The CNMC completes the liberalization of Telefónica's fiber optic network

The National Commission on Markets and Competition (CNMC), the telecommunications sector regulator, has completed the full liberalization of the residential fixed broadband market, primarily fiber optic broadband. At its meeting held last Tuesday, the 29th, the CNMC approved the analysis of the local and central access markets and determined that they are no longer reference markets whose characteristics require the " imposition of specific obligations, and are therefore not susceptible to ex ante regulation," according to sources familiar with the process confirmed to EXPANSIÓN. Therefore, the obligations binding Telefónica de España are being eliminated. The resolution will enter into force six months after its publication in the Official State Gazette (BOE).

This means, in simple terms, that starting in February 2026, Telefónica will no longer be regulated in the broadband market. What will remain in place is the current regulation requiring Telefónica to continue leasing its physical infrastructure, i.e., underground conduits, manholes, poles, etc., a regulation known as MARCo. These conduits are the basis used by the vast majority of alternative operators that have deployed fiber optics in Spain, such as Masorange, Digi, Onivia, Vodafone, and Avatel, and which have led to a broad network of redundant fiber deployments in our country, with 80 million accesses for approximately 30 million real estate units (homes, offices, and retail).

The two major factors that have convinced the CNMC to support this total deregulation and free Telefónica from regulatory constraints in this area are the strong deployment of fiber networks that has occurred in recent years, since the last review in 2021 - which includes the emergence of a dozen new independent wholesale players -, as well as the creation of Masorange .

This operator, the result of the merger of MásMóvil and Orange Spain , is the market leader in terms of customers, far surpassing Telefónica Spain, making it difficult to maintain that Movistar remains the dominant operator in the market.

The impact of Masorange

Masorange launched in early April with more than 30 million mobile service customers and 7.3 million fixed broadband customers, with a market share exceeding 40% in both fixed and mobile services. At the same date, Telefónica had 5.94 million fixed broadband customers, 1.36 million fewer than its rival, and 20.15 million mobile lines, 10 million fewer than Masorange.

The complete deregulation of the fixed broadband market has various implications, but the most significant change would probably be for Telefónica, as it would allow it to achieve much greater commercial agility.

Currently, every time an incumbent operator wants to approve a new tariff in Spain, it must undergo a review by the CNMC (National Commission for the Promotion of Consumer Protection) and requires a period of approximately one month until it receives approval. Similarly, when a Spanish operator intends to launch a temporary promotion, the deadline for obtaining regulatory approval is approximately fifteen days.

This circumstance means that Telefónica's agility in the market is necessarily less than that of its rivals , since it cannot react to commercial developments from other operators as quickly as its competitors.

'Replicability'

But it's not just about response times; it's also about the conditions under which it can offer its services. Any of Movistar's offers must pass the so-called "replicability" test , which means they must be analyzed by the CNMC to ensure they don't cause a "margin squeeze." In other words, Telefónica's offers must be priced so that its rivals can replicate them using Telefónica's wholesale prices.

If the price or promotion Telefónica wants to launch is low, the CNMC may consider that price unreplicable by its rivals and would not authorize it. This mechanism makes the full liberalization of fiber optics very commercially important for Telefónica in terms of retention. When a customer from one telco wants to switch to another and initiates a portability program , the operator that loses the customer may attempt to retain them before the portability is completed with an attractive retention offer. But Telefónica's retention offers must also pass the replicability filter, which limits its ability to respond to a campaign by rivals targeting its user base.

Therefore, if the liberalization is approved, Telefónica will be able to be more aggressive and agile in its retention offers , and this will likely translate into fewer customer losses.

The deregulation of the fiber market has been taking place in phases, although the fact that Telefónica has voluntarily signed commercial agreements with its main rivals, such as Masorange, Digi, and Vodafone, for many years has lessened the market impact of this measure.

Phases

In the first stage, in February 2016, the CNMC (National Commission for the Promotion of Consumer Protection) ruled that there was sufficient competition in the Spanish market in a group of 66 cities—the largest—and therefore liberalized those areas. This meant that Telefónica was no longer required to lease its fiber optic network—already deployed through competition, primarily since 2012—in municipalities that accounted for 35% of the population. The existence of commercial agreements allowed these operators to continue to have access to Telefónica's networks in the liberalized areas.

The second phase of liberalization took place in October 2021, following a market review. The CNMC decided that there was already sufficient competition in 696 cities , ten times more than the previous time. This meant that the liberalized market increased from 35% to 70% of the Spanish population. This regulation is still in force and will be repealed with the CNMC's recent decision.