Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Directive on a common framework for general authorizations - individual licences in the field of telecommunications services`

(96/C 204/06)

On 14 March 1996, the Council decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 10 April 1996. The Rapporteur was Mr Hernández Bataller.

At its 335th Plenary Session (meeting of 24 April 1996), the Economic and Social Committee adopted the following Opinion by 108 votes to 1 with 3 abstentions.

1. Introduction

1.1. The Commission earlier presented a Green Paper on the liberalization of telecommunications infrastructure and cable televisions networks (COM(94) 682 final). Among the questions discussed in it were licence award procedures, selection criteria and the conditions which may be attached to licences for infrastructure.

1.2. The Green Paper laid down a basic approach to: licensing infrastructure; licensing infrastructure and the position of services; licence award procedures; selection criteria for the award of licences and authorizations; the conditions which may be attached to licences for infrastructure, including public service requirements in the form of trade regulations, together with other aspects of licensing infrastructure such as duration, licence fees, changes of ownership, freeing telecommunications organizations from non telecommunications-related obligations, and promotion of competitive service provision.

1.3. On 3 May 1995 the Commission published a communication to the Council and the European Parliament concerning the consultation period for license award procedures, which drew a distinction between licences for infrastructures on the one hand and services on the other.

1.4. The ESC drew up an Opinion on the Green Paper () endorsing the Commission's objective of creating a clear and predictable regulatory environment, at the same time recognizing that the liberalization of telecommunications infrastructures is of central importance to Europe's continuing economic and social modernization.

1.5. The Council Resolution of 18 September 1995 on the implementation of the future regulatory framework recognizes as key factors in drawing up the future regulatory framework (i) the establishment of common principles for general authorization and individual licensing regimes in the Member States, based on categories of balanced rights and obligations (ii) the absence of any unjustified restrictions on market entry (iii) the implementation of objective, transparent and non-discriminatory award procedures and criteria, and (iv) the efficient management of essential resources, particularly frequencies, numbers and rights of way, to ensure the equitable treatment of the various market players, under the supervision of the competent national authorities.

2. The Commission proposal

2.1. The draft Directive aims to establish a common framework for national authorization regimes. Its main features are:

a) Prohibition of a priori limits on the number of authorizations for any category of telecommunications services or infrastructures, except to the extent required to ensure the efficient use of radio frequencies.

b) A distinction between general authorizations (granted in accordance with general regulations or law and not requiring individual prior authorization for market entry) and individual licences ('a priori` control required), with priority being given to general authorization rather than individual licences, in accordance with public interest requirements.

c) Definition of harmonized principles; provision of a harmonization mechanism for both authorization procedures and the conditions attached to such authorizations; and introduction of provisions to facilitate cross-border services.

d) The possibility for Member States not to make market entry dependent upon obtaining authorization.

3. General comments

3.1. The ESC welcomes the Commission proposal, and restates its view that licence award procedures should be as streamlined and straightforward as possible.

3.2. General and individual authorization procedures must comply with public interest and public service objectives.

3.2.1. The ESC supports the possibility of introducing specific conditions which may attach to authorizations granted to operators wishing to access public networks.

3.3. In any case, the categories of rights and obligations for authorizations must be balanced, without unnecessary obligations being imposed on new market operators.

3.4. The proposal should be based on the general principle that authorization - whether general or individual - is required: it would seem unreasonable for Member States to operate on the working principle of service provision without authorization in a sector of such strategic importance as telecommunications, except where this may be considered appropriate.

3.5. It should be clarified that authorizations, even when general, do not automatically include the provision of all types of telecommunications services, but only specified ones.

3.6. Given the complexity of some of the services covered by general authorizations, the time available to national regulatory authorities to check that operators are complying with the necessary conditions may be too short. Reasonable periods should therefore be set in line with the services involved.

3.7. The ESC also reiterates its view that citizens' interests should not come second to technical and commercial interests. For workers, employment and training, together with humane working conditions, represent the foundations of a progressive, but socially responsible, information society. Only thus will a modern, progressive communication policy and the strengthening of the European economy be broadly acceptable throughout Europe.

3.8. The Committee agrees in general with the Commission's line that services involving the use of scarce resources may be subject to individual licences, while others may be covered by general authorizations.

3.8.1. A distinction should, however, be made between services requiring connection to the telephone network and services which do not. All services which may be entitled to connection with the public network may be subject to individual licence procedures.

3.9. The Committee believes that the establishment of public service requirements in the form of trade regulations is necessary, provided that the conditions attached to licences (i) are consistent with Community legislation on the freedom of establishment and free movement of services (ii) ensure a high level of consumer protection, and (iii) comply with competition rules.

4. Specific comments

4.1. The provisions of Article 9(2) do not appear reasonable, since if it is established as a general principle that information on procedures for granting licences is to be published, Member States will be obliged to grant authorization before completing the procedure, unless duly explained reasons for making a temporary exception can be offered. Moreover, the period set is too short given the potential complexity of certain of the services involved.

4.2. The draft Directive provides that Member States must review the limit on the number of licences. It must be pointed out that this introduces an element of uncertainty to the market, for both licensees and potential new market players. Consequently, in the event that the number of new market players is reviewed, a set of conditions should be introduced to enable companies to respect plans based on earlier conditions.

4.2.1. Although the general principle espoused by the proposal is to ban a priori limitation of the number of licences, consideration should be given to such limitation where the creation of infrastructures is involved, especially where this entails the use of public property, since this may also constitute a scarce resource; neither would it appear sensible to permit insufficient investment which might lead to the collapse of the enterprises concerned, with all the ensuing social and economic consequences.

4.2.2. The Committee agrees with the Commission that it should be possible to attach specific conditions to individual licences, where justified and in accordance with the principle of proportionality, with respect to quality and service or network availability and permanence requirements, including financial, technical and management capacities, together with conditions which may set down a minimum operation duration.

4.3. The proposal stipulates that all existing authorizations must be brought into line with the Directive by 1 January 1999, although there may be a transition period. It is to be noted that the transition period must not be used to prolong a series of existing obligations upon certain operators, which could threaten commercial freedom and therefore be incompatible with a competitive market.

4.4. The Committee would therefore restate its position () (expressed in CES 970/95) that the societal and social impact of further liberalization is extremely important. More specifically:

'The Committee fears that creating jobs in the field of telecommunications, and possibly in other areas, will not make up for the job losses already suffered or now impending, especially among hitherto publicly-owned operators. Of course, there have also been job losses owing to technical progress and the use of new technologies. Harmonization and liberalization have to be balanced, among other things, to ensure, in the interests of employees, that further liberalization is socially acceptable.`

4.5. The proposal should guarantee equal treatment for the various market players, including a balanced set of rights and obligations for future licensees and providing freedom of opportunity for all businesses: it is essential that all companies enjoy the same freedom to trade.

4.5.1. One of the criteria for the application of obligations contained in the draft Directive is based on 'significant market power`, as also under the draft Directive on interconnection.

4.5.1.1. The reference to this criterion should be removed: existing competition regulations and case-law should serve instead.

4.5.1.2. The 'significant market power` criterion violates the principle of equal treatment, since it could lead to further obligations being imposed on certain organizations on account of their market share, which would be damaging to current operators' freedom and ability to compete. Such distinctions should be avoided in a competitive environment; licences should lay down a balanced set of rights and obligations for all operators, favouring neither established nor new market operators.

4.6. The bases on which the universal service is to be provided and the way in which it is to be financed are not clearly specified.

4.7. The right to connection with the telephone network is a factor of crucial importance in establishing the appropriate set of obligations. An authorization regime is therefore essential in order to verify accurately whether authorized companies satisfy the basic aims of the authorization, i.e. the obligations attached to the right to connection with the public network.

4.7.1. The obligations consequent upon connection to the public network should basically cover: providing a service to the general public; meeting the essential requirements; and accepting a series of transparency safeguards to protect competition in respect of the connection terms and conditions offered by newly-connected operators.

4.8. Although the definition of 'one-stop-shopping` in Article 2 already makes a reference to this aspect, it should be made clear that this procedure only applies to services which it is intended to provide in more than one Member State.

4.8.1. Moreover, the planned deadlines for the one-stop-shopping procedure should be established with reasonable regard to the complexity of the services to which the procedure may refer.

4.9. The Economic and Social Committee believes that a European regulatory body with full powers is required. The Commission should submit appropriate proposals.

4.10. The Commission proposal establishes an advisory European Union Telecommunications Committee (EUTC).

4.10.1. The Commission should more clearly define the measures it may adopt under Articles 13 and 17 of the proposal: firstly, concerning action by the European Union Telecommunications Committee, the solution put forward in Article 13 is unsatisfactory in that it refers to Article 17, which simply states summarily that the Commission may take measures, without specifying what these are or how they may be implemented.

4.10.2. Secondly, with reference to the procedures under Articles 13 and 17 of the proposal, if the EUTC already comprises a Commission representative, why should the EUTC not be given the direct authority to determine the measures to be taken, thereby streamlining the procedure?

Done at Brussels, 24 April 1996.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No C 301, 13. 11. 1995, p. 24.