Market Watch

OPTA Open Cable Decision Reversed by Dutch Business Court



The Dutch business tribunal-College van Beroep voor het Bedrijfsleven (CBb)-has ruled against the regulator OPTA's decision to open up the cable networks of the nations four largest operators to third party competition. In its market review conducted last year, the Dutch regulator OPTA found that four of the nation's largest cable operators (Ziggo, UPC, CAIWay, Delta) had a significant dominance in their areas of operations. As a corrective measure, OPTA ruled two of the operators - Ziggo and UPC - should open up their analogue networks to third party providers, while all four should allow third party providers to use their networks to provide their own digital packages.

In March of this year, OPTA followed up with the publication of wholesale rates at which UPC and Ziggo would need to sell analogue services to third party operators, who could then resell them to customers either as stand-alone products or part of bundles. Following the publication of OPTA's wholesale rates, both Ziggo and UPC approached the courts.

Analysis

The Open Cable decision has been dogged with controversy since the beginning. It was first proposed in 2005, when OPTA first ruled that both Ziggo and UPC had a strong presence in their regional markets. However, its proposals for retail-level intervention were turned down by the EC. In 2009, following its next market review (conducted once every three years) OPTA concluded that although the operators had been losing subscribers, they continued to have a dominant presence. Screen Digest data reveals that Ziggo and UPC together accounted for over 93 per cent of the analogue cable market at end 2009, their market share having remained stable since 2006. This time, however, OPTA has chosen the path of 'least resistance' - having opted to implement wholesale tariff regulations, and ensuring that it received the necessary EC backing. In March 2010, OPTA published the wholesale rates at which Ziggo and UPC would have to sell their analogue services to third party providers - which was significantly lower than the ones suggested by Ziggo and UPC themselves.
The CBb's decision to reverse OPTAs' Open Cable decision will come as a major relief for the four cable operators, but a setback for smaller operators like Tele2 who had already started to market analogue cable services. The CBb's reasons for over-ruling the Open Cable decision appears to rest on OPTA's definition of the relevant markets in which these operators have a dominance. The CBb has stated that OPTA should have measured competition on a national level, as opposed to a regional basis. The CBb's decision apparently cannot be appealed, but OPTA has indicated that it will consider all other options.
 
It will interesting to see how this develops, as local press has indicated that several political parties and consumer organisations are already calling for the Open Cable decision to be brought back, and through a change in legislation if necessary. Ziggo and UPC are by no means out the woods yet.
 
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