Spanish communications and competition regulator CNMC has opened a public consultation into its proposal to deregulate the submarine cable route between the Spanish peninsula and the Canary Islands.
Source: TeleGeography, Julian Rawle Consulting
The CNMC said CanaLink, the only cable operator providing an alternative to the incumbent (Telefonica), has consolidated its position, becoming the operator with the largest share of the wholesale market. The entry of CanaLink has in fact led to considerable price reductions of the capacity handled over the route, said the CNMC, adding that it therefore proposes to eliminate existing obligations within a period of two months after it receives market approval.
ANALYSIS: IslaLink, the Spanish owner of the CanaLink system, will not be entirely happy at this ruling. Having only commissioned CanaLink in 2011, IslaLink is likely to claim that they have not yet achieved an acceptable return on the investment required to compete with incumbent, Telefónica, even if the latter has had one hand tied behind its back by the Regulator.
IslaLink has not yet announced full financing for its next more ambitious submarine cable project: ELLALink, connecting Portugal to Brazil. This cable is also proposed to land in the Canary Islands which may be a contributing factor in the CNMC’s decision to open the market up.
If ELLALink did not happen, this would leave IslaLink not only with a failed transatlantic project but also with vulnerability to loss of market share in the Canaries from a resurgent Telefónica or a new entrant. To make matters worse, IslaLink’s other submarine cable project, OranLink (Algeria-Spain) has been delayed by “bureaucratic burdens” within the Algerian government.
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