Communication from the Commission - The results of the public consultation on the 1999 communications review and orientations for the new regulatory framework
Date: 2000-04-26
Institutions: European Commission
Subjects: competition law, information technology, liberalisation of the market, telecommunications industry, trade licence

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 26.4.2000
COM(2000) 239 final

COMMUNICATION FROM THE COMMISSION

The results of the public consultation on the 1999 Communications Review and
Orientations for the new Regulatory Framework

EXECUTIVE SUMMARY

This Communication reports to the Council, the European Parliament, the Economic
and Social Committee, the Committee of Regions and the public at large on the
consultation associated with the Communication on the 1999 Communications Review,
and draws conclusions with regard to the content of its forthcoming proposals for the
new regulatory framework.

The Lisbon European Council has highlighted the potential for growth, competitiveness and
job creation of the shift
it has
emphasised the importance for Europe’s businesses and citizens of access to an inexpensive,
world-class communications infrastructure and a wide range of services.

to a digital, knowledge-based economy.

In particular,

The Communication on the 1999 Communications Review drew attention to the central role
It
played by the communications sector in the economic, social and cultural life of the EU.
highlighted the dynamism of technological and market change in the sector, illustrated by the
technological convergence of the telecommunications, media and information technology
sectors, and the emergence of the Internet. It reviewed the current regulatory framework for
the telecommunications sector, and made a series of policy proposals for a new framework to
cover all communications infrastructure and associated services. These proposals covered
eight key areas of regulatory policy: licensing and authorisations; access and interconnection;
management of radio spectrum; universal service; user and consumer rights; numbering,
naming and addressing; specific competition issues; and institutional issues.

Interested parties were invited to comment on the proposals by 15 February 2000. The
Commission received over 200 responses, representing a wide range of interests.

The consultation

in respect of some policy proposals, and
The consultation highlighted broad agreement
differing views in respect of others. In particular a large majority of respondents were in
favour of the following proposals:
• maintaining sector specific ex-ante regulation in parallel with competition rules, with

ex-ante rules being rolled back where the objectives are met by the market;

• establishing in Community legislation those regulatory objectives and principles
detailed in the Communication to guide national regulatory authorities (NRAs) in
their decision-making at national level;

• covering all communications infrastructure and associated services in the scope of the
new framework, while ensuring it can take account of the continuing links between
transmission and content;

• introducing institutional mechanisms to achieve greater harmonisation of regulation
in Member States, while allowing flexibility, for example via provision for self regulation
there was no support for a European Regulatory
alongside binding legal measures;
Authority;

• extending the use of general authorisations for the provision of communications
services and networks, while ensuring appropriate mechanisms are put in place to manage
the use of frequencies, numbers and rights of way;

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• ensuring efficient management of radio spectrum, and establishing a group on radio

spectrum policy;

• maintaining the current scope of universal service, while ensuring that its scope can
be extended where appropriate to keep pace with market and technological
developments;

• ensuring the availability of local loop unbundling in all Member States; respondents
supported the Commission’s short term intention to use Recommendations and its powers
under competition rules of the Treaty to encourage local loop unbundling throughout the
EU and called for this action to be reinforced by introducing a legal obligation in the new
framework;

• maintaining the current

framework for standardisation (industry-led voluntary

standardisation with the possibility to make standards mandatory in the public interest);

• updating the current Telecoms Data Protection directive;
• withdrawing the leased lines Directive once there is adequate competitive supply of

leased lines for all users;

• setting out rules for defining markets dynamically when considering obligations for

access and interconnection;

• providing for strong and independent NRAs, with effective co-operation arrangements

with national competition authorities and the Commission.

Areas where there were differing views were as follows:
• in what areas specific authorisations continued to be justified: some governments
wanted to maintain specific authorisations (requiring prior approval) for rights of way and
to have specific rights and obligations for network operators investing in infrastructure;
• licence fees for funding NRAs: market players were in favour of funding NRAs out of
funding via licence fees helped to guarantee

taxation; NRAs argued that

general
independence from government;

• spectrum valuation and secondary trading: market players, users and governments were
divided over the use of auctions and the possibility to allow for secondary trading of
spectrum;

• the proposal to introduce two thresholds for asymmetric obligations in respect of access
and interconnection – Significant Market Power (SMP) and dominance: (some argued
for SMP as the threshold for ex-ante obligations, some argued for dominance);

• guidelines for affordability of universal service: many doubted the value of guidelines,

arguing this was essentially determined by national conditions;

• users’ facilities and quality of service:

network operators were generally against
obligations to provide facilities like caller location for emergency calls, per call tariff
transparency; and against NRA intervention on quality of service issues; consumer and
user representative organisations and regulators were generally in favour;

• number portability for mobile users: the majority of mobile operators were against such
an obligation, but some mobile operators argued in favour; users, fixed network operators
and some NRAs were in favour of these facilities.

• institutional arrangements: while a large majority were in favour of the proposed new
Communications Committee and High Level Communications Group, many sought

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clarification of their respective roles; some Governments argued existing structures were
sufficient.

Conclusions for the new regulatory framework

The new regulatory framework will be composed of a framework directive, together with four
specific directives covering licensing and authorisations, access and interconnection,
universal service consumers’ and users’ rights, and telecoms data protection. The key
considerations on which the Commission will base its preparation of these proposals are as
follows:
• incorporating the principles and objectives set out in the Review Communication, as
appropriate, in the new framework, and require national regulators to follow them in their
decision-making at national level;

• covering all communications infrastructure and associated services in the scope of the new
framework, while making appropriate provision for the links between transmission and
content;

• moving to an authorisations system based on the use of general authorisations to authorise
all communications networks and services; specific rights of use would be granted for
spectrum and numbering resources;

• modifying the notion of Significant Market Power to base it on the concept of dominant

position, calculated in a manner consistent with competition law practice.

• introducing an obligation on undertakings with significant market power to provide

unbundled access to their copper local loops;

• establishing dynamic procedure for defining markets where ex ante regulation remains
essential; defining the obligations NRAs can impose on SMP operators in respect of access
and interconnection, with strong co-ordination procedures at European level to safeguard
the single market;

• maintaining existing obligations for conditional access systems, with a review
procedure to consider whether such obligations should be relaxed or possibly extended to
other gateways (such as Application Program Interfaces and Electronic Programme
Guides), on the basis of an analysis of the market;

• ensuring user and consumer rights and maintaining current scope of universal service,
while introducing procedures to review and update its scope as appropriate in the light of
technological and market development and the objective of social inclusion;

• introducing obligation on mobile operators to offer number portability to users;
• allowing Member States to introduce secondary trading of radio spectrum, subject to

appropriate safeguards at Community level;

• introducing access to caller location information for calls to emergency services

(including calls to the European emergency number, <112>);

• updating existing Telecoms Data Protection directive to ensure that data protection

rules in the communications sector are technologically neutral and robust.

Next steps

The Commission will issue five proposals for directives in June 2000. The Lisbon European
Council called for these proposals to be adopted as soon as possible in the course of 2001.

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TABLE OF CONTENTS

1.

2.

Introduction ................................................................................................................. 6

The results of the public consultation ........................................................................... 7

2.1. Objectives, principles, design and scope of the new regulatory framework............. 7

2.2. Licensing and authorisations .................................................................................. 8

2.3. Access and interconnection .................................................................................... 9

2.4. Management of scarce resources .......................................................................... 13

2.5. Universal service.................................................................................................. 14

2.6. User and consumer rights..................................................................................... 15

2.7. Numbering, naming and addressing ..................................................................... 17

2.8.

Specific competition issues .................................................................................. 18

2.9.

Institutional arrangements .................................................................................... 19

3.

Conclusions for the future regulatory framework ....................................................... 20

3.1. Horizontal provisions........................................................................................... 20

3.2. Licensing and Authorisations ............................................................................... 21

3.3. Access and Interconnection.................................................................................. 22

3.4. Users and consumer rights and universal service .................................................. 24

3.5.

Privacy and data protection in the communications sector .................................... 26

4.

Next Steps ................................................................................................................. 26

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1.

INTRODUCTION

The Commission’s Communication on the 1999 Communications Review1 builds on the
achievements of the liberalisation of telecommunications and the regulatory framework
established to oversee competition and other public interest objectives. The aims of the
to promote more
proposed changes to the present regulatory framework were fivefold:
effective competition;
to remove
unnecessary regulation and simplify associated administrative procedures; to strengthen the
internal market; and to protect consumers.

to technological and market developments;

to react

The communications sector plays a key role in the economic, social and cultural life of the
EU. New communications services and in particular the development of the Internet are
revolutionising the way people communicate, and the way we do business. This revolution
has been driven by the technological convergence of telecommunications, media and
information technology sectors, and the policy of liberalisation and harmonisation at EU level
has accelerated this phenomenon.

In this context, it is vital that any regulatory framework for the communications sector
sustains and drives forward these developments. Experience so far has demonstrated that the
regulatory framework can best do this by facilitating the development of effective and
vigorous competition at all
the same time defining and
levels of the market, while at
safeguarding key public interests. The existing regulatory framework for telecommunications
has achieved this balance, but its very success in unleashing competition and innovation
means a new framework is now required.

This Communication does not set out a specific regulatory framework for the Internet. But it
does aim to facilitate vigorous competition and innovation in the networks and services which
make up the Internet, and over which the new knowledge economy is going to be delivered.

The Communication took as its starting point the results of the convergence consultation and
in particular one of its key messages that there should be a more horizontal approach to
regulation with homogenous treatment of all transport network infrastructure and associated
services, irrespective of the types of services carried. The Communication proposed that the
future regulatory framework should cover all communications infrastructure and associated
services, whereas services carried over that
infrastructure, e.g. broadcasting services, or
Information Society services would be outside its scope. This proposal was therefore based
on the distinction between the regulation of transmission and the regulation of content.2 It set
out the objectives and principles that would underlie the new framework. Finally it made a
number of policy proposals in eight areas:
licensing and authorisations; access and
interconnection; management of radio spectrum; universal service; user and consumer rights;
numbering, naming and addressing; specific competition issues; and institutional issues.

Recognising that the policy issues at stake are vital for Europe, the Commission sought the
views of interested parties on the policy positions proposed in the Communication over a
three month period running up to 15 February 2000.

1 

2

Towards a new Framework for Electronic Communications Infrastructure and associated services: The
1999 Communications Review COM (1999) 539 final
See Commission Communication on the principles and guidelines for the Community’s audiovisual
policy in the digital age, COM (1999) 657 final, section 3(2)

6

2.

THE RESULTS OF THE PUBLIC CONSULTATION

More than 200 responses were received, from a wide range of interests, from inside and
outside the EU. A list of respondents can be found in the Annex to this Communication3. In
addition, over 550 people attended a two-day public Hearing held by the Commission on 25
and 26 January 2000.

This section summarises the responses received to the policy proposals set out in the 1999
Communications Review.

2.1.

Objectives, principles, design and scope of the new regulatory framework

2.1.1.

Regulatory objectives and principles

There was general agreement on the appropriateness of the objectives and principles set out in
the Communication.
It was considered that requiring regulators to take account of these
objectives and principles in their day-to-day actions would contribute to more consistency of
decision-making across Member States, with consequent benefits for the single market. There
was broad support for setting out the objectives and principles explicitly in Community
legislation, although there was some concern that the objectives and principles were too
general to be of use in testing the validity of decisions by national regulators.

Many telecoms operators felt that since the proposed regulatory principles could conflict with
one another, there was a need to give clear guidance to regulators as to the order of
importance of these principles. Many of these argued that
the principle of minimum
necessary legislation should be the overriding principle.

One principle on which there was broad agreement was that regulation should aim to be
technologically neutral. There was general agreement that equivalent services should be
regulated in an equivalent (although not necessarily identical) manner. Thus communications
services using Internet Protocol (IP)-based networks should for example be treated in the
same way as the same services carried over cable TV networks. But many commentators (in
particular telecoms operators) were concerned that technological neutrality could be used as a
tool for
into others not
previously regulated, with the risk of creating disincentives to invest.

increasing regulation, extending regulation from one market

2.1.2. Design of the regulatory framework

There was a broad consensus in favour of the Communication’s intention to introduce more
instruments such as
flexibility into the regulatory framework by increased use of
Recommendations and industry self-regulation (e.g. codes of conduct).
It was felt however
that such measures were unlikely to be effective unless they were based firmly within a legal
framework which gave all stakeholders means of redress should the solutions reached not be
satisfactory. There was also general agreement that such non-binding measures would not be
appropriate to deal with all issues.
In particular, where there were issues related to market
power, such measures could not be expected to be effective.

Many respondents felt it was important to separate Recommendations, which were non-
binding on Member States but often resulted in binding measures at national level, from

3

comments

The
http://www.ispo.cec.be/infosoc/telecompolicy/review99/comments/comments.html

Commission’s

found

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the

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ISPO

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7

industry codes of conduct, which by their nature were not legally binding. There was also
some concern expressed that the increased use of such measures could have the effect of
bypassing parliamentary scrutiny of regulation in the sector, and calls for procedures to ensure
that the European Parliament was kept informed of developments.

2.1.3.

Scope of the regulatory framework

There was a broad consensus that
the new regulatory framework should cover all
communications infrastructure and associated services, building on the conclusions of the
convergence consultation4.
It was generally felt that this would help to make the new
regulatory framework more robust and capable of dealing with the challenges of rapidly
developing markets and technology.

Many commentators, in particular broadcasting interests, stressed that any new framework
should recognise the continuing links between transmission and content, and in particular that
some services (e.g. Electronic Programme Guides - EPGs) raised issues that would need to be
addressed in the framework of content regulation.

Some commentators identified problems with the working definitions adopted in the
the margin of the
Communication,
transmission/content division.

in particular in relation to “associated services” at

2.2.

Licensing and authorisations

2.2.1.

Increased use of general authorisations

Almost without exception, operators, manufacturers, users and public authorities supported
increasing the use of general authorisations. There were differing views however on what
circumstances justified the use of specific authorisations. The overwhelming majority of
commentators agreed that general authorisations were the most appropriate tool
for
authorising the provision of services. A large majority was also in favour of using general
authorisations for fixed networks, although a few regulatory authorities, and certain operators
who already had licences, argued that specific authorisations were necessary for the operation
of fixed network infrastructure.

The majority of operators and manufacturers argued that specific authorisations were justified
for the use of radio spectrum (although satellite operators took the view that it was only where
frequency bands were not harmonised that specific authorisations were necessary). Some
operators and manufacturers were less convinced that specific authorisations were justified for
the use of numbering resources, arguing that as long as numbering plans were properly
managed, there was no scarcity and thus no justification for specific authorisations.

retaining specific
Governments and telecoms regulators were strongly in favour of
authorisations for frequency and numbering resources, which they considered necessary to
ensure the efficient use of these resources. Some also argued that specific authorisations were
necessary to govern the granting of rights of way, because of the need for proper oversight of
these rights. Certain operators were also concerned that without a specific authorisation to
demonstrate to local authorities that they had rights of way, their ability to roll out their

4

Commission Communication on the Convergence of the Telecommunications, Media and Information
Technology Sectors, and the Implications for Regulation – Results of the Public Consultation on the
Green Paper COM(97) 623

8

networks would be constrained. Certain operators, in particular cable operators considered
that the administrative requirements currently imposed by some local authorities were too
burdensome, and argued that such requirements should at least be transparent not discriminate
between incumbents and new entrants.

to separate service and spectrum authorisations found broad support,

The proposal
in
particular with telecoms operators, who were strongly in favour of regulators being obliged to
identify those licensing conditions applicable to each authorisation and separating them
accordingly. Comments from terrestrial broadcasters and their regulators were somewhat less
favourable, questioning whether such separation was feasible in practice.

2.2.2.

Fees and charges

Telecoms operators were generally critical of the current regime governing fees charged for
licences by National Regulatory Authorities (NRAs). The criticisms focused mainly on a lack
of transparency in the system, arguing that there was little or no way in which an operator
could judge whether the fee being charged truly reflected administrative costs. There was
general support for the proposal to limit such fees to “justified and relevant” administrative
costs, as well as for the proposal
to issue Commission guidelines on fee levels and
benchmarking. Some operators went further, arguing that such charges acted as a tax on the
telecoms sector, and calling for the activities of NRAs to be funded out of general taxation.

Most national authorities felt that levying charges from the sector was necessary to ensure that
NRAs had sufficient resources to carry out their tasks effectively. But they sympathised with
the need to improve transparency and were prepared to consider proposals to that end.
Regulators and governments were divided on the need for Commission guidelines. Some
were supportive, recognising the lack of harmonisation under the current regime. Others were
prepared to consider recommendations on best practice for elements to be included in fees,
but felt recommendations on benchmarking went too far.

Some NRAs also raised the question of how sufficient funding could be secured in the context
of a general move towards the use of general authorisations.

2.2.3.

Harmonisation/simplification of licence conditions

There was general support from users, operators and national authorities for increased
harmonisation of licence conditions across the EU. Operators argued that
the current
variation across the EU was harmful to the development of a true single market.

2.2.4.

Internet

The majority of respondents, including regulators and most operators, argued that the Internet
should be regulated as a communications network like any other. There was however a
minority of operators who considered that the Internet should not be regulated at all.

2.3.

Access and interconnection

The majority of respondents were in favour of continuing ex ante rules to safeguard the
development of competition, at least in the short term. They supported the Commission’s
general principle that regulation should be reduced as competition increased. But they were
not convinced in all cases that the detailed proposals made by the Commission were ideal.

9

2.3.1.

Access to infrastructure

The issue of access by service providers to the networks and facilities owned by operators
elicited the majority of comments from respondents to the consultation. There was general
agreement that the issue was a key one for the future framework, as the development of
broadband platforms opened up opportunities for a wide variety of services to be provided on
these platforms. There was less consensus on how the new framework should deal with the
issue.

The Communication proposed that regulatory obligations would vary as a function of market
power. Where an operator was ‘dominant’ they would have an obligation to meet all
reasonable requests for access, at cost-oriented prices and on a non-discriminatory basis.
Where an operator had ‘significant market power’ (SMP), there would be an obligation to
negotiate access, with reserve powers for regulators to intervene where there were disputes.
The vast majority of commentators could accept
the principle of regulated access to
infrastructure where there were issues of incumbency to be addressed. Thus there was a
broad consensus in favour of unbundling the incumbent’s copper local access networks .
It
was argued that there were unlikely to be widely available alternative infrastructure to the
local access network of the incumbent telecoms operator in most geographical areas in the
short to medium term.

The issue of access to other infrastructure was more controversial. Mobile operators argued
that the mobile market was competitive, and therefore that there was no market failure which
would justify the imposition of regulated access for service providers. They pointed to the
fact that commercial agreements were already being reached with service providers in some
countries. They emphasised the level of investment made by mobile operators in rolling out
networks and argued that regulated access would undermine these investments.

Service providers5 contested this point, arguing that the level of return mobile operators were
currently making on their investment was more than enough to make a reasonable profit for a
service provider and network operator. Users also supported mandated access to mobile
networks in certain circumstances, arguing that the current market structure was nationally
focused, with inflated international roaming charges. Mobile operators were refusing to
conclude virtual private network deals with business customers, and forcing them to pay the
high roaming fees. The entry of service providers could be a way of breaking down this
inefficient structure.

Cable operators were concerned at the possibility of open access rules being applied to their
networks, arguing that this could harm the incentive to invest in their networks. The cable
industry could not survive on a “transport only” basis, but needed commercial freedom to
package services, and control over associated services like conditional access systems.

There was criticism of the introduction of two thresholds for regulation both from industry
and regulatory authorities, arguing it was confusing and hard to justify. Network operators
tended to favour using a threshold based on the competition law concept of dominance to
impose any regulatory obligations, arguing that it was only at this threshold that there was
demonstrated market failure to justify ex ante regulatory obligations. Service providers, as
well as most regulatory authorities, favoured the use of the existing threshold of significant
market power (SMP), arguing that a threshold of dominance would not be sufficient to

5

Service providers are understood here as operators who do not have a network of their own.

10

safeguard competition in many markets. Broadcasting interests generally preferred further
evolution and strengthening of access on “fair, reasonable and non-discriminatory terms”.

There was also much criticism of the proposal to impose an obligation to negotiate access on
SMP operators. New entrants argued in favour of maintaining an obligation to provide
access, and considered an obligation to negotiate would not be taken seriously by operators
with SMP, and therefore be ineffective. Others – including cable operators - argued that the
prospect of regulatory intervention where negotiations broke down meant that an obligation to
negotiate access would in practice have the same effect as an obligation to provide access,
since service providers would not negotiate seriously, but wait for the regulator to impose a
price.

2.3.2. Carrier selection and pre-selection for mobile

There was no consensus on the proposal to mandate carrier selection on mobile operators with
SMP. Operators were divided. Mobile and incumbent fixed operators were generally
opposed to such an obligation, arguing it was not justified given the extent of competition in
the mobile market. Users and new entrant operators were generally in favour, in many cases
arguing that the obligation for carrier selection and pre-selection should be imposed on all
mobile operators, not only those with SMP. Similarly, some regulators were in favour of
imposing this obligation, while others thought it was premature to do so.

Several regulators argued that carrier-selection and pre-selection were forms of access, and
thus that these issues should be dealt with in the proposed access framework. Some also
questioned the distinction drawn in the Communication between carrier selection and pre-
selection.

2.3.3.

Interconnection

There was broad consensus that primary interconnectivity rules of the current regulatory
framework remained valid in the new framework and thus that the obligation and right of all
parties to negotiate interconnection, as well as regulatory powers of dispute resolution should
be maintained. There was also agreement among most commentators that the pre-definition of
markets for interconnection was unlikely to be durable in the long term and therefore that
more specific market definition was necessary (e.g. originating traffic, transit traffic, and
terminating traffic).

Opinions were divided on the extent
to which asymmetric obligations in respect of
the incentives to
interconnection remained necessary.
Some incumbents argued that
interconnect were the same for all market players, and therefore equivalent obligations should
apply to all. New entrants and regulatory authorities disagreed, arguing that the incentives,
especially in call termination, remained fundamentally different because of the ubiquity of the
incumbent’s network.

As with the access discussion, there was disagreement over the criteria for applying cost-
orientation and non-discrimination obligations to operators with market power. Regulators
retaining an obligation to provide
and new entrants generally argued in favour of
interconnection at cost-oriented prices for all SMP operators.
Incumbents and other larger
operators supported the proposal to impose such obligation only on operators who were
dominant on the relevant market.

11

2.3.4.

Local Loop Unbundling

The overwhelming majority of operators and manufacturers, user and consumer interests and
regulatory authorities were in favour of including an obligation in the new regulatory
framework on incumbent fixed network operators to unbundle their copper local access
network, to drive forward the development of broadband Internet services in Europe. The
Commission’s Recommendation6 on this issue also found broad support. Some commentators
however stressed the importance of ensuring that the implementation of local loop unbundling
did not have the effect of discouraging investment in alternative local access infrastructure.

2.3.5.

Access to broadcast infrastructure and must carry rules

Broadcasters saw a need to maintain the obligations in the TV Standards Directive7 for all
suppliers of conditional access services to grant access on fair, reasonable and non-
discriminatory terms. Many owners of such infrastructure also supported such an obligation.
Some, particularly public broadcasters, also argued that this obligation should be extended to
other facilities associated with access to end-users, such as Application Program Interfaces
(APIs) and Electronic Programme Guides (EPGs).

Public broadcasters were also concerned that the proposals on access could constrain their
ability to gain access for their content to suitable infrastructure at a reasonable price. They
argued that if they were forced to pay large sums, this would have implications for their
ability to invest in content.

Public broadcasters and consumer groups argued that there remained a need for ‘must-carry’
rules for certain public interest content in a digital environment.
Indeed, such rules became
much less onerous in a digital world, because of the reduction in scarcity of transmission
capacity. Regulators and operators agreed that a continuation of ‘must-carry’ rules would be
appropriate. But many cable operators considered that ‘must-carry’ needed to be reassessed,
and in particular stressed the need for such rules to be justified, proportionate and subject to
appropriate remuneration.

2.3.6.

Interoperability and standardisation

There was broad support for the Commission’s proposal to build on the current arrangements
for
industry-led standardisation in telecoms, and to extend such rules to cover all
communications infrastructure and associated services (including digital television) in order
to develop proportionate means of ensuring interoperability.
Several broadcasting
organisations noted that global developments would need to be taken into account in digital
television standardisation. Public broadcasters, consumer interests and regulators all argued
in favour of increased interoperability, but without agreeing how best to achieve it. Proposals
included declaration of key interfaces under non-disclosure agreements, imposition of the
common interface, and accelerated or compulsory use of the Multimedia Home Platform (an
open architecture for multimedia information including digital television, developed by the
Digital Video Broadcasting (DVB) Group).

6

7

Commission Recommendation on Unbundled Access to the Local Loop COM
Directive 95/47/EC of the European Parliament and of the Council of 24 October 1995 on the use of
standards for the transmission of television signals (OJ L 281/51, 23.11.95 “the TV Standards
Directive”).

12

2.3.7. Costing and pricing of interconnection and access

There was broad support for the Commission’s intention to use Recommendations to specify
specific pricing methodologies that could apply to particular situations.
But some
assumption that different pricing
commentators disagreed with the Commission’s
methodologies might be appropriate in different situations. They argued that long run average
incremental cost (LRAIC) should be the base methodology for setting regulated prices in all
cases.

2.4.

Management of scarce resources

2.4.1.

Radio spectrum policy

All stressed the importance of radio spectrum to the communications sector. All recognised
the need to balance the competing needs of commercial and non-commercial usage of
spectrum.
Industry and user groups agreed with the Commission’s proposal to establish a
group on radio spectrum policy to ensure that a pan-European approach to radio spectrum
policy across all sectors relevant to Community policies.
There was strong support for
greater harmonisation of spectrum usage across the EU, using the technical expertise, where
appropriate, of existing bodies such as CEPT to achieve this.

These issues were addressed in the Communication summarising the results of
the
consultation on the spectrum Green Paper8, and the forthcoming proposal for a Decision on
radio spectrum policy will include the establishment of the group on radio spectrum policy,
and measures to improve harmonisation of spectrum usage. The Communication underlined
the need for action at Community level to achieve a harmonised and balanced approach on the
use of radio spectrum in particular in the areas of communications, broadcasting, transport,
research and protection of human health, in order to ensure such use respects internal market
principles, and to protect Community interests at international level.

2.4.2.

Spectrum valuation: administrative pricing and auctions

As the Review Communication recalled, the current licensing framework permits Member
States to use auctions and administrative pricing as a means to encourage the efficient use of
scarce resources, including radio spectrum. The Communication proposed to maintain this
option for Member States, but not
Although the Review
Communication emphasised that there were different measures available to Member States
with regard to spectrum valuation, respondents concentrated almost exclusively on auctions.

to make it mandatory.

As was clear in the consultation on the Radio Spectrum Green Paper9, there are differing
views among all interested parties as to the desirability of auctions. The majority of industry
commentators expressed themselves against the use of auctions. They claimed that auctions
had various disadvantages; for example that auctions increased prices for end-users; acted as a
disincentive to investment; and harmed European industry vis à vis its global competitors,
especially in the mobile sector. User representatives were generally opposed to auctions, as
were broadcaster interests, whose main concerns related to the capacity of broadcasters to

8

9

Communication from the Commission to the European Parliament, the Council, the Economic and
Social Committee and the Committee of the Regions, The Next Steps in Radio Spectrum Policy –
results of the public consultation on the Green Paper, COM(1999)538.
Green Paper on Radio Spectrum Policy in the Context of European Community Policies such as
Telecommunications, Broadcasting, Transport and R&D, COM(1998) 596, 09.12.98.

13

maintain investment in content if auctions were imposed on them. Telecoms operators were
concerned that auctions would be applied to their sector but not to competing ones.

On the other hand, other industry commentators were in favour of auctions. Some argued that
auctions were the fairest way of deciding between competing bids for spectrum. They also
argued that auctioning encouraged efficient use of spectrum, as long as they were properly
designed to avoid speculation and hoarding.

Regulators and governmental authorities were also divided on the merits of auctions. But all
argued that individual Member States had the right to decide on the basis of subsidiarity what
assignment mechanisms were appropriate in its particular territory.

Whatever the assignment mechanism chosen, a large majority of industry respondents argued
in favour of ring-fencing revenues from spectrum charges for the purpose of increasing
spectrum efficiency.

2.4.3.

Secondary trading

As with spectrum valuation, secondary trading of spectrum divided the industry. A larger
proportion of commentators was in favour of secondary trading, especially where spectrum
had been auctioned, and where there was proper regulatory supervision of transactions with
safeguards against speculation and anti-competitive concentration. Broadcasting interests
were generally opposed to such a policy.

Regulatory authorities took broadly the same line as with spectrum valuation. Although
views as to the merits of secondary trading differed between Member States, there was broad
support for allowing regulators to choose whether to permit secondary trading of spectrum in
certain bands. But many stressed the need for any such system to take place only with
monitoring by the regulator. Governments still had a duty to ensure that the radio spectrum
was properly and efficiently managed.

2.4.4.

Pan-European harmonisation of spectrum licensing/assignment

There was some support from industry for greater harmonisation of licensing and assignment
mechanisms across the EU, particularly from the satellite sector for which national licensing
is seen as an unnecessarily burdensome and time consuming exercise which runs counter to
the economic and technical model of satellite communications. Member States, on the other
hand, were generally opposed, arguing that spectrum assignment was a matter of national
competence.

2.5.

Universal service

2.5.1.

Scope

Operators, almost without exception, and many regulators and Member States supported the
Commission’s proposal to maintain the current scope of universal service. Some operators
even favoured reducing the scope of services included under a universal service obligation.
But many also recognised that the concept had to keep pace with market and technological
developments, and thus that it should be flexible and capable of amendment in the future.
Nonetheless, many operators warned that an obligation for periodic review should not become
a de facto extension.

14

Users and regulatory authorities argued strongly that universal service was an essential tool
in order to combat social exclusion. They also agreed that at this stage, there was no need to
extend the scope, and supported the proposal to establish criteria for periodic review.

There were very few services proposed by respondents as immediate candidates for inclusion
in the scope of universal service in the new framework. Consumer organisations called for
extension of the scope to include email and web addresses for all. One regulator suggested
that consideration should be given to including mobile telephony in the scope of universal
the vast majority of
service for certain disadvantaged groups, e.g. disabled.
commentators agreed with the Commission’s analysis that at this stage it would be counter-
productive to include broadband access within the scope.

But

2.5.2.

Financing

Telecoms operators were generally opposed to the use of sectoral financing schemes for
universal service. They argued that where regulators imposed obligations for political/social
than via
reasons, any such activity should be financed from general
contributions from operators. There was broad support for other means, such as public
tendering procedures and pay-or-play, because such methods were seen as intrinsically fairer.

taxation rather

Regulators and national governments argued that Member States should continue to have the
option of introducing financing schemes, particularly in the light of impending enlargement to
central and eastern European countries. Some argued that individual countries should be able
to impose universal service obligations according to national conditions.

2.5.3.

Affordability

Views were divided on the proposal to define guidelines on affordability at European level.
Some operators and Member States felt that such a proposal was impractical, because the
criteria on which affordability depends are essentially defined at national level. So any such
European guidelines would be meaningless, and possibly dangerous. Others felt that an
attempt to define affordability at European level would be helpful in ensuring that all
European citizens had access to truly affordable communications services. One candidate
country drew attention to the particular problems faced by countries from central and eastern
Europe in seeking to ensure affordability.

2.6.

User and consumer rights

2.6.1.

Protection of personal data and privacy

The majority of commentators agreed that a technological update of the Telecoms Data
Protection Directive10 was useful.

Nevertheless, some commentators, particularly those representing industry interests, felt that
since there was already horizontal legislation in this field (i.e. the general data protection

10

Directive 97/66/EC of the European Parliament and of the Council of 15 December 1997 concerning
the processing of personal data and the protection of privacy in the telecommunications sector . (OJ L
24, 30.1.98, p1 “the Telecoms Data Protection Directive”)

15

directive11), sectoral legislation was superfluous. Some suggested that a sector code for
communications under the general directive would be a more flexible instrument than the
existing sector-specific directive.

Others, particularly regulators, agreed with the Commission that the current Telecoms Data
Protection directive was in need of amendment, in particular to clarify those areas of the
directive which have caused problems for Member States in implementation.

2.6.2.

European Emergency Call Number (<112>)

Member States, regulators and consumer groups were in favour of a requirement for caller
location for emergency calls (including to the European Emergency Number) being imposed
from 1 January 2003.

Many network operators raised concerns about the imposition of such a requirement.
In
particular, some questioned whether the timescale for implementation was realistic. Some
pointed to the danger of regulating in this area when operators were already preparing to
introduce such a capability. Others argued that such an obligation would be costly, and would
have important limitations. There were also calls for some form of pan-European co-
ordination among industry players on its implementation. There was general agreement
among operators that any such obligation imposed in the public interest should be funded
from the state budget.

2.6.3. Complaint handling and dispute resolution

There was general support for ensuring that users and consumers had access to simple,
inexpensive complaint handling and dispute resolution procedures, and that
the basic
principles of such schemes should be set out at European level. User and consumer interests
were broadly in favour of the Commission’s proposal to give the High Level Communications
Group powers to resolve cross-border disputes. Regulatory authorities were less convinced,
arguing instead that bilateral agreements between NRAs would be more appropriate. Some
Member States were also concerned at giving quasi-judicial powers to an advisory body.

2.6.4.

Tariff transparency

There was broad support for increasing tariff transparency for consumers from all quarters.
But there were differences of opinion about how best to achieve this. Operators were
generally opposed to regulatory obligations related to per-call tariff transparency. They
argued that the nature of competition was such that operators had a direct interest in ensuring
that consumers were well informed about the price of the services they offered. They
believed that the implementation of per-call tariff information could ossify tariff structures
and make tariff innovations harder to implement. But many were prepared to consider self-
regulatory solutions to increase transparency.

Regulators and user and consumer interests were concerned to ensure that consumers had
information about tariffs. They called for the various options
accurate and transparent

11

Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the
protection of individuals with regard to the processing of personal data and on the free movement of
such data (OJ L 281/31, 23.11.95 “the General Data Protection Directive”)

16

available, including per call tariff information, to be explored further before taking a decision
to impose any one technical solution.

2.6.5. Quality of service

Operators argued that in a competitive market, quality of service was not an issue that should
concern regulators. Quality was one of the issues on which operators would compete. They
disagreed with the Commission’s proposal to maintain reserve powers for regulators to
intervene.

Regulators argued it was necessary to retain such powers, in order to be able to protect
consumers.

2.6.6.

Recommended and mandatory services

There was broad support for the proposal to withdraw the Leased Lines directive12 once there
was sufficient competition in their provision. Most agreed that there would be sufficient
competition to justify withdrawal by the time the new framework came to be implemented.
But some operators were concerned that any decision to withdraw the provisions of the
Leased Lines directive should be taken on the basis of an analysis of the degree of
competition at the time.

2.7.

Numbering, naming and addressing

2.7.1. Number portability for mobile

User and consumer interests were strongly in favour of the imposition of number portability
for mobile users. They argued that particularly for business customers, the absence of
portability was having the effect of locking in consumers to one particular network. They
also argued that number portability was not simply a competition measure, but a “user right”.

Regulators were generally also in favour of imposing this obligation. The regulators in those
Member States where it had already been implemented argued that it was working effectively.

Many mobile operators (in particular those operators first licensed in their national markets)
were opposed to the imposition of an obligation to impose number portability. They argued
that number portability was a measure designed to address deficiencies in competition in the
fixed market; it should not be imposed on a competitive mobile market. They also argued
that the costs of implementation would be very substantial, and disproportionate to the benefit
likely to accrue from the measure.

Other mobile operators, most of which were new entrant operating GSM-1800 networks, was
In particular, some new entrant
however in favour of the imposition of the obligation.
operators in Member States where number portability has already been implemented argued
that they had benefited from its imposition. They acknowledged that the transitional means of
implementation were not
that with the use of intelligent network platforms,
ideal, but
implementation would become easier.

12

Council Directive of 5 June 1992 on the application of open network provision to leased
lines
(92/44/EEC; OJ L165/27, 19.06.92), as amended by European Parliament and Council Directive
97/51/EC, (OJ L 295/23, 29.10.97 “the Leased Lines Directive”)

17

2.7.2.

Interoperability of national Intelligent Network databases

Several Member States and regulatory authorities echoed the concerns expressed in the
Review Communication that insufficient steps were being taken to ensure that national I/N
databases for number portability were interoperable. They argued however that at this stage,
action should focus on encouraging voluntary interoperability, rather than imposing a
regulatory obligation.

2.8.

Specific competition issues

2.8.1. Market definition

The current regulatory framework for telecommunications defines specific markets for
regulatory purposes in the legislation. The Review Communication took the view that this
approach would not be sustainable in any future framework as markets would be evolving
ever more quickly. The Commission therefore proposed that national regulators should have
responsibility for defining markets for the purposes of ex ante regulation, on the basis of
Commission Recommendations.

Most commentators agreed with this approach in principle, although some argued it also
In this
created the potential for divergence of regulatory decision-making across the EU.
context, the importance of Commission Recommendations was emphasised, as well as the
need for effective co-operation between NRAs and national competition authorities. Most
industry commentators welcomed the Commission’s signal that it regarded call origination,
transit and termination as separate markets, with differing levels of competition in each.
Some new entrants however raised concerns that the new regime would create the potential
for leverage by a dominant operator of its market power from one market to related markets.

There were also concerns that NRAs might seek to use market definition as a means of
regulating a particular situation, for example, by defining the market very tightly in order to
ensure an operator had a large enough market share to justify regulation. Others expressed
more general concerns over the methodologies used for market definition.

2.8.2.

Significant market power and dominance

There was general agreement that ex ante regulation remained necessary as a proxy for
competition in those markets where competition was not firmly established. Some argued
that where there was competition in a given market, there was no need for asymmetric
obligations to be imposed. However, new entrants were concerned that even where a market
was competitive,
from other
uncompetitive markets into that competitive one, allowing them to compete unfairly with new
entrants.

incumbents might be able to leverage market power

But most commentators disagreed with the Commission’s proposals to introduce two
thresholds for regulation. Most argued instead for one, but there was no consensus on which
one. Fixed new entrants and most regulators called for the obligations currently applicable to
SMP operators to be maintained, arguing that
if regulatory obligations such as cost-
orientation were imposed only on dominant operators, new entrants would face real
difficulties competing with incumbents. They also argued that in markets where there was
joint dominance but where no player was dominant on its own, regulators would have no tools
to combat that market power. Several commentators raised concerns about the measurement

18

of market share, pointing out that where it was measured by value, incumbent operators’
market share was far lower than where measured by volume.

Supporters of using the concept of dominance as a threshold for ex ante regulatory obligations
argued that focusing on dominance was the only way for the new framework truly to reflect
its objective of regulating only where necessary. Only where an operators was dominant
could ex ante regulation be justified to safeguard competition. They argued that the SMP
notion gave regulators too much latitude to intervene unnecessarily in competitive markets.

Broadcasters generally favoured an approach that imposed obligations on all infrastructure
providers to offer access on fair, reasonable and non-discriminatory terms.

Some commentators were unhappy with using the term “dominance”. They thought that
using this concept in ex ante regulation would invite comparisons with competition law and
could lead to divergent jurisprudence between competition rules and sector-specific rules. An
operator would want to avoid the situation where its position in any future legal disputes in
relation to abuse of dominance under competition law would be undermined because of a
determination by an NRA that a certain operator was “dominant” for the purposes of the new
framework. Such operators would be anxious to challenge their “dominant” status.

2.9.

Institutional arrangements

2.9.1. COCOM and HLCG

There was broad support for the Commission’s proposal to build on current regulatory
structures, rather than to establish a European Regulatory Authority. The Communications
Committee (COCOM) and the High Level Communications Group (HLCG) found favour
among most commentators, who considered that the proposals would improve consistency of
regulatory decision-making across the EU.

There was overwhelming support from industry and user groups for transparency in the
workings of the COCOM and the HLCG, with many commentators calling for structured
contact or participation of industry and other interested parties in the work.

Regulators were broadly in favour of replacing the current ONP and Licensing Committees
with the COCOM. But they were more sceptical about the HLCG. They questioned whether
the HLCG would be capable of carrying out the tasks allotted to it in the Communication.
Some even questioned the need for such a Group, arguing that the current Independent
Regulators Group (IRG) and CEPT/ECTRA13 would be capable of carrying out the tasks set
for the HLCG.

Some national authorities questioned whether it was appropriate to give an advisory body
such as the HLCG responsibility for resolution of cross-border consumer disputes, something
which was a judicial task. They argued that this task should either be entrusted to the
COCOM, or to bilateral arrangements between regulators.

13

The European Committee for Telecommunications Regulatory Affairs of the European Conference of
Posts and Telecommunications

19

2.9.2. National Regulatory Authorities

There was general support for the Review Communication’s proposals to strengthen the
independence of NRAs and to improve transparency of their decision-making. As has already
been mentioned, many commentators called for increased co-operation with competition
authorities and with the Commission.

3.

CONCLUSIONS FOR THE FUTURE REGULATORY FRAMEWORK

On the basis of its assessment of the responses received in the course of the consultation on
the Review Communication, the Commission sets out below its conclusions in respect of the
future regulatory framework. This chapter summarises the key considerations on which the
Commission will base the preparation of the proposals for directives that will constitute the
updated regulatory framework.

The orientations set out below fall into 3 categories:

• Orientations based on policy proposals which received broad support

in the public

consultation. These proposals are maintained by the Commission.

• Orientations based on policy proposals where there were divided views in the public
consultation, as described in chapter 2 of this Communication. In all but one area, the
Commission has decided to maintain the original proposal. This area is access and
interconnection where the Commission has decided not to introduce two thresholds for ex-
ante obligations in respect of access and interconnection. Instead, it proposes a new
approach in this area, which is described in detail in section 3.3.

• Orientations which were not explicitly proposed in the Review Communication. These are
the obligation for significant market power operators to give access to unbundled elements
of the local loop and the envisaged possibility for the Commission to challenge and require
NRAs to suspend their decisions if it considered they were not justified according to the
regulatory framework.

3.1.

Horizontal provisions

The Commission will propose that the objectives and, where appropriate, the principles set
out in the Review Communication be incorporated in the new framework and that national
regulators should be obliged to base their decisions on them.

The new framework will cover all communications infrastructure and associated
services, as proposed, and introduce appropriate definitions. Services carried over that
infrastructure, e.g. broadcasting services or information society services, are outside its scope.
It is therefore based on the distinction between the regulation of transmission and the
regulation of content.14

The Commission considers that an effective way of introducing much-needed flexibility into
the new regulatory framework can be via the increased use of Recommendations and
Guidelines.
transparency,
It recognises the legitimate concerns of stakeholders about
effectiveness, legal certainty and democratic control in respect of such measures.

14

See footnote 2

20

The new framework will also set out rules for management of scarce resources by NRAs.

In respect of radio spectrum, it will make clear that Member States remain free to establish
auctions and other spectrum pricing mechanisms for assignment of frequency if they
consider them necessary to ensure the optimal use of radio spectrum. In order to increase the
efficiency and flexibility of the use of radio spectrum, it will also allow – although not
mandate – Member States to introduce secondary trading of radio spectrum. But
appropriate regulatory safeguards will be included in the new regulatory framework, as was
foreseen in the Review Communication, in particular to require that transactions take place
under the supervision of the national regulatory authority.

In respect of numbering, it will maintain current rules for numbering management, making
clear that NRAs must be responsible for all numbering resources, including such resources
currently controlled by incumbents.

In the case of Internet naming, the Commission will ensure that national registries do not
discriminate unjustifiably between national applications for domain names and applications
from other Member States.

The Commission intends to propose the establishment of a Communications Committee
and High Level Communications Group. The legislative proposals will clearly specify the
tasks attributed to each. The new framework will also ensure that the provisions setting out
the powers and independence of national regulatory authorities are adequate, and in
particular that there is effective co-operation between NRAs and competition authorities.

The new framework will distinguish between two types of regulation. Regulation that is
primarily designed to manage the transition to competition (e.g. obligations in respect of
access to infrastructure) will be imposed on specific undertakings as a function of their market
power. Such regulation will be removed as competition increases (and is dealt with in section
3.3). Regulation that is designed to meet general interest objectives (e.g. sector-specific
consumer protection rules, primarily dealt with in section 3.4) will remain in place
independent of the degree of competition and will be applied to all players in a given market.

3.2.

Licensing and Authorisations

On the basis of the overwhelming support expressed in the consultation, the Commission
considers that Member States should be obliged to use general authorisations for authorising
all communications services and networks. In addition, where justified, specific rights of use
will be granted to individual organisations for spectrum or numbering resources. However,
where frequency bands have been harmonised and common selection criteria and procedures
agreed in CEPT (e.g. for some satellite services), the new framework will ensure that such
rights of use of spectrum at national level do not restrict or delay service deployment by
imposing additional conditions.

Because rights of way are not specific to an individual organisation, the Commission is not
persuaded that specific rights of use are justified for such resources, but it recognises the
legitimate concerns of regulators and operators in this respect, and will take these concerns
into account in the new authorisation framework.

these measures will substantially increase the level of
The Commission believes that
harmonisation of authorisation regimes across the EU, as well as remove much unnecessary
regulation.

21

Where specific rights of use are granted, the Commission intends that these will be separate
from the general service authorisation. The conditions relating to the general authorisation
and to the specific rights of use will be strictly separate as well. The Commission considers
that this will go a long way towards making authorisation conditions more transparent to
operators. It will specify in legislation a maximum list of conditions that can be attached to
authorisations and will ensure this list is restricted to those conditions that are absolutely
necessary.

In respect of fees, the Commission considers that the variation across the EU in the level of
fees demonstrates that the formulation of the principle15 governing fee levels in the current
framework is inadequate. It will reinforce this principle, while ensuring that the funds raised
from the sector are sufficient to cover the cost of the NRAs’ activities.
It considers that
in bringing greater consistency to
guidelines to benchmark fee levels could be useful
authorisation fees across the EU.

3.3.

Access and Interconnection

The new directives will set out the path to move from the current sector-specific regulation in
the telecommunications sector to reliance on the competition rules, building on the consensus
during the public consultation to reduce sector-specific regulation to those areas where such
regulation is indispensable.
In the light of comments received however, the Commission
considers that its proposal to introduce two thresholds (SMP and dominance) for ex ante
regulation is unlikely to be effective.

It considers that a more flexible mechanism than the current SMP concept is required for
determining the cases where imposition of ex ante regulation is indispensable, based on an
economic market analysis and identification of the real sources of an operator’s power in a
given market or market segment. This will have the advantage of giving flexibility to national
regulators to fit the regulatory framework to its national situation, while maintaining the
integrity of the single market through strong co-ordination procedures at European level.

The Commission therefore proposes to modify the concept of significant market power and
use it as the underlying concept for imposing ex ante obligations relating to access and
interconnection. In particular, the market share threshold of 25% would no longer be part of
the definition. Instead, the definition would be based on the concept of dominant position in
particular markets, calculated in a manner consistent with EC competition law practice, as a
trigger for the heavier ex ante obligations, and would cover all aspects including joint
dominance and leverage of market power into associated markets.

NRAs would designate undertakings as having SMP where:

the undertaking has financed infrastructure partly or wholly on the basis of special or
exclusive rights which have been abolished, and there are major legal technical or
economic barriers to market entry, in particular for construction of network infrastructure;
and/or

15

Set out in Article 6 of Directive 97/13/EC of the European Parliament and the Council on a common
framework for general authorisations and individual
licences in the field of telecommunications
services.

22

-
the undertaking concerned is a vertically-integrated entity and its competitors necessarily
require access to some of its facilities to compete with it in a downstream market;

and where both national and EU competition law remedies do not suffice to ensure effective
competition and choice in the market concerned.

The types of obligation that could be imposed, either separately or in combination, on an
undertaking with significant market power will be exhaustively listed in the new directives.
They will cover, inter alia:

– non-discrimination and transparency,

in particular to
address problems of vertical integration, leverage of market power into associated markets

including accounting separation,

– pricing of services,

including cost orientation,

in particular to address areas where

competition is not effective in controlling prices

– access to, and use of, unbundled network elements and/or associated facilities, including
in
the provision of specified services needed to ensure interoperability of services,
particular where an operator controls a facility that constitutes an essential input for
another service provider.

NRAs would draw up the list of organisations with significant market power for the purposes
of implementing the ex ante obligations and notify such a list to the Commission, together
with the precise obligations imposed, by the date which will be fixed in the directive.
Thereafter, determinations of the relevant markets, and of the positions of market players on
those markets, would be carried out by NRAs on a regular basis, in order to adapt regulatory
obligations. This market assessment would be conducted using the methodology used under
competition law and within strictly limited time periods.16

Such assessment by NRAs should take place in close co-ordination with the national
competition authority. Guidelines at European level would facilitate correct application of the
competition law principles, to avoid having different market definitions in different Member
States, which would be incompatible with the internal market.

In order not to hinder innovation, the new framework would ensure that NRAs do not impose
SMP obligations in small newly emerging markets where de facto the market leader is likely
to have a substantial market share.

Legal certainty would be provided by listing exhaustively the obligations that can be imposed
in the directives as well as clear and unambiguous rules for the process by which market
power is assessed and obligations are justified. NRAs would be required to act
in a
transparent manner, and justify their decisions against both the competition case-law and pre-
defined guidelines published by the Commission, designed to establish common, objective
criteria that minimise the need for discretionary decisions by regulators. As was stated in the

16

The time periods would be similar to those used in Council Regulation (EEC) No 4064/89 of 21
December 1989 on the control of concentrations between undertakings as amended by Council
Regulation (EC) No 1310/97 of 30 June 1997.

23

-
Review Communication, it will be important to establish strong co-ordination mechanisms at
EU level to ensure that the rules are implemented in a consistent way. One way of achieving
this would be for the Commission to have the power to challenge, and if necessary, require
NRAs to suspend, the decisions taken if it considered they were not justified according to the
regulatory framework. In deciding whether to do so, the Commission would consult the High
Level Communications Group, and if necessary, the Communications Committee. This
would be without prejudice to the prerogatives of the Commission under the Treaty.

Initially, this process could allow the same obligations that are imposed under the current
regulatory framework to be carried forward in a seamless way, insofar as they remained
necessary. But NRAs would be obliged regularly to review the need for these obligations to
be maintained. Regulation linked to public interest objectives - which is independent of the
degree of competition in the market - would of course remain.

Specific regulatory obligations referred to in the Review Communication would for the most
part be dealt with in the framework described above. Thus there would be no specific
regulatory obligations in Community legislation to impose e.g. access for service providers
to cable TV networks, or to mobile networks, nor to impose carrier selection or pre-
in the Review
selection for mobile users
Communication with regard to access and interconnection). This would mean that any
decision about imposing such access obligations on infrastructure owners would be made in
the light of prevailing market conditions, the effectiveness of competition, and the extent of
customer choice.17

(thus modifying the position set out

In respect of interconnection, it is proposed to maintain the existing rights and obligations
for all parties to negotiate interconnection,
together with regulatory powers of dispute
resolution. Any changes to the additional obligations currently applied to SMP operators
would be made by means of the process outlined above.

In respect of conditional access systems (CAS), the existing obligations under Directive
95/47/EC for all suppliers of CAS services to provide access on fair, reasonable and non-
discriminatory terms would be maintained. Such rules would be subject to review under the
procedure outlined above, which could lead to a relaxation of these obligations, or possibly
their extension where this was justified on the basis of the market analysis undertaken, e.g. to
address issues related to Application Program Interfaces (APIs) or Electronic Programme
Guides (EPGs).

In addition to measures currently being undertaken, an obligation to give access to
unbundled elements of the local loop would be imposed on operators with significant
market power on the relevant markets.

3.4.

Universal service and other users and consumer rights

The new directive on user and consumer rights and universal service will ensure that all
citizens have affordable access to a universal service and will maintain the current scope
of universal service18, but introduce an obligation for periodic review of the scope. The

17

18

NB: ‘must carry’ obligations, which also concern access for content to communications infrastructure,
are dealt with in section 3.4 of this Communication.
The current scope of universal service as defined in Articles 2 and 3 of the Voice Telephony directive
(98/10/EC) includes the provision of voice telephony, fax and voice band data transmission via

24

proposed directive will set out the process for this review, and the principles and criteria to be
applied. But as was stated in the Communication, in considering whether any particular
service should be included within the scope of universal service, any review will have to
combine a market-based analysis of demand for and availability of the service, with a political
assessment of its social and economic desirability, in particular taking into account the
objective of fostering social inclusion in the knowledge-based society across Europe.

On the basis of experience with the current framework, the Commission considers that in
most cases universal service obligations will not constitute such a burden on the notified
universal service operator that financing schemes will be necessary. But it accepts that in
some Member States, this could remain the case, especially in the light of accession by
countries from central and eastern Europe. The new framework will therefore maintain the
possibility for Member States to establish schemes to compensate the universal service
provider where such provision constitutes an unfair burden on the designated operator.
But it will continue to scrutinise such schemes closely to ensure they are justified, transparent
and proportionate.

On the question of guidelines on affordability of universal service, the Commission considers
that there may be more scope for guidelines for NRAs on how affordability can be assessed
than for guidelines on affordability per se. The new framework will also ensure that
consumers have the necessary information and facilities to manage their expenditure on
communications services.

On the question of leased lines for business users, the Commission notes the broad support in
the consultation for
removing the provisions on leased lines once there is adequate
competition.
It will ensure that provisions remain in respect of leased lines in the new
directive, with sunset clauses to allow regulators to no longer impose such requirements
where users have sufficient choice in the provision of leased line services.

On the question of user and consumer rights, the Commission will ensure the protection of
consumers in their dealings with suppliers in the new directive. It will require transparency of
information on tariffs and other conditions for using communications services. With regard to
introducing an obligation for the provision of per-call tariff information, the Commission
remains committed to ensuring that consumers have access to accurate and transparent
information about the price of individual calls, including the costs incurred by users when on-
line, and the new framework will include measures to encourage this. It will also address the
special needs of specific social groups, in particular disabled users.

On the question of complaint handling and dispute resolution, the Commission notes the
differences in opinion on what the powers and responsibilities of the NRAs and the High
Level Communications Group should be. The Commission, however, remains committed to
ensuring that consumers have access to simple and inexpensive dispute resolution procedures
nationally and cross-border.

In respect of the proposal to introduce a caller location obligation for emergency services
the Commission considers that it would be appropriate to introduce a
(including <112>),
requirement for operators to provide access to appropriate caller location information for

modems. Users must have access at a fixed location to international and national calls, as well as
emergency services (via national numbers or the European emergency number – 112). The definition
also covers the provision of operator assistance, directory services, public pay phones and special
facilities for customers with disabilities or with special social needs.

25

calls to emergency services (including calls to the European emergency number, <112>).
Such a measure would be in the consumer interest, and the Commission notes that national
regulatory authorities also support such an obligation.
It is proposed to set up a working
group of all interested parties, including operators and emergency authorities, to deal with the
detailed implementation issues, including those associated with privacy.

The Commission, noting the broad support in the consultation for the implementation of
number portability for mobile users, will introduce proposals to this effect. In this context,
to facilitate its
it will examine the best solutions available, using new technologies,
implementation. The new regulatory framework will ensure that the implementation of
number portability for mobile networks does not lead to one single tariff for call termination
being imposed upon all mobile operators.

With regard to ‘must carry’ rules, the Commission accepts that such rules may remain
justified in the digital broadcasting environment. Member States will therefore remain able to
impose ‘must carry’ obligations on network operators to require them to carry specified radio
and television broadcasts. But the Commission considers such rules should be proportionate,
and limited to those channels that are charged with the fulfilment of a public service
broadcasting remit. Such rules should be applied only in order to achieve specific public
to such rules should receive
interest objectives. In particular, cable operators subject
reasonable remuneration,
the non-profit nature of public service
broadcasting, and the value of these broadcast channels to operators.

taking into account

3.5.

Privacy and data protection in the communications sector

The Commission, noting the support in the consultation for updating the telecoms data
protection directive, will introduce proposals to ensure that data protection rules in the
communications sector are technologically neutral and robust. In this context, it will examine
in particular existing terms and definitions of the Directive and the consistency of coverage of
old and new telecommunications services with new functionalities embedded in networks or
software.

4.

NEXT STEPS

The Commission anticipates that the proposals for directives will issue in June this year, and
then be forwarded to the Community institutions, with a view to their adoption by the Council
and European Parliament. The Commission calls on the Community institutions to make
every effort to adopt these proposals as early as possible in 2001, in accordance with the
conclusions of the Lisbon European Council,
the European
communications sector can continue to thrive.

to ensure that

in order

The Commission notes that it is essential that the impact of the proposed changes to the
acquis communautaire on countries which are candidates for accession to the EU is fully
discussed with them as negotiations progress, in order to ensure that accession is as smooth as
possible.

The Commission notes that a new round of GATS and other international negotiations are
likely to take place in parallel with Community negotiations on the new framework.
It will
ensure that the new framework and the results of these negotiations are fully consistent with
each other.

26

ANNEX

List of respondents

- Finland

Ministry of Transport & Communications
Consumer Ombudsman

Governments, Regulatory Authorities, and other
public authorities

- Belgium

- Sweden

Government

- United Kingdom

of

Institute

Services &

Belgian
Postal
Telecommunications (IBPT/BIPT)
Ministère des télécommunications
Vlaamse Gemeenschap
Gouvernement de la Communauté Française de
Belgique
Conseil Supérieur de l'Audiovisuel de Wallonie

- Denmark

Government

- Germany

Bundesregierung
Direktorenkonferenz der Landesmedienanstalten in
der Bundesrepublik Deutschland DLM
Bundesamtes für Kommunikation (BAKOM)

- Spain

Ministerio de Fomento
Concejal de Comunicación (Ayuntamiento de
Gijón)
Gobierno de Canarias

- France

Autorités françaises
Autorité de régulation des
(ART-Telecom)

- Ireland

télécommunications

Department of Public Enterprise
Irish Competition Authority
Office of
Regulation (ODTR)

the Director of

telecommunications

- Italy

Ministero delle comunicazioni
Autorità per
(Agcom)

le Garanzie nelle Comunicazioni

- Luxembourg

Government

- Netherlands

Regering
OPTA

- Austria

Federal Ministry for Transport and Research
Telekom-Control

- Portugal

Instituto das Comunicações de Portugal (ICP)

27

Government
Office of Telecommunications (OFTEL)
Office
of Telecommunications
Communications for England (OFTEL/CCE)
The Independent Television Commission (ITC)

/ Consumer

- Other Governments and public authorities

of Transport

Article 28 Data Protection Working Party
Hungary: Ministry of Transport, Communications
and Water Management
Japanese Government
Liechtenstein Office for Communications
Ministry
Norway
United States Government
European Conference of Telecommunications and
Posts (CEPT)
Council of Europe, Media Division, Directorate
General of Human Rights
Independent Regulators Group (IRG)

and Communications,

Industry Associations

Française

des Câblo-Opérateurs

ANIEL
Asociación de Empresas Operadoras y de Servicios
de Telecomunicaciones, (ASTEL)
Asociación de Televisiones Locales de Andalucía
(ACUTEL)
Associação dos Operadores de Telecomunicações
(APRITEL)
Association des Télévisions Commerciales
Association
(AFCO)
Association Française des Opérateurs Privés en
Télécommunications (AFOPT)
Association of European Radios (AER)
CEEP
Confederation
Employers (VNO-NCW)
Consumer Electronics Manufacturers
Group (EACEM)
Digital Video Broadcasting Ad hoc Regulatory
Group (DVB)
ENPA
ETNO European
Network Operators' Association
EU Committee of the American
Commerce in Belgium
Euro-ISPA
European Broadcasting Union (EBU/UER)
European Cable Communications Association
(ECCA)
European Economic Interest Grouping (ENCIP)

Public Telecommunications

of Netherlands

Chamber of

Industry

Industry

and

und

Information

Rundfunkempfangs-

and Communications

European
Technology Industry Association (EICTA)
European Telecommunications Platform (ETP)
Fachverband
Kabelanlagen e.V (FRK)
Fédération des Entreprises de Belgique (FEB)
Federation of the Electronics Industry FEI
Finnish Newspapers Association
Groupement des Industries de Télécommunications
et d’Electronique professionnelle (GITEP)
GSM Europe
ICRT
Motion Picture Association (MPA)
Satellite Action Plan Regulatory Working Group
Service Providers Interest Group (SPIG)
Société Européenne des Satellites (SES)
Telecommunications Resellers Association (TRA)
UK Operators Group
UNICE
United States Council for International Business
(USCIB)
VECAI
Netherlands)
Verband der Anbieter von Telekommunikations-
und Mehrwertdiensten (VATM )
Verband
Telekommunikation (VPRT)
Wirtschaftkammer Österreich (WKO)
World Association
Broadcasters (AMARC)
World DAB

(Association of Cable Operators, The

Community

Rundfunk

Privater

Radio

und

of

Consumer and user bodies

de

Usuarios

Española

of European Computer User

Advisory Committee on Telecommunications for
Disabled and Elderly People (DIEL)
Asociación
de
Telecomunicaciones, (AUTEL)
Bureau Européen des Unions de Consommateurs
(BEUC)
Confederation
Associations (CECUA)
Consumers Association
Deaf Broadcasting Council
European Association for
Consumer Representation
(ANEC)
European
commercial e-mail
European Disability Forum (EDF)
Genossenschaft der Werkstätten für Behinderte eG
(GDW)
INTUG
the
Telecommunications Users Group
INTUG Europe & EVUA - Mobile the International
Telecommunications Users Group
Mencap
National Consumer Council UK
Royal National Institute for the Blind (RNIB)

the Co-ordination of
Standardization

International

Committee

unsolicited

General

against

in

-

Advisory

Scottish
Telecommunications (SACOT)
Telecommunications Action Group (TAG)
Voice of the Listener & Viewer

Committee

on

Market
organisations

players

and

other

commercial

ALCATEL
ALMA Media Corporation
AMENA Retevision Movil
AOL Europe
ARD & ZDF
BBC
Belgacom
Belgacom Mobile
Bertelsmann Mediasystems
BLU S.p.A.
Bougues Télécom
BT plc
Cable & Wireless
Canal+ (MP)
CASTEL
CODENET
COLT Telecom Group plc
CONCERT
COSMOTE
Covad Communications
CPRM Companhia Portuguesa Rádio Marconi
DEBITEL
Deutsche Telekom
EIRCOM
Empresarios Cable, S.A
Energis Carmelite
E-Plus Mobilfunk GmbH
Esat Digifone
Esat Telecom
Ericsson
EQUANT
Finnet Group
First Telecom plc
France Télécom
GE Capital Europe
Global Crossing
Global Telesystems Inc.
Hughes Network Systems/Spaceway
INFOSTRADA
INTEL Corporation
Irish Multichannel (Dublin)
IS-Production
ITV
KPNRoyal KPN N.V.
LDMI Telecommunications
Level 3
Lucent Technologies
Lyonnaise Câble
Mannesmann
Mannesmann Arcor
Mannesmann Mobilfunk
Maxitel

28

Individuals & consultancies

Antelope Consulting
Baker & McKenzie
Mr Francisco Javier Angelina
Mr Frank Pfeifer
Gat & Gav
Mr Michael Barrett
Martineau Johnson
Mr Pierre Larouche
Mr Thomas Stadelmann
Wilkinson Barker Knauer

Research institutions/universities

CTI & DATSA The Center for Tele-Information
(Technical University of Denmark), Lyngby,
Denmark;
and Datsa Belgium
/
Centre de recherches
Facultes Universitaires Notre-Dame De La Paix De
Namur (CRID/FUNDP)

Informatique et Droit

Other Associations

Arbeitskreis Rundfunkcompfangsanlagen
Bundeskammer für Arbeiter und Angestellte
EURIM
Réseaux Services Publiques
Independent Committee for
Standards of Telephone
(ICSTIS)
Public Utilities Access Forum

the Supervision of
Information Services

MCI Worldcom International
Mercantil Empresarios Cable
Microsoft
Mobilix
Mobistar
Motorola
MTV
Nokia
Nortel Networks
NTL
Ocean Communications Ltd
Omnitel Pronto Italia
One-2-One
ONITELCOM
Open TV
OPTIMUS Telecomunicações SA
Orange Personal Communications Services Ltd
OTE
Pacific Gateway Exchange Inc.
Philips
PhoneAbility
Portugal Telecom
Radio Nazionali Associate (RNA)
Radio Teilifís Éireann (RTE)
RETEVISION, Mobil Amena
Reuters Ltd.
RTS Wireless
Sanoma-WSOY Oyj
SBC Communications Inc.
SEC
SEMA Group
Sense Communications International AS
Sonera
SONOFON
ST Microelectronics
Swisscom
TDF
Tele2
Telecel
Telecom Italia
Tele Denmark
Teledesic
Telefonica
Telekom Austria
Telenet
Telenor AS
Telenordia
Telfort
Telewest
Telia AB
Teracom AB
United Pan-European Communications (UPC)
Uni-Telecom Europe
Versatel Telecom
VIAG Interkom GmbH & Co
VIATEL , Inc.
Vodafone AirTouch Group
WIND Telecomunicazioni S.p.A.

29