Czech operators offer concessions on network sharing deal

Czech operators offer concessions on network sharing deal

Deutsche Telekom and PPF have submitted proposals to EU antitrust authorities outlining potential changes to the network sharing arrangement between their Czech units T-Mobile CZ and mobile operator O2 Czech Republic.

According to Reuters, the operators – together with infrastructure provider CETIN - are looking to avoid fines for violating EU antitrust laws after the European Commission issued charges against them in July 2019. IN 2016, the EC opened an investigation into whether the network sharing deal between the units would reduce competition in the market by removing the incentive for providers to “unilaterally invest in network infrastructure.”

The Czech Republic has some of the highest wholesale data charges in Europe, with MVNOs claiming that T-Mobile’s wholesale rate is 40% more expensive than the price that it offers to its customers. According to TeleGeography, the EC considers T-Mobile, O2 and CETIN to be largely accountable for this following the signing of a network sharing agreement by the mobile providers in 2011.

This agreement was aimed at improving time and cost efficiencies for the operators given that there are a number of regulatory hurdles relating to mergers. However, the EU’s antitrust regulators are concerned that circumventing the rules in this way may in fact violate them.

Reuters notes that as part of the concessions, O2 and CETIN have “offered to modernise the mobile network by using multi-standard Radio Access Network (RAN) equipment in certain radio frequency layers and also set and review the financial conditions for unilateral network deployments”, as well as offering cost-based pricing for investments or services offered by their partners.

Additionally, the companies proposed limiting information exchange to purposes “absolutely necessary” for operating the shared network, with CETIN pledging to prevent “spill-over” of information between T-Mobile and O2 Czech Republic. If the proposals are accepted, they will be in force until 28th October 2033.

The EC has stated that it will consult with third parties, including Vodafone, before it reaches a decision on whether to accept the proposals. If it declines, the EC could fine each company as much as 10% of their global revenue. Last month, Vodafone hit out at the Czech Telecommunication Office (CTU) for failing to address the network sharing arrangement.

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