Fifth report on the implementation of the telecommunications regulatory package

1) OBJECTIVE

To outline the current state of implementation of the regulatory package in the telecommunications sector.

To detect any shortcomings in the application of the Community framework at national level and any lacunae remaining. To draw conclusions so as to present proposals for a new regulatory framework.

2) COMMUNITY MEASURE

Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions on the Fifth Report on the Implementation of the Telecommunications Regulatory Package.

3) CONTENTS

In 1993 the European Community and its Member States gave a commitment, in accordance with the Treaty on European Union, to liberalise the telecommunications services sector in Europe on 1 January 1998. This was a decision on liberalisation anticipating the agreement on the opening up of markets worldwide under the General Agreement on Trade in Services (GATS). The necessary legislative measures of the Community consisted essentially of a number of directives intended to create a single market for telecommunications services in Europe.

The Commission compiled a number of reports, even before liberalisation (May 1997) to monitor the telecommunications sector. Moreover, the directives making up the regulatory framework of the sector provide that reports on the functioning of the directives must be submitted to the Council and the European Parliament.

This report outlines the state of implementation of current directives. This study will enable the Commission to identify any lacunae in the present system and formulate proposals for a new regulatory framework which would be better adapted to market developments and technical progress and would offer a better quality/price ratio.

The report:

• assesses the extent to which the principles laid down in the harmonisation directives have been transposed in national law;
• analyses the way in which the transposed national provisions apply to these principles in practice;
• describes the current situation on the Member States' communications services markets.

Transposition of liberalisation and harmonisation directives

Most Member States have transposed these measures while some have only transposed a part of the directives and others recently served notice of transposition measures, still being studied by the Commission.

However, in this report the Commission notes that there have been improvements in transposition of harmonisation directives. The Licencing Directive has been substantially transposed in four more States and the Interconnection Directive in three Member States. Furthermore, 13 Member States have transposed the Numbering Directive either fully or partially and 11 have transposed the Data Protection Directive.

With regard to the liberalisation directives, Portugal has substantially transposed Directive 90/388/EEC. It should be added that Portugal had been granted an additional implementation period under Decision 97/310/EC.

Analysis of practical application of the liberalisation and harmonisation directives

The Member States have efficient frameworks for licensing, interconnection, tariffs, numbering and frequencies. However, a number of problems remain to be solved regarding the practical application of the regulatory package as a whole and the limits to be dealt with.

National Regulatory Authorities (NRAs)

The NRAs play an important role in ensuring the consistent application of the EC regulatory framework through their input to the ONP and Licensing Committees, their participation in the High Level Committee of National Administrations and Regulatory Authorities and, in the case of regulatory bodies separate from national ministries, their coordination in the Independent Regulators Group.

The tasks of the NRAs are sometimes made difficult by the lack of human resources and their limited powers. Consequently, procedures are considered lengthy and rigid.

Licensing

The pan-European operators, including those using satellite-based networks, stress the considerable differences there are as regards the time limits for licensing, periods of validity, charges, and the classification of operators. This situation runs counter to the principle laid down in the directives that licensing regimes should be light, favouring general authorisations over individual licences.

Most operators have to contend with very heavy regimes which, for instance, impose conditions for licensing that go beyond those laid down in the Licensing Directive. Such regimes are costly, slow and potentially discriminatory. The lighter regimes already established in a number of Member States appear to be very efficient and compatible with a liberalised environment.

Interconnection

The terms for the provision of interconnection, the physical linking of (fixed and mobile) networks and services to enable users of one network to communicate with those of another are of crucial importance to the emergence of a competitive European telecommunications market.

The main problem facing new entrants in obtaining interconnection is reluctance on the part of the regulatory authorities (NRAs) or their inability to take effective action. As a result, new entrants are faced with reference interconnection offers (RIOs) that are published late, delays in negotiating terms, etc.

A great weakness of the existing regulatory framework is the cost-accounting systems of existing operators which must serve as the basis of charging for interconnection. In a competitive environment the level of tariffs is of fundamental importance. In some Member States, the high level of interconnection tariffs combined with low prices for users form a barrier to the entry of new operators on the market.

Universal service and user/consumer protection

The interests of users and consumers are at the heart of the liberalisation process. The EU's regulatory package requires universal service to allow Member States to ensure that a minimum set of services, of specified quality and at an affordable price, is offered to all users.

With regard to the financing of universal service through funding or otherwise, only France has established such a mechanism.

New entrants consider this form of financing an additional income tax and consequently as an obstacle to entry. In their view, universal service is a social matter which ought to be financed from the general budget of the State.

Consumers are affected by the absence of transparency in the tariff offerings of new entrants, the slow procedures for complaints and repairs, or unfair clauses in contracts. The Member States should apply the existing framework more efficiently while making more use of the existing provisions of Community law on consumer protection.

Consumers are also concerned about the effects of the cost of leased lines in Europe. The failure both of competition and of regulators to bring down what are perceived to be patently non-cost oriented tariffs works to the detriment of the provision of Internet and other services in Europe.

The Member States should also make use of the existing provisions to make consumers aware of the existence of the European emergency number (112) placed at their disposal.

Frequency

There are very few problems raised in connection with frequency management in the Member States in the context of directives on global mobile communication (GSM), digital European cordless telecommunication, and the European radio messaging system.

In the great majority of Member States it has been decided to phase out the analog system operating in the frequency bands reserved for GSM and some have already completed this process.

As regards the grant of licences for third-generation mobiles, Finland has already granted licences (March 1999) and other Member States will follow suit in the course of 2000.

Better coordination with the application of the rules on competition

Liberalisation of the market has produced significant tariff reductions leading to convergence of call charges and actual costs. International tariffs in particular have been substantially reduced to the benefit of residential and business users. However, it is clear that within the existing regulatory framework there are still competition problems in local access in all the Member States and there remain a number of obstacles to the development of transnational services and infrastructures. A survey was initiated in July 1999 to enable the Commission to determine whether the prices and practices recorded are in violation of the Commmunity rules on competition.

Numbering

Considerable progress has been made regarding number portability and carrier preselection. These services are available in several Member States while others have indicated that they will be in place by the deadline fixed (1 January 2000).

The introduction of these two services has made it necessary to adopt administrative provisions and to reconfigure highly complex and extremely costly networks. In a number of Member States there is as yet no clarity about the way in which costs will be shared between users and operators.

Rights of way

In most cases, rights of passage are held by local or regional authorities rather than central government. Operators are thus subject to constraints extraneous to telecommunications and the Member States are obliged to find imaginative solutions within the existing regulatory framework at national and local level, in particular as regards colocation and sharing of sites.

Status of the EU telecommunications services market

The liberalisation of the telecommunications market has given a strong impetus in all market sectors. There has been a substantial increase in the number of market entries, a doubling of the number of interconnection agreements for call termination on fixed networks and a significant drop in prices of regional and long-distance calls. On the other hand, prices of local calls remain stable.

With regard to leased lines, a comparison of the prices charged by current operators in the Member States shows that they tend to vary for identical services.

Last updated: 30.04.2007