Opinion of the Committee of the Regions on:

- 'the draft Commission Directive amending Directive 90/388/EEC with regard to mobile and personal communications`, and - 'the draft Commission Directive amending Directive 90/388/EEC regarding the implementation of full competition in telecommunications markets`(96/C 129/03)

The Bureau of the Committee of the Regions decided to draw up an overall Opinion on the above-mentioned documents.

Sub-Commission 3 adopted the Opinion unanimously on 14 December 1995, under Rule 9(3) of the Rules of Procedure (urgency procedure). The Rapporteur was Mr Ricca.

At its 11th Plenary Session (meeting of 17 January 1996), the Committee of the Regions adopted the following Opinion without debate.

REFERENCE DOCUMENTS

- The Treaty establishing the European Community, and in particular Article 90(3) thereof;

- The Green Paper on a common approach in the field of mobile and personal communications in the European Union, COM(94) 145 of 27. 4. 1994;

- The Bangemann Report on Europe and the global information society;

- The communication from the Commission of the European Community to the Council and the European Parliament on the consultation on the Green Paper, COM(94) 492 of 23. 11. 1994;

- The communication from the Commission of the European Community to the Council and the European Parliament on the Consultation on the Green Paper on the liberalization of telecommunications infrastructure and cable television networks, COM(95) 158 of 3. 5. 1995;

- The Council Resolution on new developments in mobile and personal communications within the European Union;

- The Opinion of the Committee of the Regions 'Towards the personal communications environment: Green Paper on a common approach in the field of mobile and personal communications in the European Union`, COR 179/94 of 28. 9. 1994.

GENERAL COMMENTS

1. As has been well shown in the White Paper on growth, competitiveness and employment, information and telecommunication technologies are radically altering many aspects of economic and social life.

2. It can be said that we are living through a period of change, with the passage from the 'industrial society` to the 'information and telecommunication society`, and seeing the beginnings of a direct link between the process of technological innovation and economic and social organization.

3. In employment terms too, we are seeing a progressive reduction in the number of people employed in traditional activities, while new employment is increasingly being generated by the new activities that have sprung from the growth of the information society.

4. The Bangemann report on Europe and the global information society provided Europe with a decisive push towards the new frontier of the information society and clearly indicated the steps to be taken and the importance of advancing towards this new frontier, an essential objective if Europe is to benefit from increased growth while maintaining competitiveness on world markets.

5. In this context, on 27th April 1994, the Commission adopted the Green Paper on mobile and personal communications, a field that in the meantime has moved to the centre of the debate on the information society, in so far as it is considered a necessary element for the development of the Information Society.

6. The Committee of the Regions has already issued an Opinion on the Green Paper, which is here referred to in full.

7. The Commission opened extensive consultations on the Green Paper, sending a communication dated 23. 11. 1994 with proposals for the further development of mobile and personal communications in the European Union, and a communication dated 3. 9. 1995 on the liberalization of telecommunications infrastructure and cable television networks, to the European Parliament and the Council.

8. The documents cited above highlight the fact that in recent years mobile communications have become a vital growth sector in the European Union. There are currently over 11 million mobile cellular radiotelephone users in Europe, 35 % more than when the Green Paper was drawn up. There are also over 8 million users of other forms of mobile communications and it is forecast that there will be almost 40 million users by the year 2000, a figure that could rise to 80 million by 2010, with the steady development of personal communications services (PCS).

9. With the rapid growth and expansion of the information society, telecommunications infrastructures and networks are set to become indispensable channels for the passage of a wide range of communications.

10. The consultations enabled the Commission to propose practical steps for framing a package of proposals for the sector, geared to a definition of overall technological development and an appropriate regulatory framework; this was also singled out in the conclusions of the Brussels G7 meeting of February 1994 as one of the eight basic principles for the creation of a global information society.

11. The further action required to develop the basic technological and regulatory framework seeks balanced attainment of full liberalization of telecommunications infrastructures and services by 1998, within a regime of fair competition, eliminating obstacles of persisting national communications monopolies, and establishing a clear and predictable regulatory context, so that key investments can be made and long-term economic decisions taken.

12. This will create conditions conducive to the competitive dynamics that 'protect` competition and thus further the development of the economy.

13. The two proposed amendments to Directive 90/388/EEC on which the Committee of the Regions has been asked to issue an Opinion fall within this sphere.

A. Draft Commission Directive amending Directive 90/388/EEC with regard to mobile and personal communications

14. The document defines the amendments to be made to directive 90/388/EEC with particular reference:

14.1. To definitions, extending the definition of telecommunications services to include mobile services in the scope of the Directive.

14.2. To the granting of licences and the abolition of exclusive or special rights in this sector. This is one of the principal objectives for the full application of Community regulations and the removal of current distortions in competition.

In many Member States the number of licences granted is still limited and based on discretional criteria, or remains subject to technical restrictions such as prohibition of the use of infrastructures that differ from those provided by the telecommunications company. Certain procedures for the granting of licences with set durations must be instituted, taking due account of the need to promote investment from new competitors in the sectors in question.

14.3. To access to frequencies.

In June 1991, the Council allocated frequency bands for the coordinated introduction, in the Community, of a digital system of cordless telecommunications (DECT).

Some Member States are preventing the use of these frequencies for such services, thus reinforcing the position of companies who already enjoyed a dominant position, which had the effect of delaying the growth of personal communications services and thus restricting technical progress, at the expense of the consumer.

14.4. To the protection of competition so that telecommunications companies cannot abuse their dominant positions in terms of network infrastructure (resulting from the exclusive rights conferred on them) to extend this dominance to the market for new mobile telecommunications services.

14.5. To the definition of procedures for the allocation of radio frequencies, which constitute a crucial and limited resource, based on criteria of objectivity, transparency and non-discrimination.

Possible fees for the use of frequencies must be proportional to, and levied on the basis of, the number of channels actually used.

14.6. To the abolition of restrictions on the provision and use of infrastructures which entail costs that have a significant effect on the commercial viability and cost structure of mobile operators.

It is only possible to prevent potential abuses of dominant positions if the Member States ensure that interconnection of public mobile communications systems is made possible at specific interfaces with the public telecommunications network, and that the interconnection conditions are based on objective criteria, are transparent and non-discriminatory, and are published in advance.

14.7. To the setting of a maximum additional transitional period for Member States whose networks are less well developed or very small.

OPINION OF THE COMMITTEE OF THE REGIONS

15. The COR congratulates the Commission on its proposed amendments to Directive 90/388/EEC which are designed to implement the indications of the Green Paper and the guidelines that emerged from subsequent consultations aimed at establishing a European regulatory framework for telecommunications to accompany the full liberalization of the sector.

16. The COR believes that the proposals to amend Directive 90/388/EEC represent a first fundamental step in preparations for full liberalization of the telecommunications markets in the European Union that will take effect as of 1 January 1998 and hopes that the proposals will be approved forthwith.

17. With regard to the detailed Articles of the proposal, the COR would make following comments.

17.1. Article 1(2), new Article 3A, last paragraph, the COR suggests the extension of the ban on further licences not only to Member States who are granted an additional transitional period to abolish restrictions on infrastructure, but also in all the cases in which telecommunications companies hold exclusive rights on network infrastructure; this was in fact provided for in an earlier draft of the Directive.

17.2. Article 2, paragraph 1, the introduction into other language versions of the proposal of the phrase 'as soon as possible`, which is to be found in the English version, thus providing for three periods for the extension of GSM licences to the DCS 1800 System:

- as soon as possible;

- following the adoption of a decision by the European Radiocommunications Committee;

- or, in any event, before 1. 1. 1998.

17.3. Article 2, paragraph 1, the elimination, with reference to the phrase 'wherever justified` of any uncertainty or margin for discretion with regard to cases that justify the extension of the licence for GSM services to the DCS 1800.

B. Draft Commission Directive amending Directive 90/388/EEC regarding the implementation of full competition in telecommunications markets

18. The proposal, which has seven Articles, defines the amendments to be made to Directive 90/388/EEC with particular reference

18.1. To the inclusion of new definitions and to the establishment of a regulatory framework that will resolve the conflict of interests between telecommunications organisms who provide infrastructure and services, thus opening up the sector to true competition.

18.2. To the abolition of special and exclusive rights and to the adoption of the measures required for each firm to be guaranteed the right to provide telecommunications services or networks.

18.3. With regard to authorizations for voice telephony and the public telecommunications networks, to the debarring of measures designed to delay the access of new competitors to the voice telephony and public telecommunications networks markets, thus strengthening the dominant position of the national operator.

To this end the Member States are to be obliged to notify the Commission of any licensing or declaration requirements before they are introduced, in order to allow the Commission to assess their compatibility with the Treaty and in particular the proportionality of the obligations imposed.

18.4. To the principle of proportionality, whereby the number of licences may only be limited where this is unavoidable to ensure observance of essential requirements concerning the use of scarce resources and the existence of physical limitations imposed by spectrum shortages for the frequencies requested.

18.5. With regard to numbering, to the creation of conditions that will allow newly authorized voice telephony providers to allocate adequate numbers to their subscribers, thus enabling them to compete effectively with existing telecommunications companies.

18.6. To conditions for interconnection, which telecommunications companies must guarantee to the other firms authorized to provide services and networks on the basis of non-discrimination, proportionality and transparency and in accordance with objective criteria.

To this end, and in order to allow interconnection obligations to be monitored under competition law, cost elements that relate to interconnection prices should be clearly defined.

18.7. To the abolition of all exclusive rights relating to the provision of telephone directory services.

18.8. To the definition of the national regimes needed to distribute the net cost of universal service obligations, in order to guarantee that the method of distribution between the interested parties is based on criteria of objectivity and non-discrimination and complies with the principle of proportionality.

18.9. To the granting, to newly authorized operators, of the same opportunities of access to public and private property when installing their networks.

18.10. To the necessity of keeping separate financial records in order to distinguish between costs and revenues relating to activities associated with essential services provided under special and/or exclusive rights and those provided under competitive conditions.

18.11. To the elimination of all exclusive rights on the provision of network infrastructure for services other than voice telephony as of 1. 1. 1996.

18.12. To the necessity of not delaying the adoption of new specifications for the type approval of terminal equipment that is to be linked to new telecommunications networks, in order not to delay access to the market.

OPINION OF THE COMMITTEE OF THE REGIONS

19. The COR welcomes the Commission's proposal for amending Directive 90/388/EEC, and refers to the indications already made in points 15 and 16 of the present document.

CONCLUSIONS

20. The Committee of the Regions approves the two proposals made by the Commission and underlines the urgent need to finalize the future Community regulatory framework for the telecommunications sector by concluding the other complementary measures required for this, with a view to the achievement of fair, efficient and dynamic competition within the time limits set for the liberalization of the telecommunications market.

21. The COR proposes inclusion in the text of the Directive of rules to prohibit discrimination between public telecommunications network organisations with regard to the granting of public rights of 'passage` for 'provision` of these networks.

22. The COR hopes that the Commission's proposals will be swiftly and definitively approved and that the Member States will implement them fully and without delay.

23. To this end, the Commission is invited to monitor, and acquire from the Member States, all the information required to enable it to confirm that the provisions are being observed.

24. The COR, while endorsing the aim of full liberalization of telecommunications, is aware of the enormous social impact that the creation of the information society will have, and urges the Commission to adopt, in parallel with essential regulatory actions, initiatives that relate to a series of themes touched on in the Green Paper concerning:

- employment trends in the sector;

- the social implications of full liberalization of telecommunications services;

- the interaction between telecommunications policies and European Union policies for related sectors, with particular reference to requirements for personal and consumer data protection;

- the implications of the impact of new technologies on public health.

As already noted in the COR's Opinion of 28 September 1994, on the Green Paper, the European Commission is invited to intensify its research, which has hitherto been inadequate, with particular regard to exposure to electromagnetic radiation and to the role of regional and local authorities, and also with regard to authorizations for installation of aerials and for transmission installations.

Done at Brussels, 17 January 1996.

The Chairman of the Committee of the Regions

Jacques BLANC