The latest SMP decisions from the Swedish PTS

By Carl Johan Af Petersens

12 December 2013 at 18:19 BST

Vinge's Carl Johan Af Petersens reviews the latest SMP decisions from the Swedish Post and Telecom Authority.

Mikael Damkier

The operators of the different telecom markets have been under review by the Swedish Post and Telecom Authority (“PTS”) regarding their SMP status. In 2013 PTS has published new SMP decisions in five out of the seven defined telecom markets in the Commission Recommendation 2007/879/EG.  In addition, decisions regarding access to the broadcasting market for radio and TV have been published, introducing Teracom as the sole operator with SMP status. PTS has imposed a number of obligations on the operators to prevent behaviour which hampers competition.
In June 2013, the SMP decisions for the markets pertaining to wholesale terminating segments of leased lines (market 6) and mobile termination (market 7) were published. The market for wholesale terminating segments of leased lines includes dedicated connections and capacity that is constantly available and at the customers’ disposal, whether used or not. This gives wholesale customers a permanent connection with reserved and guaranteed capacity and transmission that provides a constant bit-rate (speed), ie. dedicated. The connection enables symmetrical and asymmetrical transmission of digital data over the network infrastructure in the form of copper and fibre optic cable. The former state owned incumbent, TeliaSonera was found to have SMP status and was thus obliged to grant access to such terminating capacity connections. The obligations imposed included general terms and conditions governing such access and non-discriminatory pricing.    
On the market for mobile termination, TeliaSonera was accompanied by eight other operators that are subject to obligations. Obligations imposed included a requirement to interconnect with other operators, to apply cost-oriented pricing and not to discriminate while providing interconnection services. 
On 24 October 2013, PTS published its latest SMP decisions regarding the markets for access to the fixed telephone network, call origination and call termination at fixed locations; markets 1, 2 and 3 respectively. TeliaSonera was once again found to have a significant market influence on all three markets.
In the market for fixed telephone network, TeliaSonera is obliged to provide access to operators in order to increase competition in the market. In comparison to the previous SMP decision from 2009, PTS elaborated on the obligation for TeliaSonera to apply a margin-based pricing model in the provision of WLR. TeliaSonera's wholesale price may not exceed the average revenue of the company’s PSTN subscriptions in the retail market, excluding VAT, decreased by a margin percentage. The average revenue is to be based on the last 12-month period.
TeliaSonera is also obliged to apply cost-oriented pricing in regard to call origination, where it is the sole operator with SMP status. The new SMP decision clarified the way of calculating the amount to be charged.    
As regards the market for fixed call termination, PTS maintained its view that all network operators receiving calls to their end users, occupy a position with significant market power. Hence, each individual network is a separate market where the owner enjoys a monopoly in terminating calls. Each individual network and thus all operators thereon are subject to obligations imposed by PTS. Other operators than TeliaSonera, are required to maintain a fair and reasonable price for call termination, which is defined as being no higher than the level calculated according to the cost-oriented model imposed on TeliaSonera.
The SMP decisions for markets 4 and 5, wholesale (physical) network infrastructure access at a fixed location and wholesale broadband access, are under construction. Before SMP decisions are made, a second and a third consultation with the operators and a final round of consultations with the EU Commission and relevant regulatory authorities must be completed.
Previous SMP decisions by PTS have been appealed by several operators. The outcomes have not always been in favour of PTS, which has thereby created a degree of uncertainty on the predictability of its decisions on the telecom market, including the correct pricing models. The operator Tele2 has appealed the PTS decision in market 7, the market for mobile termination. Primarily, Tele2 claims that the decision be set aside and secondarily, that the obligation to apply cost-oriented pricing be reversed. The basis on which the price is calculated, is according to Tele2 in breach of Swedish law.The deadline for appealing the decisions from October was 28 November 2013.
Carl Johan Af Petersens is a partner at Vinge. He can be contacted at:

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