International Benchmark

Sweden

Form of separation: None
Infrastructure: Telia wholesale
Retail: Telia retail
Non-discrimination: EoI and EoO
Supervisory committee: No

Sweden from legal separation to EoI

Wholesale division (2018): Skanova established as a separate legal entity in 2008 in a voluntary move to pre-empt mandatory functional separation On 1 Jan. 2018 Skanova reintegrated into Telia as part of its wholesale division
Elements of equivalence: EoO: legacy copper-based products EoI: fibre-based products Same KPIs to monitor compliance
Equality Access Board: Established in 2008 to monitor compliance with nondiscrimination commitments Ceased to exist in Jan. 017, following EoI implementation
Provisioning & ordering: A single system implemented on 1 Dec. 2016: same product, price, information, ordering, billing and delivery systems for Telia and ANOs

Key facts

Fixed broadband subscriptions by technology: xDSL – 13%, FTTH/B – 70%, cable – 17%
Fibre and xDSL broadband no longer seen as substitutes!
Incumbent’s retail broadband market share: 32% – EU average 40%
Competition is driven by alternative infrastructures: over 180 local municipal fibre networks (mostly wholesale-only)
Incumbent’s fibre network reach and market shares differ across municipalities and SDU/MDU areas
EC vetoed PTS proposal for the national scope of M3a and argued for a more granular geographic market analysis

Model of separation adopted

The Swedish incumbent operator, Telia Company, is currently not subject to any form of functional or legal separation applied to its wholesale operations, either voluntarily or following a regulatory intervention.

The division of Telia that offers regulated wholesale access products operates as a part of a larger organisational unit responsible for wholesale operations and network infrastructure. This unit is subject to accounting separation and strict non-discrimination remedies based on a combination of EoI for fibre-based products and EoO for legacy copper-based products.

In 2008, Telia had voluntarily separated its access network by creating a wholly-owned infrastructure subsidiary Skanova. It also implemented several changes to its organisational and governance structure in an attempt to ensure equal wholesale terms for its rivals and its own retail operations in the provision of physical network infrastructure access over its copper and fibre networks. The separation decision was triggered by an amendment to the Swedish Electronic Communications Act, proposed in 2007, that would introduce new powers for PTS, the NRA, to impose functional separation as a new SMP remedy. The establishment of Skanova as a separate legal entity within Telia group was seen as a move to pre-empt a possible imposition of functional separation by PTS.

PTS, however, never formally endorsed the separation of Skanova, deeming it insufficient to improve non-discrimination or to bring any major improvement to the competitive conditions of access markets. Consequently, the access network separation was only briefly mentioned by PTS in its 2010 market analysis, and the full set of remedies was applied by PTS to Telia’s copper- and fibre-based access products despite the voluntary legal separation.

In the next round analysis of wholesale broadband markets completed by PTS in February 2015, Telia committed to a stronger form of non-discrimination for its fibre-based access products, based on EoI and subject to economic and technical replicability.

All elements of EoI were fully implemented by Telia for the regulated fibre-based local access products on 1 December 2016 – and followed by PTS’ withdrawal of the ex ante price control and cost orientation obligations from FTTH products. Once PTS had confirmed Telia’s compliance with EoI, Telia moved to re-integrate Skanova as part of its larger wholesale organisation. There was no formal assessment by PTS of this integration, other than a brief statement that PTS would continue monitoring compliance with EoI. PTS stated that, as long as Telia continued to fulfil all the obligations that are part of EoI, it is not relevant for the regulator how Telia organises its operations.

Organisational and governance structure

Telia’s organisational and governance structure has developed through a series of different regulatory steps and undertakings, summarised in the table below:

Step	Date	NRA/NCA decision	Actions
1	1 January 2008	Not applicable: a voluntary separation decision by Telia	Skanova Access AB established as a legally separate entity, 100% owned by Telia, offering access to physical copper- and fibre-based infrastructure to ANOs and Telia's own retail operations. Key organisational and governance elements of Skanova were: Independent management, separate branding and office location Code of conduct for Skanova staff with rules to ensure non- discrimination, transparency, information sharing constraints and confidentiality Equality Access Board (EAB) monitoring compliance with the non- discrimination and equivalence undertakings. Composed of the chairman (the head of Telia's Internal Audit) and two members independent of Telia. EAB’s main task was to verify compliance with a set of predefined KPIs and report to Telia’s CEO every four months.
2	24 May 2010	PTS market analysis decisions on M4/2007 and M5/2007 (Flash)	Designation of Telia as having SMP in M4 and M5/2007 (Telia and Skanova considered by PTS to be a single economic entity) Imposition of a full set of regulatory obligations, including ex ante price control and cost-orientation based on LRIC for copper- and fibre-based access products
3	19 February 2015	PTS market analysis decisions on M3a/2014 and M3b/2014 (Flash)	Deregulation of M3b/2014 and withdrawal of bitstream access obligations from Telia Designation of Telia as having SMP in M3a/2014 Imposition of non-discrimination obligations based on EoI for fibre- based wholesale access products and based on EoO for copper- based products Non-imposition of ex ante price controls on fibre-based wholesale products, once EoI has been implemented by 1 December 2016, subject to economic and technical replicability Requirement to publish internal and external KPIs related to the processing of orders, service delivery and maintenance
4	1 January 2018	Not applicable: an internal decision by Telia	The Equality Access Board (EAB) ceased to exist from 1 January 2017 From 1 January 2018, Skanova reintegrated into Telia as part of a larger wholesale unit Telia Wholesale

One of the main reasons why the voluntary separation of Skanova, along with its key organisational changes and commitments, was not considered by PTS as a credible measure to achieve the equal treatment of Telia and its competitors was that, even after the separation was implemented, Telia and Skanova continued to use separate ordering and fault reporting systems: one for Telia’s own retail operations and another for ANOs. This aspect was later addressed in PTS’ 2015 market analysis decision as one of the prerequisites for the implementation of the equivalence model based on EoI for Telia’s new fibre-based products (as discussed below).

Elements of equivalence and non-discrimination

With regard to the effective non-discrimination obligation, PTS assessed, as part of its 2015 market analysis, the cost of implementing an EoI approach for both fibre- and copper-based access products.

Since 2008, Telia supplied wholesale physical infrastructure services, such as copper and fibre access and backhaul products, to ANOs and its own retail operations through its separate wholly-owned subsidiary, Skanova Access. This approach was assessed by PTS as corresponding to the EoO principle, as it allowed Telia to use separate ordering and fault reporting systems: one for its own operations and another for ANOs.

PTS further concluded that the implementation of EoI would only be proportionate for Telia's relatively new fibre-based infrastructure. Therefore, the provision of copper access products could continue to be based on the current EoO approach. For fibre access, EoI had to be implemented by 1 December 2016.

The key EoI elements include:

the same products, including QoS, SLA and contract terms;
the same prices, including list prices and any discount schemes;
the same information, processes and interfaces (for pre-order, order and delivery);
the same suppliers;
the same billing; and
the same internal and external KPIs to monitor compliance.

A technical replicability test (TRT) had to be implemented and applied to both fibre and copper access products within three months from the adoption of the PTS final decision. Before launching any new retail product, Telia has to carry out a TRT and notify the results to PTS. PTS may also request Telia to apply TRT to already launched products.

After PTS had confirmed Telia’s compliance with EoI, on 1 December 2016, the LRIC based price control of fibre access products was removed. Currently, these products are offered subject only to an economic replicability test on selected flagship products. The flagship products comprise those standalone and bundled retail broadband offerings which are considered to be the most significant for competition in single-family and multi-family housing segments, respectively.