WRITTEN QUESTION E-0897/98

by Daniela Raschhofer (NI) to the Commission

(26 March 1998)

Subject: Telephone charges

Austria has the highest telephone charges of all the other EU Member States. Up until now the Austrian Post und Telekom AG has been the sole provider of fixed network services. In the next few days the Commission will be completing its survey of telephone charges within the Member States with the emphasis on the charges for connections between fixed and mobile units (interconnections).

1. Are other tariff structures, as well as those for interconnections, being examined?

2. What measures can and will the Commission take if it establishes that competition is being distorted?

3. What is the Commission's assessment of the impact on economic development and competitiveness if telephone charges for calls within the Community are higher than for calls in the USA?

Answer given by Mr Van Miert on behalf of the Commission

(5 May 1998)

1. In the framework of the third report concerning the implementation of the telecommunications regulatory package of 25 February 1998(1), the Commission has examined not only the state of transposition of the Community liberalisation and harmonisation directives, but also a certain number of so-called economic indicators. Annex III to this report contains detailed tables for each Member State, showing, among other elements, the incumbents' prices, including the level of interconnection charges for telephone calls between two fixed networks or between fixed and mobile networks.

More particularly, in its recommendation of 8 January 1998 on interconnection in a liberalised telecommunications market(2), the Commission has determined the following "best current practice" interconnection charges: 0.6 to 1.0 ECU/100 per minute at the local level, 0.9 to 1.8 ECU/100 per minute for single transit interconnection at metropolitan level, 1.5 to 2.6 ECU/100 per minute for double transit interconnection at national level. These figures refer to call termination on fixed networks at peak times. Call set up charges are included where they exist, but other non traffic related charges are excluded.

2. If it should turn out that the interconnection fees do not correspond to the underlying cost, there could be evidence of excessive pricing in violation of Article 86 of the EC Treaty. Therefore, the Commission examines the interconnection fees in the light of the above mentioned "best current practice", in order to evaluate the potential grounds for own initiative procedures against incumbent operators.

However, price regulation falls within the province of national legislation, as it is laid down in paragraph 3, first indent, of the Annex to Council Directive 90/387/EEC of 28 June 1990 on the establishment of the internal market for telecommunications services through the implementation of open network provision(3), as amended by Directive 97/51/EC of the Parliament and of the Council of 6 October 1997(4). Therefore, the Commission will not intervene if the interconnection charges are only slightly above the "best current practice" or if the national regulator is investigating the case.

Notwithstanding the obligation of cost-orientation placed on operators having significant market power by Directive 97/33/EC of the Parliament and of the Council of 30 June 1997 on interconnection in telecommunications(5), the assessment of excessive pricing under Community competition rules requires a considerable disproportion between price and cost or between competing markets.

Concerning the fees for interconnection between fixed and mobile networks, the Commission has, on 20 January 1998, opened own initiative procedures against incumbent operators in all Member States. Information requests were sent out and the replies received are currently being evaluated. As concerns the fees for interconnection between fixed networks, the Commission has opened own initiative procedures on 20 March 1998 against the incumbent operators in Ireland and Portugal and has also sent out information requests.

3. The whole liberalisation process in the telecommunication sector aims at creating more competition for the benefit of both businesses and consumers in a continuously globalised market. The cost of information services is an essential element in this context. The above mentioned third report clearly shows that the liberalisation has already led to price reductions for telecommunications services and it is expected that this process will continue in the coming years.

(1) COM(98) 80 final.

(2) OJ L 73, 12.3.1998.

(3) OJ L 295, 29.10.1997.

(4) OJ L 192, 24.7.1990.

(5) OJ L 199, 26.7.1997.