WRITTEN QUESTION E-0148/98 by Graham Mather (PPE) to the Commission (2 February 1998)

Subject: Telecoms liberalization (accounting rates charged by dominant operators)

On 19 December 1997, the Commission announced an investigation into the cost orientation of accounting rates charged by dominant operators, based on Article 86 of the Treaty and Directive 97/33/EC ((OJ L 199, 26.7.1997, p. 32. )).

What is the timetable for this investigation, and what measures has the Commission taken to provide information to the public about the outcome of this investigation?

What measures does the Commission envisage at this stage for improving transparency in the setting of accounting rates (or their future equivalents)?

Answer given by Mr Van Miert on behalf of the Commission (12 March 1998)

As the Honourable Member indicates, the Commission has opened an investigation into the level and cost-orientation of accounting rates charged by dominant operators. The legal basis is Article 86 EC Treaty on abuse of dominant position.

Requests for information were sent on 24 October 1997 to operators based in the Community that are dominant or could be dominant. The Commission has received the first answers, and is presently analysing them, with the support of an independent auditing firm.

The Commission issued a press release on 19 December 1997, in order to inform the industry and the public. It indicated that cost-orientation is also pursued under Directive 97/33/EC of the 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 L 199, 26.7.1997. )), and that therefore the two approaches would be co-ordinated. The two procedures are legally distinct. While competition law applies to telecommunications operators directly, the interconnection Directive requires national telecommunications regulators to ensure that operators with significant market power apply the principle of cost-orientation to national and cross-border interconnection charges.

Currently, the United Kingdom is the only Member State to publish international accounting rates. Most operators and regulators consider accounting rates as business secrets, since they are the result, not only of applying guidelines set at international level International telecommunications union (ITU), but also of commercial negotiations. The Commission welcomes current discussions at the ITU, which aim at reforming the accounting rates system, but it cannot say yet whether confidentiality of international accounting rates would be lifted. The Commission has not, at this stage, taken initiatives to require publication of accounting rates within the Community.

As the Honourable Member rightly suggests, within the Community international accounting rates have to be replaced to a large extent by other price mechanisms, based on cross-border interconnection. Community law requires operators with significant market power to publish their interconnection charges, covering both national and cross-border interconnection at cost-orientated prices. The Commission Recommendation on interconnection pricing ((COM(98) 50 final. )), which requires this, shows the interconnection charges in Member States. The cost-oriented interconnection rates published to date are significantly lower than the corresponding international accounting rates. These lower rates should translate into substantially lower prices for intra-Community telephone calls.