I.2 Funciones para el TSA 60

Market shares can be measured in different ways. The Commission gives the regulatory authority the freedom to select the measure that is most appropriate in relation to national circumstances. The market shares for dark fibre can be calculated in many different ways. Feasible measures include: total number of kilometres of fibre; the total number of kilometres of fibre that are subject to a wholesale market; the total revenue from the wholesale dark fibre service; the number of wholesale customers and end users that are connected; etc. The dark fibre market was not previously defined as a market that was relevant on its own. This means that there is no historical data that directly relates to the market definition now being made. PTS has requested that data relating to dark fibre be compiled during the autumn of 2007 and intends to follow up dark fibre issues on a regular basis.

There are a number of problems associated with measuring the market shares in the wholesale dark fibre market as a proportion of turnover. These result from a stakeholder possibly having considerable access to optical fibre but not selling it on as dark fibre despite demand and available capacity. This means that the total market value on the basis of turnover in Swedish kronor calculated on external provision is too small and that the market shares are misleading. One or more stakeholders can thus have greater market power than indicated by their market shares in the wholesale market, as they themselves have been able to choose not to operate in the wholesale market or to only operate to a limited extent. It is consequently important not only to use the market shares as a starting point for the existing wholesale market, but also to make an assessment based on access by the respective stakeholder to the optical fibre infrastructure. Please note that all of the information provided below includes the assets and turnover for both internal and external use.

According to the information compiled by PTS in conjunction with the 'Broadband in Sweden' report, TeliaSonera accounted for 53 per cent of all of the fibre used in Sweden

at the end of 2006 and had the most extensive infrastructure. TeliaSonera was the only stakeholder with fibre-based infrastructure in backbone networks, interurban networks and local area networks.29

According to a PTS survey, fibre-based infrastructure in Sweden amounted to just over 130 000 kilometres, of which TeliaSonera was the largest stakeholder with a market share of just under 50 per cent (based on the number of kilometres of fibre). No other

stakeholder has a market share of more than 10 per cent, and most of the other large fibre owners account for 2-3 per cent of total fibre coverage in Sweden.

Metropolitan areas have a relatively large customer base; at the same time, municipal networks are perceived to be well established in these areas. This should enable keener competition between infrastructure owners. For this reason, PTS conducted surveys in these areas: Stockholm/Mälar Valley region, the Gothenburg region and the Malmö region (see Appendix 2 for more detailed information about the municipalities in the respective regions). PTS observed that, although the competition was better in these regions, TeliaSonera is also by far the largest single stakeholder in these regions and owns around half of the coverage in all the areas. No operator in any area owns more than approximately 20 per cent of the coverage. The coverage of most of the other operators is also around a few percentage points.

The number of interconnection points/nodes sometimes suggests the extent of a stakeholder's infrastructure and thereby also the strength that the stakeholder has in the market in which it is present. PTS has observed that this is not particularly useful for measuring a stakeholder's strength, as the different stakeholders' choice of rollout technology and the primary location of the infrastructure in the network structure (backbone network, interurban networks and local area networks) also have a major impact on the number of interconnection points/nodes. The interconnection

points/nodes measured by PTS include all of the interconnection points/nodes with the exception of the interconnection points at the end user. This corresponds to

interconnection points where there is a theoretical opportunity for other operators to obtain connections. In practice, there are more potential interconnection points; several stakeholders are currently setting up networks so that other operators can also connect to interconnection points at properties and apartment blocks. The advantage of a greater distribution of potential interconnection points further out in the fibre infrastructure is that this increases potential competition, assuming that network owners grant access to the infrastructure that is available and allow other operators to become connected. Other operators lease dark fibre from TeliaSonera to a considerable extent. As mentioned previously, TeliaSonera's changes to its dark fibre service mean that other operators are attempting to lower their interest in the company and to reduce their dependence on TeliaSonera. However, they have limited potential to engage a different company. According to information compiled by PTS as supporting documentation for this study, the dark fibre market amounted to SEK 720m during the first six months of 2007. This total also includes intra-group revenues. The single largest stakeholder is Stokab, which has a market share of 31 per cent, with TeliaSonera having the second largest market share at 26 per cent. Other stakeholders are much smaller, with the majority of the other relatively large fibre owners having shares of between three and four per cent. It is worth noting that TeliaSonera's sales volume rose by 10 per cent between 2005 and 2006, but appeared to reduce by at least 15 per cent between 2006 and 2007 (by translating the

value for the six months for 2007 into the full year 2007). This has also meant that their share of the total reduced from 31 per cent in 2005 to 26 per cent during the first six months of 2007. Ninety-seven per cent of the revenue received by TeliaSonera from its dark fibre service is from intra-group sales.

In order to measure the strength of a player that is potentially dominant, it is also useful to take a look at its share of the upstream market. Among other things, PTS has assessed the revenues and market shares of the stakeholders' wavelengths and capacity services (leased lines). TeliaSonera's share of the market's turnover from wavelengths amounts to approximately one-third of total turnover, 99 per cent of which is from intra-group sales. In this case, it should be noted that the market for wavelengths is relatively small with a turnover of only one-tenth of that from the dark fibre market, and only a few

stakeholders offer wavelengths as a wholesale service. TeliaSonera's share of market turnover from capacity services amounts to approximately one-half, approximately 87 per cent of which is from intra-group sales. This market is almost twice the size of the dark fibre market.

On the whole, PTS has determined that TeliaSonera's ownership of fibre suggests that the company has a dominant position in the dark fibre market.