Case C-438/04

Mobistar SA

v

Institut belge des services postaux et des télécommunications (IBPT)

(Reference for a preliminary ruling from the Cour d’appel de Bruxelles)

(Telecommunications sector – Universal service and users’ rights – Telephone number portability – Set-up costs for the provision of number portability for mobile phones – Article 30(2) of Directive 2002/22/EC (Universal Service Directive) – Pricing for interconnection related to the provision of number portability – Price orientation by reference to costs – Regulatory power of national regulatory authorities – Article 4(1) of Directive 2002/21/EC (Framework Directive) – Effective legal protection – Protection of confidential information)

Opinion of Advocate General Stix-Hackl delivered on 23 March 2006

Judgment of the Court (Second Chamber), 13 July 2006

Summary of the Judgment

1. Approximation of laws – Telecommunications sector – Universal service and users’ rights – Directive 2002/22

(European Parliament and Council Directive 2002/22, Art. 30(2))

2. Approximation of laws – Telecommunications sector – Regulatory framework for electronic communications networks and services – Directive 2002/21

(European Parliament and Council Directive 2002/21, Art. 4)

1. Pricing for interconnection related to the provision of number portability, as referred to in Article 30(2) of Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services, concerns the traffic costs of numbers ported and the set-up costs incurred by mobile telephone operators to implement requests for number porting.

Article 30(2) of Directive 2002/22 does not preclude the adoption of a national measure laying down the specific method to be used in calculating costs and which fixes in advance and on the basis of an abstract model of the costs maximum prices which may be charged by the donor operator to the recipient operator as set-up costs, provided that the prices are fixed on the basis of the costs in such a way that consumers are not dissuaded from making use of the facility of portability.

(see paras 30, 37, operative part 1-2)

2. Article 4 of Directive 2002/21 on a common regulatory framework for electronic communications networks and services must be interpreted as meaning that the body responsible for hearing an appeal against a decision of the national regulatory authority must have at its disposal all the information necessary in order to decide on the merits of the appeal, including, if necessary, confidential information which that authority has taken into account in reaching the decision which is the subject of the appeal. However, that body must guarantee the confidentiality of the information in question whilst complying with the requirements of effective legal protection and ensuring protection of the rights of defence of the parties to the dispute.

(see para. 43, operative part 3)

JUDGMENT OF THE COURT (Second Chamber)

13 July 2006 ( )

(Telecommunications sector – Universal service and users’ rights – Telephone number portability – Set-up costs for the provision of number portability for mobile phones – Article 30(2) of Directive 2002/22/EC (Universal Service Directive) – Pricing for interconnection related to the provision of number portability – Price orientation by reference to costs – Regulatory power of national regulatory authorities – Article 4(1) of Directive 2002/21/EC (Framework Directive) – Effective legal protection – Protection of confidential information)

In Case C-438/04,

REFERENCE for a preliminary ruling under Article 234 EC from the Cour d’appel de Bruxelles (Belgium), made by decision of 14 October 2004, received at the Court on 19 October 2004, in the proceedings

Mobistar SA

v

Institut belge des services postaux et des télécommunications (IBPT),

intervening parties:

Belgacom Mobile SA,

Base SA,

THE COURT (Second Chamber),

composed of C.W.A. Timmermans, President of the Chamber, R. Schintgen, P. Kūris (Rapporteur), G. Arestis and J. Klučka, Judges,

Advocate General: C. Stix-Hackl,

Registrar: K. Sztranc, Administrator,

having regard to the written procedure and further to the hearing on 20 October 2005,

after considering the observations submitted on behalf of:

– Mobistar SA, by F. Louis and A. Vallery, avocats,

– the Institut belge des services postaux et des télécommunications (IBPT), by S. Depré, C. Janssens and S. Adam, avocats,

– Belgacom Mobile SA, by D. Van Liedekerke, avocat,

– Base SA, by A. Verheyden and Y. Desmedt, avocats,

– the Italian Government, by I.M. Braguglia, acting as Agent, and by P. Gentili, avvocato dello Stato,

– the Cypriot Government, by D. Lysandou, acting as Agent,

– the Lithuanian Government, by D. Kriaučiūnas, acting as Agent,

– the United Kingdom Government, by M. Bethell, acting as Agent, and by K. Smith and G. Peretz, Barristers,

– the Commission of the European Communities, by D. Maidani and M. Shotter, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 23 March 2006,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) (OJ 2002 L 108, p. 33; ‘the Framework Directive’) and Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive) (OJ 2002 L 108, p. 51; ‘the Universal Service Directive’).

2 The reference was made in the context of a dispute between Mobistar SA (‘Mobistar’) and the Institut belge des services postaux et des télécommunications (IBPT), a public law entity, concerning the latter’s decision of 16 September 2003 fixing the set-up costs payable by the receiving mobile telephone operator for number transfer or portability from one operator to another for the period from 1 October 2002 to 1 October 2005 (‘the contested decision’).

Legal context

Community legislation

3 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 application of the principles of open network provision (ONP) (OJ 1997 L 199, p. 32), as amended by Directive 98/61/EC of the European Parliament and of the Council of 24 September 1998 (OJ 1998 L 268, p. 37; ‘Directive 97/33’) was repealed by the Framework Directive with effect from 25 July 2003. Pursuant to the first paragraph of Article 1, Directive 97/33 established a regulatory framework securing, in the European Community, the interconnection of telecommunications networks and, in particular, the interoperability of services and the provision of a universal service in an environment of open and competitive markets.

4 Article 2(1)(a) of that directive defined the concept of ‘interconnection’ as being ‘the physical and logical linking of telecommunications networks used by the same or a different organisation in order to allow the users of one organisation to communicate with users of the same or another organisation or to access services provided by another organisation’.

5 Article 7 of Directive 97/33 laid down the principles for interconnection charges and governed the cost accounting systems for interconnection. Annex IV to that directive contained a ‘list of examples of elements for interconnection charges’. That annex stated, inter alia, that ‘interconnection charges may include a fair share, according to the principle of proportionality, of joint and common costs and the costs incurred in providing equal access, and number portability, and the costs of ensuring essential requirements (maintenance of the network integrity; network security in cases of emergency; interoperability of services; and protection of data)’.

6 Article 12(5) of Directive 97/33 provided:

‘National regulatory authorities shall encourage the earliest possible introduction of operator number portability whereby subscribers who so request can retain their number(s) on the fixed public telephone network and the integrated services digital network (ISDN) independent of the organisation providing service, in the case of geographic numbers at a specific location and in the case of other than geographic numbers at any location, and shall ensure that this facility is available by 1 January 2000 at the latest or, in those countries which have been granted an additional transition period, as soon as possible after, but no later than two years after any later date agreed for full liberalisation of voice telephony services.

In order to ensure that charges to consumers are reasonable, national regulatory authorities shall ensure that pricing for interconnection related to the provision of this facility is reasonable.’

7 A new legal framework was adopted for all networks and transmission services in the form of four directives, namely, in addition to the Framework Directive and the Universal Service Directive, Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (Access Directive) (OJ 2002 L 108, p. 7; ‘the Access Directive’) and Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (Authorisation Directive) (OJ 2002 L 108, p. 21; ‘the Authorisation Directive’).

8 Article 30 of the Universal Service Directive provides that:

‘1. Member States shall ensure that all subscribers of publicly available telephone services, including mobile services, who so request can retain their number(s) independently of the undertaking providing the service:

(a) in the case of geographic numbers, at a specific location; and

(b) in the case of non-geographic numbers, at any location.

This paragraph does not apply to the porting of numbers between networks providing services at a fixed location and mobile networks.

2. National regulatory authorities shall ensure that pricing for interconnection related to the provision of number portability is cost oriented and that direct charges to subscribers, if any, do not act as a disincentive for the use of these facilities.

3. National regulatory authorities shall not impose retail tariffs for the porting of numbers in a manner that would distort competition, such as by setting specific or common retail tariffs.’

9 Article 4(1) of the Framework Directive provides:

‘Member States shall ensure that effective mechanisms exist at national level under which any user or undertaking providing electronic communications networks and/or services who is affected by a decision of a national regulatory authority has the right of appeal against the decision to an appeal body that is independent of the parties involved. This body, which may be a court, shall have the appropriate expertise available to it to enable it to carry out its functions. Member States shall ensure that the merits of the case are duly taken into account and that there is an effective appeal mechanism. Pending the outcome of any such appeal, the decision of the national regulatory authority shall stand, unless the appeal body decides otherwise.’

National legislation

10 By the contested decision, taken in application of the Belgian Law of 17 January 2003 on the statute of the regulator of the Belgian postal and telecommunications sectors (Moniteur belge, 24 January 2003; ‘the Law of 17 January 2003’) and of the Royal Decree of 23 September 2002 on portability for end-users of publicly available mobile telecommunications services (Moniteur belge, 1 October 2002; ‘the Royal Decree of 23 September 2002’), the IBPT, the national regulatory authority within the meaning of Article 2(g) of the Framework Directive, fixed the set-up cost per mobile number successfully ported from one operator to another at EUR 3.86 for a simple installation and EUR 23.41 for a complex installation for the period from 1 October 2002 to 1 October 2005. In accordance with Article 19 of the above Royal Decree, that cost was fixed on the basis of ‘the theoretical costs of an efficient mobile operator’. It follows from paragraph 4 of the contested decision that the reference operator is not necessarily the one whose costs are lowest but the one which is to be considered as competitive within the group of comparable environments. To reach the contested decision, the IBPT took into account information produced by Mobistar, Belgacom Mobile SA (‘Belgacom Mobile’) and Base SA (‘Base’), which are the three mobile telephone operators active in Belgium. , the IBPT,

11 The Royal Decree of 23 September 2002 includes, inter alia, provisions governing the attribution of costs incurred by operators in connection with mobile number portability. It draws a distinction between four types of costs: costs generated by the setting-up of portability, per-line or per-number set-up costs (‘set-up costs’), costs connected with the central reference databank, and traffic costs connected with number portability (‘traffic costs’).

12 Set-up costs are defined in Article 18 of the Royal Decree as ‘the non-recurrent additional cost generated as a consequence of the porting of one or more mobile numbers, in addition to the costs connected with the transfer of clients without number portability to another mobile operator or service provider or in order to terminate the provision of the service’.

13 In accordance with Article 19 of that Royal Decree, ‘the per-line or per-number set-up costs … shall be fixed by the [IBPT] on the basis of the theoretical costs of an efficient mobile operator. The amounts fixed by the [IBPT] to cover the per-line or per-number set-up costs … shall be cost oriented’.

14 According to the decision for reference, these refer only to the costs incurred by the mobile operator from which a mobile number is ported (‘the donor operator’). The donor operator may charge the mobile operator to which the mobile number is ported (‘the recipient operator’) set-up costs in the amount set by the IBPT. That amount is a maximum amount and mobile operators are permitted to negotiate a lower amount with one another. However, a donor operator may, in principle, demand the amount fixed by the IBPT even where its actual set-up costs are lower.

15 Under Article 11 of the Royal Decree of 23 September 2002, the donor operator may not demand payment from an end-user who has his number ported. However, the recipient operator is entitled to demand a payment of no more than EUR 15 from that end-user for the porting of the number.

16 Finally, under Article 18 of that Royal Decree, traffic costs are ‘the additional costs generated on the network by calls to ported numbers as compared with calls to non-ported numbers’. Those costs are to be reimbursed to the donor operator on a pro rata basis by the operator of the network from which the call is generated and which charges the end-user for the call.

The main proceedings and the questions referred for a preliminary ruling

17 Mobistar brought an action against the contested decision before the Cour d’appel de Bruxelles (Court of Appeal, Brussels), claiming that the costs fixed by that decision are too high. Mobistar brought that action against the IBPT, Belgacom Mobile and Base. Unlike Mobistar, Belgacom Mobile takes the view that those costs are not high enough, whilst Base, which supports Mobistar’s claim, alleges that the Royal Decree of 23 September 2002, and therefore also the contested decision of which it forms the basis, is unlawful, claiming in particular failure to comply with Article 30(2) of the Universal Service Directive.

18 The Cour d’appel de Bruxelles found that the contested decision was to be regarded as having the effects of a measure by which a common maximum price is imposed for porting a number, a price which may thus only be varied downwards and with the agreement of the donor operator, and that the merits of the action depended on the answers to various questions concerning the lawfulness of the Royal Decree of 23 September 2002 which constituted the legal basis of that decision.

19 In those circumstances, the Cour d’appel de Bruxelles decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) With regard to the number portability facility provided for in Article 30 of [the Universal Service Directive]:

(a) Does Article 30(2) of the Universal Service Directive, which provides that national regulatory authorities are to ensure that pricing for interconnection related to the provision of number portability is cost oriented, refer only to costs related to traffic to the ported number, or does it also refer to tariffs of costs incurred by operators in executing requests for number porting?

(b) If Article 30(2) of the directive refers only to interconnection costs related to traffic to the ported number, must it be interpreted:

(i) as leaving operators free to negotiate the commercial conditions for the facility and as prohibiting Member States from imposing ex ante commercial conditions on undertakings obliged to provide the number portability facility in respect of the services provided in relation to the execution of a request for porting?

(ii) as not prohibiting Member States from imposing ex ante commercial conditions in respect of that facility on operators which have been designated as having significant market power in a particular market?

(c) If Article 30(2) of the directive must be interpreted as imposing on all operators the obligation of cost orientation in respect of the costs of number porting, must it be interpreted as precluding:

(i) a national regulatory measure imposing a specific method of calculating the costs in question?

(ii) a national measure which fixes ex ante the allocation of the costs between the operators?

(iii) a national measure which empowers the national regulatory authority to fix ex ante for all operators and for a given period the maximum amount of the charges which the donor operator may claim from the recipient operator?

(iv) a national measure which grants to the donor operator the right to apply the tariff set by the national regulatory authority, relieving that operator of the obligation to prove that the tariff which it applies is oriented to its own costs?

(2) With regard to the right of appeal provided for by Article 4 of [the Framework Directive]:

Must Article 4(1) of the Framework Directive be interpreted as meaning that the authority designated to hear and determine appeals must be able to have at its disposal all the information necessary for the merits of the case to be duly taken into account, including the confidential information on the basis of which the national regulatory authority adopted the decision which is the subject-matter of the appeal?’

The questions

The first question

The first part of the first question

20 By the first part of the first question, the referring court essentially asks whether pricing for interconnection related to the provision of number portability, as referred to in Article 30(2) of the Universal Service Directive, concerns the set-up costs in addition to the traffic costs.

21 Mobistar and Belgacom Mobile, together with the IBPT, the Commission of the European Communities and the Cypriot and Lithuanian Governments, submit that the provisions of Article 30(2) relate only to the costs connected with traffic to the number ported and not to the costs incurred in implementing a request for porting of numbers between mobile operators.

22 However, Base and the Italian and United Kingdom Governments take the view that the pricing for interconnection referred to in that article includes all services linked to the implementation of number portability for which the operators are entitled to seek payment.

23 Firstly, it must be stated that the concept of number portability covers the facility available to a mobile telephone subscriber to retain the same number when changing operator.

24 The implementation of that facility requires the platforms between operators to be compatible, the subscriber’s number to be ported from one operator to another and technical operations to allow the forwarding of telephone calls to the ported number.

25 Number portability is intended to remove the obstacles to consumers’ freedom of choice particularly between mobile telephone operators and thus to ensure development of effective competition on the telephone services market.

26 With a view to achieving those aims, the Community legislature provided, in Article 30(2) of the Universal Service Directive, that national regulatory authorities are to ensure that pricing for interconnection related to the provision of number portability is cost oriented and that direct charges to subscribers, if any, do not act as a disincentive for the use of these facilities.

27 The interpretation according to which the set-up costs are not covered by that provision would be contrary to the aim and purpose of the Universal Service Directive and might limit its effectiveness from the point of view of the provision of portability.

28 The set-up costs represent a large part of the costs which may be passed on directly or indirectly by the recipient operator to the subscriber who wishes to make use of the portability facility for his mobile number.

29 Although such costs do not fall within the scope of the checks laid down in Article 30(2) of the Universal Service Directive, their fixing at excessive levels by donor operators, in particular those already established on the market which have a large client base, might dissuade consumers from making use of that facility, or even make it in fact largely illusory.

30 The answer to the first part of the first question must therefore be that pricing for interconnection related to the provision of number portability, as referred to in Article 30(2) of the Universal Service Directive, concerns the traffic costs of numbers ported and the set-up costs incurred by mobile telephone operators to implement requests for number porting.

The second and third parts of the first question

31 In view of the answer given to the first part of the first question, it is necessary to answer only the third part of that question.

32 By this part of the first question, the referring court asks essentially whether the national regulatory authorities are permitted to fix ex ante maximum prices in respect of all mobile telephone operators on the basis of an abstract model of the costs.

33 At the outset, it should be noted that Article 30(2) of the Universal Service Directive requires the national regulatory authorities to ensure that the operators set the prices on the basis of their costs and, furthermore, that the prices do not dissuade consumers.

34 Once it is established that prices are fixed on the basis of costs, that provision confers a certain discretion on the national authorities to assess the situation and define the method which appears to them to be the most suitable to make portability fully effective, in a manner which ensures that consumers are not dissuaded from making use of that facility.

35 Clearly, the limits of that discretion have not been exceeded in the present case by the national regulatory authorities. A method consisting in defining a maximum price, such as that chosen by the Belgian authorities, may be considered compatible with Article 30(2) of the Universal Service Directive, provided that it is genuinely possible for new operators to contest the application of maximum prices by operators already present in the market by showing that those prices are too high in relation to their cost structure.

36 Thus, it follows from the foregoing that, in principle, the Universal Service Directive does not preclude the competent national authorities from fixing ex ante maximum prices in respect of all mobile telephone operators on the basis of an abstract model of the costs.

37 In the light of all those considerations, the answer to the third part of the first question must be that Article 30(2) of the Universal Service Directive does not preclude the adoption of a national measure such as that at issue in the main proceedings which fixes in advance and on the basis of an abstract model of the costs maximum prices which may be charged by the donor operator to the recipient operator as set-up costs, provided that the prices are fixed on the basis of the costs in such a way that consumers are not dissuaded from making use of the facility of portability.

The second question

38 By its second question, the referring court is seeking to ascertain whether under Article 4 of the Framework Directive an independent body covered by that provision, such as the referring court, must have at its disposal all the information necessary to examine the merits of an appeal before it, including information which is confidential under the applicable legislation on business confidentiality.

39 According to the decision for reference, the IBPT is relying on the duty of confidentiality imposed on it by its statute as defined by the Law of 17 January 2003.

40 In that regard, it is appropriate to note that the body responsible for hearing an appeal against a decision of the national regulatory authority in accordance with Article 4 of the Framework Directive must be able to have at its disposal all the information necessary in order to decide in full knowledge of the facts on the merits of the appeal, including information that is subject to confidentiality. However, the protection of such information and business confidentiality must be guaranteed and must be adjusted to reconcile it with the requirements of effective legal protection and the rights of defence of the parties to the dispute.

41 Article 4(1) of the Framework Directive provides expressly that the right of appeal against the decision of a national regulatory authority which may be exercised by any user or service provider affected by it must be based on an effective appeal mechanism which permits the merits of the case duly to be taken into account.

42 Furthermore, Article 5(3) of that directive provides that, in the context of exchanges of information between the national regulatory authorities and the Commission, information considered confidential by those authorities may be communicated to the Commission which is, however, to guarantee such confidentiality.

43 Accordingly, the answer to the second question must be that Article 4 of the Framework Directive must be interpreted as meaning that the body responsible for hearing an appeal against a decision of the national regulatory authority must have at its disposal all the information necessary in order to decide on the merits of the appeal, including, if necessary, confidential information which that authority has taken into account in reaching the decision which is the subject of the appeal. However, that body must guarantee the confidentiality of the information in question whilst complying with the requirements of effective legal protection and ensuring protection of the rights of defence of the parties to the dispute.

Costs

44 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

1. Pricing for interconnection related to the provision of number portability, as referred to in Article 30(2) of Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive), concerns the traffic costs of numbers ported and the set-up costs incurred by mobile telephone operators to implement requests for number porting.

2. Article 30(2) of Directive 2002/22 does not preclude the adoption of a national measure laying down the specific method to be used in calculating costs and which fixes in advance and on the basis of an abstract model of the costs maximum prices which may be charged by the donor operator to the recipient operator as set-up costs, provided that the prices are fixed on the basis of the costs in such a way that consumers are not dissuaded from making use of the facility of portability.

3. Article 4 of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) must be interpreted as meaning that the body responsible for hearing an appeal against a decision of the national regulatory authority must have at its disposal all the information necessary in order to decide on the merits of the appeal, including, if necessary, confidential information which that authority has taken into account in reaching the decision which is the subject of the appeal. However, that body must guarantee the confidentiality of the information in question whilst complying with the requirements of effective legal protection and ensuring protection of the rights of defence of the parties to the dispute.

[Signatures]