A4-0334/95

Resolution on the draft Commission Directive amending Commission Directive 90/388/EEC regarding the implementation of full competition in telecommunications markets (C(95)1843 - C4-0415/95)

The European Parliament,

- having regard to the draft Commission Directive (C(95)1843 - C4-0415/95),

- having regard to Article 90 of the EC Treaty,

- having regard to its resolutions of 7 April 1995 ((OJ C 109, 1.5.1995, p. 310.)) and 19 May 1995 ((OJ C 151, 19.6.1995, p. 479.)) on the Green Paper on the liberalization of telecommunications infrastructure and cable television networks

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy (A4-0334/95),

A. whereas by means of this draft Directive the Commission is acting on its Green Paper, on which Parliament has had an opportunity to make a general favourable assessment,

B. whereas the Commission has not incorporated into its draft Directive a number of elements from the Green Paper the importance of which was stressed by Parliament, and in particular the need for universal service to be financed by all operators,

C. whereas the opening up of the European telecommunications market must not benefit enterprises from third countries unless those countries provide equivalent opportunities for European suppliers,

1. Welcomes the draft Commission Directive in terms of both the principle behind it and its objectives;

2. Points out, however, that the Article 90(3) procedure, while warranted as a means of preventing regulatory barriers to competition, is not intended as a substitute for legislative instruments provided for by the EC Treaty, and in particular Article 100a thereof, in order to determine the rules by which an economic sector of the Union operates;

3. Takes the view in particular that the provisions of the projected Directive must apply without prejudice to future Community legislation on the organization of telecommunications activities in the Union, and in particular on the creation of a European telecommunications authority, on the awarding of licences, on interconnection and interoperability, on the rules applicable to universal service and on those concerning numbering and directory services;

4. Stresses therefore the need to make sure that the Member States do not adopt new national legislation, in particular with regard to numbering, cost accounting and universal service funding, which is likely to make it more difficult to introduce future Community legislation;

5. Points out that transparency is essential as regards both the conditions for granting licences and the procedures by which new telecommunications network and services operators make use of their right of interconnection;

6. Rejects any exceptions to the opening up of the telecommunications market in a given Member State which are not clearly justified by the need to carry out structural adjustments;

7. Stresses that open markets and equality of competition must be compatible with the requirement made of all operators for an apportionment of costs on a social basis and an equivalent service level for citizens in different regions and for different groups of citizens;

8. Believes therefore that the following modifications must be made to the draft Commission Directive:

(Modification 1)

Recital 2

>Original text>

(2) Subsequent to the public consultation organized by the Commission in 1992 on the situation in the telecommunications sector3, the Council unanimously called for the liberalization of all public voice telephony services by 1 January 1998, subject to additional transition periods of up to five years to allow Member States with less developed networks, i.e. Spain, Ireland, Greece and Portugal, to achieve the necessary adjustments, in particular tariff adjustments. Moreover, very small networks should according to the Council also be granted an adjustment period of up to two years1 where so justified. The Council subsequently unanimously recognized that the provision of telecommunications infrastructure should also be liberalized by 1 January 1998, subject to the same transition periods as agreed by the liberalization of voice telephony.2 Furthermore, the Council established basic guidelines for the future regulatory environment.3

>Text following EP vote>

Deleted

>Original text>

3 Following the Communication by the Commission of 21 October 1992 'on the 1992 Review of the situation in the telecommunications sector' (SEC(92) 1048).

1 Council Resolution of 22 July 1993 on the review of the situation in the telecommunications sector and the need for further development in that market (OJ No C 213, 6.8.1993, p. 1).

2 Council Resolution of 22 December 1994 on the principles and timetable for the liberalization of telecommunications infrastructures (OJ No C 379, 31.12.1994, p. 4).

3 Council Resolution of ... July 1995 on the future regulatory framework in telecommunications (OJ No C..., ... 1995, p...).

(Modification 2)

Recital 4, first paragraph

>Original text>

(4) In 1990, the Commission, however, granted a temporary exception under Article 90(2) in respect of exclusive and special rights for the provision of voice telephony, since the financial resources for the development of the network still derived mainly from the operation of the telephony service and the opening-up of that service could, at that time, threaten the financial stability of the telecommunications organizations and obstruct the performance of the task of general economic interest assigned to them, consisting in the provision and exploitation of a universal network, i.e. one having general geographic coverage, and that connection to it is being provided to any service provider or user upon request within a reasonable period of time. The Council has in the meantime unanimously recognized that there are less restrictive means than the granting of special or exclusive rights to ensure this task of general economic interest.

>Text following EP vote>

(4) In 1990, the Commission, however, granted a temporary exception under Article 90(2) in respect of exclusive and special rights for the provision of voice telephony, since the financial resources for the development of the network still derived mainly from the operation of the telephony service and the opening-up of that service could, at that time, threaten the financial stability of the telecommunications organizations and obstruct the performance of the task of general economic interest assigned to them, consisting in the provision and exploitation of a universal network, i.e. one having general geographic coverage, and that connection to it is being provided to any service provider or user upon request within a reasonable period of time. However, there are less restrictive means than the granting of special or exclusive rights to ensure this task of general economic interest.

(Modification 3)

Recital 5

>Original text>

(5) For these reasons, and in accordance with the Council resolutions of 22 July 1993 and of 22 December 1994, the continuation of the exception granted with respect to voice telephony is no longer justified. The exception granted by Directive 90/388/EEC should be ended and the Directive, including the definitions used, amended accordingly. In order to allow telecommunications organizations to complete their preparation for competition and in particular the necessary rebalancing of tariffs, Member States may continue the current special and exclusive rights regarding the provision of voice telephony until 1 January 1988. As called for in the Council resolutions of 22 July 1993 and of 22 December 1994, Member States with less developed networks and with very small networks shall be granted, upon request, additional transitional periods of up to five and two years respectively in order to achieve the necessary structural adjustments. The Member States which may request such an exception are Spain, Ireland, Greece and Portugal with regard to less-developed networks and Luxembourg with regard to very small networks.

>Text following EP vote>

(5) For these reasons, the continuation of the exception granted with respect to voice telephony is no longer justified. The exception granted by Directive 90/388/EEC should be ended and the Directive, including the definitions used, amended accordingly. In order to allow telecommunications organizations to complete their preparation for competition and in particular the necessary rebalancing of tariffs, Member States may continue the current special and exclusive rights regarding the provision of voice telephony until 1 January 1988. Member States with less developed networks must be eligible for a temporary exception where this is warranted by the need to carry out structural adjustments and strictly only to the extent necessary for those adjustments.

(Modification 4)

Recital 10

>Original text>

(10) Newly authorized voice telephony providers will only be able to compete effectively with the current telecommunications organizations, if they are granted adequate numbers to allocate to their customers. Moreover, where numbers are allocated by the current telecommunications organizations, the latter are likely to reserve the best numbers for themselves and to give their competitors insufficient numbers or numbers which are certainly less attractive, for example because of their length. By maintaining such power in the hands of their telecommunications organizations Member States would therefore induce the former to abuse their power on the market for voice telephony and infringe Article 90 in conjunction with Article 86 of the Treaty.

>Text following EP vote>

(10) Newly authorized voice telephony providers will only be able to compete effectively with the current telecommunications organizations, if they are granted adequate numbers to allocate to their customers and if subscribers can keep their call number where it is necessary for them to do so, whatever their supplier, and, at all events, a solution providing continuity is ensured. Moreover, where numbers are allocated by the current telecommunications organizations, the latter are likely to reserve the best numbers for themselves and to give their competitors insufficient numbers or numbers which are certainly less attractive, for example because of their length. By maintaining such power in the hands of their telecommunications organizations Member States would therefore induce the former to abuse their power on the market for voice telephony and infringe Article 90 in conjunction with Article 86 of the Treaty.

>Original text>

Consequently, the establishment and administration of the national numbering plan should be entrusted to a body independent from the telecommunications organization, and a procedure for the allocation of numbers should, where required, be drafted, which is based on objective criteria, is transparent and without discriminatory effects.

>Text following EP vote>

Consequently, the establishment and administration of the national numbering plan should be entrusted to a body independent from the telecommunications organization, and a procedure for the allocation of numbers should, where required, be drafted, which is based on objective criteria, is transparent and without discriminatory effects and which neither prevents nor hampers the portability of numbers.

(Modification 5)

Recital 11, second paragraph

>Original text>

Such competitive safeguards should cover firstly the requirement of the telecommunications organizations to publish standard terms and conditions for interconnection to their voice telephony networks offered to the public, including interconnection price lists and access points, no later than six months before the actual date of liberalization of voice telephony and telecommunications transmission capacity. Such standard offers should be sufficiently unbundled to allow the new entrants to purchase only those elements of the interconnection offer they actually need. They may further not discriminate on the basis of the origin of the calls and/or the networks.

>Text following EP vote>

Such competitive safeguards should cover firstly the requirement of the telecommunications organizations to publish standard terms and conditions for interconnection to their voice telephony networks offered to the public, including interconnection price lists and access points, no later than six months before the actual date of liberalization of voice telephony and telecommunications transmission capacity. Such standard offers should be sufficiently unbundled to allow the new entrants to make sure that the rates applied reasonably reflect the effective cost of providing the interconnection service and do not include elements which are not relevant. They may further not discriminate on the basis of the origin of the calls and/or the networks.

(Modification 6)

Recital 11, third paragraph

>Original text>

These standard terms and conditions should be maintained during the time period required to allow the emergence of effective competition. Experience shows that a time period of at least five years from the date of the abolition of the special or exclusive rights for the provision of voice telephony is reasonable.

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Deleted

(Modification 7)

Recital 12, first paragraph

>Original text>

(12) Moreover in order to allow the monitoring of interconnection obligations under competition law, the cost accounting system implemented with regard to the provision of voice telephony and telecommunications networks should clearly identify the cost elements relevant for pricing interconnection offerings, and in particular for each element of the interconnection offered, the basis for that cost element (embedded direct costs, marginal costs or stand alone costs). Such cost accounting should further allow adequate monitoring such that the telecommunications organization may be prevented from charging itself less that the lowest charge it offers to a competitor, even where this might be justified by objective cost differentials.

>Text following EP vote>

(12) Moreover in order to allow the monitoring of interconnection obligations under competition law, the cost accounting system implemented with regard to the provision of voice telephony and telecommunications networks should clearly identify the cost elements relevant for pricing interconnection offerings and in particular for each element of the interconnection offered, the basis for that cost element, in order to ensure that this pricing does not include elements which are not relevant. Such cost accounting should further allow adequate monitoring such that the telecommunications organization may be prevented from charging itself less that the lowest charge it offers to a competitor, unless this is justified by objective cost differentials.

(Modification 8)

Recital 13

>Original text>

(13) The obligation to publish standard charges and interconnect conditions is without prejudice to the negotiation of special or tailor-made agreements for a particular combination or use of unbundled public switched telephony network components and/or the granting of discounts for particular service providers or large users where these are justified.

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(13) The obligation to publish standard charges and interconnect conditions is without prejudice to the negotiation of special or tailor-made agreements for a particular combination or use of unbundled public switched telephony network components and/or the granting of discounts for particular service providers or large users where these are justified and non-discriminatory.

(Modification 9)

Recital 13a (new)

>Text following EP vote>

(13a) Each operator must be responsible for tariffs and for routing its clients' traffic up to the interconnection point of its choice.

(Modification 10)

Recital 16, second paragraph

>Original text>

Financing schemes disproportionately burdening new entrants and accordingly strengthening the dominant position of the telecommunications organizations would be in breach of Article 90 in conjunction with Article 86 of the Treaty. Whichever financing scheme they decide to implement, Member States should ensure that only providers of public telecommunications services and networks contribute to the provision and/or financing of universal service obligations and that the method of allocation amongst them is based on objective and non- discriminatory criteria and is in accordance with the principle of proportionality. According to this principle, it could be justified to exempt new entrants which have not yet achieved any significant market presence.

>Text following EP vote>

Whichever financing scheme they decide to implement, Member States should ensure that all providers of public telecommunications services and networks contribute to the provision and/or financing of universal service obligations and that the method of allocation amongst them is based on objective and non-discriminatory criteria and is in accordance with the principle of proportionality.

(Modification 11)

Recital 17

>Original text>

(17) The tariff structure of voice telephony provided by the telecommunications organizations in certain Member States is currently still out of line with cost. Certain categories of calls are provided at a loss and are cross-subsidized out of the profits from other categories. Artificially low prices, however, impede competition since potential competitors have no incentive to enter into the relevant segment of the voice telephony market and are contrary to Article 86 of the Treaty, as long as they are not justified under Article 90(2) as regards specific identified end-users or groups of end-users. Member States should lift all unjustified restrictions on tariff rebalancing by the telecommunications organizations and in particular those preventing the adaptation of rates which are not in line with costs and increase the burden of universal service provision.

>Text following EP vote>

(17) The tariff structure of voice telephony provided by the telecommunications organizations in certain Member States is currently still out of line with cost. Certain categories of calls are provided at a loss and are cross-subsidized out of the profits from other categories. Artificially low prices, however, impede competition since potential competitors have no incentive to enter into the relevant segment of the voice telephony market and are contrary to Article 86 of the Treaty, as long as they are not justified under Article 90(2) as regards specific identified end-users or groups of end-users. Member States should lift all unjustified restrictions on tariff rebalancing by the telecommunications organizations and in particular those preventing the adaptation of rates which are not in line with costs and increase the burden of universal service provision. Pending such rebalancing, and where this is justified, the proportion of costs insufficiently covered by the tariff structure should be reapportioned fairly among all users.

(Modification 12)

Recital 18, second paragraph

>Original text>

The Commission shall review the situation in Member States where a system of supplementary charges is applied five years after the introduction of full competition, to ascertain whether these financing schemes do not lead to situations which are incompatible with Community law.

>Text following EP vote>

The Commission shall review the situation in Member States where a system of supplementary charges is applied to ascertain whether these financing schemes do not lead to situations which are incompatible with Community law.

(Modification 13)

Recital 19, third paragraph

>Original text>

Where essential requirements would oppose the granting of similar rights of way to new entrants, Member States should at least ensure that the latter have, where it is technically feasible, access, on reasonable terms, to the existing ducts or poles, of the telecommunications organization, where these facilities are necessary to roll out their network. In the absence of such requirements the telecommunications organizations would be induced to limit access by their competitors to these essential facilities and thus abuse their dominant position. A failure to adopt such requirements would therefore be contrary to Article 90 in conjunction with Article 86.

>Text following EP vote>

In many instances, essential requirements with regard to ecology or town planning would oppose the granting of similar rights of way to new entrants and Member States should guarantee that the latter, if they do not provide their own infrastructure, have access, on reasonable terms, to the existing ducts or poles of the telecommunications organization wherever these facilities are necessary to roll out their network. In the absence of such requirements the telecommunications organizations would be induced to limit access by their competitors to these essential facilities and thus abuse their dominant position. A failure to adopt such requirements would therefore be contrary to Article 90 in conjunction with Article 86.

(Modification 14)

Recital 22, second paragraph

>Original text>

In order to take account of the specific situation in Member States with less developed networks and in Member States with very small networks, the Commission shall grant, upon request, additional transitional periods as set out above.

>Text following EP vote>

Deleted

(Modification 15)

Recital 23

>Original text>

(23) The abolition of exclusive and special rights on the establishment of new telecommunications networks would have less effect if Member States were not allowing connection of terminal equipment to these new networks. If Member States decide to impose type approval to such terminal equipment, they should notify to the Commission the specifications drafted according to Council Directive 83/189/EEC. In this case, Member States should take the necessary measures to avoid that delays in the adoption of such new specifications are delaying market entry. As provided for in Article 3 of Directive 88/301/EEC, as regards equipment to be connected to the current public networks, Member States should not restrict the connection of such equipment to the new networks authorized, except where they can demonstrate that such equipment does not comply with an essential requirement, mentioned in Article 4 of Directive 91/263/EEC.

>Text following EP vote>

(23) The abolition of exclusive and special rights on the establishment of new telecommunications networks would have less effect if Member States were not allowing connection of terminal equipment to these new networks. If Member States decide to impose type approval to such terminal equipment, they should notify to the Commission the specifications drafted according to Council Directive 83/189/EEC. In this case, Member States should take the necessary measures to avoid that delays in the adoption of such new specifications are delaying market entry. As provided for in Article 3 of Directive 88/301/EEC, as regards equipment to be connected to the current public networks, Member States should guarantee the connection of such equipment, and in particular prevent telecommunications organizations from restricting their connection, to the new networks authorized, except where they can demonstrate that such equipment does not comply with an essential requirement, mentioned in Article 4 of Directive 91/263/EEC.

(Modification 16)

Recital 25

>Original text>

(25) The establishment of procedures at national level concerning licensing, interconnection, universal service, numbering and rights of way is without prejudice to the harmonization of the latter by a European Parliament and Council Directive, in particular in the framework of open network provision (ONP).

>Text following EP vote>

(25) The establishment of procedures at national level concerning licensing, interconnection, universal service, numbering and rights of way is simply provisional, pending harmonization of the latter by appropriate European Parliament and Council legislative instruments, in particular in the framework of open network provision (ONP).

(Modification 17)

ARTICLE 1(2)

Article 2(1)(b) (Directive 90/388/EEC)

>Original text>

(b) special rights which limit to two or more the number of undertakings authorized to supply such telecommunications services or such networks, otherwise than according to objective, proportional and non-discriminatory criteria; and

>Text following EP vote>

(b) special rights which, apart from in the case of essential requirements, limit the number of undertakings authorized to supply such telecommunications services or such networks or, where such essential requirements exist, limit the number or nature of undertakings authorized otherwise than according to objective, proportional and non-discriminatory criteria; and

(Modification 18)

ARTICLE 1(4)

Article 3B, third paragraph a (Directive 90/388/EEC)

>Original text>

Member States shall ensure before 1 July 1997 that adequate numbers are available for all telecommunications services. They shall ensure that numbers are allocated in an objective, non-discriminatory, proportionate and transparent manner.

>Text following EP vote>

Member States shall ensure before 1 July 1997 that adequate numbers are available for all telecommunications services. They shall ensure that numbers are allocated in an objective, non-discriminatory, proportionate and transparent manner. The numbering system shall ensure that, where a subscriber changes service provider, the information on his new number is communicated for a sufficient period to parties seeking to contact him under his old number and that, should he so desire, he may keep the same call number in return for a reasonable contribution to the cost of transferring his number.

(Modification 19)

ARTICLE 1(7)

Article 4(a)(1) (Directive 90/388/EEC)

>Original text>

1. Without prejudice to future harmonization of the national interconnection regimes by the European Parliament and the Council in the framework of ONP, Member States shall ensure that the telecommunications organizations provide interconnection to their voice telephony service and their switched telecommunications network to other undertakings authorized to provide such service or networks, on non-discriminatory, proportional and transparent terms, as set out in Annex, and which are based on objective criteria.

>Text following EP vote>

1. Without prejudice to future harmonization of the national interconnection regimes by the European Parliament and the Council in the framework of ONP, Member States shall ensure that the telecommunications organizations provide interconnection to their voice telephony service and their switched telecommunications network to other undertakings authorized to provide such service or networks, on non-discriminatory, proportional and transparent terms, as set out in Annex, and which are based on objective criteria. All public telecommunications network operators having essential resources for which competitors do not have economic alternatives shall provide open and non- discriminatory access to those resources, giving public notification of the interconnection terms.

(Modification 20)

ARTICLE 1(7)

Article 4(a)(5) (Directive 90/388/EEC)

>Original text>

5. The measures provided for in this Article shall apply for a period of five years from the date of the effective abolition of the special and exclusive rights for the provision of voice telephony granted to the telecommunications organization. The Commission shall, however, review the present Article if the European Parliament and the Council adopt a Directive harmonizing interconnection conditions before the end of this period.

>Text following EP vote>

5. The measures provided for in this Article shall apply for a period of two years from the date of the effective abolition of the special and exclusive rights for the provision of voice telephony granted to the telecommunications organization. The Commission shall, however, review the present Article if the European Parliament and the Council adopt a Directive harmonizing interconnection conditions before the end of this period.

(Modification 21)

ARTICLE 1(7)

Article 4(c), first paragraph (a) (Directive 90/388/EEC)

>Original text>

(a) only apply to undertakings providing voice telephony or public telecommunications networks;

>Text following EP vote>

(a) apply to all undertakings providing telecommunications networks;

(Modification 22)

ARTICLE 1(7)

Article 4(c), penultimate paragraph (Directive 90/388/EEC)

>Original text>

Member States shall allow their telecommunications organizations to re-balance tariffs and, in particular, to adapt rates which are not in line with costs and which increase the burden of universal service provision.

>Text following EP vote>

Member States shall allow their telecommunications organizations to lay down tariffs in the light of market conditions, in particular with a view to moving closer to a tariff structure based on real costs.

(Modification 23)

ARTICLE 1(7)

Article 4(e) (Directive 90/388/EEC)

>Original text>

As regards the requirements set out in Articles 2(3), 3 and 4(a) (1) to (3), Member States with less developed networks shall be granted upon request an additional implementation period of up to five years and Member States with very small networks shall be granted upon request an additional implementation period of up to two years, in order to achieve the necessary structural adjustments.

>Text following EP vote>

Member States with less developed networks may request an additional implementation period of up to five years in order to implement all or some of the requirements set out in Articles 2(3), 3 and 4(a) (1) to (3) of this Directive, where this is justified by the need to carry out structural adjustments. Requests shall include a detailed descriptions of the projected adjustments and a precise assessment of the projected timetable for carrying them out. They shall be notified to any interested party upon request.

>Text following EP vote>

The Commission shall assess such requests and shall take a duly reasoned decision within three months on the principle, scope and maximum duration of the period granted.

(Modification 24)

ARTICLE 3(2)

>Original text>

2. As regards the requirements set out in paragraph 1 of this Article, Member States with less developed networks shall be granted upon request an additional implementation period of up to five years and Member States with very small networks shall be granted upon request an additional implementation period of up to two years, in order to achieve the necessary structural adjustments.

>Text following EP vote>

2. Member States with less developed networks may request an additional implementation period of up to five years in order to implement all or some of the requirements set out in paragaph 1 of this Article of this Directive, where this is justified by the need to carry out structural adjustments. Requests shall include a detailed description of the projected adjustments and a precise assessment of the projected timetable for carrying them out. They shall be notified to any interested party upon request.

>Text following EP vote>

The Commission shall assess such requests and shall take a duly reasoned decision within three months on the principle, scope and maximum duration of the period granted.

(Modification 25)

ARTICLE 4

>Original text>

Where Member States decide to adopt type-approval specifications for terminal equipment intended for connection to new public telecommunications networks authorized under the present Directive, they shall notify these specifications in draft form to the Commission in accordance with Directive 83/189/EEC.

>Text following EP vote>

Member States may only adopt type-approval specifications for terminal equipment intended for connection to new public telecommunications networks authorized under the present Directive on the basis of the essential requirements set out in Article 4 of Directive 91/263/EEC. They shall notify these specifications in draft form to the Commission in accordance with Directive 83/189/EEC.

>Original text>

In the absence of such specifications, Member States shall not refuse to allow terminal equipment to be connected to such new public networks and brought into service, except in the cases where they demonstrate that this terminal equipment does not comply with an essential requirement under Article 4 of Directive 91/263/EEC.

>Text following EP vote>

In the absence of such specifications, Member States shall guarantee the right to connect terminal equipment to such new public networks and to bring it into service, except in the cases where they demonstrate that this terminal equipment does not comply with an essential requirement under Article 4 of Directive 91/263/EEC.

9. Approves the draft Commission directive, subject to Parliament's amendments;

10. Calls on the Commission to notify Parliament should it intend to depart from the text approved by Parliament;

11. Instructs its President to forward this opinion to the Commission and Council.