WRITTEN QUESTION E-0557/96 by Cristiana Muscardini (NI) to the Commission (11 March 1996)

Subject: New Telecom Italia (TI) telephone charges

TI has recently proposed increases in telephone charges which will apply only in the telecommunications sector under monopoly. Having regard to the announcement by the Competition and Market Authority of 2 February 1995, Directives 90/338/EEC ((OJ L 192, 24.7.1990, p. 10. )), 92/44/EEC ((OJ L 165, 19.6.1992, p. 27. )) and 95/62/EC ((OJ L 321, 30.12.1995, p. 6. )); Article 90(1) combined with the provisions of Article 86 of the Treaty; the price indices of OFTEL basic rates and those of Analysis Publications; and Commission communication 95/C 263/07 ((OJ C 263, 10.10.1995, p. 6. )), can the Commission state:

1. whether, in view of the above, TI's behaviour is open to censure and to be considered as abuse of dominant position?

2. whether the claim in defence of TI that the new charges were requested by the Commission is true?

3. when the adjustments were requested and what measures the EU had in fact requested?

4. whether lower inter-city and international charges for mobile telephones and ISDN should not be excluded from TI's set of proposals?

What in addition is the Commission's reaction to the tax imposed on mobile phones in the case of teleconferences and GSMs? Could it be an obstacle to development of the telecommunications market in Italy?

Answer given by Mr Van Miert on behalf of the Commission (28 March 1996)

The Commission is not in possession of any information to indicate that the proposed increases in telephone charges by Telecom Italia constitute an abuse of a dominant position. According to Telecom Italia, they are intended solely to align charges on costs.

The rebalancing of telephone charges to reflect underlying costs is a central feature of Community telecommunications policy. By letter of 21 December 1995, the Commission reminded the Italian Government of the need to allow Telecom Italia to rebalance its charges while permitting the proper special protection for certain groups of users as part of the universal service. On the eve of the opening-up of voice telephony to competition, the maintenance of imbalances in charges might give rise to major problems. Whereas excessively high charges for international calls might artificially attract competitors to this market segment, no one would be interested in investing in the local network because the charges applied do not allow operators to earn sufficient margins to cover costs.

As the Commission recalled recently in its communication of 13 March 1996 on the universal service ((COM(96)73. )), this rebalancing can be carried out in various ways and may, despite the improvement in productivity of telecoms operators, entail certain increases in charges, at least initially. Such increases may be necessary to the profitability of investment in the local network. It is only if available capacity is expanded and the network modernized that it will be possible ultimately to reduce charges.

Except in cases where the principle of alignment on costs is infringed or where charges are increased in an abusive fashion, it is not for the Commission to comment on the specific approach taken by national operators in rebalancing their charges.

Lastly, the Commission has not received any complaints regarding the tax imposed by the Italian Government on the turnover of mobile phone operators. However, its understanding is that the Italian Government intends to reduce it gradually.