Opinion on the draft Commission Directive amending Commission Directive 90/388/EEC regarding the implementation of full competition in telecommunications markets

(96/C 39/11)

On 28 September 1995 the Commission decided, under Article 198 of the Treaty, to consult the Economic and Social Committee on the above-mentioned draft Commission Directive.

The Section for Transport and Communications was instructed to draw up an Opinion on this subject; it set up a Study Group and appointed Mr Mobbs as Rapporteur.

At its 330th Plenary Section (meeting of 22 November 1995), the Economic and Social Committee appointed Mr Mobbs as Rapporteur-General and adopted the following Opinion unanimously.

1. Introduction

1.1. Commission Directive 90/388 (the Services Directive) of 28 June 1990 has been identified as crucial to the liberalization of the European telecommunications market.

1.2. Commission Directive 90/387 (the Open Network Provision Framework Directive) emphasized the importance of open and efficient access to and use of public telecommunications networks and services.

1.3. Council Resolution 93/C213/01 of 22 July 1993 supported the Commission's intention to prepare before 1 January 1996 the necessary amendments to the Community regulatory framework in order to achieve liberalization of all public voice telephony services by 1 January 1998.

1.4. In the run-up to full liberalization, various major milestones should have been achieved (not all as part of the original Services Directive and its subsequent amendments, but also by discrete legislative actions).

1.4.1. Opening up of telecommunication services other than voice telephony to competition (December 1990).

1.4.2. Establishing an independent body for granting licences and surveillance of usage conditions (July 1991).

1.4.3. Opening up simple resale capacity to competition (December 1992).

1.4.4. The application to voice telephony of open network-provision principles (COM(94) 689). A common position has been adopted ().

1.4.5. The use of alternative infrastructures for cable TV. Directive 95/51 amending Commission Directive 90/388 was adopted on 18 October 1995 and comes into force on 1 January 1996.

1.4.6. Commission proposal (SEC(95) 1352) amending Commission Directive 90/388 with regard to mobile and personal communications. This removes all special and exclusive rights from 1 January 1996. This is expected to be adopted before the end of this year. A Committee Opinion is being prepared for adoption.

1.4.7. Satellite communications (Commission amending Directive 94/46). This extends the Terminal Equipment Directive (Directive 88/301) to include satellite earth station equipment and extends the Services Directive to include satellite communications services.

1.4.8. Rebalancing of tariffs to establish efficient economic conditions for all operators and service providers, whilst ensuring the development of universal service.

1.4.9. Interconnection. A separate Commission proposal (COM(95) 379) has been submitted. Interconnection, including interoperability, is fundamental to the development of full competition and clear rules are needed to guarantee that new entrants are able to interconnect their facilities with those of existing telecommunication operators. A Committee Opinion is being prepared for early in the new year.

2. The main points of the Commission proposal

2.1. Removing of all restrictions on the provision of voice telephony services, by allowing use of existing telecommunications operators' networks which while subject to the requirement for open and transparent terms and conditions, respect service provider's confidentiality. Additionally allowing voice telephony services providers to use their own and/or any existing alternative infrastructures. Derogations are allowed for some Member States.

2.2. Permitting the use of alternative infrastructures for telecommunications services (e.g. rail, electricity and water), except voice telephony, from 1 January 1996.

2.3. Ensuring that new market entrants are not subjected to any terms and conditions more onerous than those granted or applicable to existing operators and service providers.

2.4. Permitting access to a defined minimum telecommunications service (of a specified quality) to all users everywhere at an affordable price.

2.5. Establishing safeguards to ensure interconnection and interoperability of networks and services so that users throughout the European Union will benefit from a fully competitive telecommunications market within a predictable and stable regulatory framework.

2.6. Entitling any operator to supply licensed services.

2.7. Requiring Member States to abolish all special and exclusive rights currently enjoyed by certain telecommunications' operators.

2.8. Requiring Member States, no later than 1 January 1997, to notify the Commission before implementation of any licensing or declaration procedure.

2.9. Requiring Member States, before 1 July 1997, to ensure that adequate numbers are available for all telecommunication services.

2.10. Requiring Member States to ensure that all exclusive rights with regard to the establishment of directory services on their territory are lifted.

3. General comments

3.1. The Commission's White Paper on Growth, Competitiveness and Employment referred to telecommunications networks as the 'life-blood of competitiveness'. The Committee agrees and is pleased that the Commission proposal for full liberalization is proceeding.

3.2. The Commission objective of achieving full liberalization in the field of telecommunications has been detailed for many years and originates in the 1987 Green Paper (COM(88) 48 final). The Commission aims to pursue a balanced policy of liberalization and harmonization which builds on the Commission Services Directive 90/388 and Council Directive 90/387 relating to open network provision.

3.3. As is made clear by the Commission communication (COM(95) 158) on 'the status and implementation of Directive 90/388/EEC on competition in markets for telecommunications services', the extent of liberalization in all the Member States varies considerably from one State to another and from one service to another.

3.3.1. Thus for those Member States that have extensively liberalized, the Commission proposals ought not cause many problems. In these cases it will be necessary to ensure that the Commission proposal does not upset existing satisfactory practices or impose unnecessary requirements. On the other hand some Member States will claim difficulties in meeting Commission proposals. To the extent that these difficulties are legitimate, they can be subject to derogation.

3.3.2. Concerning special and exclusive rights, the Committee would recall its Opinion of 31 May 1995 on voice telephony and in particular paragraph 2.2 ().

3.4. The Commission's proposals, especially with regard to implementation must respect subsidiarity. It is essential to avoid the imposition of burdensome mandatory requirements in Member States where there is already sufficient competition which should ensure against anti-competitive practices.

3.5. Since many similar Commission actions in the run-up to full telecommunications' liberalization are undertaken under an existing Article 90 Directive, it is inevitable that the current Commission proposal would follow in the same manner. The Commission's overall timetable, agreed by the Council, does not leave the Commission with much of an alternative if the 1 January 1998 deadline is to be kept.

3.5.1. Recourse to Article 90 is provided for under the Commission prerogative to ensure a proper balance of liberalization and harmonization measures in the area of telecommunications regulation policy (political agreement of 1989).

3.5.2. Because the Commission does not have to consult when using Article 90, the Committee is pleased to have been officially consulted. However the time allowed is not sufficient to enable full consideration to be given to such an important matter.

3.6. Other concerns include the need to enable fixed link operators to so order their business to rebalance their tariffs in order to avoid unfair 'cream skimming' by new operators, that is, taking the profitable customers without having to meet other service obligations which apply to fixed linked operators.

3.7. Despite the periods of notice that the Commission has given over the years, the Committee expresses its concern that competition in the market in telecommunications' services be developed in an orderly manner and with regard to social consequences.

3.8. In accordance with Article 7 of the Services Directive, the separation of the regulation of the telecommunications' sector from the operation of the national telecommunications' organizations by the establishment of National Regulatory Authorities (NRAs) is a key issue (and has not yet been fully achieved).

3.8.1. Unless all NRAs exist and operate to a common set of guidelines and there is an appeal procedure, there is little likelihood of common rules, regulations and practices being applied throughout the EU. Currently, in five Member States (according to the Commission) NRAs are not established and operating. If this is not corrected by 1 January 1998, then inequality, unfairness and potential anti-competitive practices will prevail. This is not acceptable.

3.9. In some Member States, competition is expected to come from new market entrants. Many of these will have to establish their organization and place in the market. Thus in the immediate future, the main new customers for the present telecommunication operators may well be the new services' providers. This will then produce new and additional revenues.

3.10. Technology development over the years means that old electro-mechanical exchanges with high maintenance requirements have disappeared or are disappearing. Such exchanges are now being replaced by new technologies which require much less maintenance. The social consequences of technology revolution must not be overlooked. It is understood that the Commission is working upon this and on a report on the consequences for employment as a result of liberalization in the telecommunications sector. This report is awaited with interest.

4. Specific comments on Article 1 of the proposal

4.1. The Commission is necessarily amending Directive 90/388 which has already been subject to a number of previous amendments. To avoid confusion and the risk of varying interpretations of the amended text, the Committee recommends that the Commission produces a consolidated text as a matter of urgency.

4.2. Article 1. Definitions

The definition of telecommunications' networks is very wide. Although some Member States may be uncomfortable with the width of the definition, the Committee is of the opinion that this is an inevitable part of the full introduction of competition.

4.3. Article 3. Licensing of voice telephony and public telecommunication networks

4.3.1. The publication of drafts of application, or authorization procedures will only work when the appropriate legal framework conditions are available in all Member States. As the conditions and particular circumstances of universal service 'obligation' (or opportunity) have not yet been fixed this may be difficult to enforce.

4.3.2. As to the limitation on the number of licences, care should be taken to avoid any a priori limitation. New licences should in fact be granted, as a result of an open and transparent procedure, to all those who apply.

4.4. Article 4c. Universal Service

4.4.1. Importantly from the point of view of social consequences of liberalization Article 4c proposes to allocate the 'burden' of universal service 'according to objective and non-discriminatory criteria in accordance with the principle of proportionality'. However 'Universal service' is not defined. Before rules on the universal service are published, universal service must therefore be defined. It is understood that the Commission is working on this subject and a communication containing proposals is due out at the end of the year.

4.4.2. The Committee would refer to its Opinion on the Communication from the Commission on Europe's Way to the Information Society: an Action Plan ().

4.5. Article 4d. Right of way

4.5.1. There is concern about large numbers of operators being granted compulsory rights of way over the same piece of public land. The Committee suggests that the Commission introduce a compulsory open access regime to ensure fair competition on transparent terms.

4.6. Article 3. Abolition of restrictions

4.6.1. This Article relates to the abolition of the restrictions on the use of alternative networks (except public voice telephony) for the provision of telecommunication services. While some Member States may be concerned about the 1 January 1996 deadline, the Committee notes that under Article 3(2), Member States with less developed networks may request an additional implementation period of up to five years.

4.7. Article 6. Entry into force

4.7.1. The coming into force of this Directive by 1 January 1996 may raise issues of practicability given the short time left. If the deadline of 1 January 1998 is to be met, this Directive still needs to come into force well before that date.

Done at Brussels, 22 November 1995.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No C 281, 25. 10. 1995, p. 19.

() OJ No C 236, 11. 9. 1995, p. 38.

() OJ No C 110, 2. 5. 1995, p. 37.