WORLD TRADE
ORGANIZATIONS/C/W/110/Add.5
21 June 1999
(99-2493)
Council for Trade in Services
Special Session on Telecommunications ServicesOriginal:  English
COMMUNICATION FROM THE EUROPEAN COMMUNITY
AND ITS MEMBER STATES
Implementation of Telecommunication Legislation
in the European Community
Addendum
A. THE EUROPEAN COMMUNITY APPROACH
1. The European Community's (EC) telecomm unications regulatory package provides a
comprehensive framework covering and complying with all the WTO commitments of the
European Communities and its Member States.
2. The EC telecommunications legislation mainly takes the form of directives . Over the ten-year
period 1988-97, the Community enacted an extensive package of telecommunications  legislation
designed to enable Europe to respond to the challenges of rapidly evolving and converging
technologies and the globalisation of the information economy. Adoption of the package by the
Council and European Parliament implied a radi cal restructuring of national telecommunications
legislation and markets.
3. Member States must ensure that the provisions of the Directives are applicable in their
territory by transposing them into national law, but they have flexibility in the means by which that is
done. The package has been extensively transposed by Member States and Member States
complying with the package also  fulfil their WTO obligations.
4. The responsibility for implementing and enfo rcing the EC regula tory framework for
telecommunications rests primarily with the Member States' national regulatory authorities
(NRAs).
5. There is in addition a strong mechanism at  Community level to ensure that national
transposition procedures are applied - the infringement procedure . If the Commission considers that
a Member State has not transposed, or has transposed wrongly, or has failed to apply a provision in a
Directive, it can begin infringement proceedings against that Member State under Article 226
(formerly Article 169) of the EC Treaty. This Article requires the Commission, after giving the
Member State concerned the opportunity to submit its observations, to issue a “reasoned opinion”. Ifthe Member State does not comply with that opinion the Commission may bring the matter before the
European Court of Justice, which can require the Member State to bring its national legislation into
line with its Community obligations. As a final resort, the Court can impose financial penalties.
6. Market players have an additional assurance: should Member States have failed to transpose,
the Court of Justice has held that the provisions of Community Directives are directly applicable inS/C/W/110/Add.5
Page 2
the legal systems of the Member States provided certain requirements as to precision and the
unconditional nature of the provisions in question are fulfilled.
B. KEY REGULATORY ISSUES
7. The following is an overview of the situation in the EC in respect of the key regulatory
issues under discussion by the CTS meeting , all of which are covered in the GATS Reference
Paper:
1. Independent regulatory bodies (Article 5 of the reference paper)
8. The regulatory package requires Member States to ensure that the national regulatory
authorities - which are primarily responsible for the implementation and enforcement of the EC
regulatory framework - are independent of organisations providing telecommunications networks
and/or services , and that where national governments reta in some degree of ownership or control
over such organisations, the regulatory function is structurally separate from activities associated withownership or control. NRAs are also responsible for dealing with disputes between operators or
between an operator and its customer, and complaints about the behaviour of a particular operator or
operators. In practice, NRAs should be the first port of call for any query about entering a national
market.
9. Since the proper functioning of the legislation relies on NRAs carrying out their tasks
effectively, Member States are required to ensure that NRAs have the resources to carry out
their tasks effectively .
10. NRAs have  begun operations in all Member States, and are co-operating and exchanging
information on a systematic basis with each other and with the Commission. While it is reasonable to
expect that they will require time to become fully effective, all have begun to implement the
principles laid down in the regulatory package .
2. Interconnection (Article 2)
11. The interconnection rules in the Community  aim at providing a common regulatory
framework by identifying the rights and obligations  of different market actors and providing NRAs
with the necessary powers to intervene in the essentially commercial and technical process ofnegotiating interconnection arrangements. The framework is set out in the service
1 and
interconnection2 Directives.
12. A significant number of interconnection agreements is already in place in the Community.
There is evidence that interconnection charges are beginning to converge on best practice charges,
thereby contributing to the level of service competition.
3. Universal service (Article 3)
13. The political importance of ensuring a defined level of service at an affordable price for all
users is widely recognised. The Community regulatory framework addresses the issue of universal
service by placing obligations on Member States which define the scope  of the defined level of
                                                     
1Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for
telecommunications services (OJ L 192, 24.07.1990, p. 10), as amended by Commission Directives 94/46/EC,95/51/EC, 96/2/EC and 96/19/EC.
2Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 (OJ L 199,
26.7.1997, p.32), as amended by Directive 98/61/EC of the European Parliament and of the Council of
24 September 1998 (OJ L 268, 3.10.1998, p. 37).S/C/W/110/Add.5
Page 3
service and which provide mechanisms  for sharing any costs associated with its provision amongst
market players, where this is considered necessary by the NRA.
14. Universal service is defined in general terms within Community legislation as a minimum set
of services  of specified quality which is available to all users independent of their geographical
location and, in the light of specific national circ umstances, at an affordable price. Under present
legislation, the precise elements to be included in this universal telephone service are contained in the
voice telephony Directive.3
15. In addition, the interconnection Directive4  provides the framework for the costing and
financing  of universal service.  The mandatory provision of these services may impose a cost on the
operator or operators who are designated by the NRAs as universal service provider for a certain area.
If NRAs felt that this cost outweighed the benefi ts of being universal service provider, and that it
therefore represented an unfair burden, there is provision in the legislation for NRAs to usemechanisms to share these costs among the various market players. It is significant that most of the
Member States which opened their markets to competition during 1998 have felt able to do so
without  activating a specific funding mechanism.
4. Competitive safeguards (Article 1)
16. Alongside the detailed sector-specific legislation referred to in the above paragraphs, national
and EC competition law also applies to telecommunications as to any other sector. If there is an effect
on trade between Member States, European competitio n law applies, in the form either of Article 81
of the EC Treaty (formerly Article 85) which prohibits “agreements between undertakings … which
may affect trade between Member States and which have as their object or effect the prevention,
restriction or distortion of competition within the common market”  or Article 82 (formerly Article 86)
which prohibits “abuse by one or more undertakings of a dominant position within the common
market or in a substantial part of it”.
17. Directorate-General IV of the European Commission is responsible for competition matters. It
has strong powers to investigate alleged breaches of competition law and to fine companies who are
found to have breached Articles 81 and/or 82.  Member States may also be found to be in breach ofthe Treaty if they cause the competition rules to be broken by their actions.
5  
18. Since a liberalised telecommunications market is a relatively new phenomenon, the European
Commission has published guidelines on the application of EC competition law in the
telecommunications sector6.  These guidelines seek to clarify the types of behaviours of
telecommunications operators likely to be caught by Articles 81 and 82 of the EC Treaty.
19. The Commission has also issued a notice on the application of competition rules to access
agreement7 (such as interconnection to the public switched telecommunications network). These
                                                     
3Directive 98/10/EC of the European Parliament and of the Council of 26 February 1998 on the
application of open network provision (ONP) to voice telephony and on universal service fortelecommunications in a competitive environment, OJ L101, 01.04.98, p. 24 (replacing European Parliamentand Council Directive 95/62/EC).
4See footnote 2
5Articles 10 (formerly 5) and 86 (formerly 90) of the Treaty establishing the European Community.
6 Commission Guidelines on the application of EEC competition rules in the telecommunications sector
(OJ C 233, 6.09.1991) http://europa.eu.int/comm/dg04/lawliber/en/91c2331.htm
7Commission Notice of 31 March 1998 on the app lication of the competition rules to access
agreements in the telecommunications sector (OJ C265, 22.8.1998, p.2)
http://europa.eu.int/comm/dg04/lawliber/en/acces.pdfS/C/W/110/Add.5
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agreements are vital if new entrant operators are to be able to reach end-users served exclusively by
the incumbent’s network. The Commission considered that this control which incumbents have over
access to end-users could prove a source of competition problems. The notice therefore sets out the
access principles which stem from EC competition law; defines the interplay between competition law
and the telecommunications  regulatory framework; and explains how the competition rules will be
applied in a consistent way across the various sectors involved.
C. OTHER IMPORTANT REGULATORY ISSUES
20. In addition, although not singled out for discussion at the CTS meeting, the following
regulatory issues covered by the reference paper are also being implemented in the Community.
1. Public availability of licensing criteria (Article 4)
21. Following the liberalisation of telecommunications  markets within the European
Community, most Member States continue to require a licence or authorisation from companieswishing to offer telecommunications services or operate networks in their territory. Attention at EC
level has focused on developing a common framework for these licences and for the procedures
according to which they are granted in order to facilitate the development of a single market in
telecommunications .
22. Licences are granted by Member States. The current legislation does not contain a mechanism
to grant licences at European level covering more than one Member State, though there are provisions
for the harmonisation of licensing conditions across the EC and the development of a one stop
shopping  procedure. Nevertheless, Member States are required to facilitate the provision of
telecommunications  services between Member States.
23. The EC framework envisages two approaches to licensing. Firstly, the use of general
authorisations, (e.g. statutory provisions, class licences) and, secondly, the use of an individual
licensing procedure – to be used only in certain prescribed cases.
24. The national frameworks  in place appear to be functioning well, with large numbers of new
players authorised to enter the market; and the procedures  being applied in practice conform broadly
to the requirements of the package.
2. Access to scarce resources: numbers, frequencies and rights of way (Article 6)
25. National frequency assignment and licensing is governed by Community legal principles.
Conditions governing access to frequencies, which is in most cases considered as a scarce resource,
should be objective, non-discriminatory, transparent, published and proportionate to the objective
sought.
26. One major principle of the Community regulatory framework is that there should be no
artificial limits on numbers of operators and service providers in the market. On a wire-basednetwork, there is no resource scarcity, and thus no need to restrict numbers of providers. However,
radio- and satellite-based communications use the radio spectrum to carry traffic. Since the spectrum
is a scarce resource which by its nature cannot meet the totality of demand for its use, its exploitation
must be rationed in some way. Numbers have traditionally also been seen as a scarce resource,
although there is a requirement for sufficient numbers to be made available to operators by NRAs, soscarcity of numbers should only now be an issue in relation to so-called golden numbers (numbers
which are particularly attractive, easy to remember, or have some other significance).S/C/W/110/Add.5
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27. The telecommunications  regulatory framework sets out basic principles for the allocation of
scarce resources. These are as follows:
• Responsibility for administration of scarce resources must rest with a body independent of
operators;
• Allocation of scarce resources must be carried out in a non-discriminatory, objective and
transparent manner;
• Any fees levied for the use of scarce resources must reflect the administrative costs of managing
the resource, except insofar as is justified in order to ensure optimal use of those resources, taking
into account to the need for non-discrimination, and the need to foster the development of
innovative services and competition.
28. In practice, operators do not appear to be squeezed due to lack of availability of numbers .
Carrier selection is operating at least partially in most Member States, while number portability has
been introduced ahead of schedule in some of them. As regards frequencies , all Member States have
issued at least two GSM  and one DCS 1800 licence . Network operators are granted the right to use
public ways  in virtually all Member States, although in some areas practical problems remain to be
addressed.
D. REPORTS ON THE IMPLEMENTATION OF THE TELECOMMUNICATIONS REGULATORY PACKAGE
29. A series of reports on the implementation of the telecommunications regulatory package
provide an overview of implementation in the Community. A fourth  and most recent report  follows
on from previous reports made in May and October 1997 and February 1998. It is part of a thoroughand ongoing process, endorsed by the Council and undertaken by the European Commission to ensure
compliance with internal EC obligations and WTO / GATS commitments
8.  A fifth report is in the
process of being prepared.
30. The first three reports made a detailed analysis of the transposition of directives, and
concluded that national measures are largely in place. The Fourth Report  complements this
assessment for four of the most recent Community directives (on Licensing9, Interconnection10, Voice
Telephone11, and Leased Line12). It focuses on the effective application of nationally transposed
measures, on the basis of series of indicators of compliance combined with market analysis. The
report sets out eight key themes  which are examined in detail to ensure that the way in which
national law is applied in practice  meets the objectives of the regulatory package:
• national regulatory authorities
• licensing
• interconnection
                                                     
8This report is available on http://www.ispo.cec.be/infosoc/telecompolicy/en/comm-en.html
9Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 (OJ L 117,
7.5.1997, p. 15).
10See footnote 2.
11See footnote 3
12Directive 92/44/EEC of the Council of 5 June 1992 (OJ L 165, 19.6.1992, p.27), as amended by
Directive 97/51/EC of the European Parliament and of the Council of 6 October 1997 (OJ L 295, 29.10.1997,
p. 23).S/C/W/110/Add.5
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• universal service
• tariffs
• numbering
• frequencies
• rights of way
31. The extent of market opening is analysed on the basis of comparative data relating to numbers
of authorisations to provide service; numbers of operators; tariffs; interconnection charges; numbers
of interconnection agreements; licence fees. This is backed by analysis of the situation in each
Member State in relation to each key theme.
32. The Fourth Report concludes that a fully liberalised single European
telecommunications market is now largely in place.
33. It is worth noting that a forthcoming " Users' guide " is intended to provide an overview of the
main provisions of the framework in a way which should help service providers, businesses and
citizens to find their way around the new telecommunications  landscape in Europe.
E. CONCLUSION
34. The WTO commitments of the EC and its Member States, including the additional
commitments of the Reference Paper, a re comprehensively covered by the EC's
telecommunications regulatory framework, and strong mechanisms exist at national and
Community level to ensure that this framework is fully implemented.
35. In addition, it should be noted that most of the directives forming the regulatory framework
contain specific articles which envisage a review of the regulatory framework to be completed by the
end of 1999. The 1999 Review will examine what prov isions of the regulatory framework need to be
adapted in the light of market developments (convergence), evolution of technology and changes in
consumer demand.
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