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House opens "last mile" to competition

Consumers should benefit from more competition among telecommunications providers Keystone Archive

The House of Representatives has removed the final hurdle to a more liberalised telecommunications market, voting to end Swisscom’s monopoly of the local loop.

This content was published on October 7, 2004 - 13:02

The country’s largest telecommunications operator protested the decision on Thursday, saying it would discourage investment in infrastructure.

The House of Representatives accepted a compromise plan from the Right which will give Swisscom’s competitors direct access to the company’s copper-wire network into people’s homes.

Customers today can choose their provider, but still have to pay a monthly SFr25 ($20) fee to Swisscom for use of the so-called “last mile,” the telephone cables connecting their home to the nearest sub-station.

Following the House’s decision, telecom operators will be able to set their own fees and invoice their clients directly for the use of subscriber lines.

Besides unbundling the local loop, the revised telecommunications law allows operators to physically access the cabling network.

Broadband

Swisscom will also have to let its competitors use broadband connections over the copper network – known as fast bitstream access - but only for a two-year period.

The Left criticised the result, saying it would threaten services and infrastructure in more isolated regions.

“Thousands of jobs will be lost and only shareholders will gain something from this,” added Social Democrat and communications’ union boss, Christian Levrat.

But the outgoing telecoms regulator, Fulvio Caccia, told swissinfo that unbundling would benefit consumers both in terms of price and choice of services.

“New service ‘packets’ could include both telephony and internet access, but also television and the chance to choose films,” he said.

Cost benefit

“If we look at European countries that have already gone down this path, we see that consumers also benefit considerably from a cost point of view.”

The government’s initial proposal was for a more general liberalisation of the telecommunications industry. The original intention was to leave it up to the Communications Commission to decide when and how to open the market based on technical considerations.

But the last mile issue proved so contentious that parliament was obliged to decide the matter.

Infrastructure

Swisscom said it saw no pressing reason for parliament to unbundle the local loop. The operator fears that it will carry the cost of infrastructure alone, warning it could be left without an incentive to invest if others benefit at its expense.

Caccia says that the former state monopoly is overstating its case and won’t lose out.

“If new operators use part of the Swisscom service, they will pay prices based on international rules, which also foresee remuneration of the capital invested by Swisscom,” he added.

“However, I do believe that Swisscom needs to be offered a certain profit margin, to encourage it to invest further and maintain network quality.”

It was not all gloom and doom for the country’s biggest operator in parliament. The company said it felt encouraged that proposals to extend new regulations to mobile telephone and wireless broadband networks had been rejected.

The revised telecommunications law has still to be approved by the Senate.

swissinfo with agencies

Key facts

Switzerland's telecommunications law was introduced in 1997.
It ended the monopoly of the state-run post and telephone service on telecommunications.
Swisscom is now privately-owned, but the government remains its biggest shareholder.

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In brief

The revised law should allow Swisscom’s rivals to have direct access to households via the copper network.

Fast-bitstream connections for all providers over the last mile will be limited to two years once they are technically feasible.

Swisscom has warned that it could reconsider insfrastructure investments if its rivals benefit too much from the new rules.

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