Proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE on interconnection in telecommunications with regard to ensuring universel service and interoperability through application of the principles of Open Network Provision (ONP)
Date: 1995-07-19
Institutions: European Commission
Subjects: communications systems, public service, systems interconnection, technical standard, telecommunications, transmission network

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  19.07.1995 
COM(95) 379  final 

95/0207  (COD) 

Proposal  for a 
EUROPEAN PARLIAMENT  AND  COUNCIL DIRECTIVE 

on interconnection  in telecommunications  with regard to ensuring 
universal  service and interoperability  through application  of 
the principles of  Open Network Provision  (ONP) 

(presented by the  Commission) 

List  of  Contents 

Summary 

Explanatory  Memorandum 

Introduction 
Background 
Aims  and  objectives  of  the  proposed  Directive 
Applicability  of the  proposed  Directive  -  a balanced  framework  of  rights  and  obligations 
Summary  of  the  contents  of the proposed  Directive 
Consultation  Process 
Interconnection  and  competition  rules 
Conclusion 

Proposal  for  a  European  Parliament  and  Council  Directive  on  interconnection 
in 
telecommunications  with  regard  to  ensuring  universal  service  and  interoperability  through 
application  of  the  principles  of  Open Network Provision  (ONP) 

Article  1  Scope  and  aim 
Article  2  Definitions 
Article  3  Interconnection  and  interoperability  at national  and  Community  level 
Article  4  Rights  and  obligations  for  interconnection 
Article  5  Interconnection  and  universal  service  contributions 
Article  6  Requirements  for  non-discrimination  and  transparency 
Article  7  Principles  for  interconnection  charges  and  cost  accounting  systems 
Article  8  Accounting  separation  and  financial  accounts 
Article  9  General  responsibilities  of the  national  regulatory  authorities 
Article  10 Essential  requirements 
Article  11  Collocation  and  facility  sharing 
Article  12  Numbering 
Article  13  Technical  standards 
Article  14 Publication  of  and  access to  information 
Article  15  Committee  procedure 
Article  16 Dispute  resolution  procedure  at Community  level 
Article  17  Notification 
Article  18  Technical  adjustment 
Article  19  Deferment 
Article  20  Interconnection  with  third  country  organizations 
Article  21  Review  of  implementation 
Article  22  Transposition 
Article  23  Entry  into  force 
Article  24  Addressees 
Annexes 

SUMMARY 

This  proposal  for  a  European  Parliament  and  Council  Directive  on  interconnection  in 
telecommunications  with  regard  to  ensuring  universal  service  and  interoperability  through 
application of the principles of Open Network Provision (ONP) constitutes a key  element in 
the future  competitive  environment. 

It will  enable new market entrants to access  existing business and residential  customers,  on 
in  the 
a  basis  which  will  encourage 
telecommunications  services  sector,  within  a predictable and stable regulatory  environment. 

investment  and  market  growth 

increased 

At the same time it will put in place safeguards to ensure interconnection and interoperability 
of networks and services so that users may increasingly benefit from the universal  provision 
of telecommunications  services throughout the Community. 

The Directive  lays  down  harmonized  principles  for  interconnection  to be implemented  at a 
national  level.  The  important features are: 

application  of the  open network  provision principles  of transparency,  objectivity,  and 
non-discrimination,  in accordance with the principle  of  proportionality; 

priority  given  to  commercial  negotiations  between  interconnecting  parties  while 
reserving some conditions to be set a priori by national telecommunications regulatory 
authorities; 

clear responsibilities for national regulatory authorities, in accordance with the principle 
of  subsidiarity,  including  effective  mechanisms for dispute resolution. 

Full  competition in the provision of telecommunications  services and network  infrastructure 
is expected  to be introduced  in most Member  States by  1 January  1998. 

This  Directive  is  an  essential  component  of  the  new  regulatory  environment  supporting 
telecommunications  liberalization,  and  as  such  forms  part  of  a  general  legislative  reform 
package for the sector. 

EXPLANATORY  MEMORANDUM 

1. 

Introduction 

This  proposal  for  a  Directive  on  interconnection  in  telecommunications  with  regard  to 
ensuring  universal  service  and  interoperability  through  application  of  the  principles  of 
Open Network  Provision  (ONP)  is  an  essential  part  of  a general  legislative  reform  package 
for  the telecommunication  sector. 

In the telecommunications  sector the European Union (EU) is following  a balanced policy  of 
the  1990  Commission  Directive  on 
liberalization  and  harmonization,  building  on 
telecommunications services(1) and the Council Directive on open network provision(2), adopted 
simultaneously. 

The telecommunications  reform  package will  implement the political  agreement to  liberalize 
telecommunication  services  and  telecommunications  infrastructure  by  1 January  1998(3),  as 
contained  in  Council  Resolutions  of  22 July  1993(4) and  22 December  1994(5).  At the  same 
time it will put in place safeguards  to ensure interconnection  and interoperability  of networks 
the  universal  provision  of 
and  services  so 
telecommunications  services  throughout  the Union. 

that  users  continue 

to  benefit 

from 

Interconnection  is seen as a key element in the future  competitive environment,  allowing new 
market  entrants  access  to  existing  end-users,  on  a  basis  which  will  encourage  increased 
investment and market growth in the telecommunications  services sector, within a predictable 
and  stable  regulatory  environment. 

2. 

Background 

Efficient  trans-European  telecommunications,  essential  for  the creation  of the  single  market, 
are  particularly  important  for  the  promotion  of  economic  growth.  The  globalization  of 
companies  requires  their  ability  to  communicate  seamlessly  between  the  different  locations 
of their  activities  in  diverse  countries  and,  increasingly,  to improve  the links they  have with 
their  customers.  The  Delors  White  Paper(6) referred  to  telecommunications  networks  as the 
"lifeblood  of  competitiveness". 

The  role  of  telecommunications  as  a  catalyst  for  the  single  market  has  been  reaffirmed  on 
several  occasions by the Commission  and the Council,  and has been  at the basis of a number 
of important  legislative measures implemented  at the Community  level  over the past decade. 
The  aim  of  these  measures  has  been  to  bring  about  the  progressive  opening  of  the  markets 

(1) 
(2) 
(3) 

(4) 
(5) 

(6) 

Ireland,  Portugal  and  Spain  have  transition  periods  of  up  to  five  years; 

Commission  Directive  90/388/EEC,  OJ  No L  192, 24.7.1990,  p.  10. 
Council  Directive  90/387/EEC,  OJ No L  192, 24.7.1990,  p.  1. 
Greece, 
Luxembourg  has  a transition  period  of up to two years. 
Council  Resolution  93/C213/01,  6.8.1993,  p.  1. 
Council  Resolution  94/C379/03, 31.12.1994,  p. 4. 
Commission  White  Paper  on  "Growth,  competitiveness  and  employment 
the  challenges  and  ways  forward  into the  21st  century",  December  1993. 

-

for  equipment  and  services as a means of providing both residential  and business users more 
effective  and  cheaper  telecommunications,  and  to  create  a  homogeneous  fabric  for  pan-
European  telecommunications  services. 

In a perfectly  competitive  environment,  the need  for  regulation would  be limited to  ensuring 
fair  play, most probably  by ex-post application  of the Treaty  competition  rules, supported  by 
ex-ante provisions aimed at satisfying  certain public service goals and essential  requirements. 
While  the  market  is  moving  towards  full  competition,  however,  an  appropriate  ex-ante 
regulatory  regime  will  be  required  to  reduce  the  risk  that  existing  players  might  use  their 
strength to discourage new potential operators and service providers from  entering the market. 

3. 

Aims  and  objectives  of  the  proposed  Directive 

The objectives of the new regulatory  environment would be to ensure open access to networks 
and  services, and to guarantee the rights of market players to obtain interconnection  with  the 
networks  and  services  of  others  where  this  is  reasonably  justified. 

The  proposed  harmonized  framework  for  interconnection  will  be  characterized  by: 

application  of  the  open  network  provision  principles  of  transparency,  objectivity,  and 
non-discrimination,  in  accordance  with  the  principle  of  proportionality; 

priority  given  to  commercial  negotiations  between  interconnecting  parties  while 
reserving  some conditions to be set a priori  by national  telecommunications  regulatory 
authorities; 

clear responsibilities for national regulatory authorities, in accordance with the principle 
of  subsidiarity,  including  effective  mechanisms  for  dispute  resolution. 

In  addition,  the  competition  rules  of  the  Treaty  will  apply. 

A European  Union Directive on  interconnection  within the ONP framework  is considered  to 
be  the  most  effective  way  of  laying  down,  in  a  harmonized  manner,  the  principles  for 
interconnection  in  Member  States,  at  the  same  time  defining  the  role  of  national  regulatory 
authorities  in  this  context,  consistent with  the  principle  of  subsidiarity. 

The  proposed  Directive  aims  to  strike  an  appropriate  balance  between  the  rights  and 
obligations  of  players  in  accordance  with  their  relative  positions  in the  market. 

4. 

Applicability  of  the  proposed  Directive  -  a  balanced  framework  of  rights  and 
obligations 

The  proposed  Directive  lays  down  a framework  for  interconnection  in which  the  rights  and 
obligations  of the parties concerned  are clearly  set out.  The National  Regulatory  Authorities 
(NRAs)  for  telecommunications  within  the  Member  States  have  a  major  role  to  play  in 
ensuring  that  interconnection  is  provided  in  the  best  interests  of  European  users,  and  thus 
many  of  the  provisions  of  the  Directive  concern  the  role  and  responsibilities  of  the 
National  Regulatory  Authorities. 

In  terms  of  the  organizations  covered,  the  proposed  Directive  recognizes  that  there  will  be 
different  types of  market  players in the Member  States.  For  each  type, the Directive  strikes 
a balance between  rights  and  obligations,  which  may  differ  from  one type  of  market  player 
to  another. 

A  new  market  entrant  wishing  to  acquire  strong  rights  to  interconnect  must  accept 
correspondingly  strong obligations; another,  depending on the services to be offered,  may  be 
content  with  fewer  rights  and  fewer  obligations. 

The latter would be  an example  of the type of organization  (e.g. a provider  of  data  services) 
not  having  any  particular  a  priori  right  to  be  granted  interconnection  by  others,  nor  any 
obligation  to  accept  requests  for  interconnection  from  others.  However  in  the  event  of  an 
interconnection  dispute,  all  parties  would  have  the  right,  at  a  national  level,  to  request  the 
national  regulatory  authority  to intervene, and, in the case of cross-border  disputes, to invoke 
a resolution procedure at the Community level.  Services provided by this type of organization 
may, in the public interest,  be subject  to certain a priori  conditions laid down by the  national 
regulatory  authority  (e.g. regarding  international  standards, numbering,  etc.),  but  in  all  other 
respects,  interconnection  agreements  would  be  the  result  of  technical  and  commercial 
negotiation  between  the  parties. 

Public  telecommunications  networks  operators  and  public  telecommunications  services 
providers  which  are  in  a position  to control  the  customer's  access to  other  service  providers 
(and  by  extension,  other  service  providers'  access  to  customers)  generally  have  rights  of 
access to national  resources, such as rights to lay cables on public highways, rights to the use 
of  radio  frequencies,  or  rights  to  use  numbers  or  numbering  ranges  from  the  national 
numbering  plan.  These  privileges  would  be balanced  by  an  obligation  to  interconnect  with 
other  organizations  in  the  same  category,  on  a  non-discriminatory  basis,  in  order  to  ensure 
national  and European-wide  services. Organizations  who also have  significant  market  power 
would  be  assigned  certain  obligations,  in  particular,  those  aimed  at  compensating  for  an 
imbalance  in  negotiating  power  with  much  smaller  new  market  entrants.  Significant  market 
power  may  be  defined  in  terms  of  a number  of  factors  which  may  be  considered  separately 
or  in  combination,  such  as  size,  market  share,  degree  of  vertical  integration,  ability  to  act 
independently  of their competitors, control  of scarce resources, any privileges with respect to 
other  market  players,  etc.  Obligations  for  these  types  of  organizations  would  include 
requirements  for  published  interconnect  price  lists,  for  cost-oriented  interconnection  tariffs 
supported  by  transparent  cost-accounting  systems,  and  for  accounting  separation  in  certain 
cases. 

5. 

Summary  of  the  contents  of  the  proposed  Directive 

Article  1 describes  the  basic  scope  and  aims  of  the  Directive. 

Article  2  contains  definitions  of  the  main  terms  used  in  the  Directive. 

Article 3 outlines the major  principles of interconnection,  requiring Member States to remove 
any  existing barriers to interconnection,  and  affirming  the priority  to be given  to  commercial 
and technical  negotiation.  It  stresses the importance of facilitating  European-wide  telephone 
and 
the 
confidentiality  of  information  transmitted  between  them. 

leased-line  services.  It  also  ensures 

interconnecting  parties  maintain 

that 

Article  4 addresses the  rights  and  obligations  of interconnected  organizations.  It affirms  the 
right  and  obligation  of  specified  organizations  to negotiate interconnection  agreements with 
one  another,  allowing  national  regulatory  authorities  to  waive these  exceptionally,  and  then 
only  in  cases where  viable  alternatives to interconnection  exist. 

Article 5 describes the conditions governing mechanisms Member  States may implement  for 
the  sharing  of  any  burden  associated  with  the  provision  of  universal  service.  A  burden 
associated  with  universal  service  obligations  may  be  shared,  either  by  assuming  directly  a 
share  of  those  obligations,  or  by  making  appropriate  financial  contributions,  a  choice 
sometimes referred  to as 'pay-or-play'.  The Directive stresses the need for transparency  in the 
calculation  of the net cost associated with universal  service in cases where market players are 
required  to make  financial  contributions. 

Article  6  specifies  the  requirements  for  non-discrimination  and  transparency  in  relation  to 
interconnection  to  networks  and  services provided  by  organizations with  significant  market 
power.  The  Article  requires  the  publication  of  interconnection  agreements  involving 
organizations  having  significant  market  power  (with  the  possible  exception  of  certain 
commercially  confidential  details). 

Article  7  describes  the  principles  to  which  those  organizations  having  significant  market 
power  must  adhere  when  setting  interconnection  charges.  Charges  must  be  transparent, 
unbundled,  cost-oriented,  and  promote  economic  efficiency  and  sustainable  market  entry. 
They  must  contain  separately-identified  cost  components  reflecting  initial  installation,  and 
conveyance  of  traffic  across  the  host  network.  The  Article  calls  for  such  organizations  to 
publish  standard  price-lists  of interconnection  tariffs.  Operators  covered  by this Article must 
demonstrate cost orientation through the implementation of approved cost accounting systems. 

Article 8 applies requirements for accounting separation to vertically-integrated  organizations 
with  significant  market  power  or  to  those  which  enjoy  special  or  exclusive  rights  in  other 
(non-telecommunications)  sectors,  in  order  to  avoid  unfair  cross-subsidization  from  one 
activity to another. There are also compulsory  requirements for independent audit of accounts, 
and  for  market  players  to  provide,  on  request,  complete  accounting  information  to  national 
regulatory  authorities,  and  where  appropriate,  to the European  Commission. 

Articles  9  defines  the  general  responsibilities  of  National  Regulatory  Authorities  (NRAs). 
It  sets out  overall  policy  objectives  and  it gives the right to NRAs to  intervene, to  set time-
limits for the successful  conclusion of negotiations, to insist that certain conditions be  fulfilled 
(Annex V refers)  and if necessary to impose interconnection terms.  The Article also describes 
a procedure  for  the resolution  of disputes arising between  organizations  operating  within  the 
jurisdiction  of  a single NRA. 

Article  10  describes  how  the  essential  requirements  (security  of  network  operations, 
maintenance of network integrity,  interoperability  of services, and protection  of personal  data 
and  confidentiality)  apply  to  interconnection. 

Article  11  describes  conditions  for  the  sharing  of  facilities  (e.g.  ducts,  trenches,  sites  and 
buildings), leaving the associated  arrangements  as a matter for  agreement between the parties 
concerned.  Member  States  may  impose  sharing  arrangements,  including  the  apportionment 
of  costs, where  justified. 

Article 12 requires that numbering plans be controlled and developed by National Regulatory 
Authorities,  taking  into  account  European  and  global  trends.  Consistent  with  the  need  to 
create a fair competitive environment, the Article stipulates that procedures for the allocation 
of  numbers  should  be  transparent,  equitable,  timely,  objective  and  non-discriminatory. 
National  regulatory  authorities  are  also  required  to  ensure  that number portability  between 
service providers is  available  as soon  as possible. 

Article  13 requires NRAs to encourage the voluntary  adoption of European  standards, or in 
their  absence,  international  then  national  standards.  The  Commission  may,  in  consultation 
with the ONP Committee, request interconnection standards to be drawn up by the appropriate 
European  standardization bodies. 

Article  14 affirms the responsibility  of National Regulatory Authorities to ensure publication 
of,  and ease  of  access to,  information  on interconnection. 

Article  15  designates  the  ONP  Committee  as  the  appropriate  forum  for  consultation  on 
interconnection matters. 

Article  16 provides  a  procedure  at the Community  level  for the  settlement  of  cross-border 
disputes. 

Article  17  requires  Member  States  to  notify  the  Commission,  by  1 January  1998,  of  the 
names  of  the  relevant  NRA(s),  the  organizations  having  universal  service  obligations,  the 
organizations  deemed  to  have  significant  market  power,  and  organizations  covered  by 
Annex  II of the Directive. 

Article  18  provides  for  future  modifications  to the Annexes  of the Directive  in the  light  of 
technological  developments, changes in market or consumer demand or to improve coherence 
of the  regulatory  environment  in the European Union. 

Article  19  allows  for  deferment  in  respect  of  some  obligations  contained  in  the  Directive, 
under certain  conditions. 

Article  20  calls  on  Member  States  to  report  any  difficulties  in  interconnecting  with 
organizations in third countries. The Council may, when necessary, authorize the Commission 
to negotiate  with  a view  to obtaining  comparable rights for  Community  organizations. 

Article  21  contains a general  provision  on the review  of  implementation  of the Directive in 
Member  States,  as well  as  specific  provisions  on the  review  of  comparable  interconnection 
conditions  in third  countries pursuant to Article 20. 

Article  22  contains  standard  provisions  on  the  transposition  of  the  Directive  into 
Member  States' national  law, noting that this should be accomplished by 31 December  1997. 

Annex  I describes the categories  of networks and services  subject to conditions  specified  in 
various Articles  of the Directive. 

Annex  II  describes  the  organizations  with  rights  and  obligations  to  interconnect  with  each 
other. 

Annex  HI  describes  the  method  to  be  used  to  calculate  of the  net  cost  of  universal  service 
obligations  for  voice  telephony. 

Annex IV is a non-exhaustive list of the elements making up the charges for  interconnection. 

Annex V  specifies  the headings under which  details of the cost accounting  systems  operated 
by  organizations  with  significant  market  power  must be  made public. 

Annex  VI  sets  the  turnover  limit  below  which  organizations  are  exempted  from  certain 
obligations  for  accounting  separation. 

Annex  VU identifies  conditions  appropriate  for  interconnection  agreements,  dividing  them 
between  those  which  must  be  included  and  those  which  are  voluntary  though  nevertheless 
desirable. 

6. 

Consultation  Process 

The  need  for  a  clear  regulatory  framework  for  interconnection  was  identified  in  the 
Green  Paper  on  Personal  and  Mobile  Communications^  which  proposed  that  reliance  on 
direct  commercial  negotiations  between  the  interconnecting  parties  should  be  a  guiding 
principle.  At the same time, the traditional  open network provision  principles of  objectivity, 
transparency,  non-discrimination,  and  cost-orientation  were  to  apply. 

The  consultation  on  the  Mobile  Green  Paper  made  it  clear  that  a  predictable  and  stable 
environment  for  interconnection  was  needed  at  EU  level  to  ensure  further  investment  and 
growth  in  the  market(8). 

The  Commission  announced  its  plans  for  a  European  Parliament  and  Council  Directive  on 
Interconnection  in  the  context  of  open  network  provision  in  its  Action  Plan  on  the 
Information  Society(9),  and  further  elaborated  the  outline  structure  of  such  a Directive  in  its 
to 
Communication  on 
telecommunications  networks  and  services  (Open  Network  Provision)(10)  and 
in  the 
Green  Paper  on  infrastructure,  Part  II,  published  in  January  1995(11).  In  addition,  the 
Commission  held  two  public  workshops  in  November  1994  on  the  results  of  studies  by 
independent  consultants  on  interconnect!on(12)  and  cost  accounting(13). 

the  present  status  and 

for  open  access 

future  approach 

The  Commission's  report  on  the  Consultation  on  the  Green  Paper  on  the  liberalization  of 
infrastructure  and  cable  television  networks(14)  revealed  strong  support  for  an  effective 

(7) 
COM(94)  145, 27.4.1994. 
(8) 
COM(94)  492,  23.11.1994. 
(9) 
COM(94)347,  17.7.1994. 
(10)  COM(94)  513, 29.11.1994. 
(11)  COM(94)  682,  15.1.1995. 
(12) 

Study  by WIK/EAC  on  "Network  interconnection  in  the  domain  of  ONP"  undertaken 
for  EC  DGXIII/A/1, November  1994. 
Study  by  Arthur Andersen  on  "Cost  allocation  and general  cost accounting  principles" 
undertaken  for  EC  DGXIII/A/1, November  1994. 

(13) 

(14)  COM(95)  158, 3.5.1995. 

interconnection  framework  based  primarily  on  commercial  negotiation,  supported  by  a 
common  regulatory  framework  at  a  European  level  and  effective  mechanisms  to  resolve 
disputes. 

The  text  of  the  draft  Directive  reflects  these  concepts.  The  principles  embodied  in  the 
proposed  Directive  have  been  discussed  in  detail  in  the  ONP  Committee  with  national 
regulatory  authorities. 

7. 

Interconnection  and  competition  rules 

Interconnection 
agreements  are  one  of  the  most  important  factors  determining  future 
conditions for  fair  competition  in the sector.  The application  of the competition  rules of the 
Treaty to issues of interconnection  and access in the telecommunications  sector will  therefore 
become  increasingly  important.  It  is  planned  that  the  proposed  Directive,  which  does  not 
affect  the application of the Treaty competition rules, will be complemented by a Commission 
Notice  on the  application  of  the  competition  rules  to  interconnection  and  access.  Adoption 
of  this Notice  is  expected  to  be  in  conformity  with  the  timetable  set  by  the  Commission  in 
its  Communication  of  3  May  1995  on  the  Consultation  on  the  Infrastructure  Green  Paper 
(COM(95)  158),  on  the  basis  of  a comprehensive  public  consultation  carried  out  on  a  draft 
the 
Notice 
European  Communities. 

to  be  published  by 

the  Commission 

the  Official 

Journal  of 

in 

8. 

Conclusion 

The proposed  Directive  is an  essential  component  of the regulatory  environment  required  to 
ensure  the  effective  introduction  of  full  competition  in  the  provision  of  telecommunications 
services and telecommunications infrastructure  in most Member States of the European Union 
by  1 January  1998, and  in  the  remainder  by  the year  2003. 

10 

Proposal  for a 
EUROPEAN PARLIAMENT  AND  COUNCIL DIRECTIVE 

on interconnection  in telecommunications  with regard to ensuring 
universal  service  and interoperability  through application  of 
the principles  of Open Network Provision  (ONP) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  100a thereof, 

Having regard to the proposal  from the Commission(1), 

Having  regard to the Opinion  of the Economic  and Social  Committee(2), 

Acting  in  accordance with the procedure referred to in Article  189b of the Treaty, 

1.  Whereas from  1 January  1998  (with transition periods for  certain Member  States) the 
provision  of telecommunications  services and infrastructure  in the Community  will  be 
liberalized; whereas the Council's Resolution  of  7 February  1994 on universal  service 
principles  in  the  telecommunications  sector*3*  recognizes  that  in  order  to  promote 
Community-wide telecommunications services there is a need to ensure interconnection 
of public networks and, in the future competitive environment, interconnection between 
different national and Community operators; whereas 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  (ONP)(4)  lays  down 
harmonized  principles  for  open  and  efficient  access  to,  and  use  of,  public 
telecommunications  networks  and,  where  applicable,  services;  whereas  the  Council's 
Resolution  of  22  July  1993  on the  review  of  the  situation  in  the  telecommunications 
sector  and  the  need  for  further  development  in  that  market(5)  recognizes  that  open 
network  provision  measures  provide  an  appropriate  framework  for  harmonizing 
interconnection  conditions; 

2.  Whereas  a  general  framework  for  interconnection  to  public  telecommunications 
networks  and  public  telecommunications  services,  irrespective  of  the  supporting 
technologies  employed,  is  needed 
in  order  to  provide  end-to-end  interoperability  of 
services  for  Community  users;  whereas  fair,  proportionate  and  non-discriminatory 
conditions  for  interconnection  and  interoperability  are  key  factors  in  fostering  the 
development  of  open  and competitive markets; 

(1)  OJ 
(2)  OJ 

(3) 

<«) 

(5) 

O J N o C 4 8,  16.2.1994,  p.  1. 
OJNoL  192, 24.7.1990,  p. 1. 
OJNoC213,  6.8.1993,  p.  1. 

11 

3.  Whereas the abolition of special and exclusive rights in telecommunications means that 
certain  existing  definitions  need  to  be  revised;  whereas  for  the  purposes  of  this 
Directive,  telecommunications  services  do not include  radio and television  broadcast 
services;  whereas  the  technical  conditions,  tariffs,  usage  and  supply  conditions  that 
apply to interconnection are different from the conditions that apply at end-user/network 
interfaces; 

4.  Whereas, following the removal of special and exclusive rights for telecommunications 
services  and  infrastructure  in  the  Community,  the  provision  of  telecommunications 
networks  or  services  may  require  some  form  of  authorization  by  Member  States; 
whereas all organizations authorized to provide public telecommunications networks or 
public telecommunications  services in all  or part of the Community  should be free to 
negotiate  interconnection  agreements  on  a  commercial  basis  in  accordance  with 
Community  law,  subject  to  supervision  and  intervention  by  national  regulatory 
authorities;  whereas  it  is  necessary  to  ensure  adequate  interconnection  within  the 
Community  of  certain  networks  and  services  essential  for  the  social  and  economic 
well-being  of  Community  users,  notably  public  telephone  networks  and services,  and 
leased lines; 

5.  Whereas it is necessary  to define  those  organizations who  have rights and  obligations 
for  interconnection;  whereas  in  order  to  stimulate  development  of  new  types  of 
telecommunications services, it is important to encourage new forms of interconnection 
and special  network access; 

6.  Whereas the Resolution of 7 February  1994 sets out conditions for financing a universal 
voice  telephony  service;  whereas  obligations  for  the  provision  of  universal  service 
contribute  to  the  Community  objective  of  socio-economical  cohesion  and  territorial 
equity;  whereas  there  may  be  more  than  one  organization  in  a Member  State  with 
universal  service obligations; whereas the calculation of the net cost of universal service 
should  take due  account  of  costs  and revenues,  as well  as economic  externalities and 
the  intangible  benefits  resulting  from  providing  universal  service  but,  in  order not to 
hinder the on-going process of tariff rebalancing, should not include elements which are 
due to historic tariff  imbalances; whereas costs of universal  service obligations should 
be  calculated  on  the  basis  of  transparent  procedures;  whereas  financial  contributions 
related to the sharing of universal  service obligations should be unbundled from charges 
for  interconnection; 

7.  Whereas  it  is  important  to  lay  down  principles  to  guarantee  transparency,  access  to 
information,  non-discrimination  and equality  of  access,  in particular for  organizations 
with  significant  market power; whereas the market power  of  an organization  depends 
on a number of factors including its share of the relevant product or service market in 
the  relevant  geographical  market,  its  turnover  relative  to  the  size  of  the  market, 
its 
ability to influence  market conditions,  its control  of the means of access to end-users, 
its access to financial  resources,  its experience  providing  products and services  in the 
market; whereas, for the purpose of this Directive, an organization with a share of more 
than  25%  of  a  particular  telecommunications  market  in  the  geographical  area  in  a 
Member  State  within  which  it  is  authorized  to  operate  would  be  presumed  to  enjoy 
significant  market power,  unless  its national  regulatory  authority  determined  that this 
was  not  the  case;  whereas,  for  an  organization  falling  below  this  threshold  market 

12 

share, the national regulatory authority may nevertheless determine that the organization 
enjoyed  significant  market power; 

8.  Whereas pricing for interconnection is a key factor to determine the  structure and the 
intensity  of  competition  in  the  transformation  process  towards  a  liberalized  market; 
whereas organizations with significant  market power must be able to demonstrate that 
their interconnection  charges  are  set  on the  basis  of  objective  criteria  and  follow  the 
principles of transparency and cost orientation, and are sufficiently  unbundled in terms 
of  network  and  service  elements  offered;  whereas  publication  of  a  list  of 
interconnection  services  and  charges  enhances  the  necessary  transparency  and  non 
discrimination; whereas flexibility  in the methods of charging for interconnection traffic 
should  be  possible,  including  capacity-based  charging;  whereas  the  level  of  charges 
should promote productivity and encourage efficient  and sustainable market entry, and 
should not be below a limit calculated by the use of long-run incremental  cost and cost 
allocation and attribution methods based on actual cost causation, nor above a limit  set 
by the  stand-alone  cost  of  providing the interconnection  in question; 

9.  Whereas appropriate accounting separation between interconnection activities and other 
activities ensures transparency of internal cost-transfers; whereas, where an organization 
with  special  or  exclusive  rights  in  a  non-telecommunications  field  also  provides 
telecommunications  services,  accounting  separation  is  an  appropriate  means  to 
discourage  unfair  cross-subsidies; 

10.  Whereas national regulatory authorities shall have an important role in encouraging the 
development  of  a  competitive  market  in  the  interests  of  Community  users,  and  of 
securing  adequate  interconnection  of  networks  and  services;  whereas  negotiation  of 
interconnection  agreements can be facilitated by national  regulatory  authorities  setting 
down  certain  conditions  in  advance,  and  identifying  other  areas  to  be  covered  in 
interconnection  agreements;  whereas  in  the event  of  a dispute  over  interconnection 
between parties in the same Member  State, an aggrieved  party must be able to call on 
the  national  regulatory  authority  to  resolve  the  dispute;  whereas  national  regulatory 
authorities must be able to require organizations to interconnect their facilities,  where 
it can be demonstrated  that this is in the users' interests;  whereas the task of national 
regulatory  authorities could be facilitated  by the publication of non-binding guidelines 
in these areas; 

11.  Whereas,  in  accordance  with  Directive  90/387/EEC,  the  essential  requirements  upon 
which  restrictions  on  access  to  and usage  of  public  telecommunications  networks  or 
services  are justified  are  limited  to  security  of  network  operations,  maintenance  of 
network  integrity,  interoperability  of  services  in justified  cases,  and protection  of data 
as appropriate; 

12.  Whereas facility-sharing  can be of benefit for town planning, environmental,  economic 
or other  reasons,  and  should  be  encouraged  by  national  regulatory  authorities  on the 
basis of voluntary agreements;  whereas compulsory facility-sharing may be appropriate 
in  some  circumstances,  but  should be  imposed  on  organizations  only  after  full  public 
consultation;  whereas  virtual  collocation  may  provide  a  satisfactory  alternative  to 
physical  collocation  of telecommunications  equipment; 

13 

13.  Whereas  numbering  is  a key  element  for  equal  access;  whereas  national  regulatory 
authorities should have the responsibility to administer and control national numbering 
plans,  and those naming and addressing aspects of telecommunications  services where 
coordination  at  a  national  level  is  required,  so  as  to  ensure  effective  competition; 
whereas  number  portability  -  meaning  that  the  end-user  is  able  to  change  the 
organization  providing  telephone  service  at  a location  without  changing  the  national 
number  -  is  an  important  facility  for  users,  and  should  be  implemented  as  soon  as 
practicable;  whereas numbering schemes should be developed in full  consultation with 
all  the  parties  involved  and  in  harmony  with  a  long-term  Europe-wide  numbering 
framework  and international  numbering  schemes; whereas numbering requirements in 
Europe,  the  needs  for  the  provision  of  pan-European  and  new  services  and  the 
globalization and synergy of the telecommunications market make necessary a common 
Community position in international organizations and fora where numbering decisions 
are taken; 

14.  Whereas,  in  accordance  with  Directive  90/387/EEC,  the  harmonization  of  technical 
interfaces  and  access  conditions  must  be  based  on  common  technical  specifications 
which take account of international  standardization;  whereas the development  of new 
European  standards  for  interconnection  may  be  needed;  whereas  in  accordance  with 
Council  Directive  83/189/EEC  of  28  March  1983  laying  down  a  procedure  for  the 
provision  of  information  in  the  field  of  technical  standards  and  regulations05*,  new 
national  standards  must  not  be  developed  in  areas  where  harmonized  European 
standards are under  development; 

15.  Whereas, in accordance with Directive 90/387/EEC, open network provision conditions 
must be transparent and published  in an appropriate manner;  whereas  that Directive 
set  up  a  Committee  (hereinafter  referred  to  as  "the  ONP  Committee")  to  assist  the 
Commission,  and  provides  a  procedure  for  consultation  with  telecommunications 
organizations,  users,  consumers,  manufacturers  and service providers; 

16.  Whereas in addition to the rights of recourse granted under national or Community law, 
there is a need for simple procedures for resolution of cross-border disputes which are 
outside  the  competence  of  a  single  national  regulatory  authority;  whereas  these 
procedures  should  be  responsive,  inexpensive  and transparent,  and  should  involve  all 
the parties concerned; 

17.  Whereas,  to  enable  the  Commission  to  monitor  effectively  the  application  of  this 
Directive,  it  is  necessary  that Member  States  notify  to  the  Commission  the  national 
regulatory  authorities which will  be responsible for the functions  of this Directive and 
the  organizations  covered  by  its provisions; 

18.  Whereas  given  the  dynamic  development  in  this  sector,  a  responsive  procedure  for 
adjustment  of  the  Annexes  to  this  Directive  should  be  established  which  takes  full 
account  of the views  of Member  States and should  involve the  ONP Committee; 

(6) 

OJ No L  109, 26.4.1983, p. 8. Directive as last amended by Directive 94/10/EC of the 
European Parliament  and the Council  (OJ No L  100,  19.4.1994,  p.  30.) 

14 

19.  Whereas  implementation  of  certain  obligations  must  be  linked  to  the  date  of 
liberalization of telecommunications services and infrastructure;  whereas deferment of 
the  obligation  to  provide  number  portability  may  be  granted  where  the  Commission 
agrees that the obligation would impose an excessive burden on certain organizations; 

20.  Whereas this Directive should also apply to organizations providing telecommunications 
networks  and  telecommunications  services  in  the  Community  which  are  not 
substantially  owned and controlled by Member States of the European Economic Area 
and/or nationals from such Member States, referred to as "third country organizations"; 
whereas Community operators should benefit from effective  and comparable access to 
third country  markets and enjoy a similar treatment in third countries as this Directive 
confers  on third  country  organizations; whereas  the  Community  gives  priority  to the 
attainment of this goal  within the context  of  multilateral  agreements; 

21.  Whereas the functioning of this Directive should be reviewed after three years; whereas 
at the same time the situation with regard to interconnection with third countries should 
also be reviewed,  to allow  appropriate action to be taken; 

22.  Whereas the essential  goal  of interconnection  of networks and services throughout the 
Community  and  the  provision  of  trans-European  networks  and  services  cannot  be 
realized satisfactorily  at Member State level, and is better achieved at Community level 
by this Directive; 

23.  Whereas this Directive is without prejudice to the application of the competition  rules 
of  the  Treaty  with  regard  to  interconnection  to  telecommunications  networks  and 
services, 

HAVE ADOPTED  THIS DIRECTIVE: 

Article  1 

Scope  and aim 

This  Directive  establishes  a  regulatory  framework  for  securing  the  interconnection  and 
interoperability  of  telecommunications  networks  and  services  in  the  Community,  in  an 
environment  of  open  and competitive markets. 

It concerns the harmonization  of  conditions for open and efficient  interconnection  to public 
telecommunications  networks and public telecommunications  services. 

Article 2 

Definitions 

1. 

For the purposes of this Directive: 

(a)  "interconnection"  means  the  physical  and  logical  linking  of  the  facilities  of 
organizations providing telecommunications networks and/or telecommunications 
services,  in  order to  allow  the  users  of  one  organization  to  communicate  with 

15 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

users  of  another  organization,  or  to  access  services  provided  by  another 
organization; 

"public telecommunications  network" means a telecommunications  network used 
inter  alia  for  the  provision  of  public  telecommunications  services; 

"public  telecommunications  service"  means  a  telecommunications  service 
available  to the  public; 

"telecommunications network'" means transmission systems and, where applicable, 
switching equipment and other resources which permit the conveyance of  signals 
between  defined  termination  points  by  wire,  by  radio,  by  optical  or  by  other 
electromagnetic  means; 

"telecommunications  services"  means  services whose  provision  consists  wholly 
or  partly  in  the  transmission  and  routing  of  signals  on  telecommunications 
networks,  with  the  exception  of  radio  and  television  broadcasting; 

"users"  means  end-users,  including  consumers  (e.g.  residential  end-users),  and 
service  providers; 

than  according 

"special  rights"  means  rights  that  are  granted  by  a  Member  State  to  a  limited 
number  of  undertakings  through  any  legislative,  regulatory  or  administrative 
instrument  which,  within  a  given  geographical  area,  limits  to  two  or  more  the 
number  of  such  undertakings  authorized  to  provide  a  service  or  undertake  an 
activity,  otherwise 
to  objective,  proportional  and  non 
discriminatory  criteria,  or  designates,  otherwise  than  according  to  such  criteria, 
several  competing  undertakings  as  being  authorized  to  provide  a  service  or 
undertake  an  activity,  or  confers  on  any  undertaking  or undertakings,  otherwise 
than according to such criteria, legal or regulatory  advantages which  substantially 
affect  the  ability  of  any  other  undertaking  to  provide  the  same  service  or  to 
undertake the  same activity  in the same geographical  area under  substantially  the 
same  conditions. 

2. 

Further  definitions  given  in  Directive  90/387/EEC  shall  apply,  where  relevant. 

Article  3 

Interconnection  and  interoperability  at  national  and  Community  level 

1.  Member  States  shall  take  all  necessary  measures  to  remove  any  restrictions  which 
prevent  organizations  authorized  by  Member  States  to  provide  telecommunications 
networks and telecommunications services from  negotiating interconnection  agreements 
between themselves in accordance with Community  law.  The organizations  concerned 
may  be  in  the  same  Member  State  or  in  different  Member  States.  Technical  and 
commercial  arrangements  for  interconnection  shall  be a matter  for  agreement  between 
the parties involved, subject to the provisions of this Directive and the competition  rules 
of  the  Treaty. 

16 

2.  Member  States  shall  ensure  the  adequate  and  efficient  interconnection  of  the  public 
telecommunications  networks  and  public  telecommunications  services  identified  in 
Annex I, Parts  1 and 2, to the extent necessary  to ensure universal  provision  of these 
services for  all  users within the Community. 

3.  Member States shall ensure that organizations who interconnect their facilities to public 
telecommunications  networks and/or public telecommunications  services respect at all 
times the confidentiality  of information  transmitted  or stored. 

Article  4 

Rights and obligations for  interconnection 

1.  Organizations authorized to provide public telecommunications networks and/or public 
telecommunications  services  as  identified  in  Annex  II  shall  have  a right and,  when 
requested by  organizations in that category,  an obligation to negotiate  interconnection 
with each other for the purpose of providing the services in question, in order to ensure 
provision of these networks and services throughout the Community.  On a case-by-case 
basis, the national regulatory authority may agree to limit this obligation on the grounds 
that there  are technically  and  commercially  viable  alternatives  to the  interconnection 
requested,  and  that  the  requested  interconnection  is  inappropriate  in  relation  to  the 
resources  available  to  meet  the  request.  Any  such  limitation  imposed  by  a  national 
regulatory  authority  shall  be  fully  reasoned  and  made  public  in  accordance  with 
Article  14(2). 

2. 

Organizations  authorized  to  provide  public  telecommunications  networks  and  public 
telecommunications services identified in Annex I which have significant market power 
shall  meet all  reasonable  requests for interconnection,  including  requests from  service 
providers  for  connection  to the  network  at  points  other than the  network  termination 
points  offered  to the majority  of  end-users ("special  network access"). 

Article  5 

Interconnection  and universal  service  contributions 

1.  Where  a Member  State  determines,  in  accordance  with the  provisions  of this  Article, 
that universal  service obligations represent a unfair burden for an organization,  it may 
establish mechanisms for sharing the net cost of the universal  service obligations with 
other organizations operating public telecommunications networks.  Member States shall 
take  due  account  of  the  principles  of  transparency,  non-discrimination  and 
the  public 
proportionality 
telecommunications  networks  and  public  telecommunications  services  identified  in 
Annex I, Part  1, may  be financed  in this way. 

in  setting  the  contributions 

to  be  made.  Only 

2. 

Contributions to the cost of universal  service obligations may be based on a mechanism 
specifically  established for the purpose and administered by a body independent  of the 
beneficiaries,  or  may  take  the  form  of  a  supplementary  charge  added  to  the 
interconnection  charge. 

17 

3. 

In order to  determine the burden which  the provision  of universal  service represents, 
organizations  with universal  service  obligations  shall,  at the  request  of  their national 
regulatory  authority,  calculate  the  net  cost  of  such  obligations  in  accordance  with 
Annex  III.  The  calculation  of  the  net  cost  of  universal  service  obligations  shall  be 
audited by a competent body, independent of the telecommunications organization, and 
approved  by  the national  regulatory  authority.  The  cost  calculation  and the results  of 
the audit shall  be open to public inspection  in accordance with Article  14(2). 

4.  Where justified  on the basis of the net cost calculation referred to in paragraph 3, and 
taking  into  account  the  market  benefit  which  accrues  to  an  organization  that  offers 
universal  service, national  regulatory  authorities shall determine whether a mechanism 
for  sharing the net cost of universal  service  obligations  is justified. 

5.  Where the mechanisms  referred  to in paragraph 4  are established,  national  regulatory 
authorities shall ensure that the principles for cost sharing, and details of the mechanism 
used,  are open to public inspection  in accordance with Article  14(2). 

National regulatory authorities shall ensure that an annual report is published giving the 
calculated cost of universal  service obligations,  and identifying  the contributions made 
by  all  the parties involved. 

6. 

Until  such time  as the  procedure  described  in paragraphs 3,  4  and  5 is  implemented, 
any charges payable by an interconnected party which include or serve as a contribution 
to the cost of universal service obligations, shall be notified,  prior to their introduction, 
to the national  regulatory authority and the Commission. Where the national regulatory 
authority  or the  Commission  finds  that  such  charges  are  excessive,  the  organization 
concerned  shall  be  required  to  reduce  the  relevant  charges.  Such  reductions  shall  be 
applied  retrospectively,  from  the date of  introduction  of the charges. 

7.  Where appropriate, the Commission may, acting in accordance with the procedure laid 
down  in  Article  15,  draw  up  guidelines  on  the  costing  and  financing  of  universal 
service. 

Article  6 

Requirements  for  non-discrimination  and transparency 

For interconnection to the public telecommunications networks and public telecommunications 
services identified  in Annex I provided by organizations which have been notified by national 
regulatory  authorities  as having  significant  market power,  Member  States  shall  ensure that: 

(a) 

the organizations concerned  adhere to the principle of  non-discrimination  with regard 
to  interconnection  offered  to  others.  They  shall  apply  similar  conditions  in  similar 
circumstances  to  interconnected  organizations  providing  similar  services,  and  shall 
provide interconnection  facilities  and information  to others under the  same conditions 
and  of  the  same  quality  as  they  provide  for  their  own  services,  or  those  of  their 
subsidiaries  or partners; 

18 

(b) 

(c) 

(d) 

all  necessary  information  and  specifications  are  made  available  on  request  to 
organizations  considering  interconnection,  in  order  to  facilitate  an  agreement  being 
concluded; 

any  changes  to  existing  interconnection  arrangements  are  notified  to  interconnected 
parties at least six months in advance of the change being implemented,  unless agreed 
otherwise by the parties concerned; 

interconnection  agreements  are  open  to  public  inspection,  in  accordance  with 
Article  14(2), with the exception of those parts which deal with the commercial strategy 
of the parties.  In every  case,  details  of interconnection  charges  and any  contributions 
to universal  service  obligations  shall  be published. 

Article  7 

Principles for interconnection  charges and cost  accounting  systems 

1.  Member  States  shall  ensure  that  the  provisions  of  paragraphs  2  to  6  apply  to 
organizations  operating  the  public  telecommunications  networks  and/or  public 
telecommunications  services  identified  in  Annex  I,  Parts  1  and  2,  who  have  been 
notified  by  national  regulatory  authorities as having  significant  market power. 

2. 

3. 

Charges  for  interconnection  shall  follow  the  principles  of  transparency  and  cost 
orientation, and promote economic efficiency  and sustainable market entry.  The burden 
of  proof  that  charges  are  cost-oriented  shall  lie  with  the  organization  providing 
interconnection  to  its  facilities.  National  regulatory  authorities  may  request  an 
organization  to  provide  full  justification  for  its  interconnection  charges,  and  where 
appropriate  shall  require charges to be adjusted. 

Charges for interconnection shall be based on the costs of providing the interconnection 
services  requested,  and  shall  normally  contain the following  elements,  each  of  which 
should be itemized  separately: 

a charge to cover re-imbursement of the one-time costs incurred in providing the 
specific  elements  of  the  interconnection  requested;  (i.e.  the  initial  cost  of  any 
engineering  work  needed to provide the interconnection  facilities  requested); 

usage  charges  related  to  the  utilisation  of  the  network  elements  and  resources 
requested.  These  may  include  capacity-based  charges  and/or  traffic  related 
charges; 

Annex  IV  indicates,  for  information  only,  the types  of  costs that may  be  included  in 
each  of  these tariff  elements.  Where  other tariff  elements  are applied,  these  must be 
transparent  and  based  on  objective  criteria,  and  approved  by  the  national  regulatory 
authority. 

Charges for interconnection  may include bulk discount  schemes.  In some cases, these 
may be available  only to organizations  identified  in Annex II.  Such schemes  shall be 
based  on  objective  criteria and applied  in a non-discriminatory  manner. 

19 

4. 

5. 

6. 

Charges for  interconnection  shall,  in accordance with Community  law, be  sufficiently 
unbundled,  so  that the  person  making  the  request  is  not  required  to  pay  for  network 
components  or facilities  which  are not required for the service demanded. 

National  regulatory  authorities  shall  ensure  the  publication,  in  accordance  with 
Article  14(1),  of  a list  of  interconnection  services  and associated  tariffs  broken  down 
into components,  according to market needs. 

National regulatory authorities shall ensure that the cost accounting systems used by the 
organizations  concerned  are  suitable  for  implementation  of  the  requirements  of  this 
Article,  and  are  documented  to  a  sufficient  level  of  detail.  Part  or  all  of  the 
documentation  approved  by  the  national  regulatory  authority,  giving  details  of  the 
in  Annex  V,  shall  be  open to public  inspection  in  accordance 
information  identified 
with  Article  14(2).  Compliance  with the cost  accounting  system  shall  be verified  by 
a competent independent body.  A statement concerning compliance shall be published 
annually. 

7.  Where  they  exist,  charges  related  to  the  sharing  of  the  cost  of  universal  service 

obligations,  as described  in Article  5,  shall  be unbundled  and identified  separately. 

8.  Member States shall  ensure that published interconnection charges and charges related 
to the sharing of the cost of universal service obligations are made available to the ONP 
Committee  at the request of the Commission. 

9. 

In order to provide a common basis for the derivation  of interconnection  charges, the 
Commission  shall, if necessary,  draw up,  acting in accordance with the procedure laid 
down  in  Article  15,  recommendations  on  cost  accounting  systems  in  relation  to 
interconnection. 

Article  8 

Accounting  separation  and financial accounts 

1.  Member  States  shall  require  organizations  who  provide  public  telecommunications 
networks and/or public telecommunications services and who have special  or exclusive 
rights  for  the  provision  of  services  in  other  sectors  in  the  same  or  another 
Member  State,  to keep  separate accounts for the different  activities,  to the extent that 
would be required if the activities in question were  carried out by legally  independent 
companies. 

2.  Member States shall  require organizations notified by national regulatory  authorities as 
having  significant  market  power  who  provide  public  telecommunications  networks 
and/or public telecommunications services for end-users and who offer  interconnection 
services  to  other  organizations,  to  keep  separate  accounts  for,  on  the  one  hand,  their 
activities  related  to interconnection  -  covering  both interconnection  services  provided 
internally and interconnection services provided to others - and, on the other hand, other 
activities,  to  the  extent  that  would  be  required  if  the  two  types  of  activities  were 
carried  out by  legally  independent  companies. 

20 

3. 

4. 

public 

providing 

telecommunications 

Organizations 
or  public 
telecommunications  services  shall  provide  financial  information  to  their  national 
regulatory  authority  promptly  on request and to the level  of detail  required.  National 
regulatory authorities may publish such information as would contribute to an open and 
competitive market, while taking account of the aspect of commercial  confidentiality. 
Detailed  financial  information  shall  be supplied to the Commission  on request, where 
required for fulfilling  its obligations under specific  Community  legislation. 

networks 

The financial accounts of organizations providing public telecommunications networks 
or public  telecommunications  services  shall  be  drawn up,  published  and submitted to 
independent audit.  The audit shall be carried out in accordance with the relevant rules 
of national  legislation. 

The first subparagraph shall also apply to the separate accounts required in paragraphs 1 
and 2. 

5. 

The provisions of paragraphs 1 and 2 shall not apply to organizations where the annual 
turnover in telecommunications  activities  in the Community  is less than the threshold 
set in Annex VI. 

6.  Where appropriate, the Commission shall, acting in accordance with the procedure laid 
down  in  Article  15,  draw  up  guidelines  on  accounting  separation  in  relation  to 
interconnection. 

Article  9 

General  responsibilities  of the national  regulatory  authorities 

1. 

National  regulatory  authorities shall  encourage  and secure adequate interconnection in 
the interests of all users, exercising their responsibility in a way that provides maximum 
economic  efficiency  and gives the maximum  benefit  to end-users. 

In particular,  national  regulatory  authorities  shall  take into account: 

the need to ensure  satisfactory  end-to-end  communications  for users; 

the need to  stimulate  a competitive market; 

the  need  to  promote  the  establishment  and  development  of  trans-European 
networks  and  services,  and  the  interconnection  and  interoperability  of  national 
networks  and services,  as well  as access to  such networks  and services; 

the principles of non-discrimination  (including equal  access) and proportionality; 

the need to maintain the universal  service. 

2. 

In  pursuit  of  the  goal  referred  to in  paragraph  1, national  regulatory  authorities  shall 
have the right to intervene on their own initiative at any time, in order to specify  issues 
which  must  be  covered  in  an  interconnection  agreement,  or  to  lay  down  specific 
conditions  to  be  observed  by  one  or  more  parties  to  such  an  agreement.  National 

21 

regulatory  authorities  may  require  changes to be made to interconnection  agreements 
to  ensure  effective  competition  and/or 
already  concluded,  where  justified 
interoperability  of  services for users. 

Conditions  set  by  the  national  regulatory  authority  may  include  inter  alia  conditions 
designed to ensure effective competition, technical conditions, tariffs,  supply and usage 
conditions,  conditions  about  conformance  to  relevant  standards,  conformance  to 
essential  requirements,  protection  of  the  environment,  and/or  the  maintenance  of 
end-to-end  quality  of  service. 

The national regulatory authority may also set time-limits within which negotiations on 
interconnection  are  to  be  completed.  If  agreement  is  not  reached  within  the  time 
allowed, the national  regulatory  authority  shall take steps to bring about an agreement 
under procedures laid down by that authority.  The procedures shall be open to public 
inspection  in accordance with Article  14(2). 

3. 

General  conditions  set  down  in  advance by  the national  regulatory  authority  shall  be 
published  in accordance with Article  14(1). 

In  relation  to  interconnection  between  organizations  identified  in  Annex  II,  national 
regulatory  authorities shall: 

set time-limits  for the negotiation  of  interconnection  agreements,  in  accordance 
with  paragraph 2; 

set ex  ante conditions,  as listed  in Annex  VII, Part 1; 

ensure  that  the  issues  in  Annex  VII,  Part  2,  are  covered  in  interconnection 
agreements, where appropriate; 

encourage  the  issues  in  Annex  VII,  Part  3,  to  be  covered  in  interconnection 
agreements. 

4.  Where  an organization  authorized  to  provide  public  telecommunications  networks or 
public telecommunications  services enters into interconnection agreements with others, 
the national  regulatory  authority  shall have the right to inspect all such interconnection 
agreements  in their entirety. 

5. 

In  the  event  of  an  interconnection  dispute  between  organizations  operating  under 
authorizations granted by the same Member  State, the national  regulatory  authority  of 
that Member State shall,  on request of either party, take steps with a view to resolving 
the dispute. 

In so  doing,  the national  regulatory  authority  shall  take into  account,  inter alia: 

the user interest, 

regulatory  obligations  or constraints imposed  on any  of  the parties, 

22 

the desirability of stimulating innovative market offerings,  and of  providing users 
with  a  wide  range  of  telecommunications  services  at  a  national  and  at  a 
Community  level, 

the  availability  of  technically  and  commercially  viable  alternatives  to  the 
interconnection  requested, 

the desirability  of ensuring  equal  access arrangements, 

the need to maintain the integrity  of the public telecommunications  network and 
the interoperability  of  services, 

the nature of the request in relation to the resources available to meet the request, 

the relative market positions of the parties, 

the public interest (e.g.  the protection  of the environment). 

A  decision  on  the  matter  by  a national  regulatory  authority  shall  be  made  public  in 
accordance  with  Article  14(1).  The parties concerned  shall  be given  a full  statement 
of the reasons on which  it is based. 

If the dispute  is  not resolved  in  a satisfactory  way  for  all  the  parties concerned,  or if 
no solution  has been found by the national  regulatory  authority  within two months of 
its referral  to this authority: 

•either party may refer the dispute to the Commission  for conciliation, by way  of 
a notification  to the Commission, with copies to all parties involved.  Where the 
Commission finds that there  is  a case  for  further  examination,  the  Commission 
may  set  up  a  working  group  comprising  in  particular  the  members  of  the 
Committee referred to in Article  15 to assist it.  Recourse to this procedure shall 
not hinder the parties involved  from  bringing an action under national  law; 

or 

the national  regulatory  authority may, with the agreement of all parties involved, 
refer the dispute to the Commission for resolution under the procedure set out in 
Article  16(4) and (5), by way of a notification  to the Commission, with copies to 
all  parties involved. 

In cases where organizations who are authorized to provide public telecommunications 
interconnected  their 
networks  and/or  public  telecommunications  services  have  not 
facilities,  national  regulatory  authorities may,  in the interests of users and following  a 
period  of  public  consultation  during  which  all  interested  parties  are  given  an 
opportunity to express their views,  require the organizations concerned to interconnect 
their facilities  and, where  appropriate,  set terms of interconnection. 

The  Commission  may,  in  consultation  with  the  ONP  Committee,  issue  guidelines  on 
the basis  of  experience  gained  in the implementation  of  paragraphs  1 to 6. 

23 

Article  10 

Essential  requirements 

Without prejudice  to action which  may be taken in accordance with Articles 3(5) and  5(3) of 
in  Article  3(2)  of 
Directive  90/387/EEC, 
Directive  90/387/EEC  shall  apply  to interconnection  to public telecommunications  networks 
and/or  public  telecommunications  services  as  set  out  in  this  Article.  Where  the  national 
regulatory  authority  imposes  conditions  based  on  essential  requirements  in  interconnection 
agreements,  these  conditions  shall  be  published  in the  manner  laid  down  in  Article  14(1). 

requirements  as  specified 

the  essential 

(a) 

Security  of  network  operations: national  regulatory  authorities  shall  take  all  necessary 
steps  to  ensure  the  security  of  public  telecommunications  networks  and  public 
telecommunications  services  in  case  of  emergency.  An  emergency  situation  in  this 
context means catastrophic network breakdown or an exceptional case of force  majeure, 
such  as  extreme  weather,  flood,  lightning  or  fire,  industrial  action  or  lockouts,  war, 
military  operations  or  civil  disorder.  In  an  emergency  situation  the  organization(s) 
affected  shall  make  every  endeavour  to  ensure  that  service  is  maintained  to  all  users 
and  to  all  interconnected  parties.  The  need  to  maintain  the  security  of  public 
telecommunications  networks  and  public  telecommunications  services  in  case  of 
emergency  does  not  constitute  a  valid  reason  for  refusal  to  negotiate  terms  for 
interconnection. 

The  national  regulatory  authority  shall  ensure  that  any  conditions  for  interconnection 
related  to  the  security  of  networks  in  case  of  emergency  are  proportional  and  non 
discriminatory  in  nature,  and  are based  on  objective  criteria  identified  in  advance. 

Interconnection  agreements  may  include  specific  conditions  to  compensate  one  party 
in  the  event  of  unavailability  of  the  other  party's  facilities  during  an  emergency 
situation. 

(b)  Maintenance of network integrity: national regulatory authorities shall take all necessary 
steps to ensure that  the integrity  of public telecommunications  networks  is maintained. 
The need to maintain  network  integrity  does not constitute a valid  reason for  refusal  to 
negotiate terms for  interconnection.  The national  regulatory  authority  shall  ensure that 
any  conditions for  interconnection  related  to protection  of network  integrity,  including 
specific  conditions tô compensate one party in the event of network harm caused by the 
other  party,  are  proportional  and  non-discriminatory  in  nature,  and  are  based  on 
objective  criteria  identified  in  advance. 

(c) 

Interoperability  of  services:  national  regulatory  authorities  may  impose  conditions  in 
interconnection  agreements  in  order  to  ensure  interoperability  of  services,  including 
conditions  designed  to  ensure  satisfactory  end-to-end  quality.  Such  conditions  may 
include 
technical  standards,  or  specifications,  or 
industry-agreed  codes  of  conduct. 

implementation  of  specific 

24 

(d)  Protection of data: Member States may impose conditions in interconnection agreements 
in  order to ensure the protection  of  data,  to the extent  necessary  to  ensure  compliance 
with  relevant  regulatory  provisions  on  the  protection  of  data  including  protection  of 
personaldata,  the  confidentiality  of  information  processed,  transmitted  or  stored,  and 
the  protection  of  privacy,  compatible with  Community  law. 

Article  11 

Collocation  and  facility  sharing 

Where an organization  is granted  a general right under national  legislation  to install  facilities 
for  telecommunications  purposes  on,  over  or  under  public  or  private  land,  or  may  take 
advantage  of  a  procedure  for  the  expropriation  or  use  of  property  for  telecommunications 
purposes,  national  regulatory  authorities  shall  encourage  the  sharing  of  such  facilities  and 
property  with  other  organizations  providing  public telecommunications  services. 

Agreements for  collocation  or facility  sharing  shall normally  be a matter for  commercial  and 
technical  agreement  between  the  parties  concerned.  The  national  regulatory  authority  may 
intervene  to  resolve  disputes,  as provided  for  in  Article  9. 

In  particular,  Member  States  may  impose  facility  sharing  arrangements  (including  physical 
collocation) only after  an appropriate period of public consultation during which all  interested 
parties must be given  an opportunity  to express their views.  Such arrangements  may  include 
rules  for  apportioning  the  costs  of  facility  sharing. 

Article  12 

Numbering 

1.  Member  States  shall  ensure the provision  of  adequate  numbers  and  numbering  ranges 

for  all  public  telecommunications  services. 

2. 

In  order  to  ensure  full  interoperability  of  European-wide  networks  and  services, 
Member  States shall take all necessary  steps to ensure the coordination  of their national 
positions  in  international  organizations  and fora  where numbering  decisions  are taken, 
taking  into  account  possible  future  developments  in  numbering  at  a European  level. 

public 

providing 

telecommunications 

3.  Member  States  shall  ensure  that  national  telecommunications  numbering  plans  are 
controlled by the national regulatory  authority, in order to guarantee independence from 
organizations 
public 
telecommunications  services. 
In  order  to  ensure  effective  competition,  national 
regulatory  authorities shall  ensure that the procedures for  allocating individual  numbers 
and/or  numbering  ranges  are  transparent,  equitable  and  timely  and  the  allocation  is 
carried  out  in  an  objective,  transparent  and  non-discriminatory  manner.  National 
regulatory  authorities may lay down conditions for the use of certain prefixes  or certain 
short  codes,  in  particular  where  these  are  used  for  services  of  general  public  interest 
(e.g. freephone  services,  kiosk billed  services,  directory  services,  emergency  services), 
or  to  ensure  equal  access. 

networks 

or 

25 

4. 

5. 

6. 

National  regulatory  authorities  shall  ensure  that  the  main  elements  of  the  national 
numbering  plans,  and all  subsequent  additions or amendments to them,  are published 
in  accordance  with  Article  14(1),  subject  only  to  limitations  imposed  on the grounds 
of national  security. 

National  regulatory  authorities shall  encourage the earliest possible introduction of the 
facility whereby  end-users who so request can retain their national number at a specific 
location  independent  of  the  organization  providing  service,  and  shall  ensure  that this 
facility  is  available  at least  in  all  major centres  of  population  before  1 January 2003. 

National  regulatory  authorities  shall  ensure  that numbering  plans  and procedures  are 
applied  in  a  manner  that  gives  fair  and  equal  treatment  to  all  providers  of  public 
In  particular,  an  organization  allocated  a  range  of 
telecommunications  services. 
numbers shall avoid discrimination in the number sequences used to give access to the 
services  of  other telecommunications  operators. 

Article  13 

Technical  standards 

1.  Without prejudice to Article 5(3) of Directive 90/387/EEC whereby the implementation 
of  specified  European  standards  may  be  made  compulsory,  national  regulatory 
authorities shall ensure that organizations providing public telecommunications networks 
or public telecommunications  services take full  account of  standards referenced  in the 
Official  Journal  of  the  European  Communities  as  being  suitable  for  the  purpose  of 
interconnection. 

In the  absence  of  such  standards,  national  regulatory  authorities  shall  encourage  the 
provision  of  technical  interfaces  for  interconnection  according  to  the  standards  or 
specifications  listed  below: 

standards  adopted  by  European  standardization  bodies  such  as  ETSI  or 
CEN/CENELEC, 

or, in the  absence  of  such standards, 

international  standards  or  recommendations  adopted  by  the 
Telecommunications  Union 
Standardization  (ISO)  or the International  Electrotechnical  Committee  (IEC), 

International  Organization 

International 
for 

(ITU), 

the 

or,  in the absence  of  such standards, 

specifications  having  a  wide  acceptance  within  industry  and  developed  by 
international  industry bodies, 

or,  in the  absence  of  such  specifications, 

national  standards  or  specifications. 

26 

2. 

The Commission may, acting in accordance with the procedure laid down in Article 15, 
request standards for  interconnection  and access to be drawn up, where appropriate, by 
European standardization bodies.  Reference to standards for interconnection and access 
may  be published  in the  Official  Journal  of the European  Communities  in  accordance 
with  Article  5 of Directive  90/387/EEC. 

Article  14 

Publication  of  and  access to  information 

1.  With  regard  to  the  information  identified  in  Article  7(5),  Article  9(3),  Article  9(5), 
Article  10 and Article  12(4), national regulatory  authorities shall ensure that up-to-date 
information  is  published  in  an  appropriate  manner  in  order  to  provide  easy  access  to 
that  information  for  interested  parties.  Reference  shall  be  made  in  the  national 
Official  Journal of the Member State concerned to the manner in which this  information 
is  published. 

2.  With  regard  to  the  information  identified  in  Article  4(1),  Article  5(3),  Article  5(5), 
Article 6, Article 7(6)  and Article 9(2), national  regulatory  authorities shall ensure that 
up-to-date  information  is  made  available  for  public  inspection  during  the  normal 
working  day  at no charge.  Reference  shall  be made in the national  Official  Journal  of 
the Member  State concerned  to the times and  location(s)  at which  the information  can 
be  inspected. 

3 

1. 

2. 

National  regulatory  authorities  shall  notify  to the  Commission  before  1 January  1998 
-  and  immediately  thereafter  in  case  of  any  change  -  the  manner  in  which  the 
information  referred  to in paragraphs  1 and 2 is made available.  The Commission  shall 
regularly  publish  a corresponding  reference to such  notifications  in the Official  Journal 
of  the European  Communities. 

Article  15 

Committee  procedure 

The  Commission  shall  be  assisted  by  the  committee  set  up  by  Article  9(1)  of 
Directive  90/387/EEC. 

The  representative  of  the  Commission  shall  submit  to  the  committee  a  draft  of  the 
measures  to  be  taken.  The  committee  shall  deliver  its  opinion  on  the  draft,  within  a 
time-limit  which  the  chairman  may  lay  down  according  to  the  urgency  of  the  matter, 
if  necessary  by  taking  a vote 

The opinion  shall be recorded  in the minutes; in addition, each Member  State shall have 
the  right  to  ask to  have  its  position  recorded  in  the  minutes. 

The  Commission  shall  take  the  utmost  account  of  the  opinion  delivered  by  the 
committee.  It  shall  inform  the committee of the manner  in which  its opinion  has been 
taken  into  account. 

27 

Article  16 

Dispute resolution procedure at Community  level 

1. 

2. 

3. 

The  procedure  set  out  in  paragraphs  2  to  5  shall  be  available  in  the  event  of  an 
interconnection dispute between organizations operating under authorizations provided 
by  different  Member States. 

Any  party may refer the dispute to the national  regulatory  authorities concerned.  The 
national  regulatory  authorities  shall  coordinate  their  efforts  in  order to  bring  about a 
resolution  of the dispute,  in accordance with the principles  set out in Article 9(1). 

If the dispute is not resolved within two months of its referral to the national regulatory 
authorities  concerned,  either party  may,  with  the  agreement  of  all  parties,  invoke the 
procedure  provided  for  in  paragraphs  4  and  5,  by  way  of  a  notification  to  the 
Commission, with copies to all parties involved.  In so doing, the parties renounce any 
further action under national  law. 

4.  Where,  following  a  notification  to  the  Commission  based  on  paragraph  3,  the 
Commission finds that there is a case for further examination, the Commission may set 
up a working group comprising in particular members of the Committee referred to in 
Article  15, to assist it. The working group shall define its position within three months. 

5. 

The position  agreed in accordance with the procedure referred to in paragraph 4 shall 
form the basis of a solution to be implemented at a national  level  without delay.  If an 
agreed  position  is  not  reached,  or if  an  agreed  position  is  not  implemented  within a 
reasonable  time  which  shall  not,  except  in  justified  cases,  exceed  two  months,  the 
appropriate  solution  shall  be  adopted  by  the  Commission  in  accordance  with  the 
procedure laid down  in Article  15. 

Article  17 

Notification 

1.  Member  States  shall  ensure  that  national  regulatory  authorities  have  the  necessary 
means  for  carrying  out  the  tasks  identified  in  this  Directive,  and  shall  notify  to  the 
Commission  by  31  January  1997  the  national  regulatory  authorities  responsible  for 
those tasks. 

2. 

National regulatory authorities shall notify to the Commission by 31 January  1997, and 
immediately  thereafter  in  the  event  of  any  change,  the  names  of  those  organizations 
which: 

have  universal 
telecommunications  networks and services  identified  in Annex  I, Part 1; 

service  obligations 

the  provision  of 

for 

the  public 

28 

are  subject  to  the  provisions  of  this  Directive  concerning  organizations  with 
significant  market power; 

are covered by  Annex II. 

The Commission  may  request national  regulatory  authorities  to  provide  their reasons 
for classifying  an organization  as having  significant  market power. 

3. 

The  Commission  shall  publish  the  names  referred  to  in  paragraph  2  in  the  Official 
Journal  of the European Communities. 

Article  18 

Technical  adjustment 

Modifications  necessary  to  adapt  the  Annexes  to  the  Directive  to  new  technological 
developments or to changes in market and consumer demand or to improve the coherence of 
the  regulatory  environments  in  Member  States  shall  be  determined  by  the  Commission  in 
accordance with the procedure laid  down in Article  15. 

Article  19 

Deferment 

1. 

2. 

Deferment from the obligations under Articles 3(1) and 9(3) may be requested by those 
Member States identified in the Council's Resolution of 22 July  1993 who benefit from 
an  additional  transition  period  for  the  liberalization  of  telecommunications  services. 
Deferments  granted on these grounds shall  not exceed  the transition periods set out in 
the  said Resolution. 

Deferment  from  the  obligations  under  Article  12(5)  may  be  requested  where  the 
Member  State  concerned  can  prove  that  they  would  impose  an  excessive  burden  on 
certain  organizations  or classes  of  organization. 

The  Member  State  shall  inform  the  Commission  of  the  reasons  for  requesting  a 
deferment, the date by which the requirements can be met, and the measures envisaged 
in order to meet this deadline.  The Commission  shall  consider the request taking into 
account the particular situation in that Member State and the need to ensure a coherent 
regulatory  environment  at  a  Community  level,  and  shall  inform  the  Member  State 
whether it deems that the particular situation in that Member State justifies  a deferment 
and, if  so, until  which  date such deferment  is justified. 

Article  20 

Interconnection  with third country  organizations 

1.  Member  States  shall  inform  the  Commission  of  any  general  difficulty  encountered, 
de jure or de facto, by Community organizations in interconnecting with organizations 
in third countries,  which  have been  brought to their attention. 

29 

2.  Whenever the Commission establishes that a third country is not providing Community 
organizations with effective rights to interconnect which are comparable to those which 
the  Community  grants to organizations  from  a third country,  the Commission will,  if 
necessary,  submit proposals to the Council  for an appropriate mandate for negotiation 
or other appropriate measures to ensure comparable rights for Community organizations 
in these third countries.  The Council  shall  decide by qualified  majority. 

3.  Measures taken pursuant to paragrah 2  shall be without prejudice to the Community's 

and Member  States' obligations under relevant international  agreements. 

Article  21 

Review  of  implementation 

1. 

2. 

The  Commission  shall  report  to  the  European  Parliament  and  to  the  Council  by 
31 December  1997,  and  periodically  thereafter,  on  the  availability  of  rights  to 
interconnect in third countries for the benefit  of Community  organizations,  and on the 
state of any negotiations undertaken pursuant to Article 20(2), or within the framework 
of international  organizations. 

The  Commission  shall  examine  and  report  to  the  European  Parliament  and  to  the 
Council  on  the  functioning  of  this  Directive,  on  the  first  occasion  not  later  than 
31 December  2000.  For this purpose, the Commission may request information from 
the Member  States.  Where necessary,  further measures can be proposed  in the report 
for the full  implementation  of the aims of this Directive. 

Article  22 

Transposition 

1.  Member States shall bring into force the laws, regulations and administrative provisions 
necessary to comply with this Directive by 31 December  1997. They shall  immediately 
inform  the Commission  thereof 

When  Member  States  adopt  these  provisions,  these  shall  contain  a reference  to  this 
Directive  or  shall  be  accompanied  by  such  reference  at  the  time  of  their  official 
publication.  The procedure  for  such reference  shall  be adopted by Member States. 

2.  Member States shall  communicate to the Commission the texts of the main  provisions 

of  national  law which  they  adopt in the field covered  by  this Directive. 

Article 23 

Entry  into force 

This Directive  shall  enter into force  on the twentieth day following  that of its publication in 
the Official  Journal  of the European Communities. 

30 

Artois  Z4 

Addressees 

This Directive  is addressed to the Member States. 

Done  at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

31 

ANNEX  I 

SPECIFIC PUBLIC TELECOMMUNICATIONS NETWORKS AND 
PUBLIC TELECOMMUNICATIONS  SERVICES 

The following public telecommunications networks and public telecommunications 
services are considered  of major  importance at the European level. 

Organizations providing the public telecommunications networks and/or services  identified 
below who have significant  market power are  subject to specific  obligations with regard 
to interconnection,  as specified  in Articles 4(2), 6 and 7. 

Part 1 

The fixed  public telephone network 

The fixed public telephone network means the public switched  telecommunications 
network which  supports the transfer  between network termination  points at fixed locations 
of speech and 3.1 kHz bandwidth audio information,  to support inter alia: 

voice telephony; 

facsimile  Group I, II and III communications, in accordance to ITU-T 
Recommendations in the T-series"; 

voice band data transmission  via modems at a rate of at least 2400 bit/s, in 
accordance with ITU-T Recommendations in the "V-series"'. 

Access to the end-user's network termination  point  is via a number or numbers in the 
national  numbering plan. 

The fixed public telephone service 

The fixed public telephone service means the provision to end-users at fixed locations of a 
service for the originating and receiving of national  and international  calls, and may 
include access to emergency  (112) services, the provision  of operator assistance, directory 
information  services, provision  of public pay phones, provision  of service under special 
terms and/or provision  of special  facilities  for  customers with disabilities. 

Access to the end-user is via a number or numbers in the national  numbering plan. 

32 

Part  2 

The  commercial  provision  of  leased  lines 

Leased  lines  means  the  telecommunications  facilities  which  provide  for 
transparent 
transmission  capacity  between  network  termination  points,  and  which  do  not  include 
on-demand  switching  (switching  functions  which  the  user  can  control  as  part  of  the  leased 
line  provision).  They  may  include  systems  which  allow  flexible  use  of  the  leased  line 
bandwidth,  including  certain  routing  and  management  capabilities. 

Part  3 

Public  mobile  telephone  networks 

A  public  mobile  telephony  network  is  a  public  telephone  network  where  the  network 
termination  points  are  not  at  fixed  locations. 

Public  mobile  telephone  services 

A public mobile telephone service is a telephony  service whose provision  consists, wholly  or 
partly, in the establishment of radiocommunications to one mobile user, and makes use wholly 
or  partly  of  a mobile  telephone  network. 

33 

ANNEX  H 

ORGANIZATIONS  WITH RIGHTS  AND  OBLIGATIONS  TO INTERCONNECT  WITH 
EACH  OTHER  IN  ORDER  TO ENSURE  EUROPEAN-WIDE  SERVICES 

This  Annex  covers  those  organization  which  provide  switched  and  unswitched  bearer 
capabilities  to users upon  which  other telecommunications  services  depend. 

Organizations in the following categories have both rights and obligations to interconnect with 
each  other,  in  accordance  with  Article  4(1).  Interconnection  between  these  organizations  is 
subject  to  additional  supervision  by  national  regulatory  authorities,  in  accordance  with 
Article  9(3).  Special  interconnection  charges may  exist  for  these  categories  of  organizations 
in  accordance  with  Article  7(3). 

1 

2. 

3. 

4. 

Organizations  who  provide  fixed  and/or  mobile  public  switched  telecommunications 
networks and/or public telecommunications  services, and in so doing control the means 
of  access to one or  more network  termination  points identified  by  one or more unique 
numbers  in  the  national  numbering  plan,  (see notes  below) 

Organizations  who  provide  leased  lines to users'  premises. 

Organizations  who provide international  telecommunications  circuits to and from  third 
countries. 

Organizations  included  in  this  category  at  their  own  request,  under  relevant  national 
licensing  or  authorization  schemes. 

Notes 

Control  of  the  means  of  access  to  a  network  termination  point  means  the  ability  to 
control  the  telecommunications  services  available  to  the  end-user  at  that  network 
termination  point  and/or  the  ability  to  deny  other  service  providers  access to the  end-
user  at  that  network  termination  point. 

Control  of the means  of access may  entail  ownership  or control  of the physical  link  to 
the  end-user  (whether  wire  or wireless),  and/or  the  ability  to  change  or  withdraw  the 
national  number  or  numbers  needed  to  access  a end-user's  network  termination  point. 

34 

ANNEXm 

CALCULATING  THE  COST  OF UNIVERSAL  SERVICE  OBLIGATIONS  FOR 
VOICE  TELEPHONY 
ARTICLE  5(3) 

Universal  service  obligations  refer  to  those  obligations  placed  upon  an  organization  by  a 
Member  State  which  concern  the  provision  of  service  throughout  a  specified  geographical 
area,  including  -  where  required  -  geographical  averaged  prices  for  the  provision  of  that 
service. 

The cost of universal  service obligations shall be calculated  as the difference  between the net 
cost  for  an  organization  of  operating  with  the  universal  service  obligations  and  operating 
without  the universal  service  obligations. 

This  applies whether  the  network  in  a particular  Member  State is  fully  developed  or  is  still 
undergoing  development  and  expansion. 

The  calculation  shall  be  based  upon  the  costs  attributable  to: 

(i) 

elements  of  the  identified  services  which  can  only  be  provided  at  a  loss  or  provided 
under  cost  conditions  falling  outside  normal  commercial  standards. 

This category includes service elements such as access to emergency telephone services, 
provision  of  certain  public  pay  telephones,  provision  of  certain  services  or  equipment 
for  disabled  people,  etc. 

(ii) 

specific end-users or groups of end-users who, taking into account the cost of providing 
service, the revenue generated and any geographical  averaging of prices imposed by the 
Member  State,  can  only  be  served  at  a  loss  or  under  cost  conditions  falling  outside 
normal  commercial  standards. 

This category  includes those end-users or groups of end-users who would not be served 
by  a commercial  operator who did  not have an obligation  to provide universal  service. 

In  developed  networks  where  such  end-users  are  already  being  served,  the  cost 
calculation  should  be  based  on  the  savings  that  would  be  achieved  if  these  end-users 
were  not  served. 

In peripheral  regions with expanding networks, the cost calculation  should be based on 
the additional  cost of serving those end-users or groups of end-users which  an operator 
applying the  normal  commercial  principles  of  a competitive  environment  would  chose 
not  to  serve. 

Revenues  shall  be  taken  into  account  in  calculating  the  net  costs.  Costs  and  revenues 
should  be  forward-looking. 

35 

ANNEX  IV 

LIST  OF ELEMENTS  AND  SUB-ELEMENTS  OF  THE  OVERALL 
INTERCONNECTION  CHARGES 
ARTICLE  7(3) 

The  following  list  is  indicative  and  not  exhaustive,  and  may  vary  depending  on  the 
Member  State  and  the  specific  circumstances  of  each  particular  interconnection  agreement. 

Overall  Interconnection  Charges 

Connection  charges 

are  based  on the  costs  of  providing  the  specific  interconnection  services  requested  by 
the  interconnecting  organization.  They  may  include  inter  alia: 

rental  costs  of 

interconnection 
implementing 
one-off  and 
(e.g.  specific  equipment;  signalling  resources;  compatibility  testing;  connection 
maintenance;  etc.); 

the  physical 

variable  costs  for  ancillary  and  supplementary  services  (e.g.  access  to  directory 
services;  operator  assistance;  data collection;  charging; billing;  switch-based  and 
advanced  services etc.); 

Usage  charges 

are based  on the costs incurred  in the conveyance of traffic  through the  interconnected 
network  (e.g.  the  costs  of  switching  and  transmission).  Usage  charges  may  be  on  a 
call-per-call  basis,  and/or  on  the basis  of  additional  network  capacity  required. 

In  addition,  interconnection  charges  may  include  a  fair  share,  according  to  the  principle  of 
proportionality,  of the costs incurred  in  providing equal  access (e.g. the  support  of  identical 
end-user  access  procedures),  and  number  portability,  and  costs  of  ensuring  essential 
requirements  (maintenance  of the network  integrity;  network  security  in  cases  of  emergency 
situation;  interoperability  of  services;  and  protection  of  data). 

36 

ANNEX  V 

COST  ACCOUNTING  SYSTEMS  FOR  INTERCONNECTION 

Article  7(6)  calls for  details  of  the  cost  accounting  system  to be  open  to  public  inspection. 

The  purpose  of  publishing  this  information  is  to  provide  transparency  in  the  calculation  of 
interconnection  charges,  so that  other  market  players  are in  a position  to  ascertain  that  the 
charges have been  fairly  and  properly  calculated. 

This  objective  should  be  taken  into  account  by  the  National  regulatory  authority  and  the 
organizations  affected  when  determining  the  level  of  detail  in  the  information  published. 

The  list below  indicates  the  elements to be  included  in the  information  published. 

1. 

The  cost  standard  used 

e.g.  fully  distributed  costs,  long-run  average  incremental  costs,  marginal  costs,  stand 
alone  costs,  embedded  direct  costs,  etc. 

including  the  cost  base(s)  used, 

i.e.  historic  costs (based  on  actual  expenditure  incurred  for  equipment  and  systems)  or 
forward-looking  costs (based on estimated replacement costs of equipment or systems). 

2. 

The  cost  elements  included  in  the  interconnection  tariff 

Identification  of  all  the  individual  cost  components  which  together  make  up  the 
interconnection  charge,  including  the  profit  element. 

3. 

The  degrees  and  methods  of  cost  allocation,  in  particular  the  treatment  of  joint 
and  common  costs 

Details of the degree to which  direct costs are analysed,  and the degree  and method by 
which joint  and  common  costs  are included  in  interconnection  charges. 

37 

4. 

Accounting  conventions 

i.e.  the  accounting  conventions used  for  the treatment  of  costs  covering: 

the  timescale  for  depreciation  of  major  categories  of  fixed  asset 
buildings,  equipment,  etc.) 

(e.g.  land, 

the treatment, in terms of Revenue versus Capital cost, of other major  expenditure 
items  (e.g.  computer  software  and  systems,  research  and  development,  new 
business development,  direct  and indirect  construction,  repairs and  maintenance, 
finance  charges,  etc.) 

The information  on cost accounting systems to be published, as identified  in this Annex, may 
be  amended  in  accordance  with  the  procedure  in  Article  18. 

38 

ANNEX  VI 

THRESHOLD  IN TELECOMMUNICATIONS  TURNOVER 
ARTICLE  8(5) 

The threshold for annual turnover in telecommunications activities referred to in Article 8(5) 
shall  be fifty million  (ECU  50 million) ecu. 

39 

ANNEX  VH 

FRAMEWORK  FOR NEGOTIATION  OF INTERCONNECTION  AGREEMENTS 
ARTICLE  9(3) 

Part  1. 

Ex-Ante  Conditions  to  be set  by  the  national  regulatory  authority 

(a)  Dispute  resolution  procedure 
(b)  Requirements  for  publication/access to  interconnection  agreements  and  other  periodic 

publication  duties. 

(c)  Requirements  for  the  provision  of  equal  access  and  number  portability. 
(d)  Requirements  to  provide  facility  sharing,  including  collocation 
(e)  Requirements  to  ensure the maintenance  of  essential  requirements. 
(f)  Requirements  for  allocation  and  use  of  numbering  resources  (including  access  to 

directory  services,  emergency  services  and  pan-European  numbers). 
(g)  Requirements  concerning  the  maintenance  of  end-to-end  quality  of  service. 
(h)  Where  applicable,  determination  of  the  unbundled  part  of  the  interconnection  charge 
which  represents  a contribution  to the  net  cost  of universal  service  obligations. 

Part  2. 

Other  issues  which  should  be  covered  in  interconnection  agreements 

(a)  Description  of  interconnect  services to be  provided 
(b)  Terms  of  payment,  including  billing  procedures 
(c)  Locations  of the  points  of  interconnection. 
(d)  Technical  standards  for  interconnection. 
(e)  Measures  to  conformance  with  essential  requirements. 
(f) 
(g)  Definition  and  limitation  of  liability  and  indemnity. 
(h)  Definition  of  interconnection  charges  and  their  evolution  over time. 
(j)  Dispute  resolution  procedure  between  parties  before  requesting  national  regulatory 

Intellectual  property  rights. 

authority  intervention, 

(k)  Duration  and  renegotiation  of  agreements, 
(m)  Procedures in the event of alterations being proposed to the network or service  offerings 

of  one  of  the  parties. 

Part  3. 

Other  issues  which  may  be  covered  in  interconnection  agreements 

(a)  Achievement  of  equal  access. 
(b)  Provision  of  facility  sharing. 
(c)  Access  to  ancillary,  supplementary  and  advanced  services. 
(d)  Traffic/network  management. 
(e)  Maintenance  and  quality  of  interconnection  services. 
(f) 
(g)  Training  of  staff. 

Confidentiality  of  non-public  parts  of  the  agreements. 

40 

EVALUATION  OF  THE  IMPACT 

Impact  of  the  proposal  on  the  enterprises  and,  in  particular, 
on  the  small  and  medium  enterprises  (SMEs) 

Title  of  the  Proposal:  Directive  of  the  European  Parliament  and  the  Council  on 
interconnection  in  telecommunications  with  regard  to  ensuring  universal  service  and 
interoperability  through  application  of the  principles  of  Open Network  Provision  (ONP) 

Document  reference  number: 

The  proposition 

1- 

The  need  of  the  legislative  measure 

The  full  liberalization  of  telecommunications  services  and  infrastructures  in  1998  lifts  the 
remaining restrictions for organizations to enter into the telecommunications market, allowing 
more  competition  in  the  sector  with  the  consequential  benefit  for  the  telecommunications 
enterprises,  the users  and  the whole  economy  of Europe. 

In  such  a liberalized  environment,  a Directive harmonizing  conditions for  open  and  efficient 
interconnection  between  different  competing  public  telecommunications  networks  and 
services,  and  for  the  interoperability  of  services, becomes  indispensable  so that users  in  one 
network  can  seamlessly  communicate  with  users  in  any  other  network  while  increasing  the 
choice  of  services,  offering  value  for  money,  and  ensuring  the maintenance  of the  universal 
service.  Within this framework  all competing organizations in Europe shall have a stable and 
predictable  regulatory  environment  complementing  the  competition  rules  of  the  Treaty. 

is  a  key  factor  in  the 
Therefore  a  harmonized  European  interconnection  framework 
transformation  process towards  a liberalized  telecommunications  market.  This will  improve 
the  social  and  economic  well-being  of  European  users  and  the  competitiveness  of  the 
European  enterprises. 

The  proposed  Directive  has  received  broad  sector  support  (see  section  6). 

The  impact  on  enterprises 

2.  Who  will  be  affected  by  the  proposal 

The proposed  Directive will  guarantee the rights of all  market  players,  and  in particular  will 
allow new entrants in the market (many  of them  small  and medium  enterprises, at least in an 
initial  phase), to obtain  interconnection  with the networks and  services of others on the basis 
commercially  negotiated  agreements, thus opening business opportunities for  new  companies 
in  the  telecommunications  market. 

41 

The proposal  sets out a framework  based on the proportionality  of rights and obligations with 
respect to interconnection  in order to ensure open access to networks and  services, promoting 
economic  efficiency  for  already  established  organizations,  and  sustainable  market  entry  for 
new  competitors. 

Certain  providers  of  public  telecommunications  networks  and  public  telecommunications 
services will have a right and an obligation  to negotiate interconnection with each other.  This 
category  may  include,  for  instance,  small  and/or  medium  enterprises  operating  in  specific 
geographical  areas  (eg  a  cable television  operator). 

Organizations providing public telecommunications networks and public  telecommunications 
services will  have  additional  obligations  in the areas of tariffs,  accounting  systems  and  non 
discrimination. 

3. 

Conformance  with  the  proposal 

The national  regulatory  authorities  in the Member  States will  be responsible for  notifying  to 
the Commission  the  names  of the organizations  in their  territory  to whom  the Directive will 
apply,  and  must  also  ensure  that  those  organizations  comply  with  the  provisions  of  the 
Directive. 

4. 

Economic  effects 

New  investment  in  the  telecommunications  sector  will  be  stimulated  by  a  stable  and 
predictable  regulatory  environment.  The  harmonized  interconnection  framework  to  be 
established  throughout  the  Union  by  this  Directive  will  foster 
investment  and  new 
employment  in  the  sector,  increasing  the  number  of  market  players  and  stimulating  growth. 
The  interconnection  rules  of  the  proposed  framework  are  designed  to  promote  productivity 
and  to  encourage  efficient  and  sustainable  market  entry. 

In the  absence  of  such  a Directive,  the fragmented  national  markets that would  result  would 
be less  attractive  to  new  market  entrants  than  a single European  market,  with  the  likelihood 
that  investment  and  new  employment  would  be  reduced  in  consequence. 

5. 

Specific  provisions  for  SMEs 

the  proposed  Directive  will 

Provisions  of 
that  small  and/or  medium 
telecommunications  enterprises  enter  the  market  and  compete  with  other  organizations  in  a 
liberalized  environment.  Nevertheless  there  are  no  specific  measures  in  the  proposal 
addressing  SMEs. 

facilitate 

42 

6. 

Consultation 

The  Commission  announced  its  plans for  a European  Parliament  and Council  Directive  on 
Interconnection in the context of open network provision in its Action Plan on the Information 
Society(1),  and  further  elaborated  the  outline  structure  of  such  a  Directive  in  its 
Communication  on  the  present  status  and  future  approach  for  open  access  to 
telecommunications  networks  and  services  (Open  Network  Provision)(2)  and  in  the  Green 
Paper on Infrastructure part II, published in January 1995(3). In addition, the Commission held 
two public workshops in November  1994 on the results of studies by independent consultants 
on interconnection^ and cost accounting(5). 

The Commission's report on the Consultation on the above mentioned  Green Paper revealed 
strong support for an effective  interconnection  framework  from  all  players in the sector.  In 
addition, the principles of the Directive have been discussed in detail in the ONP Committee, 
which  brings 
for 
telecommunications  in the Union and the EEA, under the Chairmanship of the Commission. 

the  representatives  of  national  regulatory  authorities 

together 

Hearings 

During the consultation on the Green Paper, a number of hearings were undertaken, involving 
a large number of  organizations: 

Round  Table  for  the  Chairman  of  Network  Operators:  10  February  1995.  54  fixed, 
mobile  and alternative infrastructure  companies were represented; 

General Consultation Meeting: 20/21 February  1995. Approximately  125 organizations 
participated; 

Meeting with the Trade Unions:  14 March  1995; 

Meeting with the Ad Hoc High Level  Committee  of National  Regulatory  Authorities: 
16 March  1995. 

(1) 
(2) 
(3) 
(4) 

(5) 

COM(94)347,  17.7.1994. 
COM(94)  513,  29.11.1994. 
COM(94)682,  15.1.1995. 
Study  by WIK/EAC on  "Network interconnection  in the domain  of  ONP" undertaken 
for EC DGXIII/A/1, November  1994. 
Study by Arthur Andersen on "Cost allocation and general  cost accounting principles" 
undertaken  for EC DGXIII/A/1, November  1994. 

43 

List  of  consulted  organizations 

Association  of  Private European  Cable  Operators 
Association  of Finnish  Telephone  Companies  (ATC) 
Association  Française  des Utilisateurs  du  Téléphone  et  des Télécommunications  (AFUTT) 
Bureau  Européen  des Unions  de  Consommateurs 
The  Cable  Communications  Association 
Conseil  National  du Patronat  Français 
Danish  Bankers  Association 
Danish  Chamber  of  Commerce 
Danish  Insurance  Association 
Deutsche  Industrie  und  Handlestag 
Deutsche  Postgewerkschaft 
ECTEL  (the European  Telecomminications  and Professional  Electronics  Industry) 
European  Public  Telecommunications  Network  Operators  Association  (ETNO) 
EU  Committee  of  the  American  Chamber  of  Commerce 
European  Association  of  Advertising  Agencies 
European  Broadcasting  Union 
European  Council  of  Telecommunications  Users  Association  (ECTUA) 
European  Conference  of Data Protection  Commissioners 
European  IT  Industry  Round  Table  (EITIRT) 
EVUA  - European  Virtual  Private Network  Users  Association 
Federation  Belges  des  Coopératives  (FEBECOOP) 
Federation  of the  Electronics  Industry  (FEI) 
French Consumer and User Associations : (joint submission of ASSECO CFDT, AFOC, ANC, 
AFUTT,  LEO,  Lagrange,  ORGECO,  CSF,  UNAF,  CNAFAL,  Familles Rurales,  CNAPFS, 
CGI, UFCS,  J.  Lucas) 
Foreningen  af  Teknikumingengeni0rer 
Gewerkschaft  der  Post-  und  Fernmeldebediensteten 
IT  Association  of  Denmark 
Mediaraad 
Motion  Picture  Association 
Office  of  the  United  States  Trade  Representative 
UN1CE 
Verband  der  Telekommunikationsnetz und  Mehrwertdiensteanbieter  (VTM) 
Vereniging  van  exploitanten  en  machtiginghouders  van  centrale  antenne  inrichtingen 
(VECAI) 
World  Travel  &  Tourism  Council 

44 

Individual  Organizations 

ARD 
Airtouch 
AT&T 
BBC 
Belgacom 
BellSouth  Europe 
Bouygues  Telecom 
British  Telecom 
Cable &  Wireless  pic 
Cellnet 
Club  informatique  des grandes  entreprises  françaises 
CNI-Communications Network  International  GmbH 
Colin  Long,  Coudert  Brothers 
Communication  Media  Services  S.A. 
Compagnie  Générale  des  Eaux 
Datsa  Belgium 
Debitel 
Deutsche  Sparkassen  und  Giroverband 
Deutsche  Telekom 
Energis 
Enertel 
E-Plus  Mobilfunk 
EURIM 
France  Telecom 
Fundesco 
Hermes Europe  Hitrail  B.V. 
Kingston  Communications 
Mannesmann  Mobilfunk 
Mercury  Communications 
Mercury  one2one 
MFS  Communications 
National  Research  and  Development  Centre  for  Welfare  and  Health  (NAWH)  (FIN) 
Netcologne  GmbH 
Netcom  GSM 
Nokia 
OTE 
Orange 
Ôsterreichische  Post 
Post  et  Télécommunications  (LUX) 
Post  &  Telekom  (AU) 
Portugal  Telecom 
PTT  Telecom 
Société Française  du  Radiotéléphone  (SFR) 
Sonofon  GSM 
Stet 
TeleDanmark 
Telecom  Finland 
Telefonica 

45 

Telekommunikations  Gesellschaft  fîir Betrieb und Dienstleistungen mbH 
Telenor Mobil 
Thyssen Telecoms  AG 
Torch Telecom 
Telia 
Uni source 
Dr Rolf H.  Weber 
Prof.Dr.  Paul  J.J.  Welfens 

46 

ISSN 0254-1475 

COM(95) 379  final 

DOCUMENT 

EN 

08  16 

Catalogue number  :  CB-CO-95-420-EN-C 

ISBN 92-77-92569-3 

Office for Official  Publications of the European Communities 

L-2985 Luxembourg 

47