Dear mr. De Kleijn,

OPTA, afdeling Interconnectie en bijzondere toegang T.a.v. de heer H.R. de Kleijn

Postbus 90420 2509 LK Den Haag.

Amsterdam, 25 februari 2002 Re: OPTA/IBT/2002/2000027

Dear mr. De Kleijn,

In addition to the “Response to OPTA Consultation Document on Interconnecting Leased Lines”, a combined contribution from Energis, COLT, WorldCom and Versatel, Versatel wants to clarify its different opinion on the recommended method to use for setting tariffs.

The method to use for setting tariffs for interconnection and special access services is depending on the market it is dealing with and the phase this market is in.

As Opta in its Document of April 13

2001 stated: in identifying the relevant cost base the type and characteristics of a certain market segment need to be taken into account. In general terms BU-LRIC seems the right method in market segments where there is no freedom of choice whatsoever. Telco terminating is a clear example of a service for which users (retail and wholesale) have no choice. For areas where there is a choice it depends on the level of choice and the phase the market is in (how much impact will upcoming competition have on prices in the future) what the most effective method for tariff setting is.

Versatel believes that it is not right to state that in the segment of access networks there is no competition whatsoever at this moment in the Netherlands. Versatel for one has

invested heavily in both DSL (2Mb and subrates) and fiber rings (34 Mb and up). Clearly with these investments Versatel can’t fulfill all access requirements for its customers but it can offer a substantial part of access based on its own infrastructure for which Versatel has made large investments. It would not be the right way forward to disregard these investments done by Versatel and other OLO’s and to go for a method as if no

investments are done at all. The principle of BU LRIC disregards these investments and

is therefore not the right way for all segments of the access services market.

In addition to this it needs mentioning that OPTA has clearly chosen EDC as the method to be used for tariff regulation for ULL services, which are the basic building blocks for DSL based services. It would lead to a very strange situation when basic ingredients, which are essential facilities for OLO’s and for which OLO’s don’t have any other choice than to buy this from the incumbent (Loops, colo space etc) are regulated based on EDC whereas the services that are build on top of these building blocks, and are providing competition, would be regulated based on BU LRIC. This regulation would very likely create a price squeeze for DSL services. This will be highly unfavorable for operators that have invested in DSL based on ULL.

Versatel agrees with Energis, Colt and Worldcom on the principle of regulating tariffs for ILL’s but Versatel believes that BU LRIC must be applied in market segments were there is no choice. In areas where there is choice and OLO’s have been encouraged to invest, the applied method for tariff regulation must sufficiently keep their interests in mind.

Again in order to create fair competition, next to the choice of the method to regulate tariffs it is of the utmost importance that all players can deal with the same level playing field. This means that the incumbent’s retail tariffs must be based on the regulated wholesale tariffs in a transparent way. In this respect we would like to point out that recent developments in the (A)DSL based VPN- market with KPN’s product E-pacity show that this level playing field could very well get under severe pressure. Iin E-pacity KPN is able to offer DSL based VPN services based on a large footprint of DSL in the Netherlands and KPN will complete this footprint with low cost leased lines (for which it grants itself huge discounts). There is no OLO in the Netherlands that can compete against that offer. We would like to urge OPTA to pay full attention to this before damage is done and the market has signed long term contracts with KPN.

With kind regards,

Versatel Nederland BV

Marc van der Heijden Chief Regulatory Officer

CC. Energis, Ellen Koopmans

WorldCom; Rob Roosendaal

COLT, Paul van Straaten