COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to the second subparagraph of Article 251 (2) of the EC Treaty concerning the common position of the Council on the adoption of a Directive of the European Parliament and of the Council on access to, and interconnection of, electronic communications networks and associated facilities

1. Background

The Commission adopted its proposal for a Directive COM(2000)384 final - 2000/0186 (COD) on 12 July 2000 [1].

[1] OJ C 365, 19.12.2000, p. 215.

This proposal was submitted to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions on 25 August 2000.

The Economic and Social Committee delivered its Opinion on 24 January 2001 [2].

[2] OJ C 123, 25.4.2001, p. 50.

The Committee of the Regions informed the Council and the European Parliament by letter of 16 February 2001 that it would not deliver an opinion on the subject.

The European Parliament delivered its Opinion at first reading under the co-decision procedure and adopted a legislative resolution approving the Commission's proposal subject to the amendments contained in that resolution and calling on the Commission to amend its proposal accordingly, on 1st March 2001 [3].

[3] OJ C

The Commission adopted its amended proposal incorporating in whole or in part many of the amendments voted for by the European Parliament in first reading, in accordance with Article 250 of the EC Treaty, on 4th July 2001 [4].

[4] OJ C

The Council, in accordance with Article 251 of the EC Treaty, adopted its common position on this proposal for a directive, on 17 September 2001 [5].

[5] OJ C

This Communication sets out the Commission's opinion on the common position of the Council, pursuant to Article 251 of the EC Treaty.

2. Aim of the Commission proposal

The Commission's proposal is part of the new proposed regulatory package for electronic communications networks and services and harmonises the way in which Member States regulate the market between suppliers of communication networks and services in the Community.

The Directive lays down a framework of rules that are technologically neutral, but which may be applied to specific product or service markets in particular geographical areas, to address identified market problems between suppliers of access and interconnection. This covers inter alia access to fixed and mobile networks, as well as access to digital broadcasting networks, including access to conditional systems and other associated facilities such as electronic programme guides (EPGs) and application programme interfaces (APIs). The Directive provides legal certainty for market players by establishing clear criteria on their rights and obligations (Articles 3 and 4) and for regulatory intervention (Article 5). It imposes limitations on what obligations concerning access and interconnection can be imposed in which circumstances, whilst at the same time allowing for sufficient flexibility to allow regulatory authorities to deal effectively with new market problems that hinder effective competition (Articles 6 to 13).

3. Commentary on the Common Position of the Council

3.1. Summary of the position of the Commission

The Commission welcomes the common position which takes on board many of the amendments proposed by the European Parliament at its first reading (and which the Commission accepted in its amended proposal). The Council common position remains close to the Commission's amended proposal, as regards both its structure and content. Many of the amendments introduced by the European Parliament, and adopted by the Commission in its amended proposal, in particular those that improve technical provisions and clarify the legal rights and obligations of undertakings on access and interconnection, as well as those providing more detailed criteria for the triggering of regulatory intervention, have been subsequently refined and retained by the Council in its common position.

The common position presents a proportionate compromise to the key requirements introduced by the Parliament and accepted by the Commission, with more refined provisions and flexible solutions than included in the amended proposal. Therefore, the Commission can fully endorse the Council common position with all changes made to its amended proposal by Council, and supports the rapid adoption of the Directive which is an essential part of the new regulatory framework of electronic communications networks and services in the Community.

3.2. Amendments adopted by the European Parliament on first reading

3.2.1. Amendments of the European Parliament

The European Parliament adopted at first reading 47 amendments to the initial proposal of the European Commission. As a result of the European Parliament's opinion, the Commission introduced many important amendments in its amended proposal.

In its amended proposal, the Commission incorporated 31 out of 47 of the European Parliament's amendments, either in full, in principle or in part: amendments 1, 6, 7, 8, 9, 12, 15, 16, 17, 18, 19, 21, 23, 24, 26, 28, 29, 30, 31, 32, 33, 34, 37, 38, 41, 42-43, 44, 45, 47 and 48.

3.2.2. Amendments of the European Parliament accepted by the Commission and included in the common position, in whole, in part or in substance

The following amendments, accepted by the Commission in its amended proposal, have been retained by the Council either fully, in principle or in part: amendments 1, 6, 7, 9, 12, 16, 19, 23, 24, 26, 29, 33, 34, 37, 38, 41, 42-43, 44, 45, 47 and 48.

Of the amendments that have been retained, there have been minimal or partial adjustments to some, whilst others have been significantly modified, although the underlying objective of the European Parliament's amendments has nevertheless been maintained. Substantive changes will be explained below.

3.2.3. Amendments of the European Parliament accepted by the Commission but not included in the common position

The following amendments were accepted in full, in principle or in part by the Commission in its amended proposal but not included by the Council in its common position: amendments 8, 15, 17, 18, 21, 28, 30, 31 and 32.

In part of amendment 17 in relation to Article 5 on the powers and responsibilities of the national regulatory authorities, the European Parliament demands the stipulation of the principle that 'In a competitive market, interconnection and access to networks shall in principle be agreed on the basis of commercial negotiation between undertakings concerned'. This was accepted by the Commission in its amended proposal. Although the Council indicated general support to this principle, Council decided not to include it in the article considering that it could give rise to some legal uncertainty in relation to the use by the national regulatory authority of other discretionary powers for the imposition of some other obligations on undertakings, regarding access or interconnection, that are beyond their mutual commercial interest (quality and integrity of services, obligations to co-locate to limit the environmental impact, etc). Instead, the Council has retained the reference to the principle of commercial negotiations on access and interconnection at recital 5.

In relation to amendment 8 that technically amends the definition of interconnection at Article 2(b), the Council preferred to retain the wording of the original Commission proposal considering that seemed to provide greater legal clarity.

In amendment 15 at Article 4(3), the European Parliament seeks to provide powers for national regulatory authorities to impose penalties for non-compliance with the respect of confidentiality of information received during or after the process of negotiating access or interconnection agreements between undertakings. This was accepted by the Commission in its amended proposal. However, Council considered that sanctions for non-compliance should be let discretionary to the Member State.

In amendment 18 also at Article 5, the European Parliament requires that where there is real competition in a specific market, national regulatory authorities should withdraw any ex ante obligations imposed upon operators in respect of that market. This was accepted by the Commission in its amended proposal. Council basically agrees with the application of this requirement that in fact should generally be the consequence of the market analysis procedure referred at Article 8 for the withdrawal of obligations. But Council also noted that the amendment could also give rise to legal uncertainty regarding other particular measures that the national regulatory authority may also impose on operators outside the market analysis procedure, in justified circumstances and in the general interest of users, e.g. to ensure the interoperability and integrity of services as included in new provisions of article 5(1) and 5(2) of the Council common position.

The Commission also accepted amendment 32 and last part of amendment 28 at Article 8 in relation to the imposition, amendment or withdrawal of obligations, requiring national regulatory authorities to consider the decision's impact on all undertakings present on the market and to make a quantitative data analysis. However Council considered this requirement to be covered by a broader formulation included in new provision of Article 8(4), based on amendment 29 of Parliament, that requires obligations to be based in accordance with the nature of the problem identified, and to be proportionate and justified in the light of the general policy objectives specified at Article 7 of Framework Directive.

Regarding amendment 31 on new provision at Article 8(3a) that requires an operator to provide adequate notice to other operators with interconnection and access arrangements in place before the withdrawal of an obligation, the Council considered it was already covered by Article 7(3).

Finally, the first part of amendment 30, that was accepted by the Commission in relation to the communication to the Commission of draft decisions being considered by national regulatory authorities, this was not accepted by Council for not being in conformity with the transparency procedure that Council agreed in the common position of Framework Directive. Also, amendment 21 that makes reference to the Commission to take action to extend access obligations beyond those listed in Annex II of the Directive, was not supported by the Council because such extension was considered premature and would prejudge the position of the Communications committee on this.

3.2.4. Differences between the Commission's amended proposal and the Council's common position

Recitals

Some of the recitals have been refined with minor changes and some others with new wording introduced to motivate new key provisions introduces in the common position (see below). In particular new wording has been introduced in recital 5 to explain the new provision of Article 5(1a), in recital 9 for new provision of Article 5(1b) and in new recital 10 to motivate the new provision of Article 6(3).

Chapter I - Scope, aim and definitions (Articles 1 and 2)

The Council has maintained the scope of the Directive but has refined some of the technical definitions. It should be noted that Council has introduced a definition of conditional access system for digital broadcasting services that complements the definition on associated facilities proposed by Parliament in amendment 9. Both definitions have been refined by Council for consistency and included at the Framework Directive for its general applicability across the regulatory package. Indeed, the definition of end-user has also been moved to Framework Directive.

Chapter II- General framework for regulating access and interconnection (Articles 3 to 5)

The Council has refined but basically maintained the underlying principles governing the regulation of undertakings on access and interconnection (Articles 3 and 4), and the powers and responsibilities of national regulatory authorities in this regard (Article 5).

The powers to intervene of the national regulatory authority have been reinforced. In particular a new provision at Article 5(1a) enables the national regulatory authority to impose, to the extend that is necessary to ensure end-to-end connectivity, obligations on undertakings that control access to end-users. In addition, a new provision at Article 5(1b) enables a Member State to permit its national regulatory authority to impose, to the extend that is necessary to ensure accessibility for end users to specified digital radio and television broadcasting services, obligations on operators of conditional access systems and other associated facilities to provide access to new gateways, such as electronic programme guides (EPGs) and application programme interfaces (APIs), on fair, reasonable and non-discriminatory terms. The obligations imposed by national regulatory authorities on those cases should be in conformity with the principles of objectivity, transparency and proportionality (referred in the new provision of Article 5(3)), and be implemented in accordance with the transparency procedure of Article 6 of Framework Directive.

Chapter III - Obligations on operators and market review procedures (Articles 6 to 13)

The Council has made some refinements to Articles 6 to 13 but it has basically maintained the scope of the obligations and procedures for the imposition to undertakings of obligations, when justified, on access and interconnection.

The Council has extended the scope and obligations of Article 6 in relation to conditional access for digital broadcasting that will also now cover digital radio services. This was a requirement included in part of amendment 19 of the Parliament.

The Council has refined and clarified key provisions of Article 8 in relation to the imposition, amendment or withdrawal of obligations, in particular with the reformulation of its paragraph 3, that now clearly stipulates that national regulatory authorities cannot impose the obligations set out in Articles 9 to 13 on operators that have not been designated as having significant market power on a specific market, unless otherwise necessary for the implementation of particular provisions under this or other directives of regulatory framework. The closed list of exceptions is referred at the first subparagraph of Article 8(3), thus ensuring legal certainty.

The Council has also introduced a new important procedure at Article 6(3) in relation to the review of obligations applicable to providers of conditional access systems for digital broadcasting services by which it may permit its national regulatory authority to assess, through the harmonised market analysis procedure included at Article 14 of Framework Directive, whether to withdraw or amend conditions for operators that do not have significant market power on the relevant market. Such withdrawal or amendment must not adversely affect access for end-users to such services or the prospects for effective competition, and the national regulatory authority must respect the transparency procedure of Article 6 of Framework Directive. This procedure allows a Member State to apply the harmonised market analysis approach, and possible obligations deriving from it, to any type of electronic communications service market including services for conditional access to digital TV broadcasting.

Chapter IV - Procedural provisions (Articles 14 to 19)

The task of the advisory committee has been added to the Committee procedure for the implementation of this Directive and included at Article 14(2). The review, transposition and entry into force procedures have been aligned with those in the Framework Directive.

4. Conclusion

In the Commission's view, the common position, which was adopted by unanimity, is an important step in the context of the creation of a new regulatory framework in the dynamic market of electronic communications networks and services. It reflects many of the key amendments of the European Parliament whilst remaining faithful to the structure and substance of the amended proposal of the Commission.

In conclusion, the Commission can fully endorse the common position of the Council.