Bundesnetzagentur publishes draft on duct access prices

Bundesnetzagentur publishes draft on duct access prices

The Bundesnetzagentur has today published its draft approval of the prices for the use of Telekom's civil engineering assets. The prices in question are the prices competitors would pay Telekom to use its underground and overground ducts and poles.

"In mid-2022 we imposed an obligation on Telekom to open up its ducts to competitors wanting to deploy fibre. We have now assessed Telekom's proposed prices for access to its ducts. Our aim has been to accommodate Telekom's legitimate interests while enabling competitors to realise their business models," said Klaus Müller, President of the Bundesnetzagentur. "This balance of interests creates incentives to invest in swift fibre rollout across the country for the benefit of all consumers."

Prices lower than proposed

The Bundesnetzagentur assessed a large number of different prices that Telekom would charge competitors using its civil engineering assets. Many of the prices that the Bundesnetzagentur is considering approving are lower, and some much lower, than the prices that Telekom had proposed.

This is the first time a price assessment has had to take account of the consequences for the dominant undertaking's business plan. This is to ensure that there is still an incentive for the undertaking to roll out high-speed networks. The prices calculated by Telekom had factored in its potential loss of customers to competitors and consequent loss of revenue (lost contribution margins). The Bundesnetzagentur basically followed this approach but also took into account the costs incurred by Telekom. Markups on costs because of a potential loss of customers are only justified for infrastructure for which Telekom is making particular fibre investments. This is the case with the connections between street cabinets and customers, where Telekom has only just begun to deploy fibre.

In contrast, the connections between exchanges and street cabinets are already mostly fibre installed by Telekom at the same time that it deployed vectoring. Investments in these connections are safeguarded by a risk premium on the rate of return for fibre networks (known as the "VHCN WACC").

It is not yet possible to say exactly how take-up of duct access will be. The approval will therefore initially be for a short, two-year period.

Package of measures for duct access

The pricing decision is one of a series of decisions relating to duct access.

The Bundesnetzagentur also imposed an obligation on Telekom to submit its contractual terms and conditions for the use of its civil engineering assets (its "reference offer") for assessment. In addition, Telekom is obliged to provide data on available duct capacity on a regular basis for publication in the Infrastructure Atlas. Telekom has so far met these obligations. The Bundesnetzagentur will issue a decision on Telekom's reference offer in due course.

Next steps

Comments on the draft approval decision can be submitted until 10 May 2024. The final decision will be issued following a consolidation procedure involving the European Commission and the regulatory authorities of the other EU countries.

The draft decision is available at www.bundesnetzagentur.de/bk3-23-079 (in German).

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