OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on the Green Paper on the liberalization of telecommunications infrastructure and cable television networks - Part II
Date: 1995-09-13
Institutions: European Economic and Social Committee
Subjects: cable distribution, liberalisation of the market, single market, telecommunications, transmission network













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51995AC0970

OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on the Green Paper on the liberalization of telecommunications infrastructure and cable television networks - Part II  


Official Journal C 301 , 13/11/1995 P. 0024 





Opinion on the Green Paper on the  liberalization of telecommunications infrastructure and cable television networks - Part II(95/C  301/09)In its letter of 30  January 1995 the Commission decided to consult the Economic and  Social Committee in accordance with Article  198 of the Treaty establishing the European Community,  on the Green Paper on the liberalization of telecommunications infrastructure and cable television  networks - Part II. The Section for Transport and Communications, which was responsible for the Committee's work on the  subject, adopted its Opinion on 10  July 1995. The Rapporteur was Mr von Schwerin. At its 328th Plenary Session (meeting of 13  September 1995), the Economic and Social Committee  adopted the following Opinion by a large majority, with two votes against and five abstentions. 1. Introduction1.1. The Green Paper was born out of the Council Resolution of 22  July  1993 on the review of the situation in the telecommunications sector. This Resolution states that  future policy on telecommunications infrastructure will be adopted on the basis of a wide-ranging  consultation procedure following publication of the Green Paper. 1.2. The Green Paper incorporates the conclusions of the Corfu European Council of 24 and 25  July  1994 on the report on Europe and the global information society by a group of leading  industrialists under the chairmanship of Commissioner Bangemann. This report calls for the on-going  process of liberalization of the telecommunications sector to be accelerated by opening up to  competition infrastructures and services still in the monopoly area. 1.3. The Commission adopted Part I of its Green Paper on the liberalization of telecommunications  infrastructure and cable television networks on 25  October 1994. In that document the Commission  laid down the general principles and timetable for action which are to form the basis for  consultation on the development of a common approach to infrastructure in the European Union. 1.4. A Council Resolution of 22  December 1994 laid down the principles and the timetable for  liberalization of telecommunications infrastructure, according to which full liberalization of  network infrastructure is to be carried out by 1  January 1998. This includes the additional  transition periods for certain Member States under the terms of the Council Directive of 22  July  1993. 1.5. With the publication by the Commission of Part II of its Green Paper on the liberalization of  telecommunications infrastructure and cable television networks, the time has come for a broad  discussion with all interested parties of the major issues involved in the future regulation of  network infrastructure. 1.6. Thus Parts I and II of the Green Paper in combination constitute the beginning of a process to  formulate a strategy in the Union on infrastructure, which is a prerequisite for the broadening of  the liberalization process beyond voice telephony to encompass the whole telecommunications  sector. 2. The Commission Green Paper2.1. General comments2.1.1. The ESC recognizes the importance of  the Green Paper, which puts forward the framework and timetable for future regulation of network  infrastructure in the European Union and launches a wide-ranging consultation in accordance with  the Council Resolution of 22  December 1994 (94/C 379/03). The ESC emphasizes that a clear  regulatory framework and timetable is essential so that all players in the sector, including both  traditional and new investors, can plan ahead. In line with the outcome of the G7 Ministerial  Conference on the information society, the Committee emphasizes that, when creating the legal  framework, customers must come first and the framework must be constructed in such a way as to  allow choice, high-quality services and affordable prices. 2.1.2. The ESC acknowledges the objective set by the Commission in the Green Paper, which is to  create a clear and predictable regulatory environment in order to ensure: - the completion of the internal market for telecommunications by stimulating the development of  both basic and advanced infrastructures in the Union; - the provision of efficient and cost effective telecommunications services in Europe for the  benefit of business, customers and citizens; - the stimulation of growth, innovation and public and private sector investment, thereby  contributing to employment and cohesion in a social Europe. 2.1.3. The Green Paper covers the following topics: I. Introduction and objectives; II. The approach chosen and the scope; III. The current situation; IV. The major drivers for change; IV. Universal service; VI. Employment, societal and cultural issues; VII. The extension of the principles of the European Union's telecommunications policy to  infrastructure; VIII. Future development of the regulatory framework to meet the challenges of convergence; IX. Issues for consultation and Annexes (including studies carried out in preparation for the Green  Paper and a list of key regulatory measures and pending proposals). 2.1.4. The major challenges and positions/measures set out in the Green Paper are summarized under  eleven headings in chapter VII.  1. General principles;  2. Exclusive and special rights over infrastructure;  3. Licence award procedures, selection criteria and the conditions which may be attached to  licences for infrastructure;  4. Interconnection and interoperability;  5. Open access to public infrastructure - application of the competition rules and ONP  principles;  6. Safeguarding and developing universal service in a competitive environment;  7. The particular circumstances of peripheral regions with less developed networks;  8. Competitive safeguards;  9. The international dimension - international trade in telecommunications services; 10. Access to rights of way, numbers, frequencies, and directory services; 11. Action in neighbouring fields. The ESC focuses on these and the proposed timeframe in its specific comments. 3. Specific comments3.1. The proposed removal of special and exclusive rights over the use of  infrastructure for the provision of telecommunications services is based on the two-stage approach  outlined in the Green Paper. Stage 1: The immediate removal of existing restrictions on the provision of own or alternative  infrastructure (for the distribution of satellite communications, mobile communications and  fixed-network telecommunications already liberalized, including cable television networks). Fixed-network telecommunications already liberalized include voice telephony and data processing  services as part of a corporate network for closed user groups, in addition to non-voice services.  On this point, the ESC is concerned that, by 1998, new service providers could seize large market  shares, in the absence of any market regulation, through liberal interpretation of the term 'closed  user groups'. This could lead to premature undermining of the network monopoly even before then,  with the telecommunications organizations suffering substantial losses of income. Such premature  liberalization does not give telecommunications organizations in the Member States the chance to  adapt to the new market conditions. Particular account should be taken of the differing level and  pace of development in the various Member States. Furthermore, premature moves towards  liberalization may disrupt development of an overall concept, making it difficult to adapt when a  regulatory framework is implemented. Stage 2: Stage 2 deals with licensed service providers for voice telephony using new and existing  infrastructure. This market will be liberalized with the aid of measures which are based on the  Green Paper Part II. Stage 2 is assessed below. 3.2. Maintaining, developing and financing a universal service are key factors in the future  development of telecommunications in the Community. The ESC regrets that the Council Resolution of  7  February 1994 on universal service principles in the telecommunications sector is not adequately  reflected in the Green Paper. The Green Paper proposes access for all users to a 'minimum service'  of specified quality at an affordable price where heed is also taken of persons with physical  disabilities. The Committee feels that limiting such a service to voice telephony and narrow-band infrastructure  will not do justice to future developments. The feeling is that users expect a comprehensive  universal service which meets their needs and which is to evolve further as technology advances. In the Committee's view, the road towards the information society will be characterized primarily  by new technologies and services in the multimedia field. This lends further weight to the view  that arrangements must be made to provide equal opportunities for all users and fair access to  modern information and communication services, first and foremost by making broad-band  infrastructure available. The Committee endorses the proposal that transparent plans specifying the cost and financing of the  universal service obligation must be drawn up. However, the Committee has some reservations  regarding the proposed methods for determining the cost of the universal service. The financing  cannot be based solely on the net cost of providing services to uneconomic customers and the  provision of public telephones, emergency services and other social obligations. When competition  is introduced, adequate allowance must be made not only for the cost of maintaining networks  (operating costs) but also for the cost of investment in future developments involving network and  equipment modernization and expansion. These costs must be apportioned as equitably as possible by  the operators and service providers. In particular, the Commission must not wait until  January  1996 before taking a decision on the principles and financing of universal service; these must be  submitted in the near future. 3.3. On the subject of interconnection and interoperability the Green Paper mentions the need for a  specific Directive on interconnection and a framework for ONP (open network provision)  applicability. On the application of ONP conditions, see the ESC Opinion of 31  May 1995 (CES  582/95). 3.4. On the question of licensing, the Green Paper sets out the principles of licence award  procedures and selection criteria for the award of licences. The Committee feels that restricting  the number of licences is justified because of technical limitations. Apart from that, licences may  be restricted in number on the basis of the essential requirements and, in the case of networks  intended for the general public, on the basis of public service requirements in the form of trade  regulations. The ESC endorses the statement that licensing conditions which are based on objective  grounds must be transparent and non-discriminatory and that the principle of proportionality must  be respected. It also feels that the licensing procedures must be unbureaucratic. 3.5. In order to ensure fair competition and full implementation of competition rules, it is of  prime importance to bring about an orderly transition from the present monopolies to a competitive  market, regardless of whether these are private or public undertakings in accordance with Article   222 of the Treaty. This is the only way to prevent abuse of the market and to ensure that suppliers  do not carry the burden alone. It is also important that companies in protected monopoly sectors  (energy, other local monopoly sectors) do not cross-subsidize their activities in the  telecommunications sector by using income from these monopolies. The Committee feels that it is  essential to introduce some kind of control mechanism here. The regulatory conditions laid down according to objective, non-discriminatory and transparent  criteria must be binding on all future network operators in the interests of equal opportunities  and viable competition. 3.6. The Committee endorses the points made in the Green Paper on access to rights of way,  frequencies and numbering. In the case of rights of way, the Committee notes that in order to  introduce competition into the market for infrastructure provision, the Member States must ensure  that telecommunications organizations are subject to the same conditions as their competitors. 3.7. The Committee welcomes the action in neighbouring fields (data protection, audiovisual, media  and IPRs) proposed in the Green Paper. 3.8. The societal and social impact of further liberalization is extremely important. However, the  Committee fears that creating jobs in the field of telecommunications and possibly in other areas  will not make up for the job losses already suffered or now impending, especially among hitherto  publicly-owned operators. Of course, there have also been job losses owing to technical progress  and the use of new technologies. Harmonization and liberalization have to be balanced among other  things to ensure, in the interests of employees, that further liberalization is socially  acceptable. A package of measures is required to accompany the ongoing transition to an information society.  This involves both training existing employees and exploring every avenue for providing continuing  employment. It should also draw on the experience gained and programmes implemented in the steel  and shipbuilding sectors. Such measures should be initiated and funded both at European and  national level. The ESC endorses the Green Paper's reference to the need for retraining and  redeployment of employees as the traditional telecommunications sector adapts to a competitive  environment. The ESC also welcomes the Commission's proposal to set in motion a comprehensive action programme  to investigate potential health hazards associated with the proliferation of fixed and wireless  infrastructures and to accelerate the preparation of necessary safety standards. 3.9. On the global approach to infrastructure and ensuring fair access to third country markets the  Committee notes that the European Union must also see to it that priority is given to upholding the  principle of reciprocity with third countries, especially with trading partners who have  restrictions built into their legal frameworks. It is the Committee's view that this should be more  than just an overall objective - there must be some form of guarantee ensuring comparable and  effective market access with clear definitions and reciprocity conditions in return for access to  the European market. As long as this objective is not achieved, it is important that the Union  reserves the right to impose the same conditions as those currently prevailing in the markets of  third countries with regard to market access and licensing. 3.10. The Committee welcomes the fact that the Commission is looking beyond the immediate moves  towards liberalization of telecommunications infrastructure and is launching a debate on the  development post 1998 of the regulatory framework, which will bring about technological and  economic convergence. 3.11. The Committee is pleased to see that the Commission takes account of the international  dimension of the information society's establishment and seeks to find multilateral solutions. In  the Committee's view, it is important for the future of the information society that liberalization  is based on a realistic timescale, is carried out in a responsible manner and gives due  consideration to the various interests involved. 4. Conclusions4.1. The Committee recognizes that liberalization of telecommunications  infrastructure is extremely important if Europe is to continue to modernize economically and  socially. Creating the regulatory framework will also have a decisive influence on the viability of  competition, the ability of the European economy to innovate, the range of services upstream and  downstream in the telecommunications field, the securing of jobs and the development of living and  working conditions. 4.2. Liberalized markets must be regulated in social, economic and technical terms in order to  prevent undesirable developments. Such regulation involves a comprehensive universal service which  takes account of the development of society in Europe. The funding must be assured. 4.3. The Committee feels that the interests of citizens must take priority alongside technical and  commercial interests. For workers, work and training, as well as decent working conditions, form  the basis of an information society which is both progressive and underpinned with social  provision. This is the only way that a modern and progressive telecommunications policy will find  broad acceptance in Europe, and that Europe's economic position will be strengthened in future. 4.4. The Committee feels that the Commission should set up a panel of experts to examine the  effects of liberalization on the employment situation, with the purpose of cataloguing the social  consequences and proposing solutions. If similar studies are being conducted elsewhere in the  Commission, they should be made available to this panel of experts. 4.5. The ESC considers that on such an important issue the Commission is urged to ensure as broad a  debate as possible by issuing a draft Directive under Article  100a of the Treaty. 4.6. Since Part II was published and the Committee started work, the Commission has issued many  papers, amendments and statements on its future actions. Some of the Commission's intentions forestall actions called for in the Committee's Opinion. The  Committee has not had an opportunity to consider the effects of the Commission action but hopes it  will be able to do so shortly. Done at Brussels, 13 September 1995. The Presidentof the Economic and Social CommitteeCarlos FERRER