INTERCONNECTION

The methodology used for the reference interconnection offer for 2000 (BRIO 2000) is reported by the market to be much improved by comparison with the procedure used for BRIO 1999. The new entrants joined forces in the negotiations, enabling them to be more effective. IBPT/BIPT is said to have done an excellent job in consulting operators on the initial offer made by Belgacom, but new entrants regret that they normally only have limited time to respond to the offer (a few weeks, whereas the incumbent has several months to prepare it). Also, the final offer approved by the Minister (although, as new entrants pointed out, the law clearly states that it is to be approved by IBPT/BIPT) did not take account of all suggestions made by IBPT/BIPT, for reasons which are not clear to new entrants. New entrants regretted that written questions from them to IBPT/BIPT on the approved BRIO 2000 had not been answered by July 2000, but those issues have now been taken into account in the negotiations for the BRIO 2001.

BRIO 2000 was not approved until December 1999, a few weeks before its entry into force. This left little time for operators to make the necessary (technical) adjustments. IBPT/BIPT intends to have BRIO 2001 approved in October 2000.

The scope of BRIO 2000 is significantly greater than that of the 1999 offer, but it still includes neither ADSL/bitstream access nor certain value added services (0908 and 0909 transit services).

Moreover, new entrants regret that no information has been provided on the cost base for interconnection, which is needed to show that interconnection is cost-oriented. For example, the costs of interconnection links decreased by 20% in June 2000, but BRIO indicated that no cost studies had been carried out on these links, so it is unclear to new entrants on what data the most recent reduction was based. However, information on the cost model used is provided on IBPT/BIPT’s web site. Furthermore, new entrants comment that there are still no service level agreements (SLAs) for interconnection, although the incumbent claims that a basic SLA is in place. IBPT/BIPT has announced that SLAs will be annexed to BRIO 2001.

Negotiations between the incumbent and new entrants on the standard interconnection agreement have reached a deadlock, and new entrants say that IBPT/BIPT has not used the powers in the Interconnection Directive to intervene on its own initiative. IBPT/BIPT has pointed out that it prefers to respect commercial negotiations, but that it had intervened immediately in those cases where an operator had formally requested it to do so. New entrants also reported that the forecasting and ordering procedures for interconnection capacity are very cumbersome and inflexible, and that the penalties imposed unilaterally by Belgacom for failure to meet forecasts are excessive. Belgacom says that it is also subject to penalties in case of non-delivery, which are included in the standard interconnection agreement - the same agreement on which negotiations have reached a deadlock according to the new entrants. The other licensed operators also have difficulty understanding why the forecasting system for interconnection links is more complex than the system for leased lines, as there are capacity problems with both.

The Fifth Report noted that the Belgian authorities anticipated that most of the problems market players were complaining about would end once the Chamber of interconnection, leased lines, special access and shared use (the Chamber) was in place. The Chamber is now in place, but Belgacom has challenged the validity of the Decree setting it up, which was adopted in October 1999. Until the Council of State delivers its ruling on this appeal (which does not suspend the validity of the Decree), alternative operators are reluctant to refer disputes to the Chamber for settlement, as the validity of its decisions is uncertain. So far, four issues have been referred to the Chamber, of which one has been withdrawn, a second declared inadmissible, and a third has led to a decision, while the fourth is still being examined. IBPT/BIPT regrets that Belgacom has taken this course of action, and says that it fears that the incumbent might take all possible steps to challenge the establishment of the Chamber. The powers of the Chamber are more limited than some operators had hoped: since, under Belgian law, all disputes regarding civil rights - which covers all rights and obligations resulting from contracts - come under the exclusive jurisdiction of civil courts, they cannot be dealt with by the Chamber, which can therefore only deal with cases in which the parties have failed to sign contracts. New entrants have reported that the retail tariffs for fixed-to-mobile calls are very high in Belgium, and that this is because of the high interconnection charges for the termination of calls charged by the mobile operators. In October 2000 Belgacom Mobile (Proximus) was designated as an operator with significant market power in the national market for interconnection, in accordance with the Interconnection Directive. Notified operators have to follow the principle of cost orientation, which will bring down the interconnection charges.

LOCAL ACCESS

The Fifth Report noted that the regulator did not regard local loop unbundling (LLU) as an urgent matter, because of the availability of an alternative: the cable network. Much has changed since then. On 30 March, just after the Lisbon European Council, the Minister announced that LLU would be addressed seriously. IBPT/BIPT has held a consultation on the issue, and on 6 October the Council of Ministers adopted a Royal Decree on LLU. Notified operators will be obliged to offer all three

forms of unbundled access referred to in the Commission Recommendation on unbundled access from 31 December 2000. The new legislation will enter into force immediately after the Regulation on unbundled access has been adopted by the Council and European Parliament. The Minister has stated in the past that he also intends to require unbundled access to cable networks.

In the meantime, on 24 August 2000, Belgacom announced that it would offer unbundled access to its local loop in the last quarter of 2000, in advance of any regulatory requirement for it to do so. New entrants have responded cautiously to this announcement, and are awaiting the actual offer, which will have to be in line with the coming legislation.

New entrants stress the need for all three forms of unbundling (full unbundling, shared access, and bitstream access), as different kinds of unbundling suit different sorts of operators. The incumbent is particularly unhappy about the shared access option, as it fears spectrum management problems. It also claims that LLU is not the way to increase competition in the local access network, because alternative technologies are available and LLU will limit investment in infrastructure. All three forms of unbundling will be mandated by the Royal Decree. Disputes concerning unbundling will be referred to the Chamber for Interconnection, special access, leased lines and shared use.

The other alternative local infrastructure, the wireless local loop (WLL), is still only at an experimental stage. The legislation, which was in preparation at the time of the Fifth Report, has now been published. However, the actual licensing procedure has been delayed because of legislative changes on antenna site sharing. New entrants wonder whether the procedure will take place before the end of the year. There will be seven or eight WLL licences in Belgium, but currently it is not yet an alternative local access network.

CATV penetration is very high in Belgium, and one CATV operator already offers voice telephony services, but by the end of 1999 the number of subscriptions was still very small. Other CATV operators offer Internet access only, but not voice telephony services.

The incumbent has had an ADSL retail offer on the market since April 1999. Only in March 2000 did the new entrants receive an ADSL wholesale offer (adapted version in May). New entrants find the wholesale offer unacceptable for a variety of reasons. According to them, there seems to be no relationship between Belgacom’s retail offer and its wholesale offer. It is not clear if either the retail prices or the wholesale prices are cost-based: in any case, alternative operators find it hard to match the retail tariffs offered by Belgacom. In addition, the wholesale offer is limited to fast Internet access, but Belgacom’s own retail service is much broader. IBPT/BIPT has already intervened on several occasions in order to achieve a better offer from Belgacom. Progress has been made in this regard.