2.3.2.1 The legal framework

In keeping with the "Regulation of the European Parliament and of the Council on unbundled access to the local loop" (Regulation (EC) No. 2887/2000), which entered into force on 02 January 2001, operators of public fixed telephony networks that hold a position of significant market power, as determined by the national regulatory authority, in connection with the provision of these networks and the corresponding services (in accordance with Annex I, Section I, of Directive 97/33/EC), must make possible the unbundled access to their subscriber connections and the attached facilities. The obligations of such operators to grant other users access to their telecommunications network or to unbundled parts thereof - especially to subscriber access lines with or without additional technical equipment - existed in Austrian law already before this Regulation went into force, namely according to § 37 of the TKG, in connection with §§ 2 and 3 of the ZVO.

In keeping with the definitions contained in Article 2, letter f) of Regulation (EC) 2887/2000 access to the subscriber connection and the attached equipment comprises "the provision to a beneficiary of access to the local loop or local sub-loop of the notified operator authorising the use of the full frequency spectrum of the twisted metall wire " and therefore also comprises the access to the sub-network, a sub-component of the subscriber connection that connects the network termination point at the location of the subscriber with a concentrator point, or a determined intermediate access point of the public fixed telephone network.

The prices for the unbundled access to the subscriber connection and the attached equipment, for which the operator with significant market power may charge a price on the basis of cost-orientation according to Article 3 (3) of Regulation (EC) 2887/2000. When determining cost-oriented charges, regulatory practice throughout Europe must uniformly apply the approach of the "forward looking long run average incremental costs" (FL-LRAIC). ¹

2.3.2.2 TKK decisions on unbundling

2.3.2.2.1 Summary of previous decisions:

In its notices Z 1/99, Z 3/99 and Z 4/99 (of 02 July 1999), the TKK ruled for the first time on the access of alternative network operators to unbundled local loops (TASL). The monthly fee per customer and double copper wire amounted to ATS 170 (EUR 12.35), irrespective of the transmission volume (i.e. also for the use by high bit-rate services) . As a one-time fee, the "acceptance costs" had to be paid, which Telekom Austria accrued by the work required for unbundling and which amounted to ATS 750 (EUR 54.50) per double copper wire. The "physical" implementation of unbundling was to be done by means of collocation on the premises of the Telekom Austria exchange, or by means of a collocation substitute (outdoor container/cabinet) on adjacent land, or by passive extension of the subscriber access line to a Point of Presence (PoP) of the network operator.

2.3.2.2.2 Unbundling of subscriber access lines for ISPs and operators of leased lines (Z 18/99, Z 29/99, Z 3/00)

In autumn/winter 1999, several ISPs and one operator of leased lines filed applications with the TKK for access to unbundled subscriber access lines of Telekom Austria.

In spring and summer 2000 the requested ruling on unbundling was issued, which essentially provided for an extension of the implications of the unbundling ruling for voice telephony operators of July 1999 to ISPs and operators of leased lines at the same conditions.

The TKK decision was based on the fact that ISPs and operators of leased lines are also providers of telecommunications services, as defined by the Austrian TKG, and therefore have access rights to the subscriber access lines in the network of the operator with a market dominant position. Telekom Austria therefore had to make available access to the so-called "last mile" (final stretch) to end users to all telecommunications providers on the market, also in the event that this would be used to provide to customers broadband services, such as a particularly swift Internet access or "video on demand services". In addition to the possibility of a high bit-rate use of the TASL (local loop), using ADSL/HDSL, the SDSL process was also recognised to be an admissible transmission standard.

In the course of 2000, the regulatory authority continued to address questions relating to unbundling. In particular, it developed an analytical bottom-up model in co-operation with the "Wissenschaftliches Institut für Kommunikationsdienste" (WIK) (Scientific Institute for Communications Services) for the calculation of the costs of an efficient access network, which was used as a basis for decision in a number of proceedings.

2.3.2.2.3 Unbundling of the subscriber access line: New regulations as of 12 March 2001 (Z 12, 14, 15/00)

As the aforementioned unbundling rulings (for voice telephony operators, ISPs and operators of leased lines) expired on 30 September 2000, several alternative network operators applied for another ruling. After obtaining comprehensive expert opinions by official and non-official experts on the technical and economic aspects of unbundling, the TKK decided on 12 March 2001 on a number of unbundling rulings, on the basis of the "Regulation of the European Parliament and of the Council on the unbundled access to subscriber connections (Regulation (EC) 2887/2000).

The notices Z 12/00, Z 14/00 and Z 15/00, issued by the TKK, follow on from the previous rulings and also contain many new rulings. The notices apply for an unlimited period of time, the charges, however, are limited to 30 September 2002.

With the new rulings, a uniform regime has now been created for the access of all users (with voice telephony and operators of leased lines, as well as ISPs as "unbundling partners") to the subscriber access lines in the public telecommunications network of Telekom Austria.

The monthly fee for allowing access to the entire local loop (TASL) - full unbundling - was reduced to ATS 160 (EUR 11.63), and to ATS 150 (EUR 10.90) as of 01 January 2001, irrespective of the bandwidth and the transmission systems used. The TASL costs were determined on the basis of the bottom-up costing model, developed in co-operation with the "Wissenschaftliches Institut für Kommunikation" (WIK) (Scientific Institute for Communication). At the same time, the possibility was provided, for the first time in Europe, to have access to parts of the TASL ("sub-loop unbundling") at relevant interfaces ( line junctions, cable junctions, distribution frames in buildings) at correspondingly lower fees. For access to distribution frames in buildings a monthly fee of ATS 0 was fixed, since the setting-up fee is paid by the subscriber.

On account of the scarce collocation premises, the unbundling partners of Telekom Austria were also given the opportunity to link up a subscriber access line, made available to them, by means of collocation via another unbundling partner attached to the same main distribution frame. Moreover, a limit was introduced on the allocated size of collocation premises.

According to the provisions of the unbundling rulings, there is no restriction regarding the telecommunications services (voice telephony, leased lines services and data services) which are provided via the unbundled subscriber access lines. In consequence, the subscriber access lines can also be used for the in-house leased lines services of a company (e.g. to link up the transmitter stations in a mobile radio communication network).

The aforementioned rulings have created decisive incentives for the cost-efficient provision of innovative broadband services, especially in the Internet area.

Pursuant to the aforementioned EU Regulation, Telekom Austria must also offer (and publish) the "shared use" option as part of its reference unbundling offer. This option had not been part of case in question and the TKK did therefore not rule on this matter.

2.3.2.2.4 Reference unbundling offer (Z 4/01)

Since 01 January 2001, Regulation (EC) 2887/2000 requires companies in a market dominant position to submit a reference unbundling offer. However, the reference unbundling offer of Telekom Austria did not correspond to the requirements contained in the Regulation, nor to the rulings in the relevant unbundling notices (Z 12, 14, 15/00). The TKK therefore then requested Telekom Austria by means of a notice to make the necessary adjustments.

2.3.2.2.5 Figures on unbundling

All of the approximately 1,400 main distribution frames of Telekom Austria are suited for unbundling. Sub-loop unbundling is basically possible (whenever technically feasible) at a much larger number of relevant switching points of Telekom Austria. When the present report was drawn up, approximately 10 unbundling partners (of which only a few were ISPs) had unbundled some 3,000 subscriber access lines (one third with high bit-rates) at approximately 80 main distribution frame locations of Telekom Austria. Approximately 30% of the orders for collocation premises were being processed. Approximately 60% of the already finished collocation premises were actually being used by the unbundling partners at the indicated time.

2.3.2.2.6 Outlook

Unbundling for the sole purpose of providing a narrow-band telephony service appears to offer only small profit margins, in view of the high investments for collocations and line constructions, and will require a relatively large number of end users at the respective main distribution frames. The major competitive effects of full unbundling and "shared use" can therefore be expected in the field of new (high bit-rate) services (especially fast Internet services) and (local) leased lines.

The number of unbundled subscriber access lines is currently increasing continuously. However, it is lagging behind expectations. Telecommunications service providers obviously prefer other options to reach end users. For the aforementioned reasons Carrier Pre-Selection (CPS) in the area of (narrow-band) voice telephony appears to be more attractive at present.

As far as "shared use" is concerned, no rapid increase in demand is expected for the time being. On the one hand, ISPs in Austria also have the possibility of full unbundling. On the other hand, there is an "ADSL-ISPA Wholesale Offer", agreed between Telekom Austria and ISPA, which provides ADSL access. On the basis of this offer, an ISP can offer fast Internet services via ADSL without having to make the investments necessary for equipment and collocation premises in connection with unbundling.