Swisscom ordered to lower leased line prices

Swisscom said Thursday it is considering whether to appeal a Federal Communications Commission (ComCom) decision that will cost it around 30 million francs and put the company at a “disadvantage compared with its competitors.”

The ComCom ruling, released the same day, forced Switzerland’s biggest telecom company to offer its leased lines, used to transmit large amounts of data between fixed points, to other providers at “cost-based” prices.

The seven-member federal commission said its decision cuts monthly prices for the lines, including transmission technologies and Ethernet services, by up to 30 percent.

Further, ComCom ordered the reduction retroactively for the years 2007, 2008 and 2009, something which offers the promise of reduced telecom bills for businesses and inviduals.

The commission ruled that Swisscom has a dominant position in the market for leased communications lines.

It said the company maintained it was “market dominant” only in the case of leased lines with a capacity of two megabits per second (Mbps).

But ComCom has ordered the telecom to offer cost-based prices for lines with bandwidths from two to 10 Mbps by the end of May.

It also retroactively reduced prices charged for such lines over the past three years to other telecom providers by amounts ranging from 15 to 30 percent.

ComCom said alternative providers are dependent on Swisscom’s network while they are building their own infrastructure, which it said is "time-consuming and demands high levels of investment.”

However, Swisscom, a private company that has evolved from a government-owned monopoly, took a different view.

In a statement issued in response to the regulator’s ruling, the company said ComCom failed to “sufficiently take economic circumstances into account.”

The decision means that Swisscom must offer at a lower price leased lines with a bandwidth of up to 2 Mbps to urban areas such as the greater Zurich, Bern, Geneva and Lausanne regions.

The company said the ruling ignores the “strong competitors” in these metropolitan areas, such as cable network operators, electricity companies and alternative telecom providers who have “powerful and widely available infrastructure”.

Swisscom also argued that Ethernet services, which use high-capacity fibre-optic lines, do  not establish any “exclusive point-to-point” connections and therefore do not constitute leased lines that can be regulated.

The company said ComCom’s order to provide such services at defined prices and to regulate the entire fixed-line market “will eliminate the flexibility Swisscome has with regard to product design and pricing.”

It also said it would be put at a disadvantage with its competitors “in the important business customer market.”

Swisscom said it put aside 30 million francs last year to cover possible liabilities from the issue.

But it is now studying the ruling in detail to determine a possible appeal.

The ComCom ruling marked a reversal of fortune for the telecom giant, which earlier this week won a legal victory against Switzerland’s competition bureau (Comco).

The federal administrative tribunal overturned a 333-million-franc fine levied against Swisscom for alleged abusive fees charged by the company to other providers.

The court ruled that Swisscom did not abuse its dominant position in the Swiss market.