NMa consults with telecom providers about KPN-Reggefiber proposal

The Netherlands Competition Authority (NMa) has received a proposal from Dutch telecom provider KPN and optical-fiber company Reggefiber in which fair access to the planned optical-fiber networks of their intended joint venture is guaranteed. KPN and Reggefiber plan to jointly construct optical-fiber networks in the Netherlands over the next few years. These networks will enable them to offer the kinds of broadband services that are impossible to offer with existing copper lines. The proposal was brought forward aiming to overcome the objection raised by the NMa, that the joint venture would not be stimulated enough to give other telecom providers access to the yet-to-be-constructed optical-fiber network.

The proposal has now been put before relevant market parties. This so-called market test is a standard procedure when the NMa assesses concentrations. This procedure gives relevant market parties the opportunity to react to proposals, and, by doing so, will prevent competition from being impeded by a merger, acquisition or joint venture. A critical aspect of the proposal is that KPN and Reggefiber guarantee that other telecom providers will be given the same access to the networks as KPN is given. They also proposed to limit their monthly rental rate per connection to €14.50 – €17.50 (depending on region, and annually adjusted for inflation). The proposal also includes a discount scheme with discounts of up to 20 per cent on the aforementioned rental rates.

The draft policy rules on tariff regulation, which the Independent Regulator of Post and Electronic Communications in the Netherlands (OPTA) published earlier this week, will serve as input in the assessment of the proposal. As industry-specific regulator, OPTA has an advisory role in this case.

KPN intends to take a 41 per cent stake in Reggefiber, a company that constructs and operates optical-fiber networks. Reggefiber will have a stake of 59 per cent. Reggefiber's other activities, including its business-market-oriented subsidiary Eurofiber, will remain outside the joint venture. In the long run, KPN has the option of increasing its stake in Reggefiber FttH, provided that the joint venture meets certain targets.