Regulation of providers with Significant Market Power

Regulation

The summary below describes the regulatory framework in the telecommunications industry in the EU, and Denmark in particular. It is intended to provide a general outline of the most relevant telecom regulations applicable to TDC’s operations in Denmark and is not intended to be a comprehensive description of such regulations.

European Union

Regulatory framework
The European regulatory framework requires EU Member States to impose certain obligations on providers designated as having Significant Market Power. These obligations are intended to be proportionate to the market failure found in a market where one participant, or more, has Significant Market Power. The regulatory framework is supplemented by the 'Significant Market Power Recommendation' from the EU Commission on relevant product and service markets. The Recommendation defines seven specific markets and concerns the identification of product and service markets in which regulatory obligations can be imposed on providers designated as having Significant Market Power

International roaming
EU mobile providers have to comply with a number of obligations stated in the EU Roaming Regulation, such as maximum charges relating to wholesale and retail prices for voice, SMS and data. The EU Roaming Regulation has continuously reduced the level of the roaming charges.

Denmark
Denmark has fully implemented the European regulatory Framework. The Danish regulation regarding operation of electronic communications networks and provision of electronic communications services is extensive. The Danish Tele Act is the main legal act in the Danish regulatory framework and contains the overall regulation regarding end-user aspects, universal services obligations, numbering aspects and interconnection.

Regulation of providers with Significant Market Power

Market analyses
According to the Danish Tele Act, the Danish Business Authority (DBA) is required to conduct market analyses on a regular basis for the purpose of assessing whether individual markets are sufficiently competitive. In markets where the DBA has identified a lack of sufficient competition, it designates one or more providers as having Significant Market Power.

The DBA is required to impose on providers with Significant Market Power one or more of the following obligations:

  • meeting all reasonable requests for access to interconnection
  • non-discrimination, including requirement to apply a stand-still period
  • price control
  • transparency in connection with interconnection and new interconnection products
  • accounting separation
  • functional separation

In certain circumstances and subject to prior consultation with the EU Commission and with the EU Commission’s consent, the DBA may impose other obligations than the above-mentioned on providers with Significant Market Power.

The DBA has designated TDC as Significant Market Power provider within all seven markets and has designated TDC as Significant Market Power provider in the wholesale market for SMS termination. TDC is therefore subject to all the Significant Market Power obligations listed above except for functional separation.

Where TDC is subject to the Significant Market Power obligation of price control, the LRAIC method is the pricing method generally used. The DBA shall determine each year on the basis of LRAIC model the LRAIC prices to be applied in the following calendar year

The most important market decisions for TDC’s business are wholesale markets 4 (Wholesale (physical) network infrastructure access (including shared or fully unbundled access) at a fixed location, 5 (Wholesale broadband access (BSA)) and 7 (Voice call termination on individual mobile networks), where TDC is subject to Significant Market Power obligations.

TDC shall in accordance with the market decision for market 4 offer access via copper and fiber, and according to market decision market 5 offer BSA via copper, fiber and coax.

The requirement to offer BSA via coax also includes networks not owned by TDC, but where TDC supplies broadband services to the households connected to the network and controls the frequencies necessary for broadband distribution.

TDC is on the market 4 and 5 required to apply a standstill period of 6 months for changes or introduction of new wholesale products in relation to TDC's NGA networks. The DBA has defined NGA network in this context as TDC's upgraded copper network and its fiber network.

TDC is on the market 4 and 5 as part of the imposed price control requirement required not to implement and maintain a margin squeeze. This requirement covers TDC's offering of single play and duo play broadband products on copper, and implies that TDC's end customer price for each product must exceed the costs calculated for a fictitious reasonably efficient provider of broadband (single-product test). If TDC end customer price does not exceed the calculated cost, TDC is required to bring the margin squeeze to an end either by increasing the end-user price or reduce the relevant wholesale prices unless TDC can prove that TDC is not price leading and only reacting to the price level in the market.

In addition to single-product test the DBA will once a year (starting in 2014) test whether TDC has maintained a margin squeeze on the company's total supply of the included broadband products in the previous calendar year, and if so, TDC will be required to reduce the relevant wholesale prices, unless it is deemed that TDC has not been the price leader in the market.

International roaming
EU mobile providers have to comply with a number of obligations stated in the EU Roaming Regulation, such as maximum charges relating to wholesale and retail prices for voice, SMS and data. The EU Roaming Regulation has continuously reduced the level of the roaming charges.

Denmark
Denmark has fully implemented the European regulatory Framework. The Danish regulation regarding operation of electronic communications networks and provision of electronic communications services is extensive. The Danish Tele Act is the main legal act in the Danish regulatory framework and contains the overall regulation regarding end-user aspects, universal services obligations, numbering aspects and interconnection.

Universal service obligations
TDC is designated as the universal service provider in Denmark, which implies that regardless of their geographical location, all customers have a right to be offered a number of basic telecommunications services such as landline telephony, ISDN networks and services, a certain minimum set of leased lines, special universal services for disabled persons, directory enquiry services, an electronic directory, and certain radio-based maritime distress and safety services. TDC must deliver the services covered by the universal service obligation on reasonable terms to anyone requesting such services. The universal service provider appointment expires on 31 December 2014 with an option for the DBA to extend the period by up to two years.

More about the TDC Group

Contact Investor Relations

To get further information on TDC, please contact us at Investor Relations. Telephone +45 66 63 76 80 Email:  investorrelations@tdc.dk
Marianne Jensen, Secretary Email:  marn@tdc.dk  Telephone: +45 66 63 75 83