction between competition and economies of scale in cooperation

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P27

Independent mobile communications infrastructures allow making decisions on infrastructure independently of other MNOs. At the same time, joint rollout and joint operation of mobile communications infrastructure, as opposed to several independent infrastructures, might bring about savings in many areas. In areas with low usage the benefits from network sharing in mobile communications are comparatively high. In general, economies of scale are an important reason that mobile communications markets tend to include only a small number of participants – in particular, in medium and long-term infrastructure competition.

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C. Cooperation agreements under general competition law

P28

Cooperation agreements can lead to the development or strengthening of market power of individual operators, the cooperation partners or all market participants (e.g. collusion) in the short, medium or long term and may prevent or obstruct market entry or the expansion of competitors (including MVNOs).

According to Article 101 (1) TFEU, agreements that restrict competition are prohibited. Article 101 (3) TFEU provides an exemption to the prohibition of restrictive agreements. So, in a first step any agreement between MNOs has to be assessed in order to evaluate whether it has an anticompetitive object or any actual or potential restrictive effects on competition within the meaning of Article 101 (1) TFEU. In a second step – which only becomes relevant when an agreement is found to restrict competition – an assessment of restrictive and pro-competitive effects is done within the framework of Article 101 (3) TFEU. The burden of proof of compliance with the conditions of Article 101 (3) TFEU rests on the undertaking(s) invoking the benefit of this provision.

Article 101 TFEU is without prejudice to the application of Article 102 TFEU that prohibits the abuse of a dominant position.

National competition law may apply in parallel.

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D. Restrictive effects on competition within the meaning of Article 101 (1) TFEU

P29

The European Commission's guidelines on the application of Article 101 of the TFEU to horizontal co-operation agreements provide a framework for analysis that can be applied to the various forms of mobile network sharing envisaged above.[21] When assessing whether an agreement in mobile communications restricts competition, particular attention should be paid to the following elements. This list is not exhaustive, and will depend on national and market circumstances:

a) Short-term competition vis-à-vis consumers, in particular whether consumers are able to benefit from adequate choice after an infrastructure sharing agreement is in place.

b) Medium and long-term competition, in particular the avoidance of irreversible investments (which might require, for example, one or both of the parties to abandon planned unilateral investments), maintenance of incentives to invest and the ability for autonomous decisions (regardless of existing cooperation arrangements), for example with regard to the development of new sites.

c) The likelihood of coordination: the exchange of strategic information and/or a significant commonality of variable cost may increase the likelihood of coordination with respect to short-term competition and/or infrastructure investment

Any infrastructure sharing agreement between MNOs must be examined as to whether it limits the possibility for parties to compete against each other, and/or whether it limits independent decision-making. Furthermore, sharing agreements may also give rise to anticompetitive foreclosure concerns, in particular with respect to MVNOs (for example, an agreement may limit the choice of MVNOs to select a wholesale network operator for provision of services).

A sharing agreement is unlikely to lead to restrictive effects on competition if the parties to the agreement do not have market power in the market on which a restriction of competition is assessed.[22] However, MNOs typically have market power in the corresponding mobile telecommunications markets that are typically highly concentrated. If these markets are affected, it is thus unlikely that restrictive effects can be excluded outright due to the lack of market power of any of the MNOs and a case-by-case assessment is called for.

In order to assess whether an agreement has restrictive effects on competition, the competition needs to be examined with and without the agreement in force and its alleged restrictive effects; and the two scenarios need to be compared. The existing infrastructure of each MNO that was in place prior to the agreement needs to be taken into account when assessing whether an MNO might be able to independently carry out the envisaged project or activity covered by the cooperation.

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E. Assessment of infrastructure sharing agreements that are considered to be restrictive within the framework of Article 101 (3) TFEU