1995L0051 — EN — 01.01.1996 — 000.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COMMISSION DIRECTIVE 95/51/EC
of 18 October 1995
amending Directive 90/388/EEC with regard to the abolition of the restrictions on the use of cable
television networks for the provision of already liberalized telecommunications services
(OJ L 256, 26.10.1995, p. 49)
Corrected by:
►C1Corrigendum, OJ L 308, 29.11.1996, p. 59 (95/51)
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999
should be understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
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COMMISSION DIRECTIVE 95/51/EC
of 18 October 1995
amending Directive 90/388/EEC with regard to the abolition of the
restrictions on the use of cable television networks for the provision
of already liberalized telecommunications services
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Community, andin particular Article 90 (3) thereof,
Whereas:
(1)Under Commission Directive 90/388/EEC of 28 June 1990 on
competition in the markets for telecommunications services(1), as
amended by Directive 94/46/EC (2), certain telecommunications
services were opened to competition, and the Member Stateswere requested to take the measures necessary to ensure that anyoperator was entitled to supply such services; as far as voicetelephony services to the general public are concerned, theCouncil Resolution of 22 July 1993 (
3) acknowledges that this
exception can be terminated by 1 January 1998, with a trans-itional period for some Member States; the telex service, mobilecommunications and radio and television broadcasting to thepublic were specifically excluded from the scope of theDirective; satellite communications were included in the scope ofthe Directive through Directive 94/46/EC.
During the public consultation organized by the Commission in
1992 on the situation in the telecommunications sector, followingthe Communication of the Commission of 21 October 1992, theeffectiveness of the measures liberalizing the telecommunicationssector and in particular the liberalization of data communications,value added services and the provision of data and voice servicesto corporate users and closed user groups, was questioned bymany service providers and users of such services.
(2)The regulatory restrictions preventing the use of alternative infra-structure for the provision of liberalized services, and in partic-ular the restrictions on the use of cable TV networks, are themain cause of this continuing bottleneck situation. Potentialservice providers must now rely on transmission capacity —‘leased lines' — provided by the telecommunications organ-izations, which are often also competitors in the area of liberal-ized services. To remedy this problem, the European Parliament,in its Resolution of 20 April 1993 (
4), called upon the Commis-
sion to adopt as soon as possible the necessary measures to takefull advantage of the potential of the existing infrastructure ofcable networks for telecommunications services and to abolishwithout delay the existing restrictions in the Member States onthe use of cable networks for non-reserved services.
(3)Following that resolution the Commission completed two studieson the use of cable TV networks and alternative infrastructuresfor the delivery of those telecommunications services which havealready been opened to competition under Community law: ‘Theeffects of liberalization of satellite infrastructure on the corporateand closed user group market',Analysis, 1994 and ‘L’impact del’autorisation de la fourniture de services de télécommunicationslibéralisés par les câblo-opérateurs' by Idate, 1994. The basicfindings of those studies emphasize the potential role for,amongst other things, cable TV networks, in meeting theconcerns raised about the relatively slow pace of innovation and
(1) OJ No L 192, 24. 7. 1990, p. 10.
(2) OJ No L 268, 19. 10. 1994, p. 15.
(3) OJ No C 213, 6. 8. 1993, p. 1.
(4) OJ No C 150, 31. 5. 1993, p. 39.
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delayed development of liberalized services in the European
Community. Opening such networks would help to overcome theproblems of high pricing levels and lack of suitable capacity,which are largely due to current exclusive provision of infrastruc-ture in most Member States. The networks operated by author-ized cable TV providers indeed offer opportunities for the supplyof an increasing number of services, apart from TV broadcasts, ifadditional investment is forthcoming. The example of the USmarket shows that new services combining image and telecom-munications emerge when certain regulatory barriers areremoved.
(4)Some Member States have therefore abolished previous restric-tions on the provision of some data services and/or non-reservedtelephone services on cable TV networks. One Member Statepermits voice telephony. Other Member States have, however,maintained severe restrictions on the provision of services otherthan the distribution of TV broadcasts on those networks.
(5)The current restrictions imposed by Member States on the use ofcable TV networks for the provision of services other than thedistribution of TV broadcasts aim to prevent the provision ofpublic voice telephony by means of networks other than thepublic switched telephone network, to protect the main source ofrevenue of the telecommunications organizations.
Exclusive rights to provide public voice telephony were granted
to most of the telecommunications organizations of theCommunity, to guarantee them the financial resources necessaryfor the provision and exploitation of a universal network, that isto say, one having general geographical coverage and provided toany service provider or user upon request within a reasonableperiod of time.
(6)Since those restrictions on the use of cable TV networks arebrought about by State measures and seek, in each of the nationalmarkets where they exist, to favour telecommunications organ-izations, which the Member States own or to which they havegranted special or exclusive rights, the restrictions must beassessed under Article 90 (1) of the EC Treaty. This Articlerequires Member States not to enact or maintain in force anymeasures regarding such undertakings which defeat the object ofTreaty provisions, and in particular of the competition rules. Itincludes a prohibition on maintaining measures regarding tele-communications organizations which result in limiting the freeprovision of services within the Community or lead to abuses ofa dominant position to the detriment of the users of a givenservice.
(7)The granting of exclusive rights to the telecommunicationsorganizations to provide transmission capacity for the provisionof telecommunications services to the public and the consequentregulatory restrictions on the use of cable TV networks forpurposes other than the distribution of radio and television broad-casting programmes, in particular, for new services such as inter-active television and video on demand as well as multimedia-services in the Community, which otherwise cannot be provided,necessarily limits the freedom to provide such services to or fromother Member States. Such regulatory restrictions cannot be justi-fied for public policy reasons or in terms of essential require-ments, since the latter, and in particular the essential requirementof interworking networks wherever cable TV networks and tele-communications networks are interconnected, can be guaranteedby less restrictive measures, such as objective, non-discrimina-tory and transparent declaration or licensing conditions.
(8)The measures granting exclusive rights to the telecommunica-tions organizations for the provision of transmission capacity andthe consequent regulatory restrictions on the use of cable TVinfrastructure for the provision of other telecommunicationsservices already open to competition are therefore a breach ofArticle 90, read in conjunction with Article 59 of the Treaty. The
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fact that the restrictions apply without distinction to all compa-
nies other than the relevant telecommunications organizations isnot sufficient to remove the preferential treatment of the latterfrom the scope of Article 59 of the Treaty. Indeed it is notnecessary for all the companies of a Member State to be favouredin relation to the foreign companies. It is sufficient that thepreferential treatment should benefit certain national operators.
(9)Article 86 of the Treaty prohibits as incompatible with thecommon market any conduct by one or more undertakingsholding dominant positions that constitutes an abuse of a domi-nant position within the common market or a substantial part ofit.
(10)In each relevant national market the telecommunications organ-izations hold a dominant position for the provision of transmis-sion capacity for telecommunications services because they arethe only ones with a public telecommunications network coveringthe whole territory of those States. Another factor in this domi-nant position concerns the peculiar characteristics of the marketand in particular its highly capital-intensive nature. Takingaccount of the amount of investment needed to duplicate anetwork, there is a high reliance on use of existing networks.This enhances the structural dominance of the relevant telecom-munications organizations and constitutes a potential barrier toentry. Thirdly, as a result of their market share, the telecommuni-cations organizations further benefit from detailed information ontelecommunications flows which is not available to new entrants.It includes information on subscribers’ usage patterns, necessaryto target specific groups of users, and on price elasticities ofdemand in each market segment and region of the country.Finally, the fact that the relevant telecommunications organ-izations enjoy exclusive rights for the provision of voicetelephony also contributes to their dominance in the neigh-bouring, but distinct, market for telecommunications capacity.
(11)The mere creation of a dominant position within a given marketthrough the grant of an exclusive right is not, as such, incompat-ible with Article 86. A Member State is, however, not allowed tomaintain a legal monopoly where the relevant undertaking iscompelled or induced to abuse its dominant position in a way thatis liable to affect trade between Member States.
(12)The prohibition of the use of other infrastructure, and in partic-ular CATV networks, for the provision of telecommunicationsservices has encouraged the telecommunications organizations tocharge high prices in comparison with prices in other countries,whereas innovation in European corporate networking andcompetitive service provision as well as the implementation ofapplications proposed in the ‘Report on Europe and the globalinformation society',are critically dependent on the availability ofinfrastructure, in particular of leased circuits at decreasing costs.Tariffs for such high-capacity infrastructure are on average 10times higher in the Community than equivalent capacity overequivalent distances in North America. In the absence of a justifi-cation, in the form of (for example) higher costs, these tariffsmust be considered abusive within the meaning of point (a) of thesecond paragraph of Article 86.
Those high prices in the Community are a direct consequence of
the restrictions imposed by Member States on the use of infra-structures other than those of the telecommunications organ-izations, and in particular of those of the cable TV operators, forthe provision of telecommunications services. Such high pricescannot only be explained by the underlying costs, given thesubstantial differences in tariffs between Member States wheresimilar cost structures could be expected.
(13)Moreover, the State measures preventing the CATV operatorsfrom offering transmission capacity in competition with the tele-communications organizations for the provision of liberalizedservices restrict the overall supply of capacity in the market and
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eliminate incentives for telecommunications organizations to
quickly increase the capacity of their networks, to reduce averagecosts and to lower tariffs. The resulting high tariffs charged bythe telecommunications organizations for, and the shortage of,the basic infrastructure provided by these organizations overwhich liberalized services might be offered by third parties havedelayed widespread development of high-speed corporatenetworks, remote accessing of databases by both business andresidential users and the deployment of innovative services suchas telebanking, distance learning, computer-aided marketing, etc.(See communication to the European Parliament and the Councilof 25 October 1994 ‘Green Paper on the liberalization of tele-communications infrastructure and cable television networks:Part One'). The networks of the telecommunications organ-izations currently fail to meet all potential market demand fortransmission capacity for the provision of these telecommunica-tions services, as emphasized by users and suppliers of suchservices (‘Communication to the Council and the EuropeanParliament on the consultation on the review of the situation inthe telecommunications sector'of 28April 1993, page 5, point 2;the findings made during the review thus showed that the mereobligation to provide leased lines on demand was not sufficient toavoid restrictions on access to the markets in telecommunicationsservices and limits on user’s freedom of choice).
The current restrictions on the use of CATV networks for the
provision of such services therefore create a situation in whichthe mere exercise by the telecommunications organization oftheir exclusive right to provide transmission capacity for publictelecommunications services limits, within the meaning of point(b) of the second paragraph of Article 86 of the Treaty, theemergence of, inter alia , new applications such as pay per view,
interactive television and video on demand as well as multi-media-services in the Community, combining both audio-visualand telecommunications, which often cannot adequately beprovided on the networks of the telecommunications organ-izations.
On the other hand, given the restrictions on the number of
services which they may offer, cable TV operators often postponeinvestments in their networks and in particular the introduction ofoptical-fibre which could be profitable if they were to be spreadover a larger number of services provided. Consequently, restric-tions on the use of cable TV networks to provide services otherthan broadcasting also have the effect of delaying the develop-ment of new telecommunications and multimedia services, andthus holding back technical progress in this area.
(14)Lastly, as was recalled by the Court of Justice of the EuropeanCommunities in its Judgment of 19 March 1991 in Case C-202/88, France v. Commission (
1), a system of undistorted
competition, as laid down in the Treaty, can be guaranteed only ifequality of opportunity is secured between the various economicoperators. Reserving to one undertaking which markets telecom-munications services the task of supplying the indispensable rawmaterial — transmission capacity — to all companies offeringtelecommunications services proved, however, tantamount toconferring upon it the power to determine at will which servicecould be offered by its competitors, at which costs and in whichtime periods, and to monitor their clients and the traffic generatedby its competitors, thereby putting that undertaking at an obviousadvantage over its competitors.
(15)The exclusive rights granted to the telecommunications organ-ization to provide transmission capacity for telecommunicationsservices to the public and the resulting restrictions on the use ofcable TV networks for the provision of liberalized services are
(1) [1991] ECR I-1271, paragraph 51.
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therefore incompatible with Article 90 (1) in conjunction with
Article 86 of the Treaty. Article 90 (2) of the Treaty provides foran exception to Article 86 in cases where the application of thelatter would obstruct the performance, in law or in fact, of theparticular tasks assigned to the telecommunications organizations.Pursuant to that provision, the Commission investigated theimpact of liberalizing the use of the cable networks for theprovision of telecommunications and multimedia services.
Pursuant to Directive 90/388/EEC, Member States may until a
certain date continue to reserve the provision of voice telephonyto their national telecommunications organization so as to guar-antee sufficient revenues for the establishment of a universaltelephone network. Voice telephony is defined in Article 1 ofDirective 90/388/EEC as the commercial provision for the publicof the direct transport and switching of speech in real timebetween public switched network termination points, enablingany user to use equipment connected to such a network termina-tion point in order to communicate with another terminationpoint. Where cable TV networks are transformed into switchednetworks providing voice telephony to any subscriber, suchnetworks should likewise be considered to be public switchednetworks and their termination points as termination points ofsuch networks. The relevant voice service would then becomevoice telephony, which according to Article 2 of Directive 90/388/EEC could further be prohibited on cable TV networks bythe Member States.
It appears that such temporary prohibition of the provision of
voice telephony on the cable TV network can be justified on thesame grounds as for telecommunications networks. Converselywhere switched voice services for closed user groups, and/ortransparent transmission capacity in the form of leased lines, areprovided on cable TV networks, those networks do not representpublic switched networks and Member States should not restrictthe relevant services, even when they involve the use of oneconnection point with the public switched telephone network.
Besides the case of voice telephony, no other restrictions for the
provision of liberalized services is justified under Article 90 (2),particularly if regard is had to the small contribution made to theturnover of the telecommunications organizations by thoseservices, currently provided on their own networks, which couldbe diverted towards the cable TV networks. It is recalled that themeasures liberalizing the provision of voice telephony shouldtake into account the need to finance a universal serviceincluding any development in the concept, see point V.2 in theCommunication from the Commission to the Council and theEuropean Parliament of 3 May 1995.
(16)Notwithstanding the abolition of the current restrictions on theuse of cable TV networks, where the provision of services isconcerned, the same licensing or declaration procedures could belaid down as for the provision of the same services on the publictelecommunications networks.
(17)In addition, the distribution of audiovisual programmes intendedfor the general public via those networks, and the content of suchprogrammes, will continue to be subject to specific rules adoptedby Member States in accordance with Community law and is not,therefore, subject to the provisions of this Directive.
(18)Where Member States grant to the same undertaking the right toestablish both cable TV and telecommunications networks, theyput the undertaking in a situation whereby it has no incentive toattract users to the network best suited to the provision of therelevant service, as long as it has spare capacity on the othernetwork. In that case, the undertaking has, on the contrary, aninterest for overcharging for use of the cable infrastructure for theprovision of non-reserved services, in order to increase the trafficon their telecommunications networks. The introduction of faircompetition will often require specific measures that take into
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account the specific circumstances of the relevant markets. Given
the disparities between Member States, the national authoritiesare best able to assess which measures are the most appropriate,and in particular to judge whether a separation of the activities isindispensable. In early stages of liberalization, detailed control ofcross-subsidies and accounting transparency are essential. Toallow the monitoring of any improper behaviour, Member Statesshould therefore at least impose a clear separation of financialrecords between the two activities, though full structural separa-tion is preferable.
(19)In order to allow the monitoring of any improper cross-subsidiesbetween the broadcasting tasks of cable TV operators which areprovided under exclusive rights in a given franchise area andtheir business as providers of capacity for telecommunicationsservices, Member States should guarantee transparency as regardsthe use of resources from one activity which could be used toextend the dominant position to the other market. Given thecomplexity of the financial records of network providers, it isextremely difficult to detect cross-subsidies within it between thereserved activities and the services provided under competitiveconditions. It is thus necessary to require those cable TV opera-tors to keep separate financial records, and in particular to iden-tify separately costs and revenues associated with the provisionof the services supplied under their exclusive rights and thoseprovided under competitive conditions once they achieve asignificant turnover in telecommunications activities in thelicensed area. For the time being, a turnover of more than ECU50 million should be considered a significant turnover. Wheresuch a requirement would constitute an excessive burden on therelevant undertaking, Member States may grant deferments forlimited periods, subject to prior notification to the Commission ofthe underlying justifications.
The operators concerned should use an appropriate cost
accounting system which can be verified by accounting expertsand which ensures the production of recorded figures.
The above separation of accounts should, for this purpose at
least, apply the principles set out in Article 10 (2) of CouncilDirective 92/44/EEC of 5 June 1992 on the application of opennetwork provision to leased lines(
1), as amended by Commission
Decision 94/439/EC (2). Hybrid services, made up of elements
falling variously within the reserved and the competitive services,should distinguish between the costs of each element.
(20)In the event that, in the meantime, no competing home-deliverysystem is authorized by the relevant Member State, the Commis-sion will reconsider whether separation of accounts is sufficientto avoid improper practices and will assess whether such jointprovision does not result in a limitation of the potential supply oftransmission capacity at the expense of the services providers inthe relevant area, or whether further measures are warranted.
(21)Member States should refrain from introducing new measureswith the purpose or effect of jeopardizing the aim of thisDirective,
(1) OJ No L 165, 19. 6. 1992, p. 27.
(2) OJ No L 181, 15. 7. 1994, p. 40.
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HAS ADOPTED THIS DIRECTIVE:
Article 1
Directive 90/388/EEC is hereby amended as follows:
1. Article 1 (1) is amended as follows:
(a) the fifth indent is replaced by the following:
‘— “telecommunications services” means services whose provi-
sion consists wholly or partly in the transmission and/orrouting of signals on a telecommunications network.'
(b) the following is added after the last indent:
▼
C1
‘— “cable TV network” means any mainly wire-based infra-
structure approved by a Member State for delivery ordistribution of radio or television signals to the public.
▼
B
This Directive shall be without prejudice to the specific rules
adopted by the Member States in accordance with Communitylaw, governing the distribution of audiovisual programmesintended for the general public, and the content of suchprogrammes.'
2. In Article 4, the following is inserted after the second paragraph:
‘Member States shall:— abolish all restrictions on the supply of transmission capacity by
cable TV networks and allow the use of cable networks for theprovision of telecommunications services, other than voicetelephony;
— ensure that interconnection of cable TV networks with the public
telecommunications network is authorized for such purpose, inparticular interconnection with leased lines, and that the restric-tions on the direct interconnection of cable TV networks by cableTV operators are abolished.'
Article 2
When abolishing restrictions on the use of cable TV networks, Member
States shall take the necessary measures to ensure accounting transpar-ency and to prevent discriminatory behaviour, where an operator havingan exclusive right to provide public telecommunications network infra-structure also provides cable TV network infrastructure; and in partic-ular to ensure the separation of financial accounts as concerns theprovision of each network and its activity as provider of telecommuni-cation services.
Where an operator has an exclusive right to provide cable television
network infrastructure in a given area Member States shall also ensurethat the operator concerned keeps separate financial accounts regardingits activity as network capacity provider for telecommunicationspurposes as soon as it achieves a turnover of more than ECU 50 millionin the market for telecommunications services other than the distribu-tion of radio and broadcasting services in the relevant geographic area.Where such requirement would constitute an excessive burden on therelevant undertaking, Member States may grant deferments for limitedperiods, subject to prior notification to the Commission of the under-lying justification.
Where a single operator provides both networks or both services as
referred to in the first paragraph, the Commission shall, before 1January 1998, carry out an overall assessment of the impact of suchjoint provision in relation to the aims of this Directive.
Article 3
Member States shall supply to the Commission, not later than nine
months after this Directive has entered into force, such information as
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will allow the Commission to confirm that Articles 1 and 2 have beencomplied with.
Article 4
This Directive shall enter into force on 1 January 1996.
Article 5
This Directive is addressed to the Member States.