Duct Sharing: the example set by Portugal

30 Apr

Last week I had the pleasure of having lunch with the excellent people from Cisco IBSG. Discussion meandered here and there until we started discussing regulation and, in particular Duct Access. I had already discussed this issue with Diogo Vasconcelos, who was instrumental in passing the portuguese law on Duct Access that is now scrutinised by every regulator in Europe and hopefully will inspire many of them. I suggested to Diogo that I should interview him for Fiberevolution, but he offered instead to send me the following essay as a synthesis of what this law on Duct Access does.


The following is therefore reprinted with his authorisation and my many thanks. It's not light reading, but this is groundbreaking stuff, people. I recomment you take the time to read it despite the intricacies of the argument.

The eEurope 2005 Action Plan (COM(2002) 263 final) indicates the ability to have “access by market forces to rights of way, poles and conduits to facilitate investment, for instance through the removal of legislative barriers. The Commission shall support these actions by encouraging and organising exchange of local and regional experience and private/public partnerships” as being one of the key initiatives to be implemented by Member States, by the end of 2005, with the aim of reducing barriers to broadband deployment and foster competition in the market.

Measures of this type have been implemented in various Member States with positive results regarding the massification of broadband.

In Portugal, the Law of Electronic Communications (Law no. 5/2004, of 10 February) gave a first significant step in this direction in Articles 24 and 26 therein, which set out the general principles regarding rights of way and access to conduits within the public domain by market forces.

Article 24
Rights of way

1 – Companies which supply electronic communication networks and services that are accessible to the public are ensured:

a) The right to request, under the terms of general law, the expropriation and setting up of administrative rights essential to the installation, protection and conservation of the respective systems, equipment and other resources;

b) The right to use of the public domain, under equal conditions, for the setting up, passage or crossing necessary for the installation of systems, equipment and other resources.

2 – Companies that supply electronic communication networks and services that are not accessible to the public are ensured the right to request the use of the public domain for the installation of systems, equipment and other resources.

3 – The procedures envisaged to apply the right referred to in the previous paragraphs shall be transparent and suitably publicised, rapid and non-discriminatory, and the conditions applicable to the exercise of this right shall conform to the principles of transparency and non-discrimination.

4 – All of the authorities with jurisdiction over the public domain shall draw up and publish transparent, rapid and non-discriminatory procedures with regard to the exercise of the right to use the public domain enshrined in the present law.

5 – An effective structural separation shall be ensured between the allocation or definition of conditions for the exercise of the rights envisaged in the present article and the powers linked to ownership or to the control of companies in the sector that public authorities, including local ones, ownor hold control over.

6 – The right granted for the use of the public domain under the terms of this article can not be terminated before the period for which it was attributed has expired, except in justified cases and without prejudice to the applicable compensation rules.


Article 26
Access to conduits

1 – The concessionaire of the public telecommunications service shall, through agreement and in relation to companies that offer electronic communication networks and services accessible by the public, make available access to the conduits, posts and other facilities and locations of which they are the owner or the management of which is incumbent upon them, for the installation and maintenance of their systems, equipment and other resources.

2 – The concessionaire of the public telecommunications service can request payment from the companies that offer electronic communication networks and services to the public, for the use of the conduits, posts, other facilities and locations of which they are the owner or the management of which is incumbent upon them, for the installation and maintenance of said companies’ systems, equipment and other resources.

3 – When no agreement is achieved, either one of the parties may request the intervention of the ARN, which has the jurisdiction to determine, based on a reasoned decision, the conditions of access, and specifically the price, which should be guided by the costs.

4 – For the purposes of paragraph 1, the concessionaire shall make available and provide access to the conduits, posts, other facilities and locations, which shall be part of the conditions of access and use, under the terms to be established by the National Regulatory Authorities (NRA).

5 – All the entities which come under the control, supervision or superintendence of State bodies, the Autonomous Regions or local authorities exercising administrative functions, and which are or are not commercial in nature, such as public companies, companies with predominantly public capital or concessionaires, are bound by the principle of non-discrimination when they make available to companies supplying public electronic communication networks and services access to conduits, posts and other facilities and locations of which they are the owner or the management of which is incumbent upon them.

6 – The entities referred to in the previous paragraph may request payment from the companies which offer electronic communication networks and services to the public, for the use of conduits, posts, other facilities and locations, of which they are owners or the management of which is incumbent upon them, for the installation and maintenance of systems, facilities and other necessary resources for the activity of the aforementioned companies and, in relation to concessionaires, in accordance with the provisions set forth in the respective contracts of concession.

7 – In the cases referred to in paragraph nos. 5 and 6, the act or contract through which access is made available is subject to the approval of the body with competence, supervision or superintendence over the same, following the prior opinion of the NRA.

The need for a specific law

With specific regard to the conduits held by licensed telco operators, ANACOM (the Portuguese NRA) developed specific regulations in this field, particularly in relation to providing access to the conduits of the concessionaire of the public telecommunications service – PT Comunicações [the Portuguese incumbent telco operator].

However, in all other cases, specifically in the case of public works initiated by entities that do not come under the direct control of ANACOM, there was no type of legal regulation to enable a common integrated approach to

these items (specifically w
ith regard to the construction and access to conduits and associated infrastructures by market operators), resulting in non-standard practices and procedures individually specified by the different public bodies responsible for each area of intervention.

Furthermore, even the existing best practices were cyclical, strongly dependent on the policy adopted by each institution at any given time, and not founded on clear and unique guiding principles. That created major uncertainty in this area for the economic agents that wanted to invest and to use those infrastructures.

The legislation I prepared (as member of the government responsible for information society policies) was approved by the Portuguese Council of Ministers and published two years ago. It aimed at regulating all the bodies not subject to the control of ANACOM, in the following two dimensions:

  • obligation regarding the ab initio construction of public infrastructures (with conduits, poles, manholes, etc.) for allowing future insertion of telecommunications infrastructures, by market agents;
  • guarantee of access, under transparent and non-discriminatory conditions, to those infrastructures within the public domain by all market agents seeking to invest in deploying their own telecommunications infrastructures using these conduit systems.

This was a consensual measure from a political point of view, which was decisive for the massification of broadband infrastructures throughout the country, by allowing the initial investment by market agents in the future implementation of electronic communications to be substantially reduced.

During the carrying out of the work, the construction of this type of infrastructure to house electronic communication networks represents a marginal increase in costs. Its establishment at a later stage becomes unfeasible in practical terms.

Most of the national telecommunications operators and service providers have specified this fact as being one of the main barriers to an effective liberalization of the electronic communications market and, consequently, to the development of the broadband market in Portugal.

It has contributed to the development of a competitive and sustained national electronic communications market, avoiding market distortions (with regard to competition and geographic coverage), in establishing a normative framework that ensures a uniform application of conditions of access and the possibility of appeal in the event of that not occurring.

And it is furthermore highly desirable, since it will enable strong synergies which exist between these two types of investment to be taken advantage of, encouraging the optimal application of public resources and their economic efficiency, at the same time as minimizing environmental impacts and the level of discomfort of citizens and entities due to the repeated carrying out of works in the same place.

Access to conduits on public infrastructures and mandatory obligation to build conduits on new infrastructures

Article 7: "All the infrastructures established within the public domain of the State housing electronic communication networks are administered and monitored by the public entities referred to in Article 2 within their respective areas of jurisdiction. The administration of the infrastructures established in the public domain of the State housing electronic communication networks is governed by the principle of healthy competition, ensuring free access, under equal conditions, and in a transparent and non-discriminatory manner, to all interested operators.”

Article 13: "Any work developed or supervised by the entities referred to in Article 2, including works regarding infrastructures for concessions, must obligatorily include a project to establish infrastructures for housing electronic communication networks, except in the cases of suitable infrastructures for housing electronic communication networks, established in previous works, already existing in the geographical area covered by the work being developed."

Article 2: "This Law is applicable to direct administration of the State, to public institutions and other legal persons governed by public law with jurisdiction over the public domain of the State, specifically over road, rail, port, airport, water supply and sanitation infrastructures and gas and electricity transport systems, relative to the construction, management or access to infrastructures established in the public domain of the State housing electronic communication networks."

Regulation for access to the conduit system of the Portuguese telecom incumbent

With specific regard to the conduits held by licensed operators, ANACOM developed specific regulations in this field, particularly in relation to providing access to the conduits of the concessionaire of the public telecommunications service – PT Comunicações (PT is the telco incumbent)

Some EU countries have a generic rule that gives the right of access to the incumbent’s ducts. Others, preview that whenever an operator builds a duct, he must invite other operators interested in co-built and share costs, etc. As far as I know, no other European country as a specific Reference Offer to Ducts Access (ORAC).

The Portuguese regulation is extremely detailed – see http://www.anacom.pt/template15.jsp?categoryId=126599

The ORAC not only imposes the incumbent to reserve 20% of the ducts space to his competitors but also forbids the incumbent of installing on his ducts cables that do not correspond to real needs.

  • The incumbent was also forced by the regulator to build ducts cadastre, where he has to specify, duct-by-duct, its geographic location and route, and level of occupancy.
  • PT must reserve space to its competitors. Without prejudice of space to repair or maintain ducts or cables, PT must leave free in each route, to be used by the other operators, an area of at least 20% of every duct.
  • PT cannot occupy ducts with cables it doesn’t need. PT will not install, on the ducts, tubes, sub-ducts and related infrastructures, that doesn’t correspond to its current or foreseen needs and that impede or limit the access to the infrastructures by the competitors.
  • If there is no space, PT must demonstrate why and offer and alternative route. In case a request of viability to occupy certain duct is consider non viable by the incumbent, due to lack of space to install competitors cables, it will have to justify that the cables that occupy those infrastructure correspond to their current of foreseeable needs and that the access is not deny or limit due to and not legitimate occupancy of space.
  • In case it is physical and technically unviable to the incumbent to satisfy the requests of the competitors, PT shall send with that justification, a proposal on alternative routes.
  • PT can only reserve space for his own during one year – and has to justify its reservation, base on a detailed justification of foreseen appropriate development of new services. The Regulator can annulate this reservation, if it’s proven not well justified.
  • Every time PT wants to reserve space to future development of its services, must inform the Regulator, sending the description of the concrete space on the ducts (size in relation to the total available area).
  • If PT builds ducts, it must build as well to its competitors. PT will send information on the plans to build ducts and related infrastructures with a minimum 2 months in advance in relation to the communication to the local authority. This information will be published on the restricted area of the Wholesale Portal (http://ptwholesale.telecom.pt)
  • If a competitor is interested on reserve space to its own cables on the new ducts and related infrastructure, it must send a Reserve Request to PT, on the 10 days after the communication.
  • The ORAC established a severe Service Level Agreement and it’s infringement creates a diary fine.
  • If the Quality of Service objectives established by ORAC have not been achieved, for reasons of the only responsibly of the incumbent, and with exception of force major, the competitor will be compensated.

It’s behavioral regulation, and over the past years there were several court cases successfully won by attackers. Although still not perfect in the view of many Portuguese alternative operators, it is unique in Europe and its current “fine tuned” version is actually working.

Sonae Group, the biggest non financial group and the telco main attacker, after a failed 12 billion hostile bid over PT, just made public the roll out of their own FTTH infrastructure. The investment announced – 240 million euros – surprised the market as being apparently small. Sonae explained: it will enable fiber to the home on three million clients, with minor investments on civic works, due to the access they will have to the incumbent’s ducts. That means the conduit regulation is working and is having a major impact, dramatically decreasing CAPEX on non-telco kind of investments.

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