Opinion on Towards the Personal Communications Environment: Green Paper on a common approach in the field of mobile and personal communications in the European Union (94/C 393/12)

On 19 May 1994, the Commission decided to consult the Economic and Social Committee on Towards the Personal Communications Environment: Green Paper on a common approach in the field of mobile and personal communications in the European Union.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 7 September 1994. The Rapporteur was Mr Mobbs.

At its 318th Plenary Session (meeting of 14 September) the Economic and Social Committee adopted the following Opinion unanimously.

1. Introduction

1.1. The Council Resolution of 22 July 1993 reviewed the situation in the telecommunications sector and the need for further development.

1.2. Resulting from consultation, there was a consensus within the Council about a number of key aspects, of which the following are considered amongst the most important.

1.2.1. There is a general acceptance that liberalization of telecommunications services markets is the inevitable result of technologies and market developments.

1.2.2. There is a general requirement for maintaining the financial stability of the sector and safeguarding universal service, while proceeding with the necessary adjustment of tariff structure.

1.2.3. It is imperative to have a clear timetable for regulatory changes with defined milestones, in order to give the sector the necessary stability.

1.2.4. A realistic approach to further liberalization must be followed, taking into account the need for adjustment in peripheral regions with less developed networks.

1.2.5. There is a general recognition of the value to users, industry and the whole of the European economy of a well developed telecommunications infrastructure and of advanced and efficient telecommunication services.

1.2.6. The opening of the Union telecommunications market for third countries should be linked to comparable access to such countries' markets.

1.3. Many actions have already been taken by the Commission, Council and Member States. As an action for the future, the Council considered as a major goal, in the short term, the development of mobile and personal communications and gave its support to the intention of the Commission to publish a Green Paper on the subject.

1.4. This 'Green Paper on a common approach to mobile and personal communications in the European Union' is part of the comprehensive and on-going work of the Commission since the 1987 'Green Paper on the Development of the Common Market for Telecommunication Services and Equipment' () though that Green Paper did not address matters specifically related to mobile communications.

2. Commission Green Paper

2.1. Aims and approach of the Commission:

2.1.1.:

- to permit the development of a Union-wide market for mobile services, equipment and terminals ();

- to identify common principles, where required, for achieving this objective, in relation to the provision of mobile infrastructure, the development of mobile networks and services, and the supply and operation of mobile terminals;

- to promote the evolution of the mobile communications market into mass personal communications services, with particular emphasis on pan-European services, and

- to facilitate and promote the emergence of trans-European networks and services in the sector, and to ensure that the sector's development is achieved in a manner consistent with public interest.

2.1.2. The approach chosen by the Commission is that the policy should:

- be based on the recognition of the major market and technology trends which are having dramatic effect on an already innovative sector;

- build on Member States' policies which, in most cases, have led to a substantially more open and competitive environment;

- extend the basic principles of the Union's telecommunications policy and Community law, in particular the balance achieved between liberalization and harmonization, to mobile communications;

- take full account of the wider international dimension and framework for cooperation;

- develop further the internal market in this area, as the basis for a strong negotiating position, bilateral and multilateral, aimed at achieving comparable market access in third countries.

2.1.3. The Commission considers that five major changes are required to remove the barriers to further development. This results from consultation and analysis undertaken by the Commission in preparation of the Green Paper and are summarized as:

- abolishing all remaining exclusive and special rights;

- removal of all restrictions on the provision of mobile services;

- full freedom for mobile network operators to operate and develop their networks;

- unrestricted combined offering of services via the fixed and mobile networks, and

- facilitating pan-European operation and services provision.

2.1.4. In identifying detailed positions, the Green Paper limits itself to fields where a common position is required at European Union level. These positions are:

- licensing conditions for mobile operators;

- conditions for service, provision, interconnection, infrastructure, frequency allocation and numbering issues;

- launching the evolution towards personal communications.

2.2.

Other general observations of the Commission

2.2.1. The EU policy of liberalization of all public voice telephony services by 1998 (with some possible derogations) is complemented by the Commission proposals concerning mobile communications.

2.2.2. Without liberalization measures, the speed of progress towards successful commercialization would be slowed down and a window of opportunity lost to our trading competitors.

2.2.3. The liberalization proposed in the Green Paper allows for competition to prevail throughout the European Union and is considered the best way forward if the potential benefits of all efforts are to be realized.

2.2.4. Mobile equipment manufacturers already compete with each other, around a common set of standards. The Green Paper proposes that competition should be extended to the mobile network(s) and the provision of services.

2.2.5. The Green Paper proposes that there should be a minimum of two competing mobile network operators for most mobile technologies. All licences for mobile operators must be based upon objective grounds, be transparent, non-discriminatory and respect the principle of proportionality.

2.2.6. Safeguards will be introduced to avoid abuses of dominant positions:

- national telecommunication operators (TOs) will no longer have a vested right to a presence in every segment of the communications market. They will compete in exactly the same way as any other operator and be subject to the same competition rules;

- service providers - those dealing with the end customers - shall have commercial freedom and should not be subject to licensing restrictions. To promote pan-European services and the innovative combination of different services, the mobile network operators shall be obliged to meet 'reasonable' requests to deal with service providers, [subject in the case of refusal to a right to appeal to the national regulatory authority (NRA)] and to provide transparent and non-discriminatory conditions for interconnection. This commercial relationship must be fully recognized by all Member States;

- interconnection conditions must be transparent, non-discriminatory, cost-orientated and be compatible with the principle of proportionality;

- mobile operators will not have to use infrastructure supplied by national telecommunication operators. They will have the freedom and choice to develop and build their own infrastructure or obtain infrastructure from third parties.

3. General comments

3.1. The Committee welcomes the Green Paper and congratulates the Commission on producing clear suggestions for the way ahead in this sector.

3.2. This Green Paper is an important part of the ongoing work of the Commission since the 1987 Green Paper. All Member States supported the 22 July 1993 Resolution which set out a timetable for the further development of the telecommunications sector. Therefore the Committee expects that all Member States will continue to support the Commission now that detailed proposals for the way ahead are emerging.

3.3. The Committee supports the Green Paper whilst recognizing that it contains important proposals, a number of which may require considerable changes in some Member States in the way in which new services are offered to the public. Therefore, whilst giving its support, the Committee has some reservations, especially about the ability to see all proposals implemented as suggested. These are considered in Section 4.

3.4. With the pan-European digital mobile system, GSM, the European Union has established a world leading technology and must build on its success. To date some 60 countries worldwide have either adopted GSM or signalled their intention to do so.

3.5. The Green Paper states that:

- the market potential for personal communications services is huge;

- whilst the maximum density for fixed wire telephones is not expected to exceed 50 % of the population ... personal communication services penetration has the ultimate potential to reach near 80 % of the population, and

- a cumulative investment in mobile infrastructure of between ECU 27 and 45 billion is projected to the year 2000.

3.6. Mobile communications is a high growth area and one in which European technology leads the world. Thus it is important to look at the proposals in the light of a substantially expanding market with increased opportunities for manufacturers, service providers and network operators providing benefits to the European economy as a whole. The active development of mobile and personal communications will be a major factor in stimulating employment in the telecommunication sector in the face of job losses resulting from the deployment of new technologies in the fixed network. The overall effects of this on employment are hard to assess but may be broadly neutral.

3.6.1. Some Member States are lagging behind with effective implementation of existing approved EU legislation, specifically as regards:

- implementation on the Terminal Equipment, basic ONP and Services Directives ();

- separation of operational and regulatory functions has not been effectively achieved nor have actual and effective NRAs been established as contemplated in these measures in all Member States. Effective NRAs must operate to ensure compliance with all relevant laws and regulations, since the Commission cannot be expected to cater for all aspects of regulation at the domestic level.

3.6.2. Relevant Member States will have to take steps in order to ensure that deficiencies of this nature will have to be rectified in order for positive action in the field of mobile and personal communications to make significant progress.

4. Specific comments

4.1. The Committee considers the Commission will need to give further consideration to the following, before a White Paper or concrete proposals for further actions are drafted. Reference is made to the Proposed Positions set out in the Green Paper (Figure 1, pages 40 to 52).

4.2.

Licensing procedures

The Commission raises important issues relating to licensing procedures and licensing terms and conditions which vary from Member State to Member State and may in themselves be anticompetitive and not transparent and non-discriminatory. The Commission's comments on these issues highlight an essential need to ensure transparency and non-discriminatory behaviour. There is a danger that without this, an incumbent TO could cross-subsidize its own mobile network to the detriment of the new entrant GSM operator.

4.2.1. In addition some concern has been expressed at the idea that licences should be granted at auction. The auctioning of frequencies may mean increased costs being passed on to the user. The Committee does not think this would be desirable.

4.3.

Service provision

The Green Paper suggests a Code of Conduct for Service Providers. The Code, based on voluntary participation, should spell out essential requirements and commitments on availability and quality of service. It could contain more binding requirements on participants with regard to infrastructure services. The Committee considers that any code of conduct should be adapted to national traditions and practices.

4.3.1. In addition to the obligation on mobile network operators to deal with the 'reasonable' requests of service providers, there should be a requirement that any new entrant into the mobile market place may, if it so chooses, become a service provider of any other already established mobile operator pending roll-out of the new entrant's mobile network.

4.4.

Interconnection

It is critical that interconnection should be facilitated. Again this heightens the need for proper and effective NRAs. Those needing interconnection will probably have need for recourse to the NRA in the event that the operator of the PSTN (for example) and the new operator cannot agree terms for interconnection, including the tariff. In this regard, the work of the Council already exemplified in Council Directive 92/44 on the application of the open network provision to leased lines is relevant.

4.5.

Infrastructure

The ability for new operators to establish their own infrastructure is very important. Whether it makes economic sense for a new operator to build his own infrastructure is a matter that should be left to the operator, the economic choice should not be hampered by continuing monopoly ownership. Increasingly, limited competition in infrastructure is being permitted in the Union and the benefits of such competition to consumers ought to be reflected in the prices paid for the provision of services.

4.6.

Radio frequencies

Access to radio frequency spectrum on a fair and equitable basis by all mobile operators is critical. The planning and allocation of radio frequency spectrum must therefore be dealt with impartially and independently of any particular TO. It is therefore important that such matters be administered by the NRA or by a separate independent body in each Member State.

4.6.1. It is important that binding common bands be made available for DCS-1800 services and UMTS (), DCS-1800 () is a part of the GSM () family and frequencies have already been allocated to an existing network in some Member States. No major developments in these standards are expected at present. The GSM 900 systems should have enough frequency to meet demand in Europe for some time to come. Any policy should allow for a smooth transition from today's technologies to a third generation UMTS system and sufficient frequency should be available.

4.6.2. GSM operators throughout the Union face problems in those Member States where, for example, GSM frequencies have not been cleared in accordance with Council Directive 87/372/EEC (). This will restrict the ability of the competing GSM business to compete with each other on similar frequencies.

4.7.

Numbering

The same access numbers for networks and services could considerably simplify use of the various services in Europe and lead to increased traffic. There can therefore be no objection, in principle, to new uniform numbering arrangements. But the Commission must at the same time draw up a financing plan in collaboration with various network operators. It is not clear who is to carry the cost of the reorganization of numbers.

4.7.1. Furthermore, administration of numbering plan should not be left to any TO. It is a regulatory function which should be separated (see 4.6 above).

4.8.

Launching the evolution to personal communications services

The comments on the interconnection of fixed and mobile communications networks apply to a great extent here too. Despite the reference to removal of restrictions on the combination of the operation of fixed and mobile networks contained in the review of the situation in the Telecommunications Sector in 1992, the Council's position is that a decision on the network monopoly must be linked to a broad public consultation to which the forthcoming Commission Green Paper on infrastructure will contribute.

4.9.

Other matters

4.9.1.

Fair competition

More should have been made in the Green Paper of the need for separation of businesses of TOs. This is necessary to avoid the risks and likelihood of cross-subsidies, hidden costs and undue preferences between these respective businesses.

4.9.2. Separation of business should also be covered by statements adding to existing Union law, including Competition Law, on issues such as cross-promotion of services. There should also be an adjustment for the new entrant where the incumbent TO has gained lead time and enjoys a strong presence in the market.

4.9.3. There are other issues of an information nature. For example, confidentiality and access to information. There may well be a need for a 'Signatory Affairs Office' within the TOs to ensure that the new entrant's commercial information (for example, its orders for leased line capacity in certain geographic areas) remains confidential and does not 'migrate' into the hands of the 'commercial' side of the TO.

4.9.4. With regards to tariffing, it is important to develop the market to ensure cost oriented tariffing. In this regard, the principle already stated in EU Directives and Communications argue against 'access deficit charges' as an appropriate way of rebalancing tariffs. Transparent and nondiscriminatory charging principles should be clearly established.

4.9.5.

Access to third markets

4.9.5.1. This Green Paper foreshadows the need for balanced and fair trading conditions to ensure that the European telecommunications industry is efficient and able to compete effectively in global markets. This is an appropriate goal. Whilst European markets are presently more open to operators from outside the Union, there is concern about reciprocal treatment.

4.9.5.2. The Committee, whilst noting the Commission comments, has grave doubts about the prospects for the success envisaged. Legislative restrictions, in particular in the USA hold out few prospects for the EU making any significant inroads in the USA. Therefore the Committee thinks that much more positive action, maybe at a political level, will be needed for any degree of worldwide level playing fields to be achieved in the foreseeable future.

4.9.6.

Data protection

The Commission recognizes the concern for privacy. GSM technologies offer more security than analogue systems. The Commission has stated that resolution of data protection needs are scheduled to be the subject of a forthcoming proposal.

4.10.

Health, safety and the environment

Increasing acceptance by the general public of the use of radio frequencies as a means of communications is the basis for the whole mobile industry. Therefore, concerns about hazards caused by the use of radio frequencies must be considered and taken into account. Likewise, environmental matters need to be taken into account. For example, the Green Paper refers to the need for operators to share sites, not only to benefit consumers by reducing infrastructure costs and to encourage fair competition, but also to reduce the impact on the environment by preventing, wherever possible, unnecessary proliferation of radio masts and the like.

4.11.

Economic and social issues

4.11.1. As is true in many sectors, technological developments will continue to have an effect on employment. On the one hand, jobs will be lost in the fixed network sector, on the other hand, new jobs will be created as the mobile network sector expands. A strong European telecommunications industry should ensure a competitive position in world markets, bringing consequential economic benefits, including benefits for European employees.

4.11.2. In this context, questions of training and retraining are of great importance. Initiatives by the Council and the Commission aimed, not only at harmonizing and liberalizing services, but also at studying the economic impact and consequences of these decisions would be greatly welcomed. Employees' fears could perhaps be substantially allayed if this problem were to be accorded high priority.

4.11.3. A necessary prerequisite for these initiatives is an in-depth study of the economic and social consequences for the telecommunication sector as a whole.

Done at Brussels, 14 September 1994.

The President

of the Economic and Social Committee

Susanne TIEMANN

() COM(87) 290 final, 30. 6. 1987.

() 'Equipment' includes base stations and 'Terminals' includes handsets.

() 88/301/EEC - OJ No L 131, 25. 7. 1988, p. 3.

90/387/EEC - OJ No L 192, 24. 7. 1990, p. 1.

90/388/EEC - OJ No L 192, 24. 7. 1990, p. 10.

() UMTS = Universal Mobile Telecommunications System.

() DCS-1800 = A Standard for a Personal Communications Network in the 1800 MHz band.

() GSM = Global System for Mobile Communications.

() Council Directive of 25 June 1987 - OJ No L 196, 17. 7. 1987, p. 85.