Opinion on the Green Paper on the liberalization of telecommunications infrastructure and cable television networks - Part II

(95/C 301/09)

In its letter of 30 January 1995 the Commission decided to consult the Economic and Social Committee in accordance with Article 198 of the Treaty establishing the European Community, on the Green Paper on the liberalization of telecommunications infrastructure and cable television networks - Part II.

The Section for Transport and Communications, which was responsible for the Committee's work on the subject, adopted its Opinion on 10 July 1995. The Rapporteur was Mr von Schwerin.

At its 328th Plenary Session (meeting of 13 September 1995), the Economic and Social Committee adopted the following Opinion by a large majority, with two votes against and five abstentions.

1. Introduction

1.1. The Green Paper was born out of the Council Resolution of 22 July 1993 on the review of the situation in the telecommunications sector. This Resolution states that future policy on telecommunications infrastructure will be adopted on the basis of a wide-ranging consultation procedure following publication of the Green Paper.

1.2. The Green Paper incorporates the conclusions of the Corfu European Council of 24 and 25 July 1994 on the report on Europe and the global information society by a group of leading industrialists under the chairmanship of Commissioner Bangemann. This report calls for the on-going process of liberalization of the telecommunications sector to be accelerated by opening up to competition infrastructures and services still in the monopoly area.

1.3. The Commission adopted Part I of its Green Paper on the liberalization of telecommunications infrastructure and cable television networks on 25 October 1994. In that document the Commission laid down the general principles and timetable for action which are to form the basis for consultation on the development of a common approach to infrastructure in the European Union.

1.4. A Council Resolution of 22 December 1994 laid down the principles and the timetable for liberalization of telecommunications infrastructure, according to which full liberalization of network infrastructure is to be carried out by 1 January 1998. This includes the additional transition periods for certain Member States under the terms of the Council Directive of 22 July 1993.

1.5. With the publication by the Commission of Part II of its Green Paper on the liberalization of telecommunications infrastructure and cable television networks, the time has come for a broad discussion with all interested parties of the major issues involved in the future regulation of network infrastructure.

1.6. Thus Parts I and II of the Green Paper in combination constitute the beginning of a process to formulate a strategy in the Union on infrastructure, which is a prerequisite for the broadening of the liberalization process beyond voice telephony to encompass the whole telecommunications sector.

2. The Commission Green Paper

2.1. General comments

2.1.1. The ESC recognizes the importance of the Green Paper, which puts forward the framework and timetable for future regulation of network infrastructure in the European Union and launches a wide-ranging consultation in accordance with the Council Resolution of 22 December 1994 (94/C 379/03). The ESC emphasizes that a clear regulatory framework and timetable is essential so that all players in the sector, including both traditional and new investors, can plan ahead. In line with the outcome of the G7 Ministerial Conference on the information society, the Committee emphasizes that, when creating the legal framework, customers must come first and the framework must be constructed in such a way as to allow choice, high-quality services and affordable prices.

2.1.2. The ESC acknowledges the objective set by the Commission in the Green Paper, which is to create a clear and predictable regulatory environment in order to ensure:

- the completion of the internal market for telecommunications by stimulating the development of both basic and advanced infrastructures in the Union;

- the provision of efficient and cost effective telecommunications services in Europe for the benefit of business, customers and citizens;

- the stimulation of growth, innovation and public and private sector investment, thereby contributing to employment and cohesion in a social Europe.

2.1.3. The Green Paper covers the following topics:

I. Introduction and objectives;

II. The approach chosen and the scope;

III. The current situation;

IV. The major drivers for change;

IV. Universal service;

VI. Employment, societal and cultural issues;

VII. The extension of the principles of the European Union's telecommunications policy to infrastructure;

VIII. Future development of the regulatory framework to meet the challenges of convergence;

IX. Issues for consultation and Annexes (including studies carried out in preparation for the Green Paper and a list of key regulatory measures and pending proposals).

2.1.4. The major challenges and positions/measures set out in the Green Paper are summarized under eleven headings in chapter VII.

1. General principles;

2. Exclusive and special rights over infrastructure;

3. Licence award procedures, selection criteria and the conditions which may be attached to licences for infrastructure;

4. Interconnection and interoperability;

5. Open access to public infrastructure - application of the competition rules and ONP principles;

6. Safeguarding and developing universal service in a competitive environment;

7. The particular circumstances of peripheral regions with less developed networks;

8. Competitive safeguards;

9. The international dimension - international trade in telecommunications services;

10. Access to rights of way, numbers, frequencies, and directory services;

11. Action in neighbouring fields.

The ESC focuses on these and the proposed timeframe in its specific comments.

3. Specific comments

3.1. The proposed removal of special and exclusive rights over the use of infrastructure for the provision of telecommunications services is based on the two-stage approach outlined in the Green Paper.

Stage 1: The immediate removal of existing restrictions on the provision of own or alternative infrastructure (for the distribution of satellite communications, mobile communications and fixed-network telecommunications already liberalized, including cable television networks).

Fixed-network telecommunications already liberalized include voice telephony and data processing services as part of a corporate network for closed user groups, in addition to non-voice services. On this point, the ESC is concerned that, by 1998, new service providers could seize large market shares, in the absence of any market regulation, through liberal interpretation of the term 'closed user groups'. This could lead to premature undermining of the network monopoly even before then, with the telecommunications organizations suffering substantial losses of income. Such premature liberalization does not give telecommunications organizations in the Member States the chance to adapt to the new market conditions. Particular account should be taken of the differing level and pace of development in the various Member States. Furthermore, premature moves towards liberalization may disrupt development of an overall concept, making it difficult to adapt when a regulatory framework is implemented.

Stage 2: Stage 2 deals with licensed service providers for voice telephony using new and existing infrastructure. This market will be liberalized with the aid of measures which are based on the Green Paper Part II. Stage 2 is assessed below.

3.2. Maintaining, developing and financing a universal service are key factors in the future development of telecommunications in the Community. The ESC regrets that the Council Resolution of 7 February 1994 on universal service principles in the telecommunications sector is not adequately reflected in the Green Paper. The Green Paper proposes access for all users to a 'minimum service' of specified quality at an affordable price where heed is also taken of persons with physical disabilities.

The Committee feels that limiting such a service to voice telephony and narrow-band infrastructure will not do justice to future developments. The feeling is that users expect a comprehensive universal service which meets their needs and which is to evolve further as technology advances.

In the Committee's view, the road towards the information society will be characterized primarily by new technologies and services in the multimedia field. This lends further weight to the view that arrangements must be made to provide equal opportunities for all users and fair access to modern information and communication services, first and foremost by making broad-band infrastructure available.

The Committee endorses the proposal that transparent plans specifying the cost and financing of the universal service obligation must be drawn up. However, the Committee has some reservations regarding the proposed methods for determining the cost of the universal service. The financing cannot be based solely on the net cost of providing services to uneconomic customers and the provision of public telephones, emergency services and other social obligations. When competition is introduced, adequate allowance must be made not only for the cost of maintaining networks (operating costs) but also for the cost of investment in future developments involving network and equipment modernization and expansion. These costs must be apportioned as equitably as possible by the operators and service providers. In particular, the Commission must not wait until January 1996 before taking a decision on the principles and financing of universal service; these must be submitted in the near future.

3.3. On the subject of interconnection and interoperability the Green Paper mentions the need for a specific Directive on interconnection and a framework for ONP (open network provision) applicability. On the application of ONP conditions, see the ESC Opinion of 31 May 1995 (CES 582/95).

3.4. On the question of licensing, the Green Paper sets out the principles of licence award procedures and selection criteria for the award of licences. The Committee feels that restricting the number of licences is justified because of technical limitations. Apart from that, licences may be restricted in number on the basis of the essential requirements and, in the case of networks intended for the general public, on the basis of public service requirements in the form of trade regulations. The ESC endorses the statement that licensing conditions which are based on objective grounds must be transparent and non-discriminatory and that the principle of proportionality must be respected. It also feels that the licensing procedures must be unbureaucratic.

3.5. In order to ensure fair competition and full implementation of competition rules, it is of prime importance to bring about an orderly transition from the present monopolies to a competitive market, regardless of whether these are private or public undertakings in accordance with Article 222 of the Treaty. This is the only way to prevent abuse of the market and to ensure that suppliers do not carry the burden alone. It is also important that companies in protected monopoly sectors (energy, other local monopoly sectors) do not cross-subsidize their activities in the telecommunications sector by using income from these monopolies. The Committee feels that it is essential to introduce some kind of control mechanism here.

The regulatory conditions laid down according to objective, non-discriminatory and transparent criteria must be binding on all future network operators in the interests of equal opportunities and viable competition.

3.6. The Committee endorses the points made in the Green Paper on access to rights of way, frequencies and numbering. In the case of rights of way, the Committee notes that in order to introduce competition into the market for infrastructure provision, the Member States must ensure that telecommunications organizations are subject to the same conditions as their competitors.

3.7. The Committee welcomes the action in neighbouring fields (data protection, audiovisual, media and IPRs) proposed in the Green Paper.

3.8. The societal and social impact of further liberalization is extremely important. However, 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.

A package of measures is required to accompany the ongoing transition to an information society. This involves both training existing employees and exploring every avenue for providing continuing employment. It should also draw on the experience gained and programmes implemented in the steel and shipbuilding sectors. Such measures should be initiated and funded both at European and national level. The ESC endorses the Green Paper's reference to the need for retraining and redeployment of employees as the traditional telecommunications sector adapts to a competitive environment.

The ESC also welcomes the Commission's proposal to set in motion a comprehensive action programme to investigate potential health hazards associated with the proliferation of fixed and wireless infrastructures and to accelerate the preparation of necessary safety standards.

3.9. On the global approach to infrastructure and ensuring fair access to third country markets the Committee notes that the European Union must also see to it that priority is given to upholding the principle of reciprocity with third countries, especially with trading partners who have restrictions built into their legal frameworks. It is the Committee's view that this should be more than just an overall objective - there must be some form of guarantee ensuring comparable and effective market access with clear definitions and reciprocity conditions in return for access to the European market. As long as this objective is not achieved, it is important that the Union reserves the right to impose the same conditions as those currently prevailing in the markets of third countries with regard to market access and licensing.

3.10. The Committee welcomes the fact that the Commission is looking beyond the immediate moves towards liberalization of telecommunications infrastructure and is launching a debate on the development post 1998 of the regulatory framework, which will bring about technological and economic convergence.

3.11. The Committee is pleased to see that the Commission takes account of the international dimension of the information society's establishment and seeks to find multilateral solutions. In the Committee's view, it is important for the future of the information society that liberalization is based on a realistic timescale, is carried out in a responsible manner and gives due consideration to the various interests involved.

4. Conclusions

4.1. The Committee recognizes that liberalization of telecommunications infrastructure is extremely important if Europe is to continue to modernize economically and socially. Creating the regulatory framework will also have a decisive influence on the viability of competition, the ability of the European economy to innovate, the range of services upstream and downstream in the telecommunications field, the securing of jobs and the development of living and working conditions.

4.2. Liberalized markets must be regulated in social, economic and technical terms in order to prevent undesirable developments. Such regulation involves a comprehensive universal service which takes account of the development of society in Europe. The funding must be assured.

4.3. The Committee feels that the interests of citizens must take priority alongside technical and commercial interests. For workers, work and training, as well as decent working conditions, form the basis of an information society which is both progressive and underpinned with social provision. This is the only way that a modern and progressive telecommunications policy will find broad acceptance in Europe, and that Europe's economic position will be strengthened in future.

4.4. The Committee feels that the Commission should set up a panel of experts to examine the effects of liberalization on the employment situation, with the purpose of cataloguing the social consequences and proposing solutions. If similar studies are being conducted elsewhere in the Commission, they should be made available to this panel of experts.

4.5. The ESC considers that on such an important issue the Commission is urged to ensure as broad a debate as possible by issuing a draft Directive under Article 100a of the Treaty.

4.6. Since Part II was published and the Committee started work, the Commission has issued many papers, amendments and statements on its future actions.

Some of the Commission's intentions forestall actions called for in the Committee's Opinion. The Committee has not had an opportunity to consider the effects of the Commission action but hopes it will be able to do so shortly.

Done at Brussels, 13 September 1995.

The President

of the Economic and Social Committee

Carlos FERRER