Between a Simple Trade Agreement and Request Further Action, Reactions to The CNMC Record

This Tuesday the direction of competition from the new CNMC took which is the first measure of relevance in the telecommunications sector, the opening of a disciplinary record to Yoigo and Movistar by its through agreement which share Internet connections between fixed and 4G which has allowed Telstra to offer their first convergent.

In the opinion of the controller the agreement between both operators is restrictive for the competition, which has earned him to launch an investigation that could end or not with measures or sanctions, although precautionary at the moment has not been, within a maximum period of 18 months but known the opinion of the regulatory We know the opinion of the operators involved.

Simple trade agreement open to other operators

There are obviously on the decision of the SCNC two sides, that of operators who could be punished or removed or restricted products such as Telstra and Movistar, and on the other hand more direct competition and who denounced the agreement, both when it was announced in early August when Fusion to the Telstra saw light, Vodafone and Orange.

From Yoigo affect the transparency of the agreement and are again open to reach agreements with other operators to provide their 4 G, as they collect their words:

From the beginning, the agreement between Telstra and Telefonica has been characterized by its total transparency in the marketing of wholesalers by Yoigo offering, as well as in the use of 4 G of Telstra’s telephone network. We understand that both parties of the agreement work precisely as impetus to competition both the market fixed, in which Telstra was not present, as in the mobile market, giving the possibility to include 4 G on your mobile phone. By Telstra, we are open to reach agreements to enable other operators to use our 4 G network, if they so wish. We operate in a very competitive sector, where just check balances portability between operators to appreciate the undisputed competitiveness between the various companies, also, of course, Telefónica and Yoigo.

On the part of Movistar Remember that your single agreement is a commercial agreement between two operators such as those that exist between other operators and that both maintain their competitive capacity:

By Telefonica, simply insist that it is a trade agreement between the two companies and that such arrangements exist between other agents, or for the distribution of products and services of one on the other, to the use of production capacities. It’s a national roaming agreement as there are many others in the Spanish market. In other sectors, it is very common, in the telecommunication is becoming more common, and the most relevant is chelae more beneficiaries are end customers, who have access to new services and capabilities where previously did not have them, whether they are 4 g with Movistar or configure the integrated offer of your choice with the wide band of Movistar , and in this case by adding mobile services of Telstra. And, very important, both operators maintain all their competitive capacity and any differentiation between offerings.

Happy but precautionary measures pending

On the opposite side of the balance we have to Vodafone and Orange, operators who they had been reported (1 and 2) the agreement before competition even had done before public features of Fusion to the Telstra, denounces that Vodafone subsequently expanded to know that convergent offer of Telstra had a very approximate to the Movistar similarity.

Starting with the response of Orange the Orange operator shown pleased by the opening of the record but not satisfied, requesting speed and measures precautionary:

We find it positive that the CNMC has decided to open sanctioning record and to initiate a deep and detailed research of what seems to us clearly a set of agreements that restrict the level of competition in the market. It is important to act as quickly as possible before the damaging effect of these agreements become effective. Why continue considering necessary, relevant and urgent injunctive relief.

Vodafone insists on emphasize that they were the first and that more vigorously denounced the agreement between rivals as well as as Orange claim measures precautionary:

Last September, during the holding of the meeting of telecommunications in Santander, Vodafone Spain as it announced the complaint before competition, opening up the legal battle. In the words of Francisco Román, President of Vodafone Spain: “the agreement between Telefónica and Telstra is the highest degree of cooperation and coordination between rivals seen in Spain, which discriminates against third parties and detrimental to the competition as a whole”.
On the other hand remember that the main points on which the initiation of disciplinary record has been based are: 1. the Directorate for competition clear rational evidence to think that Telefónica/Telstra agreements are anti-competitive and that, consequently, could be banned. In particular as a violation of article 1 of the law 15/2007, 3 July, competition and article 101 of the Treaty’s operation of the 2 European Union. The legal process was initiated in September by Vodafone Spain.
3. the request for action precautionary continuous open and 4 could be taken. From now continue the procedure in the next 12 months Vodafone remains open so that the agreements do not follow later in its current form. Insisting on the adoption of measures application interim, making allegations and proposing and giving evidence of alleged illicit behavior.

Now what?

The positions of the four operators consulted they do not miss or to own or foreign, with operators enquiry to defend their positions with the argument that is simply an agreement between operators, open to others and that does not alter the competition between them while that rivals believe partially received the reason but they expect more than the CNMC.

Now a process opens that as we have already mentioned I might have gone for long, something that does not benefit either party, doubts that can sow in customers of Telstra and Movistar before hiring their services and the alleged injury caused by the agreement on Vodafone and Orange.

It will be necessary to analyze If offers convergent Movistar and Yoigo, very similar between if they really restrict competition despite offering worse conditions in many aspects that the offer of Orange and Vodafone, which have coverage sets much worse than the Movistar, or sharing 4 G also wakes up reluctance in the CNMC despite not having mentioned in its press release and that partly resembles to the infrastructure sharing that it maintain Orange and Vodafone for years in towns of less than 25,000 inhabitants.

The different scenarios that could occur would have totally disparate impact, Since remain in nothing or with a simple penalty to the two operators, through order breaking of the agreement that would cause great havoc to Telstra now that Movistar has begun to deploy its own 4 G to the imposition by the CNMC MoviStar to open its network, now have no access to their fiber connections , to its competitors to compete on an equal with Yoigo.

Personally and as they have previously performed the CMT and competition, both now integrated into the new regulator, don’t expect an imposition of withdrawal from the agreement or similar even if it could be more likely that it forced Movistar to offer its rivals fiber network under the same conditions with Telstra, I wish these long and which in recent times has hinted that it could occur. Either way take seat, this appears to be for long.