Init7 wins peering case against Swisscom

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Init7 wins peering case against Swisscom

Federal Administrative Court overturns ComCom decision

On 22 April 2020, the Federal Administrative Court (BVGER) handed down a
landmark decision in the IP interconnection ("peering") proceedings of
Init7 against Swisscom, which have been ongoing since 2013, which
confirms the validity of the complainant Init7.

Init7 demanded that Swisscom continue a peering agreement concluded in
2011 on a zero-settlement basis (i.e. each partner bears its own costs).
Swisscom had terminated this contract in 2012 and, undermining the
"polluter pays" principle and the telecommunications law obligation to
grant cost-oriented prices, demanded massively excessive compensation
for peering from Init7. Init7 defended itself against this.

In its judgement, based on several expert opinions of the Competition
Commission (WEKO), the BVGER came to the conclusion that Swisscom was
dominant - quote: "The respondent has a technical monopoly for access to
its end customers". The court thus overturned the decision of the ComCom
lower instance and ruled in favour of Init7 . ComCom must now set the
cost-oriented price for peering.

As with voice interconnection, this price for peering will be zero or
close to zero. This means that Swisscom's additional demand of CHF
550,000 to Init7 is off the table. Init7 will also save the procedural
costs of CHF 126,400 still imposed on it by the previous instance.

The Federal Administrative Court's remarks are primarily relevant to an
illegal cartel which Swisscom operated together with Deutsche Telekom
(DTAG) until January 2016. It was ended thanks to the proceedings of
Init7 under pressure from the WEKO after a preliminary investigation.
The cartel enabled Swisscom to participate financially in the IP transit
capacity sold by DTAG (revenue share).

However, the ruling has a more far-reaching effect: In future, it will
no longer be possible for providers with a strong market position and
many broadband customers to artificially increase the price of IP
interconnection through competitive agreements and to make it more
difficult for smaller providers to access their customer base. The
ruling is therefore significant in the fight for an open and
discriminatory free Internet and should have an impact beyond
Switzerland. This too, because it shows the telecom regulators once
again that their laissez-faire attitude is out of place vis-à-vis
providers with market power in the area of peering.

The text of the judgement can be downloaded here (PDF, 42 pages, 31.7

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