Calculating costs for the use of a telecommunications network

Bern, 14.03.2014 - Telecom operators should pay cost-based prices for access to the Swisscom network, based on a modern cost calculation model. The Federal Council has revised the relevant Telecommunications Services Ordinance (TSO), because the pricing of unbundled copper connections (last mile) must be based on modern technologies. The revised TSO enters into force on 1 July 2014.

The price which Swisscom competitors must pay for access to the network will continue to be based on the costs which would be incurred during construction of a new network featuring modern technology. It therefore concerns model costs, which are based on the assumption that a supplier would today construct a new network.

A revision of the TSO became necessary because the applicable regulations did not take sufficient account of technical developments: until now the costs for accessing the last mile were based on a copper network and traditional switching equipment. Today, an operator would not construct a new copper network but would instead lay optical fibre. The Federal Council has now defined rules for this configuration, thereby giving the Federal Communications Commission (ComCom) a solid foundation for setting prices on the basis of modern technologies.

No competition on cable ducts

For calculating costs, it is not appropriate to apply the network construction model for all components of the network. It would not make economic sense to construct an independent cable duct system for each network. Instead, it should be possible for the existing ducts to be efficiently used by all providers. In future, the price will therefore no longer be calculated on the basis of new duct construction costs. Now, the actual costs for the long-term maintenance and the needs-based expansion will be decisive. In this way, incentives for the maintenance and repair of the equipment will remain. In future, pricing for cable ducts will therefore be based on real costs rather than model costs.

Other adjustments
The two cornerstones of the revised TSO are accompanied by additional measures:

  • Prevention of price discrimination: the Telecommunications Act sets out to ensure that all providers on the telecommunications market have a level playing field. Providers must therefore be able to use the network infrastructure on the same terms as those enjoyed by Swisscom. This indisputable non-discrimination requirement is specified: Swisscom must offer access products which allow an efficient provider to offer products at competitive prices on the retail market.
  • Lower price limit for unbundled connections: A lower price limit ensures that in all cases the price for unbundled access to the Swisscom network at least covers the short-term deployment costs.
  • Phased introduction of changes: the new cost calculation rules will be phased in over a period of three years in order to allow Swisscom to adapt to the new conditions.

Impact

As a result of the proposed revisions to the pricing principles, it is expected that in the medium term there will be a moderate reduction in regulated access prices among the telecom providers. However, this is unlikely to lead to large price fluctuations on the retail telecommunications services market, because the adjustments to the current cost calculation model are only gradual.

The revised Telecommunications Services Ordinance enters into force on 1 July 2014.

Access to the Swisscom network

Liberalisation of the telecommunications market saw Swisscom replace the former monopoly PTT and take control of its infrastructure. To ensure effective competition, since then competing providers have had the right to connect to the Swisscom network (interconnection) and to use the Swisscom copper access network (fully unbundled copper connections) in order to access customers. The Federal Communications Commission (ComCom) calculates interconnection and unbundling prices if a competitor disagrees with the Swisscom prices. For pricing, ComCom must take into account the requirements of the Federal Council, which are specified in its Telecommunications Services Ordinance (TSO).


Address for enquiries

Annalise Eggimann, Vice-Director and Co-Head of the Telecom Services Division
032 327 55 82, annalise.eggimann@bakom.admin.ch
René Dönni, Vice-Director and Co-Head of the Telecom Services Division
032 327 55 43, rene.doenni@bakom.admin.ch



Publisher

The Federal Council
https://www.admin.ch/gov/en/start.html

General Secretariat of the Federal Department of Environment, Transport, Energy and Communications; General Secretariat DETEC
https://www.uvek.admin.ch/uvek/en/home.html

Federal Office of Communications
http://www.ofcom.admin.ch

Last modification 03.10.2018

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