Notice by the Commission concerning a draft directive on competition in the markets for electronic communications services

(2001/C 96/02)

(Text with EEA relevance)

The Commission approved a draft Commission Directive on competition in the markets for electronic communications services.

The Commission intends to adopt the Directive after having heard the comments of all interested parties.

The Commission invites interested parties to submit their observations on the draft Directive published below.

Observations must reach the Commission not later than two months following the date of this publication. Observations may be sent to the Commission by fax (No (32-2) 296 98 19) by e-mail: Lambros.Papadias@cec.eu.int, or by post to: European Commission Directorate-General for Competition

Unit C1

Office J-70 2/271

Rue de la Loi/Wetstraat 200

B - 1049 Brussel.

Draft Commission Directive on competition in the markets for electronic communications services

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular Article 86(3) thereof,

Whereas:

(1) Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services(1) has been substantially amended several times, in particular by Directive 95/51/EC(2), Directive 96/2/EC(3), Directive 96/19/EC(4) and Directive 1999/64/EC(5). Since further amendments are to be made, those Directives should be recast in the interests of clarity. Directive 94/46/EC(6) should also be amended.

(2) Article 86 of the Treaty entrusts the Commission with the task of ensuring that, in the case of public undertakings and undertakings enjoying special or exclusive rights, Member States comply with their obligations under Community law. Pursuant to paragraph 3 of Article 86, the Commission can specify and clarify the obligations arising from that article and, in that framework, set out the conditions which are necessary to allow the Commission to perform effectively the duty of surveillance imposed upon it by that paragraph.

(3) Directive 90/388/EEC on competition in the markets for telecommunications services required Member States to abolish special and exclusive rights for the provision of telecommunications services, other than voice telephony, satellite services and mobile radiocommunications. Directive 94/46/EC required Member States to also abolish exclusive and special rights for the supply of satellite services, other than voice telephony. Directive 95/51/EC required Member States to abolish all restrictions on the supply of transmission capacity by cable television networks for the provision of telecommunications services, other than voice telephony. A year later, Directive 90/388/EEC was once again amended by Directive 96/2/EC which liberalised the mobile and personal communications market. Full competition in the telecommunications market was introduced by Directive 96/19/EC which required Member States also to abolish exclusive and special rights for the provision of voice telephony and the establishment and provision of telecommunications networks for the provision of telecommunications services. Directive 1999/64/EC required Member States to ensure that telecommunications undertakings which are dominant in the market for the provision of public telecommunications networks and public voice telephony services and operated a cable television network established under special or exclusive rights use different legal entities for the operation of their telecommunications and cable television networks.

(4) A number of other directives in this field have also been adopted under Article 95 of the Treaty by the European Parliament and the Council aiming, principally, at the establishment of an internal market for telecommunications services through the implementation of open network provision and the provision of a universal service in an environment of open and competitive markets, in particular Directive 98/10/EC of the European Parliament and of the Council of 26 February 1998 on the application of open network provision (ONP) to voice telephony and on universal service for telecommunications in a competitive environment(7), Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through the application of the principles of open network provision (ONP)(8), as amended by Directive 98/61/EC(9), Directive 97/51/EC of the European Parliament and of the Council of 6 October 1997 amending Council Directives 90/387/EEC and 92/44/EEC for the purpose of adaptation to a competitive environment in telecommunications(10), and Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 on a common framework for general authorisations and individual licences in the field of telecommunications services(11).

(5) In its "1999 Communications Review" to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions, entitled "Towards a new framework for electronic communications infrastructure and associated services"(12), the Commission announced the adoption of a new legislative policy framework for telecommunications aiming at promoting and sustaining an open competitive European market for electronic communications services. The stated aim was to reduce the number of the existing legislative texts from 26 to six. Accordingly, the Commission proposed the adoption of one framework Directive identifying general and specific policy objectives, and four specific Directives concerning licensing, access and interconnection, universal service, and privacy and data protection. Those Directives would be based on Article 95 of the Treaty. In addition, the Commission would consolidate and simplify Directive 90/388/EEC.

(6) In the light of the developments which have marked the liberalisation process and the gradual opening of the telecommunications markets in Europe since 1990, when Directive 90/388/EEC was first adopted, only those provisions which are still necessary for attaining the objectives of the Directives 90/388/EEC, 94/46/EC, 95/51/EC, 96/2/EC, 96/19/EC and 1999/64/EC should be maintained. For the sake of clarity, provisions which have become obsolete should be deleted. Furthermore, certain definitions used in those Directives have been amended in order to reflect the latest technological developments in telecommunications, in general. Finally, the wording of certain provisions should, where possible, be clarified in order to facilitate their application, taking into account, where appropriate, the relevant Directives adopted under Article 95 of the Treaty, and the experience acquired through the implementation of Directives 90/388/EEC, 94/46/EC, 95/51/EC, 96/2/EC, 96/19/EC and 1999/64/EC.

(7) This Directive makes reference to "electronic communications services" and "electronic communications networks" rather than the previously used terms "telecommunications services" and "telecommunications networks". These new definitions are indispensable in order to take account of the convergence phenomenon which has shaped the information technology, media and telecommunications industries over the last years by bringing together under one single definition all electronic communications services and/or networks involved in the transmission of electromagnetic signals (i.e. fixed, wireless, cable television, satellite networks).

(8) In this context, it should be made clear that Member States must remove (if they have not already done so) exclusive and special rights for the provision of all electronic communications networks, not just those for the provision of electronic communications services, although this Directive does not alter the scope of application of Directive 90/388/EEC. The definition of electronic communications networks also implies that Member States should not restrict the right of an operator to establish and/or provide a cable network on the ground that such network could also be used for the transmission of television signals. This is, however, without prejudice to the specific rules adopted by the Member States in accordance with Community law, and, in particular, in accordance with Council Directive 89/552/EEC of 3 October 1989(13), on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, as amended by Directive 97/36/EC of the European Parliament and of the Council(14), governing the distribution of audiovisual programmes intended for the general public.

(9) The possibility for Member States with less developed networks to obtain a derogation for up to five years from the full liberalisation obligation, previously provided for in paragraph 2, fourth subparagraph, of Article 2 of Directive 90/388/EEC should be deleted since [...] no such derogation is still in force.

(10) On the basis of the principle of proportionality, Member States should no longer make the provision of electronic communications services, including the provision of voice telephony, and the establishment and provision of electronic communications networks subject to a licensing regime. This is supported by Directive [...] of the European Parliament and of the Council, according to which electronic communications services or networks should be provided on the basis of an authorisation and not on the basis of a licence. An aggrieved party should have the possibility to challenge a decision preventing him from providing electronic communications services or networks before an independent body and, ultimately, before a court or a tribunal. It is a fundamental principle of Community law that an individual is entitled to effective judicial protection whenever a State measure violates rights conferred upon him by the provisions of a Directive(15)

(11) Public authorities may exercise a dominant influence on the behaviour of public undertakings as a result either of the rules governing the undertaking or of the manner in which the shareholdings are distributed. Therefore, where Member States control vertically integrated network operators which operate networks which have been established under special or exclusive rights, those Member States should ensure that, in order to avoid potential breaches of the Treaty competition rules, such operators do not discriminate in favour of their own affiliates, in particular when attaching conditions to general authorisations for mobile and personal communications systems. Therefore, Member States should take all measures necessary to prevent any discrimination between such vertically integrated operators and their competitors.

(12) With regard to the rights of use of radio frequencies, although Directive 96/2/EC did not require Member States to abolish exclusive or special rights of use of radio frequencies existing at the time, it made it clear that from that time onwards such rights should be allocated on objective and non-discriminatory criteria and that the granting of licences issued for mobile and personal communications systems should be limited only on the basis of the need for effective use of the frequency spectrum or the avoidance of harmful interference between radio-based electronic communications systems and other, space-based or terrestrial, technical systems and only where related to the lack of availability of frequency spectrum and in conformity with the principle of proportionality. This Directive thus clarifies the principle derived from Directive 96/2/EC, by providing that Member States should not grant exclusive or special rights of use of radio frequencies. However, rights of use of radio frequencies assigned according to objective, non-discriminatory and transparent procedures do not constitute special rights and they do not therefore come within this prohibition.

(13) To the extent that rights and obligations arising from international conventions setting up international satellite organisations are not compatible with the competition rules of the Treaty, Member States should take all measures necessary to eliminate such incompatibilities. Under Article 3 of Directive 94/46/EC, Member States were merely required to "communicate to the Commission" the information they possessed on such incompatibilities. Article 11 of this Directive aims to strengthen the obligation on Member States to guarantee the full liberalisation of the satellite markets by removing any restrictions which could still be in force because of those international conventions. This reflects the second paragraph of Article 307 of the Treaty, which only applies to agreements concluded by a Member State before 1 January 1958 (or, for acceding Member States, before accession). This provision does not apply to agreements concluded by a Member State after that date, meaning that if they are incompatible with the competition rules of the EC Treaty, then Community law prevails. In the interests of legal certainty, a Member State party to such an agreement the terms of which are incompatible with the competition rules of the Treaty should ensure that the relevant provision is formally repealed.

(14) Finally, this Directive maintains the obligation imposed on Member States by Directive 1999/64/EC to ensure that dominant providers of electronic communications services operate their public electronic communication network and cable television network under separate legal entities.

(15) For Member States which have correctly implemented Directives 90/388/EEC, 94/46/EC, 95/51/EC, 96/2/EC, 96/19/EC and 1999/64/EC, the only additional obligations imposed by this Directive are those set out in Article 11. This Directive does not affect the obligations of Member States concerning the deadlines for implementing and applying the Directives set out in Annex I,

HAS ADOPTED THIS DIRECTIVE:

Article 1

Definitions

For the purposes of this Directive:

- "exclusive rights" means the rights that are granted by a Member State to one undertaking through any legislative, regulatory or administrative instrument, reserving it the right to provide an electronic communications service, or undertake an activity within a given geographical area,

- "special rights" means the rights that are granted by a Member State to a limited number of undertakings through any legislative, regulatory or administrative instrument which, within a given geographical area,

- designates or limits to two or more the number of such undertakings authorised to provide a service or undertake an activity, otherwise than according to objective, proportional and non-discriminatory criteria, or

- confers on undertakings, otherwise than according to such criteria, legal or regulatory advantages which substantially affect the ability of any other undertaking to provide the same electronic communications service or to undertake the same activity in the same geographical area under substantially equivalent conditions,

- "electronic communications network" means transmission systems and, where applicable, switching or routing equipment and other resources which permit the conveyance of signals by wire, by radio, by optical or by any other electromagnetic means. It covers inter alia satellite networks, fixed (circuit- and packet-switched, including Internet) and mobile terrestrial networks, networks used for radio and television broadcasting, and cable television networks, irrespective of the type of information conveyed,

- "public communications network" means an electronic communications network used inter alia for the provision of public electronic communications services,

- "electronic communications services" means services provided for remuneration which consist wholly or mainly in the transmission and routing of signals on electronic communications networks. It covers inter alia telecommunications services and transmission services in networks used for broadcasting. It does not cover services providing or exercising editorial control over, content transmitted using electronic communications networks and services,

- "public electronic communications services" means electronic communications services available to the public,

- "network termination point" means all physical connections and their technical access specifications which form part of a public communications network and are necessary for access to and efficient communication through that public network,

- "satellite earth station network" means a configuration of two or more earth stations which inter-work by means of a satellite,

- "mobile and personal communications services" means services other than satellite services whose provision consists, wholly or partly, in the establishment of radiocommunications to a mobile user, and makes use wholly or partly of mobile and personal communications systems,

- "mobile and personal communications systems" means systems consisting of the establishment and operation of a mobile network infrastructure whether connected or not to public network termination points, to support the transmission and provision of radiocommunications services to mobile users,

- "voice telephony" means the commercial provision for the public of the direct transport and switching of speech in real-time between public switched network termination points, enabling any user to use equipment connected to such a network termination point in order to communicate with another termination point,

- "cable television networks" means any mainly wire-based infrastructure approved by a Member State for the delivery or distribution of radio or television signals to the public.

Article 2

Exclusive and special rights for electronic communications networks and electronic communications services

1. Member States shall not grant exclusive or special rights for the establishment and/or the provision of electronic communications networks, or for the provision of electronic communications services.

2. Member States shall take all measures necessary to ensure that any undertaking is entitled to provide electronic communications services or to establish or provide the electronic communications networks.

3. Member States shall ensure that no restrictions are imposed or maintained on the provision of electronic communications services over electronic communications networks established by the providers of electronic communications services, over infrastructures provided by third parties, and by means of sharing networks, other facilities or sites.

4. Member States shall ensure that an authorisation granted to an undertaking to provide electronic communications services or to establish and/or provide electronic communications networks, as well as the conditions attached thereto shall be based on objective, non-discriminatory, proportionate and transparent criteria.

5. Reasons shall be given for any decision preventing an undertaking from providing electronic communications services or networks. Any aggrieved party should have the possibility to challenge such a decision before an independent body and ultimately before a court or a tribunal.

Article 3

Vertically integrated public undertakings

In addition to the requirements set out in Article 2(2), Member States, in attaching conditions to general authorisations for mobile and personal communications systems, shall ensure that vertically integrated public undertakings which provide electronic communications networks do not discriminate in favour of their own activities.

Article 4

Rights of use of frequencies

1. Member States shall not grant exclusive or special rights of use of radio frequencies. As far as frequencies are available, Member States shall grant rights of use of radio frequencies according to open, non-discriminatory, and transparent procedures. Member States may restrict the granting of rights of use for radio frequencies only on the basis of the need for effective use of the frequency spectrum or the avoidance of harmful interference between radio-based electronic communications systems and other, space-based or terrestrial, technical systems and only where related to the lack of availability of frequency spectrum and justified by the principle of proportionality.

2. The designation of radio frequencies for electronic communication services shall be based on objective criteria. Procedures must be transparent and published at regular intervals.

Article 5

Numbering

Member States shall ensure that all exclusive and/or special rights as regards numbering are abolished and that adequate numbers are available for all public electronic communications services. In doing so, Member States shall ensure that numbers are allocated in an objective, non-discriminatory, proportionate and transparent manner.

Article 6

Directory services

Member States shall ensure that all exclusive and/or special rights with regard to the establishment and provision of directory services, including both the publication of directories and directory enquiry services, on their territory are abolished.

Article 7

Universal service obligations

1. Any national scheme which is necessary to share the net cost of the provision of universal service obligations imposed in whole or in part on public undertakings pursuant to Directive [...], shall be based on objective and non-discriminatory criteria and shall be consistent with the principle of proportionality. In particular, where undertakings provide electronic communications services as part of universal service obligations, this shall be taken into consideration in calculating any contribution to the net cost of univeral service obligations.

2. Member States shall communicate any scheme of the kind referred to in paragraph 1 to the Commission in order to enable it to check the scheme's compatibility with the Treaty and in particular with Articles 87 and 88 thereof.

3. The Commission shall, no later than 1 January [...], review the situation in the Member States and assess in particular whether the financing schemes in place do not limit access to the relevant markets. In this case, the Commission will examine whether there are other methods and make any appropriate proposals.

Article 8

Rights of way

1. Member States shall not discriminate between providers of public electronic communications networks with regard to the granting of rights of way for the provision of such networks.

2. Where the granting of additional rights of way to undertakings wishing to provide public electronic communications networks is not possible due to the protection of the environment and town and country planning objectives, Member States shall ensure access to existing facilities established under rights of way which may not be duplicated, on reasonable terms.

Article 9

Independent national regulatory authorities

Member States shall ensure that the control of type approval and mandatory specifications, the allocation of frequencies, numbers as well as the surveillance of usage conditions as well as any other regulatory functions are carried out by a body independent of a public undertaking providing electronic communications services and/or networks.

Article 10

Accounting separation

Member States shall, in the authorisation schemes for the provision of public electronic communications networks and services, at least ensure that where such authorisation is granted to undertakings to which they also grant special or exclusive rights in areas other than electronic communications services, such undertakings keep separate financial accounts as concerns activities as providers of voice telephony and/or networks and other activities, as soon as they achieve a turnover of more than EUR 50 million in the relevant electronic communications market.

Article 11

Satellites

1. Member States shall ensure that any regulatory prohibition or restriction on the offer of space segment capacity to any authorised satellite earth station network operator are abolished, and shall authorise within their territory any space-segment supplier to verify that the satellite earth station network for use in connection with the space segment of the supplier in question is in conformity with the published conditions for access to his space segment capacity.

2. Member States which are party to international conventions setting up international satellite organisations shall, to the extent that such conventions are not compatible with the competition rules of the EC Treaty, take all appropriate steps to eliminate such incompatibilities.

Article 12

Cable networks

1. Each Member State shall ensure that no undertaking providing public communications networks operates its cable television network using the same legal entity as it uses for its other public electronic communications network, when such undertaking:

(a) is controlled by that Member State or benefits from special rights; and

(b) is dominant in a substantial part of the common market in the provision of public electronic communications networks and/or public voice telephony services; and

(c) operates a cable television network which has been established under special or exclusive right in the same geographic area.

2. The Commission shall review the application of this Article when it considers that the requirements of this Article have been complied with and the objectives pursued attained, and, in any case, not later than [1 January ...].

3. Member States which consider that there is sufficient competition in the provision of local loop infrastructure and services in their territory, shall inform the Commission accordingly.

Such information must include a detailed description of the market structure. The information provided shall be made available to any interested party on demand, regard being had to the legitimate interest of undertakings in the protection of their business secrets.

4. The Commission shall decide within a reasonable period, after having heard the comments of these parties, whether the obligation of legal separation may be ended in the Member State concerned.

Article 13

Mobile and personal communications

1. Member States shall not refuse to authorise the operation of mobile systems according to the DCS 1800 standard at the latest after adoption of a decision of the European Radiocommunications Committee on the allocation of DCS 1800 frequencies.

2. Member States shall, subject to the provision set out in paragraph 4, not refuse to authorise public access, including systems operation on the basis of the DECT standard.

3. Member States shall not restrict the combination of mobile technologies or systems; in particular where multistandard equipment is available. When extending existing rights of use for radio frequencies to cover such combinations Member States shall ensure that such extension is justified in accordance with the provisions of paragraph 4.

4. Member States shall adopt, where required, measures to ensure the implementation of this Article taking account of the requirement to ensure effective competition between operators competing in the relevant markets.

Article 14

Repeal

The Directives and provisions listed in Annex I, Part A, are hereby repealed, without prejudice to the obligations of the Member States concerning the time limits for transposition and for application set out in Annex I, Part B.

References to the repealed Directives shall be construed as references to this Directive and shall be read in accordance with the correlation table in Annex II.

Article 15

Member States shall inform the Commission no later than four months after the entry into force of this Directive of the measures taken to comply with it.

When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.

Article 16

This Directive shall enter into force on the 20th day following that of its publication in the Official Journal of the European Communities.

Article 17

This Directive is addressed to the Member States.

(1) OJ L 192, 24.7.1990, p. 10.

(2) OJ L 256, 26.10.1995, p. 49.

(3) OJ L 20, 26.1.1996, p. 59.

(4) OJ L 74, 22.3.1996, p. 13.

(5) OJ L 175, 10.7.1999, p. 39.

(6) OJ L 268, 19.10.1994, p. 15.

(7) OJ L 101, 1.4.1998, p. 24.

(8) OJ L 199, 26.7.1997, p. 32.

(9) OJ L 268, 3.10.1998, p. 37.

(10) OJ L 295, 29.10.1997, p. 23.

(11) OJ L 117, 7.5.1997, p. 15.

(12) COM(1999) 539.

(13) OJ L 298, 17.10.1989, p. 23.

(14) OJ L 202, 30.7.1997, p. 60.

(15) See Cases C-70/95, Sodemare SA v Regione Lombardia [1997] ECR I-3395, and 222/86, Unectef v Heylens and Others [1987] ECR 4097.