COMCO stalls rapid network expansion by Swisscom

The Competition Commission (COMCO) has fined Swisscom CHF 18 million for what it deems unlawful conduct in the optical fibre expansion. 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. The consequence of COMCO’s decision is that the expansion will take much longer and involve significantly higher costs, especially in rural areas.

Swisscom finds COMCO’s decision incomprehensible. It remains convinced that its decision to adopt a point-to-multipoint (P2MP) topology between the exchange and local cable duct (manhole), which it began using in 2020, was the right one. Contrary to the stance taken by COMCO, 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.

A more challenging expansion requiring more civil engineering work
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. Following today’s decision by COMCO, 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.

The financial outlook for the 2024 financial year remains unchanged as Swisscom 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.

Investigation ongoing since 2020

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.