Proposal for a European Parliament and Council Directive amending Directive 97/33/EC with regard to operator number portability and carrier pre-selection
Date: 1997-10-01
Institutions: European Commission
Subjects: communications policy, liberalisation of the market, new technology, telecommunications, telephone

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 01.10.1997 
COM(97) 480  final 

97/  0250(COD) 

Proposal for a 

EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE 

amending Directive 97/33/EC with regard to  operator number portability and carrier 
pre-selection 

(presented by the Commission) 

EXPLANATORY MEMORANDUM 

Background 

Public consultation on the basis of a Commission Green Paper 

1. 

a) 

In  November  1996  the  Commission  published  its  Green  Paper  on  a  Numbering 
Policy  for  Telecommunications  Services  in Europe1,  presenting  various  options  for  a 
common approach towards certain numbering issues in order to reach the agreed goals 
of  a  competitive  and  liberalised  single  telecommunications  market.  A  broad  public 
consultation  on  these  options  provided  the  input  for  a more  concrete  plan  of  action, 
closely  following  the  needs  and  demands  of  residential  and  business  customers  and 
new  entrants  in  the  telecommunications  market  while  taking  account  of  any 
constraints within existing telecommunications  structures. 

The  consultation  has  demonstrated  wide  support  for  the  Green  Paper  proposals  to 
introduce  call-by-call  carrier  selection,  carrier  pre-selection  and  operator  number 
portability  in order to enable the customer to benefit  from  a new competitive  market. 
The  comments  also provided  a useful  basis to  determine  which  services  and  service 
providers  should  be covered  by  the  obligations  relating  to  these  numbering  features. 
It also provided a clear indication of the timetable for their introduction. 

Commission  Communication  reporting  on  the  outcome  of  the  public 

b) 
Consultation 

The  results  of this  consultation  were  set  out  in the  Commission's  Communication  to 
the  European  Parliament  and  to  the  Council2.  Drawing  on  those  results,  the 
Commission  presented  a number of policy  conclusions  and a concrete  action plan  to 
achieve the policy objectives. 

With regard to numbering mechanisms, these objectives are : 

•  by  1 January  1998,  call-by-call  carrier  selection  should  be  offered  by  all  fixed 
local  access  providers  with  significant  market  power  in  all  Member  States  where 
full  liberalisation  is required  by  that  date  and  in  Member  States  where  additional 
transition periods have been agreed, by the end of that period. 

•  by  1  January  2000, 

carrier  pre-selection,  (with  the  default  carrier  to  be 
determined  by  the  subscriber  and  with  call-by-call  override  to  be  available  to  the 
user), should be offered  by all fixed  local  access providers with  significant  market 
power in all Member States. 

•  by  1 January  2000,  operator  number  portability  should  be  offered  by  all  fixed 
local access providers; whilst all operators should offer  number portability  for  non-

1  COM(96)590 final, 20.11.1996 

2  COM (97) 203 final, 21.5.1997 

geographic  special  service  numbers  (freephone,  shared  costs,  premium  rate 
services).. 

The  legal  principles  underlying  the policy  objective  of  having  a  mechanism  for  call-
by-call  carrier  selection  by  the  dates  set  for  liberalisation  , is  already  implicit  in  the 
current  legal  framework  for  1998.  Article  12(6)  of  the  Interconnection  Directive 
requires  that  fair  and  equal  treatment  regarding  numbering  is  given  to  all  service 
providers. In practice this means that Member  States must at  least  create a system  of 
pre-fixes  by which customers can reach service providers other than their  local  access 
provider.  The  Member  States  have  confirmed  their  commitment  to  ensure  the 
liberalisation  in  a 
availability  of  call-by-call  carrier  selection  by  the  dates  set  for 
Council  Resolution  of  22  September 
for 
telecommunications services in Europe. 

1997  on  numbering  policy 

On  the  other  two  points,  the  action  plan  proposed  the  submission  of  legislative 
measures to create a legal basis for a synchronised  introduction of carrier  pre-selection 
throughout  the  internal  market  by  1  January  2000  as  well  as  for  an  accelerated 
introduction of operator number portability by the same date. 

c) 

Council Resolution 

In  its  Resolution  of  22  September  1997  the  Council  noted  "the  wide  support 
expressed  during  the  consultation  process  for 
the  introduction  of  appropriate 
numbering mechanisms  favouring  more competition throughout  the Community ".  It 
considered that : 

•  customers  of at  least all  operators  with significant  market power  providing  fixed 
local public  telephone services should have access to alternative operators through 
a  non-discriminatory and  user friendly  mechanism for  call-by  call selection  by  1 
January  1998  or  in  those  countries  which  have  been  granted  an  additional 
transition  period  by  any  later  date  agreed for  the  full  liberalisation  of  voice 
telephony services; 

• 

the  introduction  of  carrier pre-selection,  at  least  for  operators  with  significant 
market power providing fixed  local public  telephone services, is needed as close as 
possible  to, but not later than two years after, the deadlines for  introduction of full 
liberalisation referred to in EU legislation in order to encourage competition  in all 
sectors of the market and where this is necessary  under the conditions  which will 
be fixed  in the forthcoming  harmonisation Directive; 

•  with regard to number portability  which is foreseen  to be introduced in 2003 at the 
latest,  Member  States  should  make  all  necessary  efforts  to  accelerate  its 
introduction  to  a  date  as  close  as possible  to  the  timetable  established  for  full 
liberalisation and preferably  not more than two years after that date. 

and  invited  the  Commission  to prepare  proposals  to the  European  Parliament  and  the 
Council on carrier pre-selection and number portability. 

d) 

European Parliament  Resolution 

On  17  July  1997  the  European  Parliament  also  adopted  a  Resolution  on  the  Green 
Paper on a Numbering  Policy  for  Telecommunications  Services  in Europe, inter  alia, 
calling on the Commission 

•  "to  make  proposals  for  an  amendment  to  the  already  existing  directive  for 
"introducing  carrier preselection  for fixed  local access providers  with significant 
market power  no later than 1 January 2000 throughout the  Union, given the need 
for  simulataneous Union-wide introduction in order to facilitate fair comeptition; 

•  "to introduce an amendment to an existing directive in order to introduce, as soon 
as possible,  and no later than  J January 2000, number portability  (transferability 
of numbers when the service supplier changes, including non-geographical special 
service numbers); " 

2. 

Scope and aim of the proposal 

The objective of the present proposal  is to strengthen the existing provisions on equal 
qualitative and quantitative access to numbering resources for all market players in the 
Community's  current  legal  framework  for  telecommunications.  The  availability  of 
operator number portability and carrier pre-selection will make it easier for  consumers 
to choose alternative service and network  providers.  This will enable them  to  benefit 
directly  from  competition  in the telecommunications  market.  By offering  consumers 
a non-discriminatory  and user friendly  way of choosing between different  providers of 
telecommunications  services, consumer choice can act as a catalyst  in the process of 
achieving better quality telecommunications  services at more competitive prices. 

The  need  to  amend  the  Interconnection  Directive  and  the  principal 

3. 
changes proposed 

for 
Given  the  need  to  ensure  a  clear  and  transparent  regulatory  framework 
telecommunications  and,  given  the  fact  that  some  of  the  principles  set  out  in  this 
proposal  are related to the numbering  provisions of the Interconnection  Directive, the 
Commission believes that the most appropriate way of proceeding is through a limited 
and specific amendment of that Directive. 

The following  changes are proposed to the Interconnection  Directive: 

•  Accelerating  the  date  for  the  introduction  of  number  portability  by  changing 
Article  12(5)  of  the  Interconnection  Directive  which  currently  requires  the 

introduction  of  operator  number  portability  for  the  fixed  telecommunications 
networks in the major centres of population by  1  January 2003 at the latest.. 

The  amendment  set  out  in  Article  1(1)  of  this  proposal  requires  National 
Regulatory  Authorities  to  encourage  the  early  introduction  of  number  portability 
and  requires  them  to  ensure  its  availability  throughout  a  Member  State  by  1 
January 2000. 

Add  an  obligation  relating  to  carrier  pre-selection  to  the  numbering  provisions 
(Article  12)  in  the  Interconnection  Directive  and,  in  particular,  to  the  existing 
obligations  for  "fair  and  equal  treament  of  all  providers  of  publicly  available 
telecommunications services". 

Article  1(2)  of  this  Directive  therefore  inserts  a  new  Article  12(7)  to  the 
Interconnection  Directive  in  order  to create  an  obligation  for  National  Regulatory 
Authorities  to require  the provision  of  carrier  pre-selection  within  their  networks 
from  organisations  operating  fixed  public  telecommunications  networks  which 
enjoy  significant  market  power  by  1 January  2000  at  the  latest.  The  envisaged 
mechanism  consists  of  a  facility  for  subscribers  to  determine  their  own  default 
service  provider,  for  instance  for  international  or  long  distance  calls,  while 
maintaining  the possibility  to override  their pre-selected  choice  by  dialling  a short 
pre-fix  on a call-by-call basis. 

4. 

Organisations  covered 

On the basis of the results  of the public  consultation,  the  Commission  has  concluded 
that  it  would  not  be justified  at  this  stage, to  oblige  local  access  providers  without 
significant  market  power  to  offer  carrier  pre-selection.  Such  obligations  would  risk 
overregulating an emerging market.. 

The  issue  of  whether  a  broader  range  of  local  access  providers  should  be  subject  to 
specific  obligations  in this  area, will  be revisited  as part  of the  general  review  of  the 
functioning  of the  1998 package, which is foreseen  in the relevant Directives for  1999. 

Secondly, the Commission  considers that the need to oblige mobile operators  to  offer 
carrier  selection,  carrier  pre-selection  and  number  portability  needs  to  be  further 
examined,.  In  some  areas  of  the  mobile  market,  there  is  already  considerable 
competition, allowing users a choice of network operators, and, in many cases, also of 
service providers.  Nevertheless, certain  mobile markets are still  in the early  stages of 
development  and it remains to be seen what  level of competition  will  be reached.  For 
these  reasons,  the  Commission  concludes  from  the  consultation  that  it  is  not 
appropriate  to  apply  such  obligations  to  mobile  operators  at  this  stage..  The 
Commission  will re-evaluate the need for  introduction of new numbering  mechanisms 
facilitating  consumer choice in the mobile sector by the end of  1998. 

5. 

Carrier pre-selection and investment in alternative local  infrastructure 

While  the  public  consultation  demonstrated  a  wide  cross-sectoral  and  Europe-wide 
support  for  the  introduction  of  carrier  pre-selection,  which  was  confirmed  in 
Resolutions  by  the  European  Parliament  and  the  Council,  the  Commission  has  also 
carefully  considered  the  arguments  brought  forward  by  the minority  of  opponents  to 
carrier pre-selection. 

It has been argued that carrier pre-selection arrangements reduce the profit  margins for 
local access providers by opening the market  for  long distance and  international  calls 
to  stronger  competition.  Moreover,  it  would  be  more  difficult  for  alternative  local 
access providers  to  gain  new customers  because  subscribers  might  see  less reason  to 
switch  from  the  incumbent  to  a  new  entrant  if  the  former  were  offering  carrier  pre 
selection. 

As  ewpressed  in  the  Communication  reporting  on  the  outcome  of  the  public 
consultation,  the  Commission  does  not  find  the  case  against  carrier  pre-selection 
convincing , the main reasons for this assessment being that : 

•  A  policy  of  maintaining  barriers  for  services  competition  in  order  to  stimulate 
infrastructure  competition,  does not lead  to economic efficiency  nor does it give 
customers  the  best  deal.  On the one  hand  a duopoly  for  local  infrastructure  is no 
guarantee  for  real competition  regarding  the offer  of local access services  and  on 
the  other  hand,  not  having  user  friendly  instruments  to  choose  other  service 
providers  over  the  local  network  would  lead  to  service  tariffs  staying  higher  than 
necessary.  Moreover,  residual  barriers to service  competition  may  create  artificial 
incentives for  infrastructure  investment which may not be sustainable  in the longer 
term. 

•  Carrier pre-selection  would have to be offered  as of  1  January 2000 by which time, 
due  to  the  competitive  forces  in  the  liberalised  EU  telecommunications  market, 
tariffs  for  international  and  long-distance  calls  will  have  come  down  significantly 
in any  case.  Alternative  local  access providers  are  fully  aware  of this and  should, 
like all other market players,  be preparing themselves for the new market situation. 
Incentive  for  investment  in the local  loop is likely to be driven  increasingly  by the 
provision  of  new  multimedia  services  rather  than  by  competition  in  traditional 
voice telephony. 

•  The  requirement  to  offer  carrier  pre-selection  will  only  be  imposed  on  operators 
with  significant  market  power.  This will  give alternative  local  access providers an 
important  advantage because,  unlike the incumbent  operators, they will be able to 
continue  to  provide  the  complete  telecommunications  service  package  to  their 
subscribers without the risk of these customers migrating to other service providers 
for parts of the package. 

•  Guarantees  for  the  quality  and  availability  of  local  access  are  included  in  the 
universal  service  obligations  which  are  now  firmly  anchored  in  Community 
legislation.  These  obligations  ensure  that  every  citizen  can  access  an  affordable 
service of defined  quality wherever they live in the Community. 

6. 

Conclusion 

The  proposed  directive  on  operator  number  portability  and  carrier  pre-selection  has 
been requested by the European Parliament and by the Council.  It reflects  the results 
of the broad public consultation  on numbering issues following  the publication  of the 
Numbering  Green  Paper.  The  proposed  directive  will  provide  consumers  with  the 
necessary user-friendly  instruments to choose the telecommunications network and /or 
service providers which best suits their needs. 

Proposal for a 

Directive of the European Parliament and of the Council 

amending Directive 97/33/EC with regard to  operator number portability and carrier pre 
selection 

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, 

Having regard to the opinion of the Economic and Social Committee, 

Acting in accordance with the procedure laid down in Article  189b of the Treaty 

Whereas  the  Commission  has  organised  a  broad  public  consultation  on  the  basis  of  a 
Green Paper on a Numbering policy for telecommunications  services in Europe 3 

Whereas 
this  consultation  has  underlined  the  importance  of  equal  quantitative  and 
qualitative  access  to  numbering  resources  for  all  market  players,  and  the  crucial 
significance  of adequate numbering mechanisms, in particular for number portability  and 
carrier  selection,  as  key  facilitators  of  consumer  choice  and  effective  competition  in  a 
liberalised telecommunications environment ; 

Whereas  the  Council  has  adopted  a  Resolution  on  (..  September  1997)  inviting  the 
submit  proposals  to  the  European  Parliament  and  to  the  Council 
Commission  to 
regarding 
the 
introduction of carrier pre-selection; 

introduction  of  number  portability  and  regarding 

the  accelerated 

Whereas  the  European  Parliament  has  adopted  a  Resolution  on  17 July  1997 calling  on 
the  Commission  to  submit  a proposal  for  an amendment  to an already  existing  directive 
for  introducing  carrier pre-selection  and number portability  no later than  1  January  2000 
throughout the Union 

COM(96)590  final  of 20 November  1996 

HAVE ADOPTED THIS DIRECTIVE: 

Directive 97/33/EC4 is hereby amended as follows : 

Article 1 

1.  Paragraph 5 of Article  12 shall be replaced by the following  : 

"5.  National  regulatory  authorities  shall  encourage  the  earliest  possible 
introduction of number portability  whereby  end-users  who  so request  can 
retain their number(s)  on the fixed public telephone  network  at a  specific 
location  independent  of  the  organisation  providing  service,  and  shall 
ensure that this facility  is available by  1  January 2000 at the latest." 

2.  A new paragraph shall be inserted after  paragraph 6 of Article  12 : 

"7.  National  regulatory  authorities  shall  require  Organizations  operating 
public  telecommunications  networks  as  set  out  in  Part  1 of  Annex  I  and 
notified  by  national  regulatory  authorities  as  Organizations  having 
significant  market  power,  to  enable  their  subscribers  to  access  the 
switched  services  of  any  interconnected  provider  of  publicly  available 
telecommunications  services.  For  this  purpose  facilities  shall  be  in  place 
by  1  January 2000 at the latest, which allow the subscriber to choose these 
services  by  means  of  permanent  pre-selection  with  a  facility  to  override 
the pre-selected choice on a call-by-call basis by dialling a short  prefix." 

Article 2 

1. 

Member  States shall take the measures  necessary  to comply  with  this  Directive 
before  [31  December  1998].  They  shall  forthwith  inform  the  Commission 
thereof.  When  Member  States  adopt  these  measures  they  shall  contain  a 
reference  to  this  Directive  or  shall  be  accompanied  by  such  reference  on  the 
occasion  of  their  official  publication.  The  methods  of  making  such  reference 
shall be laid down by the Member States. 

2. 

Member  States shall  inform  the Commission  of the main  provisions  of  national 
law which they adopt in the field governed by this Directive. 

Directive 97/33/EC of the European  Parliament and of the Council of 30 June  1997 on  interconnection 
in  Telecommunications  with  regard  to  ensuring  universal  service  and  interoperability  through 
application  of the principles of Open Network  Provision (ONP), OJ No L 199, 26.7.97, p.32. 

'") 

Article 3 

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

This Directive is addressed to the Member States. 

Article 4 

Done at Brussels 

For the European Parliament 

For the Council 

10 

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