European consumers will be affected by a deterioration of competition in the mobile market over the next three to five years unless mobile operators can access fibre backhaul owned by incumbent operators at reasonable prices, a new report commissioned by Vodafone from Analysys Mason has found.

The report comes as the European Commission revises the list of markets that it regulates at European level to ensure fair competition. Currently, the market for broadband access does not consider the need of mobile operators for access to fibre links that carry mobile traffic from base stations back to the core network. This need is accelerating as 4G/LTE traffic grows in line with consumer demand for high-speed services and places strain on existing backhaul technologies.

Access to fibre close to base stations is predominantly controlled by former telecoms monopolies which in most European countries also offer mobile services. This enables the incumbent operators to leverage their dominant position in the fibre market into the competitive mobile market unless wholesale access for backhaul fibre is made available to other mobile operators at reasonable prices.  However, the report found that wholesale access is not always made available, or is extremely expensive, and national regulatory authorities across Europe have adopted disparate regulatory approaches.

The situation is exacerbated by the fact that the microwave technology currently used by many mobile operators to carry this traffic will require regular technological upgrades and access to additional spectrum in existing and new bands to meet accelerating consumer demand for high-speed services within three to five years. Duplicating the fixed duct and fibre infrastructure of Europe’s incumbents is both economically unviable and inefficient. Without a cost efficient alternative, mobile operators cannot compete on a level playing field with incumbent operators and competition in the mobile market will deteriorate, the report found.

Vodafone is therefore calling on the European Commission, BEREC and national regulatory authorities to explicitly consider the future impact of lack of access to regulated wholesale fibre on competition in the mobile market in the current review of relevant markets, which takes place once every seven years.

Markus Reinisch, Vodafone Public Policy Director, said: “European consumers are relishing the benefits of next generation broadband provided over super-fast mobile networks. But a truly Digital Europe will not become a reality unless we anticipate – and act now to prevent – emerging infrastructure bottlenecks. We are calling on Europe’s regulators to prevent the inevitable distortion of competition caused by lack of access to fibre by applying the necessary remedies.”

Dr James Allen, Analysys Mason, said: “Mobile backhaul is critical to the cost-economics of high-speed LTE: operators with access to fibre will be able to offer more attractive services. At the same time, regulation in this area is widely different across the EU. In this context, the European Commission’s proposed recommendation on relevant markets says too little and could usefully be improved.”

The Mobile Backhaul Market report was launched at an event in Brussels with speakers including Göran Marby, BEREC Chair and Director-General of PTS, and Reinald Krueger, Head of Unit, DG Connect.

Notes to editor:

The Mobile Backhaul Market report is presented in two phases:

  • Phase 1 examines the extent to which microwave technologies can support the provision of cell site backhaul over the lifetime of the recommendation on relevant markets, examines the extent to which operators with highly capillary fibre networks use fibre instead, and draws conclusions regarding the regulation of these markets.
  • Phase 2 reviews the approaches taken to regulation of the terminating segments of leased lines in a selection of six EU countries (France, Germany, Italy, the Netherlands, Spain and the UK), the impact of regulation on mobile base station backhaul, and implications for future regulation in this area.

For further information:

Vodafone Group
Media Relations
www.vodafone.com/media/contact

About Vodafone
Vodafone is one of the world’s largest telecommunications companies and provides a range of services including voice, messaging, data and fixed communications. Vodafone has mobile operations in 27 countries, partners with mobile networks in 48 more, and fixed broadband operations in 17 markets. As of 31 March 2014, Vodafone had 434 million mobile customers and 9 million fixed broadband customers. For more information, please visit: www.vodafone.com

About Analysys Mason
Analysys Mason are global specialist advisers in telecoms, media and technology (TMT). Our regulatory practice has advised operators, financiers, regulators and policy makers for more than 25 years. For more information, please visit www.analysysmason.com