Market Analysis of Retail Access to the Public Telephone Network at a Fixed Location

 

The MCA is hereby presenting, for national consultation, its proposed decision on the markets for retail access to the public telephone network provided at a fixed location in Malta, in accordance with the EU regulatory framework of electronic communications networks and services. 

 

The consultation period shall run from the 19th September 2014 till the 20th October 2014. 

 

The MCA has identified the following relevant markets in accordance with competition law principles:

 

1) Lower level access to the public telephone network at a fixed location.

 

2) Higher level access with a maximum of two telephone connections to the public telephone network at a fixed location.

 

3) Enhanced higher level access with more than two telephone connections to the public telephone network at a fixed location.

 

In its analysis of the identified markets, the MCA did not identify any significant barriers to market entry that could inhibit effective market competition.  Despite GO enjoying economies of scale and scope, and also being a vertically integrated operator, the MCA concludes that other operators, namely Melita, also enjoy similar conditions and are therefore competing at par with the incumbent, GO. The MCA also concludes that despite the presence of high sunk costs in deploying a new access network, new entry has happened. Moreover, with the emergence of wireless broadband networks, new operators have managed to enter the market and are somewhat posing an indirect constraint. 

 

From a consumer’s perspective, the assessment of countervailing buyer power also shows that through switching, customers can effectively constrain the behaviour of operators in the identified markets. In addition, the MCA notes that with alternative operators joining the fixed access markets, GO had started to quickly lose its market share as users started to switch to these new operators, most especially Melita. Similarly, large business clients enjoy countervailing buyer power in the higher level access markets as operators compete aggressively to provide these clients with a full suite of services. 

 

At the same time, the MCA notes that even if there were no alternative fixed telephony operators, GO would still be indirectly constrained by mobile voice telephony services and OTT services. 

 

Based on these findings, the MCA thus concludes that no operator is able to behave independently from the others in the market and therefore no operator holds significant market power in any of the identified markets. In the absence of regulation it would be very unlikely, therefore, for GO or any other operator to increase the tariffs of fixed access and/or fixed calls or act in an uncompetitive way.

 

Given the finding of no SMP, the MCA notes that regulatory intervention in local markets for retail access to the public telephone network at a fixed location is no longer warranted. Consequently, the MCA is proposing to withdraw the remedies imposed in these markets.