Opinion of the Economic and Social Committee on the "Proposal for a Directive of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services"
Date: 2001-01-24
Institutions: European Economic and Social Committee
Subjects: approximation of laws, competition law, single market, telecommunications

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2.3.
The ESC is pleased that the proposal addresses the
issue of fundamental licensing motives. As the Commission
points out, licensing has in some cases become very costly
without basically benefiting end-users. A single European
market can only be achieved if licensing is harmonised at a
low level of intervention. That has proved effective in several
Member States.

2.4.
It is important that conditions for the authorisation of
operations do not include non sector-specific obligations. The
Committee is pleased to see that this is explicitly stated in
Article 6 of the Directive and also welcomes recital 14’s
specification that it is not necessary to require systematic and
regular proof of compliance with all conditions. This can be
seen as a positive step towards reducing the burden the rules
place on companies.

2.5.
The ESC agrees with the Commission that licences
should only be used in the case of scarce radio spectrum and
telephone numbers, and that administrative charges should be
set so as to cover only those administrative costs that are
incurred under the proposed minimal regulation. There seems
to be growing concern that IT users will be forced to contribute
to spectrum licensing costs, which can significantly exceed
administrative costs besides being totally unconnected with
the outcome at auction.

2.6.
The proposed Authorisations Directive should, in the
Committee’s view, be amended so as to explicitly prohibit the
charging of one-time fees that are not used for purposes which
can boost spectrum efficiency or are not part of an auction
procedure or some other system in which the price is used as
a means to achieve efficient radio spectrum allocation.

Brussels, 24 January 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on the ‘Proposal for a Directive of the European
Parliament and of the Council on a common regulatory framework for electronic communications
networks and services’

(2001/C 123/13)

On 16 October 2000 the Council decided to consult the Economic and Social Committee, under
Article 95 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 7 December 2000. The rapporteur
was Mr Lagerholm.

At its 378th plenary session on 24 and 25 January 2001 (meeting of 24 January) the Economic and
Social Committee adopted the following opinion with 77 votes in favour and one abstention.

1.

Introduction

1.1.
Since 1990 the Commission has progressively put
in place a comprehensive regulatory framework for the
liberalisation of the telecommunications market. This has
been vital to the EU’s global competitiveness. An advanced

communications industry is a precondition for Europe’s tran-
sition to the information society. The Lisbon European Council
of 23-24 March 2000 highlighted the potential for growth,
competitiveness and job creation of the shift to a digital,
knowledge-based economy. In particular, it emphasised the
importance for Europe’s businesses and citizens of access to
an inexpensive, world-class communications infrastructure
and a wide range of services.

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The current regulatory framework for telecommuni-
1.2.
cations has been successful
in creating the conditions for
effective competition in the telecommunications sector during
the transition from monopoly to full competition. The new
framework for communications infrastructure and associated
services is designed to focus on promoting and sustaining an
open and competitive European market for communications
services. This will benefit the European citizen and consolidate
the internal market.

2.

The Commission proposal

2.1.
The convergence of the telecommunications, media
and information technology sectors (1) means that all trans-
mission networks and services should be covered by a single
regulatory framework. The proposed regulatory framework is
to consist of the present framework directive and the following
additional measures:

— Directive on the authorisation of electronic communi-

cations networks and services;

— Directive on access to, and interconnection of, electronic
communications networks and associated facilities;

— Directive on universal service and users’ rights relating to
electronic communications networks and services;

— Directive on the processing of personal data and the
protection of privacy in the electronic communications
sector; and

— Regulation on unbundled access to the local loop.

In addition to the above package, a proposal for a
2.1.1.
decision on a regulatory framework for radio spectrum policy
in the European Community has been submitted.

2.1.2.
The proposals are based on public consultations on
the Green Paper on convergence, the Green Paper on radio

(1) Green Paper on the convergence of the telecommunications,
media and information technology sectors, and the implications
for regulation — Towards an information society approach
(COM(97) 623 final); ESC opinion in OJ C 214, 10.7.1998.

spectrum policy (2) and the 1999 Communications Review (3)
on the existing regulatory framework.

2.2.
Chapter I of the proposed directive sets out the aim
and scope of the new framework. This is to establish a
harmonised framework for regulation of electronic communi-
cations networks and services, i.e. a framework covering all
satellite and terrestrial networks including both fixed and
wireless.

2.3.
Chapter II sets out principles for the establishment of
national regulatory authorities (NRAs) and establishes certain
procedures to which they are subject. Member States are to
guarantee NRAs’ independence and publish their tasks. The
directive also establishes a right of appeal, making it clear that
any appeal must be to a body independent of government.
NRAs are to be given the right to gather information from
market players in order to carry out their tasks effectively.
They must consult the interested parties on proposed decisions
and exercise their powers impartially and transparently.

2.4.
Chapter III requires NRAs to contribute in a way that
is technology-neutral to an open and competitive market and
the development of the internal market, and to support the
interests of citizens. NRAs are to promote the harmonisation
of use of radio spectrum at Community level and ensure its
effective management. They are also to ensure that adequate
numbers and numbering ranges are provided on the basis of
transparent, objective and non-discriminatory criteria. Timely
procedures should also be established for the granting of rights
of way and for compulsory facility sharing, which may be
appropriate in some circumstances.

2.5.
The general provisions set out in Chapter IV apply
to several directives within the new regulatory framework.
Accordingly, an undertaking is deemed to have significant
market power if, either individually or jointly with others, it
the
enjoys a position of economic strength affording it
power to behave to an appreciable extent independently of
competitors, customers and ultimately consumers.

(2) Communication from the Commission to the Council, the Euro-
pean Parliament, the Economic and Social Committee and the
Committee of the Regions — Next steps in radio spectrum policy
— results on the public consultation on the Green Paper
(COM(1999) 538 final); ESC opinion on the Green Paper in OJ
C 169, 16.6.1999.

(3) Communication from the Commission to the Council, the Euro-
pean Parliament, the Economic and Social Committee and the
Committee of the Regions — Towards a new framework for
electronic communications infrastructure and associated services
— The 1999 Communications Review (COM(1999) 539 final);
ESC opinion in OJ C 204, of 18.7.2000. Communication from
the Commission — The results of the public consultation on the
1999 Communications Review and Orientations for the new
Regulatory Framework (COM(2000) 239 final); ESC opinion in
OJ C 14, 16.1.2001.

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2.6. Market analyses are to be carried out regularly on
markets with an international dimension, as listed in the
Commission Decision on Relevant Product and Service Mar-
kets that has still to be issued. Where an NRA determines that
a market is not effectively competitive in a specific geographic
area,
is to impose — or maintain — sector-specific
it
obligations.

2.7.
Other provisions deal with standardisation and the
resolution of disputes between undertakings and disputes
involving parties in different Member States. To secure single
market harmonisation, the Commission is to be given scope
to issue recommendations or lay down binding harmonisation
measures using the comitology procedure. The Commission is
to be assisted by the communications committee. The frame-
work directive also establishes a high-level communications
group, acting independently and with advisory status.

3. General comments

The evolution of the information technology (IT) and
3.1.
telecommunications sectors in Europe over the last decade has
been most impressive. Customers in Europe do not yet always
have the lowest tariffs, but in most Member States they can
choose services that are appropriate to their needs to an extent
In most
that
countries tariffs are decreasing fast.

is barely matched elsewhere in the world.

Basically this is due to technology shifts, but these oppor-
tunities could not have been utilised for the benefit of end-
users if EU telecommunications regulation had not opened the
way to competition by getting rid of entrenched monopolies
and other special rights.

Although it is clear that a full transition from monopoly
provision to competitive supply is not complete in all Member
States and on all relevant markets, it is nonetheless becoming
increasingly obvious that the regulatory framework of the
1990´ s is not flexible enough for the current rapid market
changes — changes that involve both the improvement of
existing products and services and the creation of new ones;
partly due to the convergence of technologies.

3.2.
In its opinion on the Commission’s Communication
on the 1999 Communications Review (1), the Economic and

(1) Communication from the Commission to the Council, the Euro-
pean Parliament, the Economic and Social Committee and the
Committee of the Regions — Towards a new framework for
electronic communications infrastructure and associated services
— The 1999 Communications Review (COM(1999) 539 final);
ESC opinion in OJ C 204, 18.7.2000. Communication from the
Commission — The results of the public consultation on the
1999 Communications Review and Orientations for the new
Regulatory Framework (COM(2000) 239 final); ESC opinion in
OJ C 14, 16.1.2001.

Social Committee expressed general support for the proposed
new regulatory framework for electronic communications.

3.2.1.

The Committee

‘particularly welcomed the commitment to base the proposed
regulatory evolution on:

— the promotion and sustaining of an open and competitive

European market;

— the consolidation of the internal market;

— greater reliance on competition law and simplification
and reduction of sector-specific legislation accompanied
by recommendations, guidelines and interbranch agree-
ments. Besides the need to regulate access to scarce
resources, sector-specific regulation should be employed
only in areas where sufficient competition is lacking and
only during a transitional period;

— technology neutrality,

including no Internet-specific
measures. Technologically neutral regulation should not,
however, lead to stronger regulation of new services, but
rather to the roll back of existing specific regulation of
traditional services.’

The Committee underlined ‘the importance of keep-
3.2.2.
ing these principles at the forefront, as the Commission further
developed its detailed positions, and to ensure that
the
implementation of the proposals does not proceed at the pace
of the slowest Member State but instead that sector-specific
regulation is replaced by general competition legislation on
the various markets (geographical and services), as competition
arises. It was stressed that this could become more of a
problem with the enlargement of
the
enlargement can also be expected to make it necessary to
provide appropriate support to some new entrants’.

the EU and that

3.2.3.
The Committee also laid stress on ‘the global charac-
ter of the converging communication markets. The proposed
European regulatory framework must not be seen in isolation.
It is essential that the competitiveness of European players is
maintained and allowed to thrive. There can be a risk that
regional regulation could lead to the European regional
market becoming isolated from the global market, especially if
extensive regulation is allowed to curb the operation of market
forces. The Committee therefore urged the Commission to
take into account the impact of any measures on the global
competitiveness of European industry’.

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3.3.
The ESC welcomes the fact that the Commission has
maintained the general outline of the proposed regulatory
framework after the extensive public consultation on the 1999
Communications Review.

monopoly regime. That also seems to be in line with the
Commission’s arguments
in the proposed directive, as
expressed in recital (20). In the Committee’s view, this should
have been expressed more explicitly in the directive itself.

3.3.1.
The Committee considers the principle of increas-
ingly flexible regulation with a limited number of public
safeguards, which underpins the Directives as proposed at
present, to be both appropriate and timely. It is also pleased to
see that the new framework aims at predictability and greater
consistency with horizontal EU legislation on competition and
consumer protection.

The Committee wishes to stress the importance of a
3.4.
speedy realignment to horizontal principles. For institutional
and practical reasons, it would not seem possible to shorter
the timetable proposed by the Commission further. However,
in relation to actual technology and market developments, it
could prove to be too slow, and could blunt the competitive
edge which the European electronic communications sector
displays today.

3.5.
The Committee supports both the Commission’s aim
to introduce a common regulatory framework for electronic
communications networks and communications services in
the EU, and the main thrust of the proposed regulatory
framework. However, it is not able to endorse certain details
of some of the proposals.

3.6.
A number of points are worded in a way which can be
considered contradictory and not fully in line with the general
guidelines. The Committee deals with these points in its
opinions on the respective proposals for directives.

4.

The framework directive (FD)

4.1.
The ESC welcomes the fact that the FD aims to address
only cases where effective competition does not operate
effectively on a relevant market. It is also pleased that a
relevant market is to be defined in the same way as in EU
competition rules. There is long experience of this practice and
the outcome can be predicted with reasonable certainty.

4.2. Whether the outcome of the relevant market analysis
motivates ex-ante, rather than the traditional ex-post, compe-
tition regulation is a matter of debate within Member States.
Many take the view that ex-ante regulation should only be
applied to companies deriving their dominant position on the
market by virtue of their financing of investment within a

4.3.
It could also be argued that the reverse procedure for
regulatory intervention — i.e. temporarily or permanently
suspending the application of legislation (‘forbearance’) when
its objectives have been achieved — should be spelled out
more clearly. To both end-users and to providers it is at least
equally important that the regulation should cease to apply
once its objectives have been achieved. Implementation must
therefore provide scope for stability, so that the regulation is
not immediately reverted to as soon as a — perhaps temporary
— deviation from the declared objectives is noted.

It is proposed that existing obligations for undertakings
4.4.
with significant market power (SMP) should be transposed
into a new regime. In the Committee’s view it must then be
clearly stated that existing legislation should only be applied
until such time as the first analysis of relevant markets is
carried out in accordance with the new directive. This should
have been clearly stated in the proposed Framework Directive.

4.5.
Predictability is a key issue. Reliance on competition
rules tends to promote predictability, but experience so far
shows that application of a common regulatory framework
still can lead to very different interpretations in Member
States, as demonstrated by SMP notification on the mobile
communications markets. While telephony was mostly a
domestic service, new IT services are rapidly going cross-
border, requiring more harmonised interpretation than the
present regime has provided.

The ESC therefore supports the principle of listing
4.6.
acceptable NRA interventions and the mandatory notification
of proposed regulatory action in Member States according to
Article 6.
It could however be questioned whether full
consultation of all Member States is compatible in practice
with the necessary speed of IT regulation. The problem could
be significantly exacerbated by EU enlargement, which will
accentuate the discrepancies between the various Member
States’ communications environments. Further thought should
therefore be given as to whether the normal procedure for
harmonising regulatory measures can be framed in such a way
that a given measure only has to be notified to the Commission.

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4.7.
The Committee is also concerned that for instance,
under Article 14, the Commission is formally obliged to
it is necessary that
consult with NRAs only. In its view,
consumers and industry too should be consulted in a manner
compatible with the short time limits needed. The Committee
is concerned about Article 14(6) of the Directive, under which
any decision taken by a national regulatory authority can be
amended or annulled by the Commission.

4.10.1.
Technical neutrality must not be interpreted as the
carrying forward of regulatory measures devised for traditional
services into new areas. The Committee believes that the
proposed interconnection regulation provides an example of
how this can lead to error.

4.8.
Under the framework directive the Commission has
the right — at least temporarily — to prevent the implemen-
tation of measures decided by the national authorities on the
strength of the articles mentioned above, and with regard to
radio-spectrum administration. This encroachment on Mem-
ber State discretionary powers is motivated by the important
role market definitions and interconnection play in the smooth
In accordance with the
operation of
subsidiarity principle,
is the lowest
possible level for these decisions. The Article must, of course,
be implemented fairly, and in accordance with the pro-
portionality principle. The limitation must not be extended to
regulatory measures other than those mentioned in the Article.

the Community level

the single market.

If

the

allocation of

4.8.1.
spectrum licenses under
Article 8(6) is to be governed by the Article 6 procedure, a
more precise definition is needed of which part of
this
procedure has such cross-border implications that it is not
handled better domestically. Most frequency licenses would
seem to be for domestic use and not to have major implications
for the EU in general. A tried and tested international procedure
based on the ITU radio regulations exists to provide a practical
solution to any disturbance problems in border areas. Hence
the Article 6 procedure should be limited to key areas for
IT competition as a whole, such as GSM and UMTS.

4.9.
The wording of Article 4 on the right of appeal against
an NRA decision seems not to be perfectly clear in one
important respect. Article 4(1) states, inter alia, that pending
the outcome of an appeal,
‘the decision of the national
regulatory authority shall stand’. It should be made clear that
this must not affect a stakeholder’s ability to get enforcement
of an NRA measure postponed while the proceedings are in
progress — if such an inhibition procedure is available in a
Member State.

The Committee finds the Commission’s ambition of
4.10.
technological neutrality commendable, but wishes to point
out that it is not simple to achieve in the short term.

4.10.2.
Interconnection regulations take their starting point
in telephony, which is a standardised transmission service with
standardised user terminals. In this case interconnection is
easily defined; everyone must have access to a telephone
service, regardless of what network they are connected to.
With the development of new telephony-based services this
means that interconnection covers e.g. fax services.

4.10.3.
Internet Protocol (IP) based services, especially the
Internet itself, are in no way uniform, narrowly defined and
closed to customer choice to the same extent as telephony.
Depending on their mode of use customers will choose
different access to IP services. A customer can have a UMTS
telephone or a PC to communicate on the net. He/she can be
connected up to the telephone network by modem, or have a
broadband connection with a 10-20 times higher capacity. To
pay for expensive broadband, for example, is only justifiable if
customers are also prepared to pay for the downloading of
services like moving pictures. A tenth of the necessary capacity
for moving pictures will accommodate ‘normal surfing’.

4.10.4.
In the IP world, telephony networks therefore do
not all have that basic similarity which underpins the tra-
ditional notion of interconnection. It is not in fact possible for
all electronic communications networks to carry all IP services,
since there can be considerable differences in capacity. Net-
works with lower capacity would quite simply crash if
interconnection was mandatory. The alternative would be
costly upgrading.

4.10.5.
The Committee is of the opinion that a lack of
interconnection rights would hardly be a problem. In most
Member States, different companies are currently vying to roll
out their own broadband infrastructure. They therefore have
strong economic reasons to be transparent, so as to attract as
much traffic as possible — and transparency is also an Internet-
user requirement. Rather than stemming the flow of electronic
information, there would seem to be more of a risk of some
new infrastructures engaging in unfair competition by relying
on remaining specific rights in areas such as electricity
distribution and physical communication.

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4.10.6.
Clearly, new rapidly expanding markets such as
that for broadband services can at times betray real competitive
shortcomings which, from a narrow, formal, statistical stand-
point might seem to warrant SMP status. The Committee
believes that if this argument were then used to defend a cost-
based fee structure, it could be a disincentive to investment

and reduce competitiveness in the long term. It is important
to remember that these new market climates differ radically
from the traditional backdrop for ‘interconnection’ — i.e.
conventional fixed telephony — where most of the investment
in the network has already been made, and the purpose of
regulation is the optimum exploitation of historical assets.

Brussels, 24 January 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on the ‘Proposal for a Decision of the European
Parliament and of the Council on a regulatory framework for radio spectrum policy in the
European Community’

(2001/C 123/14)

On 4 October 2000 the Council decided to consult the Economic and Social Committee, under Article
95 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 9 January 2001. The rapporteur
was Mr Herna´ndez Bataller.

At its 378th plenary session of 24 and 25 January 2001 (meeting of 24 January 2001), the Economic
and Social Committee adopted the following opinion by 80 votes to one with one abstention.

1.

Introduction

— strategic planning of the use of radio spectrum;

The Community institutions have concerned them-
1.1.
selves with this question for a number of reasons, including
the intensive use of radio spectrum, the complex decision-
making process for its allocation and assignment, huge global
expansion generated by the technological convergence of
various services, and economic trends, as well as the need to
apply internal market principles and protect Community
interests at world level.

— harmonisation of radio spectrum allocation;

— radio spectrum assignment and licensing;

— radio equipment and standards; and

1.2.
The Green Paper on Radio Spectrum Policy in the
context of European Community policies such as telecom-
munications, broadcasting, transport, and R&D (1) addressed
five key issues:

(1) COM(1998) 596 final; ESC opinion in OJ C 169, 16.6.1999.

— the institutional framework for radio spectrum coordi-

nation.

1.3.
The Green Paper was welcomed by the Economic and
Social Committee, which considered radio spectrum to be the
backbone for a very wide range of important industrial sectors,
future
and argued that in addition to technical grounds,
decisions needed to reflect the economic, social and political
importance of spectrum usage.