Swisscom's Fiber Optic Expansion Under Investigation

Swiss telecoms provider Swisscom AG (SCMN.VX) said Tuesday that its joint venture agreements to extend the fiber-optic network in two areas of Switzerland are being examined by the country's competition authority amid concerns they could reduce competition for broadband internet access.

The Swiss Competition Commission, Comco, will investigate projects in Fribourg, western Switzerland and St Gallen in the north-east to see whether agreements signed by Swisscom with local utility providers could be anti-competitive. Comco, which has the power to delay work and demand contracts are renegotiated, said there were "indications" that the proposed creation of the Fribourg joint venture "established or strengthened a dominant position."

Swisscom entered into a joint venture with the canton of Fribourg and the west Switzerland-based electricity producer and distributor Groupe E, in autumn 2010.

Comco also said it is launching an investigation into the building of a fiber-optic network in the city of St Gallen, where Swisscom has signed a deal with the local utility provider. Comco has received complaints from the Swiss Cable Association, the body which represents cable TV operators in the country.

The regulator said it expects to reach a decision within four months.

The Fribourg and St Gallen projects are part of Swisscom's plans to spend CHF2 billion upgrading bandwidth for around a third of all Swiss households by 2015.

Similar projects are underway in Geneva, Zurich and Berne and Basel.

Rafael Corazza, general manager at Comco, said the regulator would also look at these other contracts.

"We will examine if they establish a restrictive or dominant positions. If this is so, we will look at fair remedies," he said.

Swisscom spokesman Carsten Roetz said work continued on the projects while the company awaited a decision. He said the company is confident that its fiber contracts are compliant with the law and do not exclude other market participants.

-By John Revill, Dow Jones Newswires; [phone] ; [e-mail]