By Tim Wijkman-van Aalst
11 Nov 2023 at 05:06
We pay too much for our internet, television and landline telephony, telecom experts conclude. According to them, this is due to limited competition. As a result, there are hardly any incentives for telecom companies to lower prices.
Ziggo and KPN provide fixed telecom services to approximately 80 percent of all households, according to telecom analyst Tim Poulus of Telecompaper. “I call the situation a duopoly, or a monopoly but with two very powerful players.”
There is still some competitive pressure from Delta and Odido, Poulus explains. But this is limited to the areas where the networks of, for example, Delta, Open Dutch Fiber and the former Reggefiber are located.
According to Poulus, there is hardly any competition between Ziggo and KPN. Ziggo has increased its costs and debt considerably in recent years to reward shareholders. Due to these high costs, there is now little room to compete on price by, for example, lowering rates. “Even a small price reduction would push the company into the red,” the analyst outlines.
“But at KPN the money is sloshing up the wall,” Poulus continues. “Even if KPN lowers prices by 20 percent, the company will still make a profit.”
Determining price without prohibited agreements
Due to the financial situation at Ziggo, KPN has little incentive to lower prices, according to Poulus. “Companies want to make as much profit as possible and Ziggo can only increase its prices. KPN happily goes along with this, because that is good for the shareholder.”
This image is confirmed by telecom advisor Taco Jelgersma. “I have seen for more than fifteen years that KPN and Ziggo announce the same price increases every year around May.”
The Netherlands Authority for Consumers and Markets (ACM) has intervened several times in recent decades because there was insufficient competition. For example, KPN was obliged to allow other companies onto its network. In addition, the regulator set maximum rates. That is called regulation.
KPN’s offer is mainly good for KPN itself
According to Poulus, KPN wants to prevent regulator ACM from intervening again. That is why KPN has made a voluntary offer to the regulator. This contains agreements about the admission of competitors and the prices that KPN charges for this.
This voluntary offer prevents a lot of legal wrangling that would arise around new regulations. “But KPN is in control and has fooled the ACM,” says Jelgersma fiercely. “KPN pretended that the offer was good for competition, but in reality small players and newcomers are being pushed out of the market.”
Partly thanks to the agreements with KPN, the ACM concludes in its market analysis that there is now sufficient competition. “It seems that way on paper, but if you look critically it is disappointing,” says Poulus. “On KPN’s fiber optic network, for example, competitors find it difficult to undercut KPN’s price.”
Experts see signals of competition restriction
KPN makes anti-competitive choices when installing its fiber optic network, fiber optic expert Rudolf van den Berg of consultancy firm Stratix previously told NU.nl. The company opts for a technique in which the main cable in the street is spliced to the homes. This makes installation slightly cheaper than laying its own fiber optic cable to each home.
This choice is not only cheaper, but according to Van der Berg it also gives KPN a competitive advantage. “Splitting the fiber optic cable is done by KPN equipment and forces other providers to use KPN equipment.”
Other providers can therefore never offer services over its network without KPN’s intervention, the fiber optic expert continues. “This ultimately makes using KPN’s network more expensive for internet providers.”
“This is all happening under the eyes of regulator ACM,” Jelgersma concludes. “They stand by and watch, but don’t take action.”
Ziggo says it experiences fierce competition
NU.nl has submitted the conclusions of the telecom experts to KPN, Ziggo and the ACM. Ziggo does not agree with Poulus’ statement in which he talks about a duopoly. “We experience intense competition in the market,” a spokesperson said. According to the company, this is evident from numerous price and product promotions.
According to KPN, the Dutch broadband market is competitive: “Internet is offered at competitive prices.” Ziggo and KPN also refer independently of each other the market analysis of the ACM. The regulator concludes that there is sufficient competition in the fixed telecom market.
KPN recognizes that the price of internet in the Netherlands has risen in recent years. According to the company, this is largely due to inflation, “because our costs have also risen considerably.”
Nevertheless, KPN has opted for a moderate price change in the past two years. “Our price increase is the lowest in the market,” says KPN. “We haven’t fully passed on inflation.”
ACM keeps an eye on the market
ACM is completing a market analysis of fixed networks, a spokesperson for the regulator said. “We regularly and extensively look at developments in the telecom markets.”
“We see that there is choice for consumers and a competitive offer is available to them,” the ACM spokesperson added. “At the same time, we continue to closely monitor developments in the telecom market to ensure that this market remains competitive.”
2023-11-11 04:06:32
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