BEREC REPORT ON IMPACT OF FIXED-MOBILE ... - berec - Europa

BoR (11) 54
satisfaction and dissatisfaction with fixed/mobile services were considered broadly
equal in relevance.
6.11. Specific supply issues
Supply-side substitution is a crucial point to consider in market definition, where its
effects are equivalent to those of demand substitution in terms of effectiveness and
immediacy, i. e. where suppliers could switch production to the relevant products and
market them quickly in response to a SSNIP without incurring significant additional
costs or risks. The lower the cost differences for switching between mobile and fixed
infrastructure the wider the scope for supply-side substitution. However, it might also
be necessary to consider any differences in capacity to deliver mobile or fixed services.
NRAs have to take into account that companies who are currently not active in the
fixed or mobile market may decide to enter the relevant market which would increase
substitutability.
However, operators may face significant investment obstacles (e.g. network
investment, mobile licences) so substitutability can be difficult to achieve. There may
also be other reasons as to why a potential new entrant may be constrained from
entering the markets with sufficient immediacy – brand awareness, customer
reluctance to switch providers and technical barriers must all be considered by NRAs
before a reasoned and fully supported conclusion can be reached on the question of
market definition.
In relation to differences in capacity, in theory LTE availability based on a very high
speed of data transfer may enhance the existence of substitutability between fixed and
mobile services. On the other hand the availability of even faster NGA products in fixed
networks may constitute an obstacle for the existence of substitutability. In any case, if
the current gap of broadband speed between fixed and mobile services significantly
decreases, the possibility of substitutability may be greater from a specific supply
perspective.
Finally depending on the characteristics and coverage of the mobile and fixed networks
in particular areas, it is possible that substitutability exists in some geographic areas
but not others.
Questionnaire results
The questionnaire results show that most NRAs consider specific supply issues as a
key element for assessing FMS of broadband and voice. A significant number of NRAs
have already used this test within retail market definition for both broadband and voice.
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