Dutch Court Strikes through Cable Unbundling

It's been ages since I last published something here—sorry, Chris!—but I've had an insanely busy summer. Hopefully everything will be back to normal business shortly when the fall semester starts—whoever said academics can relax during the summer?

This came in today: Dutch telecoms regulator OPTA lost a case today against the four Dutch cable companies, effectively preventing OPTA to unbundle the Dutch cable market. The Dutch were the first to implement such an unbundling scheme in cable, which by now has been standard practice in DSL for years. In fact, one firm normally active in the DSL market had already successfully entered the (analog) cable market in the Netherlands by leasing lines from cable firms Ziggo and UPC.

After OPTA got the green light from the European Commission to unbundle analog cable, the four cable providers active in the Netherlands immediately filed suit to prevent such from happening. I'm still reading through the opinion of The Trade and Industry Appeals Tribunal, (aka the Administrative High Court for Trade and Industry), but this is looking bad.

The court mainly slams OPTA for its definition of the geographic scope of the Dutch cable market. Whereas OPTA claimed the cable market to be consisting of a number of regional monopolies— which warranted special intervention like unbundling—the court had none of that. Rather, the Tribunal takes the scope of the Dutch cable market to be national, and thus sufficiently competitive to prevent intervention. This argument on the geographic market for cable is strengthened by the finding of the Court that the product market is pretty much uniform throughout the country.

I have been a big fan of OPTA's cable unbundling, and I was actually about to enter into a contract with a new entrant company to get cable. I've never really bought the ladder of investment theorem, but in this market it may arguable may work well in a different way: cable unbundling enables entrants already active in the high-end digital TV market to offer an entry level service to attract new customers. This basic service does not so much generate enough revenues to allow the entrants to invest according to the LoI principle, but rather creates a stepping stone for consumers towards double, triple, or quadruple play packages that these entrants couldn't offer before. And this makes the telecoms market more competitive as a whole.

So I would urge OPTA to appeal. To be continued, hopefully...