Switzerland's telecommunications regulator - the Federal Communications Commission (ComCom) - has ordered Swisscom to start "unbundling" its final loop connecting households and other retail customers to the telecoms network.
Swisscom, which is the country's largest telecommunications operator, has up till now had a monopoly on the "last mile" connection.
As a first step, Swisscom must open part of the "last mile" loop to the rival diAx company, which is a fixed line and mobile operator.
Swisscom has said it will appeal against the ruling.
Friday's decision by ComCom calls for unbundling the full spectrum of connections to end-users.
However, only "bitstream access", which lets a competitor provide its own broadband service at a wholesale price, is to be opened at first.
A ComCom statement said that it was also calling on Swisscom to work out standard agreements on shared-line access. Shared lines enable a competitor to continue to use Swisscom's telephone services, but also "piggyback" with its own modems to supply high-speed data services.
It added that with such a requirement, the groundwork toward introducing a complete unbundling should be secured. This was in line with liberalisation in the rest of Europe.
Analysts say the action is expected weigh on Swisscom's earnings from fixed-line business, which have already been eroded by tougher competition in Switzerland's liberalised telecoms market.
In a separate development, Swisscom announced on Friday that UTA Telekom, in which its holds a 50 per cent stake plus one share, has purchased Netway Communications in Austria.
The acquisition, for which no financial details were given, makes UTA the leading Internet provider in Austria.
swissinfo with agencies