Should the Electronic Communications Code include provisions on co-investments?

By Stefano De Luca Experts, industry stakeholders and representatives of national regulators and the European Commission spoke at the BITS seminar on co-investment organised by Cullen International with the universities of Leuven and Namur on May 11, 2017. The influence of co-investment on NGA networks take-up and coverage, the intensity of competition and the impact on welfare outcomes were some of the issues discussed.

Co-investment is one of the main issues addressed in the proposed European Electronic Communications Code (EECC, Tracker) presented by the Commission in September 2016.

On the same day that BITS seminar was held, BEREC published its views on coinvestment as part of a series of analyses on the EU Telecoms Framework Review (Flash), criticising both the Commission proposal and the draft report by the Industry, Research and Energy (ITRE) committee. In BEREC’s opinion the provisions on coinvestment in the draft Code should be deleted or rewritten.

Economic literature on co-investment has also informed the debate. Various economists have modelled the impact of different regulatory regimes (e.g. regulated access, co-investment, regulatory holidays) on NGN investments, NGA coverage, competition and welfare. According to the majority of the economic literature, coinvestment seems to offer a balanced outcome when compared to other regulatory alternatives because:

• there is significantly more investment compared to a regulated access scenario; and
• competition is stronger than in a regulatory holiday scenario.

Last but not least, experts and industry stakeholders offered their views on coinvestment practises, focusing on the delicate topics of how to address procedural aspects and set a risk premium in co-investment projects.

Cullen International has recently started tracking co-investment in fixed NGA network deployments (Table). The clearing of cases by national competition authorities (NCAs) will also be tracked as is already done for mobile network sharing cases (Tracker).

The debate on whether or not co-investment provisions should be included in the EECC will likely continue because co-investment deals will have a significant impact in broadband market reviews and competition authorities are likely to scrutinise them closely (see for example Telecom Italia and Fastweb JV case).

 Scarica il contributo integrale

 (Fonte: Cullen International)