September 2005 RD227- ETNO Reflection Document on re-assessing the "ladder of investment" in the context of broadband access regulationÂ

ETNO is greatly concerned with the current ERG approach to broadband regulation as laid out in its "Broadband market competition report" [ERG(05)23], based on the ladder of investment concept. ETNO contests that such approach could ensure adequate incentives for investment in infrastructure and that the ladder of investment, in particular as currently interpreted by the ERG, is a suitable means to promote sustainable competition in today’s broadband markets. Â

1. ETNO is greatly concerned with the current ERG approach to broadband regulation as laid out in its "Broadband market competition report" [ERG(05)23]. The report contains a number of contestable policy recommendations, which risk limiting the emergence of sustainable competition and perpetuating a fragmented market structure on broadband markets. In particular, the report advocates the imposition of a broad range of cost-based access obligations for network assets which can no longer be considered essential inputs to competitors and bases these findings on the "ladder of investment" concept.

2. ETNO contests that such approach could ensure adequate incentives for investment in infrastructure and that the ladder of investment, in particular as currently interpreted by the ERG, is a suitable means to promote sustainable competition in today’s broadband markets.

3. For the current generation of broadband services, NRAs should:

(a) Carefully identify whether there is still an asset necessary for a particular downstream service which cannot be replicated by competitors ("non-replicable asset")
(b) In doing so, adopt a forward-looking approach and take into account regional differences
(c) De-regulate replicable assets by lifting access obligations or applying dynamic remedies such as sunset clauses or option pricing.

4. The ladder concept does not create the prospect for increased investment in next generation access infrastructure and inter-platform competition in Europe either. The European Union needs a serious debate on a deregulatory approach to new broadband infrastructure and services if the goal of the i2010 initiative to promote advanced broadband services is to be achieved. This includes an evaluation of the deregulatory approach to broadband taken by the U.S. Federal Communications Commission (FCC).