2000/417/EC: Commission Recommendation of 25 May 2000 on unbundled access to the local loop: enabling the competitive provision of a full range of electronic communications services including broadband multimedia and high-speed Internet (notified under document number C(2000) 1259) (Text with EEA relevance)
Date: 2000-05-25
Institutions: European Commission
Subjects: competition law, exchange of information, information network, local area network, telecommunications, telephone charges

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COMMISSION RECOMMENDATION

of 25 May 2000

on unbundled access to the local loop: enabling the competitive provision of a full range of
electronic communications services including broadband multimedia and high-speed Internet

(notified under document number C(2000) 1259)

(Text with EEA relevance)

(2000/417/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular Article 211,

Whereas:

(1)

(2)

(3)

the special European Council of
The conclusions of
Lisbon on 23 and 24 March 2000 note that for Europe
to fully seize the growth and job potential of the digital,
knowledge-based economy, it is required that businesses
and citizens have access to an inexpensive, world-class
communications infrastructure and a wide range of
services, and to provide this calls on the Member States,
together with the Commission, ‘to work towards intro-
ducing greater competition in local access networks
before the end of 2000 and unbundling the local loop,
in order to help bring about a substantial reduction in
the costs of using the Internet’.

The 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) (1) as
amended by Directive 98/61/CE (2), and in particular
Articles 4(2),7,9 and 11, lays down principles on access
to networks including collocation, and gives national
regulatory authorities powers to exercise their responsi-
bility in this regard.

The Directive 98/10/EC of the European Parliament and
of the Council of 26 February 1998 on the application
of open network provision to voice telephony and on
universal service for telecommunications in a competi-
tive environment (3), and in particular Article 16, estab-
lish conditions on special network access in order to

(1) OJ L 199, 26.7.1997, p. 32.
(2) OJ L 268, 3.10.1998, p. 37.
(3) OJ L 101, 1.4.1998, p. 24.

(4)

(5)

(6)

(7)

(8)

stimulate the development of new types of telecommu-
nication services.

The Council Directive 92/44/EEC of 5 June 1992 on the
application of open network provision to leased lines (4),
as amended by Directive 97/51/EC (5) and Commission
Decision No 80/98/EC of 7 January 1998 (6) and in
particular Article 8(2) establish conditions on the provi-
sion of leased lines.

last
The Commission Directive 90/388/EEC (7)
amended by Directive 99/64/EC (8) and in particular
Article 4(c) lays down requirements for the rebalancing
of tariffs in a fully liberalised market.

as

The ‘local loop’ refers to the physical copper line circuit
in the local access network connecting the customer's
premises to the operator's local switch, concentrator or
equivalent facility. As noted in the Commission fifth
report on the implementation of the telecommunica-
tions regulatory package (9), the local access network
remains one of the least competitive segments of the
liberalised telecommunications market, because new
entrants do not have wide-spread alternative network
infrastructures and are unable with traditional technolo-
gies to match the economies of scale and scope of
operators notified as having significant market power in
the fixed network (hereinafter referred to as ‘notified
that operators
operators’). This results from the fact
rolled out their old copper local access networks over
significant periods of time protected by exclusive rights
and were able to fund its investment costs through
monopoly rents.

The provision of new loops with high capacity optical
fibre directly to major users is a specific market that is
developing under competitive conditions with new
investments and therefore this recommendation does
not address unbundled access to fibre local

loops.

It would not be economically viable to new entrants to
duplicate the incumbent's copper local loop access infra-
structure in its entirety and in a reasonable time period,
and alternative infrastructures (e.g. cable television, satel-
lite, wireless local loops) do not generally offer the same
functionality or ubiquity.

(4) OJ L 165, 19.6.1992, p. 32.
(5) OJ L 295, 29.10.1997, p. 23.
(6) OJ L 14, 20.1.1998, p. 27.
(7) OJ L 192, 24.7.1990, p. 10.
(8) OJ L 175, 10.7.1999, p. 39.
(9) COM( 1999)537

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(9)

their own
Notified operators are already rolling out
broadband high speed bit stream services for Internet
access in their copper loops, but may delay the introduc-
tion of some types of digital subscriber loop (DSL) tech-
nologies and services in the local
loop, where these
could substitute for their current offerings. Any such
delays would be at the expense of users. Therefore it is
appropriate to allow third parties to have unbundled
access to the local
in
particular, as noted in point 5 of Commission Recom-
mendation on leased lines interconnection pricing (10), to
meet users' needs for the competitive provision of leased
lines and highspeed Internet access.

loop of the notified operator,

(11) Notified operators

should provide information and
unbundled access to third parties under the same condi-
tions and of the same quality as they provide for their
own services or those of their subsidiaries or partners,
and to this end, the publication by the notified operator
of a reference offer for unbundled access to the local
loop, within a short time-frame and ideally on Internet,
and under the supervisory control of the national regula-
tory authority (NRA), would contribute, to create trans-
parent and non-discriminatory market conditions.

(12) Although commercial negotiation is

the preferred
method for reaching agreement on technical and pricing
loop access, experience shows that in
issues for local
most of the cases regulatory intervention is necessary
due to imbalance in the negotiation power between the
new entrant and the notified operator, and lack of other
alternatives. The national regulatory authority, in accord-
ance with Article 9 of Directive 97/33/EC and Article
16(4) of Directive 98/10/EC, may intervene at its own
initiative to specify issues, including pricing, designed to
ensure interoperability of services, maximise economic
efficiency and benefit end users.

(10)

In accordance with Article 4(2) of Directive 97/33/EC
and Article 16 of Directive 98/10/EC, notified operators
shall deal with reasonable requests for network access
from new entrants, in particular for shared access (11) to
the copper line, and should seek to agree commercial
and technical conditions. However, the availability of
only shared access to the local loop does not meet all
market demands and therefore, it is considered appro-
priate that the notified operator provides also full local
loop unbundling (12),
to
in parallel
reinforce competition and improve choice for all types
to decide which
of users, by allowing the market
unbundled access offerings best meet
the customers'
needs.

to shared access,

(10) (not yet published)
(11) ‘Shared use of the copper line’ allows access to the unused high
frequency part of the spectrum to deploy limited ADSL services
(i.e. data rates up to 8 Mbit/s), while the lower frequency part of
the spectrum continues to be used by the notified operator to
provide basic voice telephone service over the same copper line.
The International Telecommunication Union (ITU) has worked out
technical specifications for ADSL full rate — with speeds up to 8
Mbit/s downstream and 1 Mbit/s upstream — in its Recommenda-
tion 6.992.1. This includes a number of country-specific variants in
order to accommodate regional local loop infrastructure differences.
ADSL can achieve its highest speeds at a distance of 4 km or less.
The connection also allows the provision of voice phone service
on the basic frequency band of the same line. In addition ITU has
worked out a variant ADSL solution in its Recommendation
G.992.2, also known as G.Lite, that is very easy to deploy in the
(it needs a very simple
customer premises because is ‘splitter-less’
serial filter that separates voice and data and does not call for any
rewiring at the customer premises). Speeds are up to 1,5 Mbit/s
downstream to the user and 385 kbit/s upstream. Some PC
suppliers are already marketing PC equipment with integrated
G.Lite-ADSL modems so that standard universal solutions can be
rolled-out in a large scale in the residential market.

(12) ‘Full local loop unbundling’ gives the new entrant exclusive use of
the full
thus
frequency spectrum available on the copper
enabling the most innovative and advanced DSL technologies and
services, i.e. data rates of up to 60 Mbit/s to the user using VDSL
(Very high speed DSL). Work on standardisation on VDSL is
currently taking place in ITU and ETSI.

line,

(13)

(14)

Costing and pricing rules for local loops and associated
facilities (such as collocation and leased transmission
capacity) should be transparent, non-discriminatory and
be objective to ensure fairness. Pricing rules should
ensure that the local loop provider is able to cover its
appropriate costs in this regard plus a reasonable return.
Pricing rules for local loops should ensure that there is
in particular no margin
no distortion of competition,
squeeze between prices of wholesale and retail services
of the notified operator. In this regard it is considered
important that competition authorities are consulted.

The Directive 98/10/EC requires Member States
to
ensure that all reasonable requests for connection to the
fixed public telephone network at a fixed location and
access to fixed public telephone services are met by at
least one operator. Where a customer decides to enter
into a contractual agreement with a new entrant for
exclusive provision of
full
unbundled local
loop, then it is considered that the
notified operator has fulfilled its obligation under Article
5 of Directive 98/10/EC. Users should be fully informed
of such conditions in their contracts in accordance with
Article 10 of Directive 98/10/EC and this without preju-
dice to the application of Community law regarding
consumer protection.

services by means of

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(15)

The Licensing Directive 97/13/EC foresees the use of
general authorisations for telecommunications services,
except under certain conditions as set out in Article 7
thereof. Companies using DSL technology on unbundled
local loops to provide services to customers should be
authorised in accordance with the Directive 97/13/EC
on the basis of the activities they undertake and, in line
with the principle of technological neutrality, no specific
regulatory restrictions should be placed on services
provided in this way. Authorised data network operators
or voice telephony network operators should be entitled
to operate shared access and/or full unbundled local
loops from notified operators without additional author-
isations or being subject to additional restrictions.

(16)

is appropriate that

It
the Commission reviews this
recommendation periodically on the basis of market
developments and the experience acquired, in particular
as regards pricing issues and the content of the reference
offer included in the Annex.

(17)

The Community competition rules apply beside the
present recommendation,

HEREBY RECOMMENDS:

Article 1

Provision of access to the local loop

1.
In the context of the promotion of an advanced, harmo-
nised and competitive electronic communications market that
provides a wide choice for users for a full range of communica-
tions services, including broadband multimedia and high-speed
Internet services, this recommendation concerns conditions for
the provision to new entrants of unbundled access to the local
loop and associated facilities, by public fixed network operators
designated by the national regulatory authority as having
significant market power (hereinafter referred to as ‘notified
operators’) in accordance with Directive 97/33/EC, Directive
92/44/EEC, and, Directive 98/10/EC.

of notified operators under transparent, fair, and non-discrimi-
natory conditions.

3.
The recommended provision of full unbundled access to
the local loop of notified operators is without prejudice to the
obligations under ONP Directives 97/33/EC and 98/10/EC for
notified operators to (13):

— meet requests for other forms of access including shared
access to the local loop, in accordance with Article 4(2) of
Directive 97/33/EC and Article 16 of Directive 98/10/EC;

— comply with the principle of non-discrimination when
using the fixed public telephone network to deliver high
speed bit stream services to third parties as provided to its
own services, in accordance with Article 16(7) of Directive
98/10/EC.

Roll-out of new services

it

In applying the principle of non-discrimination imposed
4.
on notified operators under Community law,
is recom-
mended that national regulatory authorities ensure that a noti-
fied operator provides its competitors with the same facilities
as those that it provides to itself or to its associated companies,
and with the same conditions and time-scales. This applies in
particular to the roll-out of new service in the local access
network, access to unbundled local loops, availability of collo-
cation space, provision of
leased transmission capacity for
access to collocation sites, ordering, provisioning, quality and
maintenance procedures.

Pricing

loop unbundling,

5.
In order to avoid lengthy disputes on pricing between
new entrants and notified operators that would delay the effec-
tive implementation of local
it is recom-
mended that national regulatory authorities specify the pricing
methodology and the relevant parameters used to calculate
prices. Where appropriate, Member States may set the actual
prices where compatible with Community law (14), and for this
purpose it is appropriate that a competition analysis is carried
out.

insufficient

to prevent

For as long as the level of competition in the local access
6.
network is
excessive pricing of
unbundled access to local loops, it is recommended that prices
for unbundled access to local loops follow the principle of cost
orientation. In principle a forward-looking approach based on
current costs (15) will foster fair and sustainable competition
and provide alternative investment incentives; however, if this
could result in distortions of competition in the short term, for
example where the notified operator's enduser tariffs remain
unbalanced on the basis of current costs, then it is recom-
mended that the national regulatory authority, following the
procedure of point 5, specify the reasonable time period neces-
sary for the gradual adjustment to current costs of the price of
local
loops, while keeping consistency with the cost system
used when regulating retail services.

2. Without prejudice to the application of Community
competition rules, it is recommended that in Member States
where full unbundled access is not yet available, appropriate
legal and regulatory measures be adopted to mandate, by 31
December 2000, full unbundled access to the copper local loop

(13) See also Commission communication on Unbundled Access to the

local

loop (in the Official Journal).

(14) See footnote 13.
(15) Current costs are the costs of building an efficient modern equiva-

lent infrastructure and providing such a service today.

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In accordance with the principle of non-discrimination,
7.
where notified operators are already providing their own high
speed digital subscriber loop (DSL) services using unbundled
access to the local loop, national regulatory authorities may
require that competitors are given access to the local loops at
the same price which the notified operator imputes to its own
DSL services. This ‘non-discrimination' pricing rule would also
apply to the access by new entrants of associated facilities such
as collocation and leased transmission capacity in the core
network as used by the notified operator to support its own
DSL services or those of a subsidiary or associated company.

11. With regard to technologies and services used with
unbundled local loops, it is recommended that national regula-
tory authorities ensure that any restrictions designed to protect
network integrity, and in the case of shared access to the local
loop to protect the voice telephony channel, are non-discrimi-
natory and based on objective criteria identified in advance, in
accordance with Article 13(2)(b) of Directive 98/10/EC. In line
with the principle of technological neutrality for the access to
copper local loops, no additional or specific regulatory restric-
tions should be placed on companies that use new DSL tech-
nologies on the local loop as a means to provide customer
services.

8.
To provide confidence in the fair pricing of facilities, and
to demonstrate compliance with the obligations for non-
discrimination, it is recommended that appropriate and detailed
cost accounting information, including internal transfer pricing
consistent with the guidelines in Commission Recommenda-
tion 98/322 (16), is made available to the national regulatory
authority who may make it available to interested parties under
a non-disclosure agreement, while taking account of considera-
tions of commercial confidentiality.

9.
It is recommended that national regulatory authorities
conduct periodic reviews of the market conditions on local
access, adjusting pricing principles and obligations as necessary
or removing price regulation once the market offers sufficient
competition and choice of alternative offerings. The review
period should be announced in advance in order to provide
predictability to market players.

Transparency and coordination

12.
So as to minimise the time for deployment of competi-
it is recommended that
tive DSL services by new entrants,
national regulatory authorities ensure that notified operators
make available as soon as possible, and ideally on Internet, a
reference offer for full unbundled access and shared access to
the local loop, containing a description of the offerings and the
associated terms and conditions,

including prices.

The Annex provides an indicative list of items to be included in
loop.
the reference offer for unbundled access to the local

13.
In addition, it is recommended that national regulatory
authorities ensure easy availability of the following information
concerning communications services over unbundled local
loops:

Technical conditions and collocation

— licensing conditions for operators,

Physical access should be provided to any feasible
10.
termination point of the copper local
loop where the new
entrant can collocate and connect its own network equipment
and facilities to deliver services to its customer, either in the
local switch, concentrator or equivalent facility. In principle
collocating companies should be allowed to place any equip-
ment necessary to access the unbundled local loop using avail-
able collocation space, and, to deploy or rent transmission
links from there up to the point of presence of the new
entrant. It is recommended that national regulatory authorities
ensure that collocation space is offered to competitors in a way
that is transparent, fair, and non-discriminatory.

(16) See methodology for implementation of accounting separation and
a current cost-accounting approach in Commission Recommenda-
tion 98/322/EC (OJ L 141, 13.5,1998, p. 6).

— information for users who take service from operators
using unbundled local loop access, including all contractual
conditions, specially tariffs, users' rights, minimum rental
periods and universal
termination of
service, complaints and redress procedures.

service aspects,

14.
National regulatory authorities are recommended to set
up national coordination groups of interested parties, including
user representatives, to refine the requirements under points 12
and 13, and to advise on an ongoing basis on the degree of
detail in the information to be published in the reference offer.
Notified operators should report regularly to their NRA on
their implementation of local loop unbundling, including stat-
istical
information for the items identified in the reference
offer.

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It

is recommended that Member States ensure that
15.
national coordination groups take note of similar activities
being undertaken in other Member States and relevant inter-
national organisations. In order to facilitate coordination, it is
recommended that national regulatory authorities report peri-
odically to the ONP committee on issues associated with imple-
mentation of unbundled access to the local

loop.

Article 2

This Recommendation is addressed to Member States.

Done at Brussels, 25 May 2000.

Review

This recommendation, and in particular the Annex, will
16.
be reviewed by the Commission in the light of market develop-
ment, and updated where necessary.

For the Commission

Erkki LIIKANEN and Mario MONTI

Members of the Commission

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INDICATIVE LIST OF ITEMS TO BE INCLUDED A REFERENCE OFFER (1) FOR UNBUNDLED ACCESS TO THE
LOCAL LOOP TO BE PUBLISHED BY NOTIFIED OPERATORS

ANNEX

A. Conditions for unbundled access to the local loop

1. Network elements to which access is offered:

covering in particular the following elements:

— access to raw copper local loops (copper terminating at the local switch) and subloops (copper terminating at

the remote concentrator or equivalent facility),

in the case of full unbundling,

— access to non-voice frequencies of a local

loop,

in the case of shared access to the local

loop,

— access to space within a main distribution frame (MDF) site of the notified operator for attachment of DSL
access multiplexors (DSLAMs) and similar types of equipment to the local loop of the notified operator.

2. Availability: all relevant detail regarding local network architecture,

information concerning the locations of

physical access sites, availability of copper pairs in specific parts of the access network;

3. Technical conditions: technical characteristics of copper pairs in the local loop; lengths, wire diameters, loading
coils and bridged taps; line testing and conditioning procedures. Specifications for DSL equipment, splitters etc,
with reference to relevant international standards or recommendations; spectrum limitations and electromagnetic
compatibility requirements designed to prevent interference with other systems;

4. Provisioning procedures: line investigations for specific DSL technologies, ordering and provisioning procedures,

usage restrictions,

B. Collocation services

5. Information on collocation sites: in particular the precise locations (2) of the notified operator's relevant sites;
including switches, main distribution frame (MDF), concentrators, and remote distribution points such as street
cabinets, pedestals and vaults; specification of the Website(s) where the updated list of locations is published;
availability of alternatives when physical collocation is not available.

6. Collocation options at the sites indicated under point 5: the types of collocation available e.g. shared, caged/cage-
less, physical, or virtual); availability of power and air-conditioning facilities at these sites; rules for subleasing of
collocation space.

7. Equipment characteristics: restrictions,

if any, on equipment that can be collocated.

8. Security Issues: measures put in place by notified operators to ensure the security of their locations; conditions for

access by the staff of competitive operators in order to identify and repair service problems.

9. Safety Standards:

(In principle safety standards used by the incumbent and its affiliates should be deemed

adequate for competitive operators' equipment).

10. Inspections: conditions for competitive operators and NRAs to inspect the locations at which physical collocation

is available, or sites where collocation has been refused on grounds of lack of capacity.

C. Operational support systems

11. Conditions for access to be notified operator's operational support systems, information systems or databases for

pre-ordering, provisioning, ordering, maintenance and repair requests and billing.

12. In principle the operational support system (OSS) elements listed should cover access to all loop qualification
information, including information on whether a particular loop is capable of supporting advanced services.

(1) A reference offer for unbundled local loop access includes the basic set of technical facilities, including terms and conditions, and

prices, offered to market players.

(2) Availability of this information may be restricted to only interested parties to avoid concerns on public security.

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D. Supply conditions

13. Timeframes: lead time for responding to requests for supply of services and facilities, as well as contractual
compensation provided in case of failure to meet those time frames, service level agreements, fault resolution and
escalation procedures.

14. Prices for each feature, function and facility listed above, shown separately, including on time payments and

recurring rental payments.