The telco finds COMCO’s decision “incomprehensible” and says it will lead to higher fibre rollout costs
Swisscom has defended its decision to adopt a point-to-multipoint (P2MP) topology between the exchange and local cable duct (manhole), which it began using in 2020, as “the right one”. The announcement came after Swiss regulator Competition Commission (COMCO) fined Swisscom CHF 18 million for what it deemed unlawful conduct in the optical fibre expansion.
In addition to the fine, COMCO imposed “clear guidelines” on Swisscom for the expansion of its fibre optic network: “so that third parties can jointly use the fibre optic network infrastructure.”
At the start of 2020, Swisscom changed the way it built its fibre optic network. With this new network design, COMCO said competing companies would no longer have direct access to the network and would only be able to sell Swisscom services under their own name. By changing its network construction strategy, Swisscom prevented competing companies from accessing the fibre optic network and thus violated cartel law.
Since December 2020, COMCO has been investigating the extent to which P2MP topology impedes competition. Alongside the investigation, it ordered precautionary measures, preventing Swisscom, other than in a few exceptional cases, from putting any P2MP connections into operation and marketing them. Swisscom challenged these measures before the Federal Court, which, in its judgement of 29 November 2022, nevertheless upheld the measures imposed by COMCO.
It is COMCO’s view that Swisscom’s expansion of the fibre-optic network should only be permitted to continue in point-to-point (P2P) topology. Swisscom said the consequence of COMCO’s decision is that the expansion will take “much longer and involve significantly higher costs, especially in rural areas.” It added it found the decision “incomprehensible.”
P2P or not P2P?
COMCO subsequently prohibited Swisscom from making this modification from the end of 2020. The regulator said Swisscom would otherwise have modified the existing market structure and would have “created a de facto monopoly”. It stated: “Competing companies would have been deprived of a large part of their innovation possibilities and commercial opportunities, and consumers as well as commercial customers would have been severely limited in their choice of supplier and in the diversity of products.”
Not so, said Swisscom, arguing that all competitors would have been able to “obtain a data stream from Swisscom for a specific connection on non-discriminatory terms, enabling them to continue to offer a full and competitive range of services, including telephony, Internet and TV.”
In Swisscom’s view: “P2MP is the most efficient and cost-effective way for FTTH to be rolled out in Switzerland. Moreover, P2MP topology is the prevailing architecture for the FTTH rollout in most EU states. It is accepted by the regulatory authorities and considered compliant with anti-trust law. It is for this reason that Swisscom considers its conduct fair under competition legislation.”
More work needed
As previously announced in October 2022, to counteract the stalled optical fibre expansion and ensure that third-party providers have the layer-1 access required by COMCO, Swisscom will install new fibre connections as before, using the point-to-point (P2P) architecture endorsed by COMCO and convert existing P2MP connections to P2P.
As a result of the decision, Swisscom said the expansion is still mostly assured in line with the Swisscom network strategy, even though the expansion with P2P is more laborious, will involve more civil engineering work and will bring delays – especially for rural communities. “Proceeding with P2P means that, by 2030, up to 10% fewer households will have optical fibre access than would have been possible with P2MP, and the FTTH expansion will be completed several years later than originally planned,” stated the carrier.
However, COMCO believes that the financial and time savings are not sufficient to compensate for the “elimination of competition over several generations”. The regulator scathingly pointed out: “Until now, the most significant innovations and price reductions in the fibre-optic network have come from competing companies, not Swisscom. This would not have been possible in the future.”
The telco said its financial outlook for the 2024 financial year remains unchanged as it had factored COMCO’s ruling into its planning and made appropriate provisions. Swisscom reserves the right to appeal the decision before the Federal Administrative Court.