Swisscom must provide content providers with more bandwidth at a lower price. The Federal Communications Commission ruled in favour of the Internet provider Init7.
On 19 December 2024, the Federal Communications Commission (Comcom) announced its decision in the “Interconnect Peering” proceedings between Init7 and Swisscom. Comcom thus complied with an application from the Winterthur-based company in 2013. At that time, Init7 still offered the majority of content via the Internet, as founder Fredy Künzler says in an interview with inside-it.ch. In the meantime, however, the business has changed to that of an Internet provider.
The decree obliges Swisscom to operate “zero-settlement peering” with Init7. Swisscom must provide the content provider with a sufficiently large bandwidth and also expand it if necessary. The costs only include those of the router ports and the cables that are incurred for the interconnection. Since the costs are the same for both parties, each company bears its own expenses, which is referred to as “zero-settlement peering”.
Long-standing process
The proceedings lasted more than ten years and included two market investigations by the Federal Office of Communications (OFCOM), several expert opinions by the Competition Commission (COMCO), a statement by the price regulator and one party report each by the parties involved, Swisscom and Init7.
In 2018, Comcom had ruled against Init7, but the Federal Administrative Court overturned the ruling in April 2020 and sent the case back for reassessment. The decision now taken, which is based on Article 11 of the Telecommunications Act, forces Swisscom to engage in “zero-settlement peering”.
Cartel at “Interconnection Points”
In the course of the proceedings, according to Init7, it became apparent that Swisscom, together with Deutsche Telekom, had formed a cartel for “interconnection points” in order to force payments from content providers. “Internet providers have a technical monopoly of access to their end customers,” says Init7. Swisscom acts as a gatekeeper, so to speak, and only those who pay enough can send traffic to their end customers, according to the company.
The subject of the dispute was the interconnection points (yellow). Graphics: Level(3)
Comcom also made a similar assessment. The traffic ratio, i.e. the ratio between incoming and outgoing traffic, was assessed as irrelevant by the Federal Communications Commission, because the direction of flow of the data does not influence the costs, according to the authority. Until now, Swisscom has used this factor as a criterion to demand corresponding payments from Internet providers.
However, the traffic of content providers is almost exclusively caused by end customers, for example by clicking on a link to a video. Comcom invokes the polluter-pays principle and states that the costs incurred are already covered by the broadband subscription of the end customers. An additional cost sharing by the content providers is not permissible.
Final verdict still pending
Comcom’s decree also obliges Swisscom to carry out cooperative upgrades as soon as more than 50% of the network capacity has been reached. In addition, the telco must bear the procedural costs of around 170,000 Swiss francs incurred so far.
In Init7’s view, the contractual relationship between Swisscom and Deutsche Telekom continues to be contrary to antitrust law. However, it is up to the Competition Commission to punish this.
The order is not yet legally binding. Swisscom has the option of filing an appeal with the Federal Administrative Court within 30 days.
