Proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE amending Council Directives 90/387/EEC and 92/44/EEC for the purpose of adaptation to a competitive environment in telecommunications
Date: 1995-11-14
Institutions: European Commission
Subjects: competition, harmonisation of standards, telecommunications

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

ir 
ir 

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Brussels,  14.11.1995 
COM(95)  543  final 

95/0280  (COD) 

Proposal  for  a 
EUROPEAN  PARLIAMENT  AND COUNCIL  DIRECTIVE 

amending  Council  Directives  90/387/EEC  and  92/44/EEC  for  the purpose of 
adaptation  to a competitive  environment  in  telecommunications 

(presented  by  the  Commission) 

CONTENTS 

Summary 

Explanatory  Memorandum 

Introduction 

1 
2.  Background  - Open  Network  Provision  :  1990 to  1998 
3.  Open  Network  Provision  in the post-1998  liberalized  market 
4.  Need  for  ONP  legislation 
5.  ONP and  the  competition  rules 
6.  Adaptations  proposed  to existing  ONP  measures 

6.1  The entities  covered 

The revised  ONP framework  Directive 
The revised  Leased  Lines  Directive 
The ONP List  of  Standards 

6.2  Tariff  Principles 
6.3  National  Regulatory  Authorities 

7  Summary  of the contents  of the  proposed  Directive 
8.  Conclusion 

Proposal for a European Parliament and Council Directive amending Council Directives 
90/387/EEC and 92/44/EEC for the purpose of adaptation to a Competitive Environment 
in  Telecommunications 

Article 

Amendment  of  Directive  90/387/EEC 

Article 2 

Amendment  of Directive  92/44/EEC 

Article 3 

Transposition 

Article 4 

Entry  into  force 

Article  5 

Addressees 

Summary 

for 

a  European  Parliament 

This  proposal 
amending 
Council  Directives  90/387/EEC  and  92/44/EEC  is  intended  to  adapt  to'  a  .competitive 
environment  the  basic  principles  of  Open  Network  Provision  (ONP)  and  the  specific  ONP 
Directive  for  leased  lines 

and  Council  Directive 

The  basic  principles  set  out  within  the  ONP  Framework  must  be  adapted  to  provide  a 
common  approach  to  communications  services  throughout  the  European  Union  and  hence 
ensure  European-wide  services,  taking  into  account  the  forthcoming  liberalization  of  all 
telecommunications  services  and  infrastructures  on  I January  1998  (with  transition  periods 
for  certain  Member  States). 

This  proposal  will  guarantee  that  a  voluntary  approach  to  harmonized  conditions  by  the 
market  players  is  pursued  in  a  competitive  environment,  whilst  recognizing  the  key 
importance  of  maintaining  and  developing  universal  service  and  the  need  for  mandatory 
requirements in those areas where market forces  alone may not be enough to meet European 
policy  goals. 

It will further  ensure that the degree of separation between  national  regulatory  authorities and 
activities  associated  with  ownership  or  control  of  telecommunications networks,  equipment 
or  services  is clear. 

This  proposal  will  provide  for  specific  ONP  measures  to  apply  to  organizations  providing 
public  telecommunications  networks  and/or  services  in  a way  that  reflects  an  organization's 
position  in  the  relevant  market.  The  precise  entities  covered  will  depend  on  the  aim  being 
pursued,  whilst  guaranteeing  that the principle  of proportionality  is  observed. 

It will  ensure that the principle of cost orientation  continues to provide an objective basis for 
the rebalancing of telecommunications tariffs whilst acknowledging that the need to apply the 
requirement  for  cost  orientation  in  a competitive  market  diminishes. 

EXPLANATORY  MEMORANDUM 

1. 

introduction 

The  concept  was  introduced 

In  the  telecommunications  sector,  the  EU  has  since  1990  been  following  a  policy  which 
balances  harmonization  and  liberalization.  Open  Network  Provision  (ONP)  is the  policy  for 
harmonising  conditions  for  access  to  and  use  of  public  telecommunications  networks  and 
in  the  Commission's  1987  Green  Paper  on 
services. 
Telecommunications  Services,  and  given  substance  in  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(,).  Subsequent  specific  Directives  and 
Recommendations  applied  the  principles  of  open  network  provision  to  leased  lines,  voice 
telephony,  packet 
services  digital 
networks  (ISDN). 

switched  data 

(PSDS)  and 

integrated 

services 

Liberalization  in  the  telecommunications  sector  has  been  a  progressive  process  which  will 
culminate  in  the  full  liberalization  of  telecommunications  services  and  infrastructure  by 
1  January  1998  (with  transition  periods  for  certain  Member  States).  Council  Resolution 
93/C  213 of 22 July  1993 on the '92 review,(2) called  for  "the adaptation,  in the  light of  further 
liberalization,  of  ONP  principles..."  to  take  account  of  the  future  liberalized  environment. 
Council  Resolution  of  18  September  1995  on  the  implementation  of  the  future  regulatory 
framework  for telecommunications1^ called  on the Commission  "to present to the Council  and 
the European  Parliament  before  1  January  1996 all legislative provisions intended  to  establish 
the  European 
full 
liberalization  of  this  sector". 

telecommunications  accompanying 

framework 

regulatory 

the 

for 

This  proposal  for  a  European  Parliament  and  Council  Directive  identifies  amendments  to 
existing  ONP  measures  in  order  to  adapt  them  to  the  post-1998  liberalized  environment. 

2. 

Background  -  Open  Network  Provision:  1990  to  1998 

In  1990,  the  EU  took  the  first  step  towards  liberalising  telecommunications  services  by 
liberalising  the  supply  of  value-added  network  services  (VANS).  An  important  element  of 
the  political  agreement  between  the  Council  and  the Commission  was that  there  would  be  no 
structural  separation  between  the  VANS  activities  of  the  existing 
telecommunications 
organizations  and  their  traditional  network  activities. 

ONP  -  by  harmonizing  conditions  for  access  to,  and  use  of,  the  underlying  public  switched 
networks  and  leased  lines,  and  implementing  principles  of  non-discrimination  - has  provided 
a  mechanism  for  stimulating  entry  into the  VANS  market,  and  at the  same time  ensuring  fair 
competition  between  VANs  suppliers  and 
the  existing 
telecommunications  organizations. 

the  VANS  operations  of 

n> 
{2) 
(i) 

OJ  No  L  192,  24.7.1990,  p. 1 
OJ  N oC  213,  6.8.1993,  p.  1. 
OJ  N oC  258,  3.10.1995,  p. 1 

In  addition,  existing  ONP  measures  ensure  provision  throughout  the  European  Union  of  a 
minimum  harmonized  offering  of  those  public  telecommunications  networks  and  public 
telecommunications  services  identified  as being  in  the  European  interest.  Foremost  among 
these  is  voice  telephony  and  leased  lines,  for  which  mandatory  obligations  in  the  form  of 
Directives  have been  developed. 

In the areas of  ISDN  and  PSDS, Council  Recommendations  have been  adopted,  the purpose 
of  which  is to make  sure  that  these  offerings  are  available  to  users throughout  the  territory 
of  each  Member  State from  at  least  one  organization. 

Current  ONP  measures  apply  to  telecommunications  organizations,  defined  as  those 
organizations  to  whom  Member  States grant  special  or exclusive rights for  the provision  of 
public  telecommunications  networks  and,  where  applicable,  public  telecommunications 
services  One  exception  concerns  Packet  Switched  Data  Services  (PSDS)  where  special  or 
exclusive  rights  do  not  exist,  and  Member  States  have  discretion  as  to  whom  the 
ONP Recommendation  on  PSDS  should  apply. 

3. 

Open  Network  Provision  in  the  post-1998  liberalized  market 

The future  telecommunications  infrastructure  in  Europe  (infrastructure  used  in  the  sense of 
the  ensemble  of  telecommunications  networks  and  services  available  to  society  at  large)  is 
seen as a set of interconnected networks, owned and operated by many different  organizations, 
following  a common  set of conventions,  seamlessly  interworking  and giving the  appearance 
of  a  single  system,  and  supporting  a  rich  range  of  information  and  telecommunications 
services to business users and  consumers alike. 

This infrastructure  should  be  "open"  in the  sense that: 

- 

- 

- 

it  should be open  (i.e.  accessible)  to all  users  in the  European  Union; 

it  should  be open  to any  service  provider  to offer  services  over the basic  infrastructure; 

it  should  be  open  to  any  organization  to  provide  elements  of  the  overall  infrastructure, 
provided  the organization  conforms  to published  requirements. 

ONP  -  by  harmonising  conditions  for  access  to  and  use  of  public  telecommunications 
networks  and  services  to  the  extent  necessary  -  provides  a  set  of  rules  which  allows  the 
provision  of  such an  'open  network'  to become  a reality. 

ONP  conditions  applied  at  the  user-network  interface  serve  to  harmonize  users'  access  to 
telecommunications  networks  and  services, and to ensure a minimum  set of offerings  where 
appropriate. 

ONP conditions at interconnection  points serve to define  the rules for  network  operators and 
service  providers  to  link  their  facilities  in  order  to  cooperate  in  providing  elements  of  the 
overall  infrastructure 

The  role of  ONP  in  a competitive  environment  is to: 

-  guarantee  the  provision  of universal  service  in  telecommunications, 

-  ensure the availability  of  a minimum  set  of  services, 

- 

secure  access  and  interconnection  to  public  telecommunications  networks  and  public 
telecommunications  services, 

-  encourage the provision of harmonized telecommunications services to the benefit of users, 
by  identifying  and  promoting  by  voluntary  means  harmonized  technical 
interfaces 
(including  both  user/network  interfaces  and  interconnection  points)  and  associated 
standards/speci fi cati ons, 

throughout  the European  Union. 

The range of legislative measures employed within ONP provide the necessary flexibility with 
which  to  achieve these  objectives  in  a manner  best  suited  to the aim  pursued  : 

- 

- 

- 

- 

(4) 

(5) 

((>) 

(7) 

(8) 

for 
the  ONP  Directive  on  Leased  Lines 
Voice Telephony(5)  provide  for  the  mandatory  provision  of  a  minimum  offering  for  all 
EU users; 

that  proposed 

(92/44/EEC)(4)  and 

the ONP Recommendations  on  PSDS(6) and  ISDN<7) specify  the recommended  conditions 
under  which  these  services  should  be available  to all  users  in  the  EU; 

the  proposed  ONP  Directive  on  Interconnection'*'  establishes  a  regulatory  framework 
designed  to  ensure that  service  providers  and  network  operators  are  able to  interconnect 
their  facilities  to the  networks  of established  operators; 

the  publication  in  the  Official  Journal  of  the  European  Communities  of  the  ONP 
List  of  Standards  identifies  recommended  standards  for  technical  interfaces  and  user 
facilities. 

Council  Directive  (92/44/EEC)  of  5 June  1992  on  the  application  of  open  network 
provision  to  leased  lines, OJ  No L  165,  19.6.1992,  p. 27. 
Proposal  for  a European Parliament  and Council  Directive on the application  of open 
network  provision  (ONP)  to  voice  telephony  (95/C  122/04),  COM(94)  689  final  -
95/0020 (COD), OJ No C  122,  18.5.1995, p. 4.  - Council  Common  Position  adopted 
on  12.7.1995. 
Council  Recommendation  (92/382/EEC) of 5 June  1992 on the harmonized  provision 
of  a minimum  set of  packet-switched  data  services  (PSDS)  in  accordance  with  open 
network  provision  (ONP)  principles,  OJ  No L 200,  18.7.1992,  p. 1. 
Council  Recommendation  (92/383/EEC)  of  5  June  1992  on  the  provision  of 
harmonized  integrated  services  digital  network  (ISDN)  access  arrangements  and  a 
minimum  set  of  ISDN  offerings  in  accordance  with  open  network  provision  (ONP) 
principles,  OJ  No L 200,  18.7.1992,  p.  10. 
COM(95)  379 final,  19.7.1995. 

4. 

Need  for  ONP  legislation 

The  recent  Commission  Communication  on  the  Consultation  on  the  Green  Paper  on  the 
Liberalization  of  Telecommunications  Infrastructure  and  Cable  Television  Networks<9)  has 
shown  the need  for  two mandatory  elements  of the current  ONP  framework  to remain  in  place 
after  1998. 

These  are,  firstly,  the  obligation  on  Member  States  to  ensure  the  provision  throughout  their 
territory  of  a  basic  minimum  voice  telephony  service  for  the  general  public  at  an  affordable 
price  The  proposed  Voice  Telephony  Directive  constitutes  the  current  core  of  universal 
telephone  service  in  the  Union. 

Secondly,  that  Consultation  has  shown  that  the  continued  availability  of  a  minimum  set  of 
leased  lines  is  crucial  to  the  take  off  of  liberalized  telecommunications  services  throughout 
the  Union.  There  is  the  need,  in  particular,  to  ensure  that  this  minimum  set  of  leased  lines 
is  made  available  at  lower  tariffs,  reflecting  better  the  costs  of  their  provision. 

Current  tariffs  for  leased  lines  in  the  European  Union  are  excessive,  putting  the  Union  in  a 
competitive  disadvantage  with  respect  to  its  industrialised  partners*1(l).  Such  high  tariff  levels 
in  Europe  are  a  barrier  to  the  take  off  of  innovative  advanced  services,  such  as  the  range  of 
building  block  applications  identified  in  the  Bangemann  Group  Report  on  "Europe  and  the 
global  information  society"0". 

This  concern  was  shared  by  the  Bangemann  Group  Report,  which  recommended  as  a  matter 
of  urgency  the  adjustment  of  leased  line  tariffs  to  bring  these  down  into  line  with  rates 
charged  in  other  advanced  industrialized  regions. 

Experience  in  markets  already  liberalized  has  shown  that  market  forces  alone  are  not 
sufficient  to  fulfil  this  requirement,  and  therefore  regulatory  intervention  is  needed  for  an 
initial  transition  period. 

On  those  grounds,  the  Commission  has  concluded  in  that  Communication  that  the  provision 
of  a  minimum  set  of  leased  lines  should  continue  to  be  mandated  until  competition  is 
effectively  established  and  market  forces  can  be  shown  to  replace  the  need  for  mandatory 
regulations.  At  the  same  time,  this  mandated  offering  will  have  to  evolve  in  line  with 
technological  development  and  market  demand,  and  the  need  to  retain  it  will  be  reexamined 
in  the  light  of  evolution  towards  an  effective  competitive  environment. 

(9)  COM(95)  158  final,  3.5.1995. 
(10)  The  Commission's  Green  Paper  on 

the  Liberalization  of  Telecommunications 
Infrastructure  and  Cable  Television  Networks  - Part  I (COM(94)  440  final,  25.10.1994) 
indicated  that  prices for  2 Mbit/s leased  lines in the European  Union  were  on  average ten 
times  more  expensive  than  in  North  America. 
Europe  and  the  global  information  society,  Recommendations  to  the  European  Council, 
26  May  1994 

(ii 

7 

The  Communication  also  indicated  that  the  future  re-focusing  of  the  existing  ONP  Leased 
Lines Directive for  the post-1998 environment  will  require Member  States to ensure that all 
users have access to leased  lines from  at least one operator,  under  harmonized  conditions of 
access  and  use,  including  access  to  a  mandatory  minimum  set  of  leased  lines.  This 
harmonized  offering  is  likely  to  act  as  a  benchmark  in  terms  of  quality,  price  and  service 
levels which  other  operators  and  service  providers will  seek to better. 

5. 

ONP and  the competition  rules 

As  noted  in  the  Commission's  aforementioned  Communication  on  the  Consultation  on  the 
Green Paper on the Liberalization  of Telecommunications Infrastructure  and Cable Television 
Networks, there is a consensus in the sector for  a balanced  approach  between the application 
of general  competition  law  and  sector-specific  regulation. 

At the current stage of development  of the telecommunications market, an ex-ante regulatory 
framework  serves to encourage market entry by providing predictability, facilitating  strategic 
planning  and  investment  in  the  future  competitive  environment.  A  regulatory  framework 
which  harmonizes  conditions  for  access  to,  and  use  of,  networks  and  services  limits  the 
possibilities  for  discrimination  and  thus contributes to fair  competition  in the  sector. 

At  the  same  time,  the  application  of  the  competition  rules  of  the  Treaty  to  issues  of 
interconnection  and  access  in  the  telecommunications  sector  will  become  increasingly 
important. 

6. 

Adaptations  proposed  to existing  ONP  measures 

Given the role of ONP as outlined  above, the main adaptations to the existing ONP measures 
concern  the areas  of: 

- 

- 

the entities  covered, 

tariff  principles, 

- 

the  national  regulatory  authorities. 

Other amendments have also been proposed  in order to ensure coherence with new technical 
developments and with other regulatory  measures that will form  part of the future  regulatory 
environment  for  telecommunications. 

Proposed  amendments  do  not  affect  the  specific  situation  of  those  Member  States  with 
transition  periods for  liberalization.  The proposed  amending  Directive  is designed  in  such a 
way  as to apply  also to those Member  States with transition  periods. 

6.1 

The  entities  covered 

Open  network  provision  concerns  public 
telecommunications  networks  and  public 
telecommunications  services,  and  thus  in  general,  ONP  measures  concern  organizations 
providing  public  telecommunications  networks  and/or  public  telecommunications  services. 
However,  ONP  measures  do  not  place  obligations  on  all  such  organizations.  The  specific 
entities  covered  depend  on the objective  of the particular  ONP measure. 

ONP measures also set out the roles and responsibilities of the national  regulatory  authorities 
responsible  for  implementing  ONP  principles  at the national  level. 

The revised  ONP Framework  Directive 

The ONP framework  Directive does not place obligations on specific  market players.  It sets 
up a  procedural  framework  for  the  development  of  other  specific  ONP measures,  and  these 
specific  measures identify  the entities to be covered.  The entities addressed  in specific  ONP 
measures depend  on the aim  being pursued.  Different  entities may be addressed  in  different 
measures,  or  by  different  provisions  within  a  single  measure.  It  is  also  important  that  the 
principle  of  proportionality  is observed,  in  order  to ensure  that  obligations  are  applied  in a 
way  that  reflects  an organization's  position  in the  market. 

The revised  Leased  Lines  Directive 

The aim  of the revised  version  of the Leased  Lines Directive  is to ensure that  all  users have 
access to leased lines from  at least one operator,  under  harmonized  conditions of access and 
use,  including  access to a mandatory  minimum  set of  leased  lines 

In respect of the subsidiarity principle, the decision as to which organization or organizations, 
separately  or jointly, will carry this obligation-to-provide will be taken at the Member States' 
level,  in accordance with  guidelines given  in the Directive. 

Obligations should only be imposed  on organizations with significant  market power, in order 
not  to  discourage  market  entry  through  the  imposition  of  burdens  on  new  entrants  and  to 
encourage technological  innovation  by new entrants. These obligations will  not constitute an 
unreasonable  burden  on  the  organizations  chosen,  as  experience  in  telecommunications 
markets  already  liberalized  has  shown  that  the  previous  monopoly  providers  have  kept 
significant  shares of the market  for  a considerable  period  of time after  liberalization. 

The market power of an organization  will depend  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, and its experience  providing 
products  and  services  in the  market. 

An organization having more than 25% of a particular leased lines 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  The national  regulatory  authority  may  nevertheless  determine that  an  organization 
falling  below  this  threshold  market  share  enjoys  significant  market  power,  as  for  example 
when  an  organization  has control  of essential  facilities. 

Member  States must  ensure that  at every  point  in their territory,  users have access to leased 
lines provided by at least one organization  in accordance with the provisions of the Directive. 
It  is  for  the  Member  States  to  notify  to  the  Commission  the  organization  or  organizations 
subject  to  requirements  under  the  Directive,  the  leased  line  types  within  the  minimum  set 
which  they  are  required  to  provide,  and  the  geographical  area  in  which  this  requirement 
applies. 

It  is  not  necessary  that  one  organization  has  the  obligation  to  supply  the  whole  of  the 
minimum  set of leased  lines in a specified  geographical  area.  Within  a specific  geographical 
area,  all  the leased  lines types provided  by  a notified  organization  are subject  to the general 
provisions  of the Directive. 

The ONP List  of  Standards 

The  ONP  List  of  Standards,  published  in  the  Official  Journal,  is  a  list  of  standards  for 
voluntary  application  by any organizations providing public telecommunications networks or 
public  telecommunications  services.  The  ONP  List  of  Standards  identifies  standards 
recommended  as suitable for  implementation  throughout  the EU. 

6.2 

Tariff  principles 

Historically, tariffs for telecommunications services provided under special or exclusive rights 
have been shaped by social  and political  goals, with the result that tariffs  were not related to 
the  underlying  costs  of  provision.  The  resulting  distortions  are  not  sustainable  in  a 
competitive environment.  The principle of cost orientation provides an objective basis for the 
rebalancing of telecommunications tariffs,  while not preventing geographical  price averaging 
and  the provision  of a general  service for  all. 

In  a  market  where  competition  is  fully  effective,  the  need  to  apply  the  principle  of  cost 
orientation diminishes. Market forces provide downward pressure on prices, while supervision 
by  the  national  regulatory  authority  and  the  competition  rules  provide  the  necessary 
safeguards  against  collusive  behaviour  that  could  hold  prices unduly  high. 

One  of  the most  competitive  markets following  removal  of  special  and  exclusive  rights  for 
infrastructure  will be leased lines in city centres and on main inter-city  routes.  The proposal 
for  revision  of  the  Leased  Lines  Directive  therefore  provides  for  the  principle  of  cost 
orientation to be set aside by the national  regulatory  authority  once an organization no longer 
has  significant  market  power  in the  relevant  market  (in  this case, the  relevant  market  could 
be a specific  leased  line type  provided  in  a defined  geographical  area). 

6.3 

National  regulatory  authorities 

The regulatory  framework  in the telecommunications  sector relies on the national  regulatory 
authorities  for  telecommunications  to  implement  the  principles  set  out  in  EU  legislation. 
National  regulatory  authorities  were  set up  under  Commission  Directive  90/388/EEC(12) and 
are  independent  bodies  entrusted  by  a  Member  State, inter  alia,  with  regulatory  functions 

Specific  ONP  measures  assign  the  national  regulatory  authorities  various tasks,  including: 

-  supervision  of  tariffs  and  accounting  systems, 

-  dispute  resolution, 

- 

responsibility  for  national  numbering  plans, 

-  ensuring  the provision  of  specified  facilities. 

The  1995  Commission  Communication  on  the  Status  and  Implementation  of  Directive 
90/388/EEC(13) stated that "the degree of separation between these [i.e. the national  regulatory 
authorities]  and  those  of  operator  functions  is  still  not  sufficiently  clear  in  at  least  five 
Member  States". 

In  revising  the  ONP  Framework  Directive  therefore,  it  is  proposed  to  make  explicit  the 
requirement  for  independence  of the national  regulatory  authority.  This does not  affect  the 
right  of  Member  States  to  decide  the  method  of  ownership  of  telecommunications 
organizations, but  it does mean  that where a Member  State chooses to retain  some degree of 
ownership or a significant  degree of control  of a telecommunications organization,  additional 
safeguards  are  necessary  to guarantee the independence  of the  national  regulatory  authority. 

It  is  crucial  for  the  successful  development  of  an  open  and  competitive  market  in 
telecommunications  that  national  regulatory  authorities  are not  only  independent  in  practice 
and  in  spirit,  but are also seen to be independent 

7. 

Summary  of the contents  of the  proposed  Directive 

Article  1 contains the amendments to Directive 90/387/EEC 

Article  2 contains the amendments  to Directive  92/44/EEC. 

Article  3  contains  standard  provisions  on  the  transposition  of  the  Directive  into 
Member  States' national  law, noting that this should be accomplished  by 31 December  1997. 

(12) 
(,3) 

OJ No L  192, 24.7.1990,  p.  10. 
OJ  No C 275, 20.10.1995, p. 2. 

8. 

Conclusion 

Light-handed  regulation  is appropriate in a competitive market.  The regulatory  environment 
must, however, ensure universal  service for the users (including consumers), fair  competition 
for  the players,  and  quality,  choice and value for  money  for  all. 

In  a  liberalized  environment,  the  value  of  harmonized  conditions  for  access  to  and  use  of 
telecommunications networks and services remains undiminished, but the means of achieving 
such  harmonization  must  be  flexible. 

Voluntary  application  of harmonized  conditions by the market  players will  be the norm  in a 
competitive  market,  with  mandatory  application  reserved  only  for those  areas where market 
forces  alone may  not be sufficient  to meet European  policy  goals.  ONP is evolving to meet 
those needs. 

The  European  Parliament  and  the  Council  are  therefore  requested  to  adopt  the  attached 
proposal  for  a Directive. 

12 

Proposal  for  a 
EUROPEAN  PARLIAMENT  AND  COUNCIL  DIRECTIVE 

amending  Council  Directives  90/387/EEC  and  92/44/EEC  for  the  purpose  of  adaptation  to 
a  competitive  environment  in  telecommunications 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Arti cl e  100a th ereof, 

Having  regard  to  the  proposal  from  the  Commission0\ 

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. 

2. 

(,) 
(2) 
(3) 
(4) 

(5) 
(6) 
(7) 
(8) 

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(3)  (ONP)  lays  down  harmonized  principles  for  open  and  efficient 
access  to  and  use  of  public  telecommunications  networks  and,  where  applicable, 
services;  whereas, 
the  Council  adopted 
Directive  92/44/EEC  of  5 June  1992  on  the  application  of  open  network  provision  to 
leased  lines(4), 

in  accordance  with 

that  Directive, 

Whereas  the  Council  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), 
combined  with  the  Council  Resolution  of  22  December  1994  on  the  principles  and 
timetable  for  the  liberalization  of  telecommunications  infrastructures^,  call  for  the 
liberalization  of  telecommunications  services  and  infrastructure  by  1  January  1998 
(with  transition  periods  for  certain  Member  States),  whereas  this  is  supported  by  the 
European  Parliament  Resolution  of  20  April  1993  on  the  Commission's  1992  review 
in  the  telecommunications  sector(7),  and  European  Parliament 
of  the  situation 
liberalization  of 
Resolution  of  19  May  1995  on 
telecommunications  infrastructure  and  cable  television  networks  (Part  II)(8); 

the  Green  Paper  on 

the 

OJ  No  C 
OJ  No  C 
OJ  No  L  192,  24.7.1990,  p.  1. 
OJ  No  L  165,  19.6.1992,  p.  27.  Directive  as  amended  by  Commission 
Decision  94/439/EC  (OJ  No  L  181,  15.7.1994,  p.  40). 
OJ  N oC  213,  6.8.1993,  p.  1. 
OJ  N oC  379,  31.12.1994,  p.  4. 
OJ  N oC  150,  31.5.1993,  p.  39. 
OJ  No  C 

13 

Whereas  the  Council  Resolution  of  22  July  1993  considered  as  a  major  goal  for  the 
Community's  telecommunications  policy  the  application  throughout  the  Community 
and,  where  necessary,  the  adaptation,  in  the  light  of  further  liberalization,  of  ONP 
principles  in  respect  of  the  entities  covered  and  of  such  issues  as  universal  service, 
interconnection  and  access charges as well  as the consequent  questions connected  with 
licensing  conditions,  whereas  the  Council  Resolution  of  18  September  1995  on  the 
implementation  of  the  future  regulatory  framework  for  telecommunications^  called 
on 
the 
Council  Resolutions  of  22  July  1993  and  22  December  1994,  to  present  to  the 
European  Parliament  and  the  Council  before  1  January  1996 all  legislative  provisions 
intended  to  establish  the  European  regulatory  framework  for  telecommunications 
accompanying  the  full  liberalization  of  this  sector,  in  particular  concerning  the 
adaptation  to  the  future  competitive  environment  of  ONP  measures; 

the  Commission, 

accordance  with 

timetable 

set  out 

the 

in 

in 

Whereas  the  European  Parliament  Resolution  of  6  May  1994  on  the  Communication 
from  the  Commission  accompanied  by  the  proposal  for  a  Council  Resolution  on 
universal  service principles  in the telecommunications  sector00' emphasizes the central 
importance  of  universal  service  principles,  whereas  the  Council  Resolution  of 
7  February  1994  on  universal  service  principles  in  the  telecommunications  sector"" 
provides  a  basic  definition  of  universal  service  and  calls  upon  the  Member  States  to 
establish  and  maintain  an  appropriate  regulatory  framework  in  order  to  ensure  it 
throughout  their  territory;  whereas,  as  was  recognized  by  the  Council  in  that 
Resolution,  the  concept  of  universal  service  must  evolve  to  keep  pace  with  advances 
in  technology,  market  development  and  changes  in  user  demand;  whereas  universal 
service  in  telecommunications  will  have  a  role  to  play  in  strengthening  social  and 
economic  cohesion,  in  particular  in  remote,  peripheral,  landlocked  and  rural  areas  and 
islands  of  the  Community; 

to 

access 

the  basic  principles  concerning 

Whereas 
and  use  of  public 
telecommunications  networks  and  services,  set  out  within  the  ONP  framework,  must 
be adapted  to  ensure  European-wide  services  in  a liberalized  environment,  in  order  to 
benefit  users  and  organizations  providing  public  telecommunications  networks  and/or 
services;  whereas  a  voluntary  approach  based  on  common  technical  standards  and 
specifications,  with  consultative  mechanisms  undertaken  where  necessary  to  satisfy 
user  needs,  is  appropriate  in  a  liberalized  environment;  whereas  nevertheless  the 
provision  of  universal  service  and  the  availability  of  a  minimum  set  of  services  must 
be  guaranteed  to  all  users  in  the  Community  through  binding  legislative  measures; 
whereas  a  general  framework  for  interconnection  to  public  telecommunications 
networks and public telecommunications  services is needed  in order to provide end-to-
end  interoperability  of  services  for  Community  users; 

OJ  N oC  258,  3  10  1995,  p.  1. 
OJ  No  C  205,  25.7  1994,  p.  551. 
OJ  N oC  48,  16.2.1994,  p. 1 

(10) 

( , ,) 

14 

6. 

7 

8 

9 

Whereas  the  ONP  framework  concerns  public  telecommunications  networks  and 
services  provided  commercially  but  does  not  address  the  issue  of  content;  whereas 
télécommunications  services  in  this  context  do  not  include  radio  and  television 
broadcast  services; 

Whereas  in  conformity  with  the  principle  of  separation  of  regulatory  and  operational 
junctions, Member States should guarantee the independence of the national  regulatory 
authority  or  authorities,  and  ensure that  the national  regulatory  authority  or  authorities 
of  each  Member  State  will  play  a  key  role  in  the  implementation  of  the  regulatory 
framework  set  out  in  relevant  Community  legislation;  whereas  the  national  regulatory 
authorities  should  have  the  necessary  means  to  carry  out  fully  the  tasks  assigned  to 
them; 

Whereas the draft  Commission  Directive of amending Directive  90/388/EEC  regarding 
the  implementation  of  full  competition  in  telecommunications  markets02'  proposes  to 
provide  for  adequate  numbers to be available  for  ail  telecommunications  services,  and 
for  numbers  to  be  allocated  in  an  objective,  non-discriminatory,  proportionate  and 
transparent  manner; 

Whereas  in  order  to  guarantee  provision  of  leased  lines  throughout  the  Community, 
Member  States  should  ensure  that  at  every  point  in  their  territory  users  have  access 
to a minimum  set ofleased  lines from  at least  one organization;  whereas  organizations 
with  obligations to provide leased  lines should  be designated  by  Member  States on the 
basis  of  their  market  power  in  the  relevant  leased  lines  market;  whereas  Member 
States  shall  notify  to  the  Commission  the  organizations  subject  to  the  Directive,  the 
leased  line types  within  the  minimum  set  which  they  are  required  to  provide,  and  the 
geographical  area  in  which  this  requirement  applies;  whereas,  within  a  specific 
geographical  area,  all  the  leased  lines  types  provided  by  a  notified  organization  are 
subject  to  the  general  provisions  of  the  Directive; 

its  control  of  the  means  of  access  to  end-users, 

10.  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 
its  ability  to 
geographical  market,  its  turnover  relative  to  the  size  of  the  market, 
influence  market  conditions, 
its 
access  to  financial  resources,  its  experience  in  providing  products  and  services  in  the 
market;  whereas,  for  the  purpose  of  this  Directive,  an  organization  with  a  share  of 
more  than  25%  of  the  relevant  leased  lines  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  an  organization  falling  below  this  threshold  market  share 
should  not  be  regarded  as  enjoying  significant  market  power,  unless  this  can  clearly 
be  demonstrated  to  be  the  case; 

(1:) 

OJ  No  C  263,  10.10  1995,  p  6. 

15 

11.  Whereas  the  concept  oi  leased  lines  services  will  evolve  with  new  technological 
advances  and  market  demand,  allowing  users  a  more  flexible  use  of  the  leased  line 
bandwidth,  including  certain  routing  and  management  capabilities,  for  new  types  of 
leased  lines; 

12.  Whereas,  in  order  to  achieve  more  efficient  communications  within  the  Community, 
it  is  important 
the  provision  of  an  additional 
harmonized  set  of  higher  order  leased  lines,  taking  into  account  market  demand  and 
progress  with  standardization; 

that  Member  States  encourage 

13.  Whereas  until  an  effective  competitive  environment  is  achieved,  there  is  the  need  for 
regulatory  supervision  of  tariffs  for  leased 
lines  with  a  view  to  ensuring  cost 
orientation  and  transparency,  in  accordance  with  the  principle  of  proportionality, 
whereas  il  is  appiopriatc  to  set  aside  the  requirements  for  cost  orientation  and 
transparency  in  specific  markets  where  no  organization  has  significant  market  power; 
whereas,  in  a  fully  competitive  enviionnicnt,  market  mechanisms  will  ensure  that 
tariffs  for  leased  lines  are  reasonable; 

14.  Whereas 

(CTRs) 

common 

technical 

regulations 

under  Council 
Directive  9l/2b3/EEC  of  29  April  199i  on  the  approximation  of  the  laws  of  the 
Member  States  concerning  telecommunications  terminal  equipment,  including  the 
mutual  recognition  of  their  conformity00  and  Council  Directive  93/97/EEC  of 
29  October  1993  supplementing  Directive  91/263/EEC  in  respect  of  satellite  earth 
station  equipment'1"  define  the  conditions  for  connection  of  terminal  equipment  to 
leased  lines, 

adopted 

15.  Whereas  certain  amendments  to  existing  ONP  measures  are  appropriate  in  order  to 
ensure coherence with  new technical  developments  and with  other regulatory  measures 
that  will  form  part  of  the  overall  regulatory  framework  for  telecommunications; 

16 

Whereas  all  the  areas  identified  in  Annex  I to  Directive  90/387/EEC  as possible  areas 
for  the application  of  open  network  conditions  have been  addressed  in  analysis  reports 
subject  to  public  consultation,  in  accordance  with  the  procedure  set  out  in  Article  4 
of  that  Directive:  whereas  all  the priority  measures  identified  in  Annex  III  thereto  have 
been  adopted; 

17.  Whereas  in  order  to  enable  the  Commission  to  carry  out  the  monitoring  task  assigned 
to  it  by  the  Treaty,  changes  in  national  regulatory  authority  or  authorities  and  the 
organizations  affected  shall  be  swiftly  notified  to  the  Commission; 

18.  Whereas,  in  accordance  with  the  principles  of  subsidiarity  and  proportionality  as  set 
out  in  Article  3b  of  the  Treaty,  the  objective  of  adjusting  Directives  90/387/EEC  and 
92/44/EEC  to a competitive  environment  in  telecommunications  cannot  be  sufficiently 

(13) 

(14) 

OJ  No  L  128,  23.5.1991,  p.  1.  Directive  as  last  amended  by  Directive  93/68/EEC 
(OJ  No  L  220,  30.8.1993,  p.  1). 
OJ  N oL  290,  24.11.1993,  p.  1. 

16 

achieved  by  the  Member  States  and  can  therefore  be  better  achieved  by  the 
Community;  whereas this Directive  keeps within  the minimum  required  for  attaining 
that  aim  and  does  not  go  beyond  what  is  necessary  for  the  purpose; 

19.  Whereas the functioning  of Directives 90/387/EEC and 92/44/EEC should be reviewed 
not  later  than  31  December  1999;  whereas  such  review  should  take  account  of 
increasing  effectiveness  of  competition  in  telecommunications  markets; 

20.  Whereas  according  to  Articles  52  and  59 of  the  Treaty,  the  regulatory  regime  in  the 
field  of  telecommunications  should  be  compatible  and  consistent  with  the  principles 
of  freedom  of  establishment  and  freedom  to  provide  services  and  should  take  into 
account  the  need  to  facilitate  the  introduction  of  new  services  as  well  as  the 
widespread  application  of  technological  improvements; 

21.  Whereas  the European  Parliament  and  the  Council  have  adopted  Directive  95/46/EC 
of  24  October  1995 on  the  protection  of  individuals  with  regard  to the  processing  of 
personal  data  and  on  the  free  movement  of  such  dala(15), 

HAVE  ADOPTED  THIS  DIRECTIVE: 

Article 1 

Amendment  of  Directive  90/387/EEC 

Directive  90/387/EEC  is hereby  amended  as  follows: 

1.  Article  1 is amended  as  follows: 

(a)  Paragraph  2 is  replaced  by  the  following: 

of 

public 

"2.  The  conditions  referred  to  in  paragraph  1  are  designed  to  facilitate  the 
public 
telecommunications 
provision 
telecommunications  services,  within  and  between  Member  States,  and  in 
particular  the  provision  of  services  by  companies,  firms  or  natural  persons 
established  in  a Member  State  other  than  that  of the  company,  firm  or  natural 
person  for  whom  the  services  are  intended." 

networks 

and/or 

(b)  The  following  paragraph  3 is  added: 

"3.  Open  network  provision  conditions  aim  at: 

guaranteeing  the  provision  of  universal  service  in  telecommunications, 

ensuring  the  availability  of  a minimum  set  of  services, 

securing access and interconnection  to public telecommunications networks 
and  public  telecommunications  services, 

(l5) 

O J N oL  281, 23.11.1995,  p. 31. 

17 

encouraging  the  provision  of  harmonized  telecommunications  services  to 
the  benefit  of  users,  by  identifying  and  promoting  by  voluntary  means 
harmonized 
interfaces  for  open  and  efficient  access  and 
interconnection,  and  associated  standards  and/or  specifications, 

technical 

throughout  the  Community." 

2.  Article  2 is replaced  by the  following: 

For the purposes  of this  Directive: 

"Article 2 

1 

"users"  means  individuals,  including  consumers,  or  organizations  who  use  public 
telecommunications  services; 

2  -  "telecommunication network" means the 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; 

-  "public  telecommunications  network"  means  a  telecommunications  network  used 

inter  alia  for  the provision  of  public telecommunications  services; 

3  -  "telecommunications  services" means  services  whose  provision  consists  wholly  or 
partly in the transmission and/or routing of signals on telecommunications networks; 

-  "public telecommunications  service" means a telecommunications  service available 

to the public; 

4.  "universal  service" means a defined  minimum  service or  set of  services of  specified 
quality  which  is  accessible  to  all  users  everywhere  and,  in  the  light  of  specific 
national  conditions,  at an  affordable  price; 

5.  "network  termination  point"  means  the  physical  point  at  which  a  user  is  provided 
access  to  a  public  telecommunications  network  It  is  the  point  at  which  technical 
interface  specifications  are  defined; 

6.  "essential requirements" means the non-economic reasons in the general interest which 
may  cause a Member  State to restrict  access to public telecommunications  networks 
or  public  telecommunications  services.  These  reasons  are  security  of  network 
operations,  maintenance  of network  integrity  and,  in justified  cases,  interoperability 
of  services and  data  protection. 

Data  protection  may  include  protection  of  personal  data,  the  confidentiality  of 
information  transmitted  or  stored  as well  as the protection  of  privacy; 

18 

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

8.  "open  network  provision  conditions" means the conditions,  harmonized  according to 
the provisions of this Directive, which concern the open and efficient  access to public 
telecommunications  networks  and,  where  applicable,  public  telecommunications 
services and  the efficient  use of those networks  and  services. 

Without  prejudice  to  their  application  on  a  case-by-case  basis,  the  open  network 
provision  conditions  may  include  harmonized  conditions  with  regard to: 

- 

technical  interfaces,  including  the  definition  and  implementation  of  network 
termination  points, where  required, 

-  usage conditions, 

- 

tariff  principles, 

-  access to frequencies  and  numbers /  addresses /  names,  where  required; 

9 

'technical  specifications',  'standards'  and  'terminal  equipment'  are  given  the  same 
meaning for  those terms as in  Article  1 of  Directive 91/263/EEC*. 

*  O J N oL  128, 23.5.1991, p.  I." 

3.  Article 3 is amended  as follows. 

(a)  Paragraph  3 is replaced  by  the  following: 

"3.  Open  network  provision  conditions  may  not  allow  for  any  additional 
restrictions on the use of the public telecommunications networks and/or public 
telecommunications  services,  except  restrictions  which  are  compatible  with 
Community  law." 

(b)  Paragraph  4 is deleted. 

(c)  Paragraph  5 is replaced  by the  following: 

"5.  Without  prejudice  to  the  specific  Directives  adopted  in  the  field  of  open 
network provision and in so far as the application  of the essential  requirements 
referred  to in paragraph  2 may  cause Member  States to  limit  access to public 
telecommunications  networks or services, the rules for  uniform  application  of 
the  essential  requirements,  in  particular  concerning  the  interoperability  of 
services and the protection  of data, shall be determined,  where appropriate, by 
the Commission,  in  accordance  with  the procedure  laid  down  in  Article  10." 

19 

4.  Article 4 is deleted. 

5  Article  5 is replaced  by  the  following: 

"Article 5 

1  Reference  to  standards  and/or  specifications  drawn  up  as  a  basis  for  harmonized 
technical  interfaces  and/or  service  features  for  open  network  provision  shall  be 
published  in  the  Official  Journal  of  the  European  Communities  as  suitable  for  the 
requirement of open and efficient  access, interconnection  and interoperability in order 
to encourage the provision  of harmonized  telecommunications  services to the  benefit 
of users throughout  the  Community. 

Where necessary,  the Commission  may,  in  consultation  with  the committee  referred 
to in Article 9, request standards to be drawn up by European  standardization bodies. 

2  Member  States  shall  encourage  the  use  of  the  standards  and/or  specifications 
referenced  in the Official  Journal  of the European  Communities,  in accordance with 
paragraph  1, for  the provision  of technical  interfaces  and/or  network  functions. 

As  long as  such  standards  and/or  specifications  are  not adopted  or in  the  event thpt 
they  are not  economic,  Member  States  shall  encourage: 

- 

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

or,  in the absence  of  such  standards and/or  specifications, 

- 

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

International  Organization 

the  International 
for 

(ITU), 

the 

or,  in the absence of  such  standards  and/or  recommendations, 

- 

standards and/or specifications  developed  by international  industry  bodies having 
a wide acceptance  across the  sector, 

or,  in  the absence  of  such  standards and/or  specifications, 

-  national  standards  and/or  specifications  having  a  wide  acceptance  across  the 

sector. 

3.  If the implementation  of the standards and/or specifications referred  to in paragraph 1 
appears  inadequate  to  ensure  the  interoperability  of  transfrontier  services  in  one or 
more Member States, the implementation  of such standards and/or specifications may 
be  made  compulsory  under  the  procedure  laid  down  in  Article  10,  to  the  extent 
strictly  necessary  to  ensure  such  interoperability  and  to improve  freedom  of  choice 
for  users,  subject  to  Articles  85 and  86 of the Treaty. 

20 

Before the implementation  of the standards and/or specifications  is made compulsory 
in accordance with the first subparagraph,  the Commission  shall, by publication  of a 
notice  to  that  effect  in  the  Official  Journal  of  the  European  Communities,  invite 
public comment  by  all  parties  concerned. 

4  Where  a  Member  State or  the  Commission  considers  that  the  harmonized  standards 
and/or specifications  mentioned  under paragraph  1  do not correspond to the objective 
of  open  and  efficient  access,  interconnection  and  interoperability,  in  particular  the 
basic  principles  and  the  essential  requirements  referred  to  in  Article  3,  the 
Commission  or  the  Member  State  concerned  shall  bring  the  matter  before  the 
committee referred  to in Article 9, giving the reasons therefore.  The committee shall 
deliver  an opinion  without  delay. 

5.  In  the  light  of  the  committee's  opinion,  the  Commission  shall  inform  the  Member 
States whether or not it is necessary  to withdraw references  to those standards and/or 
specifications  from  the Official  Journal  of the European  Communities." 

6  The following  Article  5a is  inserted: 

"Article  5a 

1.  Member  States  may  arrange  for  the  tasks  assigned  to  the  national  regulatory 
authority  in  Community  legislation  to be undertaken  by  more than  one body. In 
this case, the Member  States  shall  clearly  identify  the tasks to be undertaken  by 
each body. 

2.  In  order to guarantee the independence  of national  regulatory  authorities: 

-  national  regulatory  authorities  shall  be  legally  distinct  from,  and  functionally 
independent  of,  all  organizations  providing  telecommunications  networks, 
equipment  or  services; 

-  Member  States  who  retain  ownership  or  a  significant  degree  of  control  of 
organizations  providing  telecommunications  networks  and/or  services  shall 
ensure effective  structural  separation  of the regulatory function  from  activities 
associated  with  ownership  or control 

# *• 

3  Member  States  shall  ensure  that  suitable  mechanisms  exist  at  a  national  level 
whereby  a party  affected  by  a decision  of the national  regulatory  authority  has a 
right of appeal  to an  independent  body." 

7.  Articles 6 and  7 are deleted. 

21 

8  Article  8 is replaced  by the  following: 

"Article 8 

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 
3 I December  1999  The report  shall  be based  inter alia on the  information  provided  by 
the  Member  States  to  the  Commission  and  to  the  ONP  Committee  Where  necessary, 
further  measures can be proposed  in the report for adapting this Directive, taking account 
of  developments  towards  a fully  competitive  environment " 

9. 

In the second  paragraph  of  Article 9(1),  "telecommunications  organizations"  is replaced 
telecommunications  networks  and/or  public 
by  "organizations  providing  public 
telecommunications services". 

10.  Annexes I and  III  are deleted. 

11.  Annex  II is replaced  by  Annex  I to this Directive. 

Article 2 

Amendment  of  Directive  92/44/EEC 

Directive  92/44/EEC  is hereby  amended  as  follows: 

1.  "Telecommunications organizations" is replaced by 'organizations notified  in accordance 

with  Article  11(1 a)' throughout  the text. 

2. 

In  Article  I,  the following  paragraphs  are added: 

"Member States shall ensure that at every point in their territory  at least one organization 
is subject  to the provisions  of this Directive. 

Without  prejudice  to the  second  paragraph,  Member  States shall  ensure that  obligations 
resulting from  this Directive are not imposed on organizations without significant  market 
power." 

3.  Article 2 is replaced  by the  following: 

"Article 2 

Definitions 

1.  The  definitions  given  in  Directive  90/387/EEC  shall  apply,  where  relevant,  to 

this Directive. 

22 

2. 

In  addition,  for  the  purposes  of  this Directive, 

- 

- 

- 

"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), 

"ONP Committee" means the committee referred  to in Articles 9 and  10 of Directive 
90/387/EEC, 

"national  regulatory"  authority  means  the  body  referred 
Directive  90/387/EEC." 

to  in  Article  5a  of 

4.  Article  3 is  amended  as  follows: 

(a)  The  second  sentence  of  paragraph  1 is  replaced  by  the  following: 

"Changes in existing offerings  and information  on new offerings  shall be published 
as  soon  as  possible.  The  national  regulatory  authority  may  lay  down  a  suitable 
period  of  notice." 

(b)  Paragraph  3 is  deleted. 

5. 

In  Article  4,  second  indent,  the  first  subparagraph  is  replaced  by  the  following: 

"-  the typical  delivery  period,  which  is the period,  counted  from  the date when the user 
has  made  a  firm  request  for  a  leased  line,  in  which  95%  of  all  leased  lines  of  the 
same type  have been  put  through  to the  customers." 

6.  Article  6 is amended  as  follows: 

(a)  Paragraph  1 is replaced  by  the  following: 

"1.  Member  States  shall  ensure  that  when  access  to  and  use  of  leased  lines  is 
restricted,  such  restrictions  are  aimed  only  at  ensuring  compliance  with  the 
essential  requirements,  compatible  with  Community  law,  and  are  imposed  by 
the national  regulatory  authorities  through  regulatory  means. 

technical 

restrictions  shall  be 

No 
the 
interconnection  of  leased  lines  among  each  other,  nor  for  the  interconnection 
of  leased  lines  and  public  telecommunications  networks." 

introduced  or  maintained 

for 

23 

(b)  The  first  subparagraph  of  paragraph  4  is  replaced  by  the  following: 

"Access  conditions  relating  to  terminal  equipment  are  considered  to  be  fulfilled 
when  the terminal  equipment  complies with  the  approval  conditions  set out  for  its 
connection  to  the  network  termination  point  of  the  type  of  leased  line  concerned, 
in  accordance  with  Directives  91/263/EEC* or  93/97/EEC". 

O J N oL  128, 23.5.1991, p.  1. 
O J N o L 2 9 0,  24.11.1993, p.  1." 

7.  Article  7 is amended  as  follows: 

(a)  The  following  paragraph  2a  is  inserted: 

"2a.  Member  States shall  encourage the provision  of the additional types of leased 
lines identified  in Annex 111, taking into account market demand and progress 
with  standardization." 

(b)  Paragraph  3 is replaced  by  the  following: 

"3. 

The  amendments  necessary  to  adapt  Annexes  II  and  III  to  new  technical 
developments  and  to  changes  in  market  demand,  including  the  possible 
deletion  of  certain  types  of  leased  lines from  the Annexes,  shall  be  adopted 
by  the  Commission  under  the  procedure  provided  for  in  Article  10  of 
Directive  90/387/EEC,  taking  into  account  the  state  of  development  of 
national  networks." 

8.  Article  8 is amended  as  follows: 

(a)  Paragraph  2 is replaced  by  the  following: 

"2.  The national  regulatory  authority  shall ensure that the organizations notified  in 
accordance  with  Article  11 (la)  adhere  to  the  principle  of  non-discrimination 
when  providing  leased  lines.  In  particular,  such  organizations  shall  provide 
leased lines 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." 

(b)  The  following  paragraph  4  is  added: 

"4.  Member  States  shall  ensure  that  organizations  providing  leased  lines  are 
obliged  to  supply  the  information  necessary  to  determine  the  organizations  to 
which  this  Directive  shall  apply." 

9.  Article  9 is  deleted. 

24 

10.  Article  10 is amended  as  follows. 

(a) 

In  paragraph  2(b),  point  (iii)  is replaced  by  the  following: 

"(iii)  when neither direct nor indirect measures of cost allocation can be found,  the 
cost category  shall  be allocated  on the basis of a general  allocator  computed 
by  using  the  ratio  of  all  expenses  directly  assigned  or allocated,  on  the one 
hand,  to  leased  lines and,  on  the other  hand,  to other  services." 

(b)  The  following  paragraph  4 is added 

"4.  The  national  regulatory  authority  shall  not  apply  the  requirements  of 
paragraph  1 where an  organization  does not  have significant  market  power in 
respect  of a specific  leased  line offering  in  a specific  geographical  area." 

11.  Article  11 is amended  as  follows: 

(a)  Paragraph  1 is replaced  by the  following: 

"1.  Member  States  shall  notify  to  the  Commission  their  national  regulatory 
authority  or  authorities  responsible  for  carrying  out  the  tasks  identified  in 
this Directive. 

They  shall  notify  promptly  to  the  Commission  any  changes  in  their  national 
regulatory  authorities." 

(b)  The following  paragraph  la  is added: 

"la.  National  regulatory  authorities  shall  notify  to the Commission  the names of 
those organizations  providing  leased  lines subject  to requirements under this 
Directive.  This  notification  shall  include,  where  appropriate,  the  types  of 
leased lines that each organization is required to provide in each geographical 
area  in  order  to  fulfil  the  requirement  of  Article  1 and  shall  include  any 
exceptions granted  in  accordance  with  Article  10(4)." 

(c) 

In  paragraph  2, the  second  subparagraph  is replaced  by the  following. 

"The  national  regulatory  authority  shall  keep  available  and  submit  to  the 
Commission  on request the data on cases where the access to or use of leased lines 
has  been  restricted,  as  well  as  details  of  the  measures  taken,  including  their 
motivation." 

25 

12.  Article  14 is,replaced  by the  foilowing: 

"Article  14 

Report 

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  1999. The 
report  shall  be  based  inter  alia  on  the  information  supplied  by  the  Member  States  to  the 
Commission  and to the ONP Committee.  The report  shall  include an assessment  of the need 
for continuation of this Directive, taking account of developments towards a fully  competitive 
environment.  Where necessary,  further  measures can be proposed  in the report  for  adapting 
this Directive." 

13  Annex  I is amended  as  follows: 

(a)  Footnote  1 is replaced  by the  following: 

"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)." 

(b) 

In  section  D, points  1, 2,  3,  5 and  6 are  deleted. 

(c)  Section  E is replaced  by the  following: 

"The information  on the attachment conditions includes a complete overview of the 
requirements which terminal equipment to be attached to the relevant leased line has 
to fulfil  in  accordance with  Directive  91/263/EEC  or 93/97/EEC." 

14.  Annex  II to this Directive  is added  as Annex  III. 

Article 3 

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 text of the main  provisions of 

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

26 

Article 4 

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 

Article 5 

Addressees 

fhis  Directive  is addressed  to the  Member  States 

Done at Brussels, 

For the  European  Parliament 
The  President 

For the Council 
The President 

27 

ANNEX 1 

Reference  framework  for  the application  of  open  network  provision  conditions 

"ANNEX 

The  application  of open  network  provision  conditions  as defined  in  Article 2(10)  should  be 
in accordance  with  the following  reference  framework,  taking into account the relevant  rules 
of the  Treaty: 

1.  Harmonized  technical  interfaces  and/or  network  functions 

In drawing  up open network  provision  conditions the following  scheme should be taken 
into  account  for  the  definition  of  specifications  for  technical  interfaces  and/or  network 
functions: 

- 

- 

- 

for existing services and networks, existing interface specifications should be adopted; 

for  entirely  new  services or  the  improvement  of  existing  services,  existing  interface 
specifications  should also be adopted,  as far  as feasible.  When existing interfaces  are 
not  suitable,  enhancements  and/or  new  interface  specifications  will  have  to  be 
specified; 

for  networks  that  are  still  to  be  introduced,  but  for  which  the  standardization 
programme  has  already  commenced,  open  network  provision  requirements  falling 
within  the  terms  of  Article  3  should  be  taken  into  account  when  developing  new 
interface  and  network  functions  specifications. 

Open  network  provision  proposals must,  wherever  possible, be in line with the ongoing 
work in the European  standardization  bodies, in particular the ETS1, and must also take 
into account  work  in  international  standardization  organizations,  such  as the ITU-T. 

2.  Harmonized  supply  and  usage  conditions 

Supply  and  usage conditions  identify  conditions  of  access and  of  provision  of services, 
as far  as  required. 

(a)  supply conditions concern conditions under which a service is offered  to users. They 

may  include: 

typical  delivery  period, 

typical  repair time, 

quality  of  service,  in  particular  availability  and  quality  of  transmission 

maintenance  and network  management; 

28 

(b)  usage conditions  concern  conditions  which  apply  to users,  such as: 

conditions  for  network  access, 

conditions  for  shared  use, 

conditions  regarding  protection  of  persona!  data  and  confidentiality  of 
communications,  where  required. 

3.  Harmonized  tariff  principles 

Tariff  principles  must be consistent  with  the  principles  set out  in  Article 3(1). 

These  principles  imply,  in  particular,  that: 

- 

- 

- 

tariffs  must be based  on  objective  criteria  and  must  in principle be cost-oriented,  on 
the  understanding  that  the  fixing  of  the  actual  tariff  level  will  continue  to  be  the 
province  of  national  legislation  and  is  not  the  subject  of  open  network  provision 
conditions.  Where  an  organization  no  longer  has  significant  market  power  in  the 
relevant  market,  the  requirement  for  cost-orientation  may  be  set  aside  by  the 
competent  national  regulatory  authority.  One of the aims should  be the  definition  of 
efficient  tariff  principles throughout the Community while ensuring a general  service 
for  all, 

tariffs  must be transparent  and  must be properly  published, 

in  order  to  leave  users  a choice  between  the  individual  service  elements  and  where 
technology  so permits, tariffs  must be sufficiently  unbundled  in accordance  with the 
competition rules of the Treaty. In particular, additional features introduced to provide 
certain specific  extra services must, as a general  rule, be charged independently of the 
inclusive  features  and  transportation  as such, 

- 

tariffs  must be non-discriminatory  and  guarantee  equality  of  treatment. 

Any charge for  access to network  resources or services must comply  with the principles 
set  out  above  and  with  the  competition  rules  of  the  Treaty  and  must  also  take  into 
account the principle of fair  sharing in the global  cost of the resources used and the need 
for  a reasonable  level  of  return, on  investment. 

There may be different  tariffs,  in particular to take account of excess traffic  during peak 
periods  and  lack  of  traffic  during  off-periods,  provided  that  the  tariff  differentials  are 
commercially justifiable  and  do not  conflict  with  the above principles. 

29 

4.  Harmonized  approach  to numbering/addrcssing/naming 

Numbering/addressing  constitute 
important  element  of  any 
telecommunications protocol  and of any telecommunications service that provides for the 
selection  of the destination  or  destinations. 

the  single  most 

Telecommunications services provided over the fixed public telephone network currently 
rely exclusively on numbering to identify  the destination or destinations of a call. In other 
telecommunications  services,  the  more  general  concept  of  addressing  takes  the 
central  role.  Naming  plays  a  role  in  some  of  these  telecommunications  services, 
e.g.  Message  Handling  Systems  according  to  the  X.400  Series  Recommendations,  in 
addition  to addressing;  the possibility  exists that  this role of naming,  complementary  to 
numbering/addressing,  will  appear  over  time in  ail  telecommunications  services. 

Adherence  to  a  harmonized  approach  for  numbering/addressing,  and  where  applicable 
naming, is therefore  essential  to guarantee European  wide end-to-end  interconnection  of 
users and interoperability of services. Further, the allocation of numbers/addresses/ names 
should  be fair  and  consistent  with  the requirements  for  equal  access. 

To achieve this,  it is necessary  to: 

-  ensure  the  provision  according  to  harmonized  principles  of  adequate  ranges  of 
numbers  and  addresses,  and  where  applicable  of  adequate  naming,  for  all  public 
telecommunications  services; 

-  ensure  the  coordination  of  national  positions  in  international  organizations  and  fora 
where  decisions  are  taken  on  numbering/addressing/naming,  taking  into  account 
possible future  developments  in  numbering/addressing/naming at a  European  level; 

-  ensure  that  the  relevant  national  telecommunications  numbering/addressing/naming 
plans  are  under  the  supervision  of  the  national  regulatory  authority,  in  order  to 
guarantee  independence  from  organizations  providing  public  telecommunications 
networks  or public telecommunications  services; 

-  ensure that the procedures for  allocating individual  numbers/addresses/names,  and/or 
addressing/numbering  ranges  are  transparent,  equitable  and  timely  and  that  the 
allocation  is carried  out  in an objective,  transparent  and non-discriminatory  manner; 

-  give national  regulatory  authorities the possibility  to lay down  conditions for the use 
in numbering/addressing plans of certain prefixes  or certain short codes, in particular 
where these  are  used  for  services  of general  public  interest  (e.g.  directory  services, 
emergency  services),  or to ensure equal  access." 

30 

ANNEX II 

"ANNEX III 

DEFINITION  OF  LEASED  LINES WHICH  MAY  BE PROVIDED, 
IN ACCORDANCE  WITH  ARTICLE  7(2a) 

Leased  line type 

" 

34 368 kbit/s 
digital  structured 
34  3<38  kbit/s 
digital  unstructured 
139 264 kbit/s"digrtaî 
structured 
139 264 kbit/s digital 
unstructured 
155 Mbit/s digital 
(STM-1)(2) 

Technical  characteristics 

Interface  presentation 
specifications 

~'""ËTS"3Ô'Ô"686fr) 

j  Connection  characteristics 
and  performance 
specifications 
"~~" ETS 300 687(1)  ~ ™~ 

' 

ETSlÔ0  686n7  — ~ ~ ~E ÎS  ^ 

^jm 

ETS  300 686(T) 

" "ETS  300  688U) 

ETS  300 686"> 

" 

ETS  300 688U) 

~ 

based  on 
ITU-T  G.708 

based on 
ITU-T  G.708 

(2) 

These  standards are  still  under  development  in  ETSI. 
ETSI  has been  requested  to  carry  out  further  work  on  standards  for  SDH VC-based 
leased  digital  bandwidth " 

31 

ISSN 0254-1475 

COM(95) 543 final 

DOCUMENTS 

EN 

15  08 

Catalogue number  : CB-CO-95-602-EN-C 

ISBN 92-77-96203-8 

Office  for  Official  Publications of the European Communities 

L-2985 Luxembourg 

32