Keywords
Summary

Keywords

1. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation

(European Parliament and Council Regulation No 2887/2000, Art. 3(3))

2. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation – Costs

(European Parliament and Council Regulation No 2887/2000, Art. 3(3))

3. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation

(European Parliament and Council Regulation No 2887/2000, Art. 3(3))

4. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation

(European Parliament and Council Regulation No 2887/2000, Art. 4(2)(b))

5. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation

(European Parliament and Council Regulation No 2887/2000, Arts 1(4), and 3(3))

6. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation – Monitoring by the national regulatory authorities

(European Parliament and Council Regulation No 2887/2000, Arts 3(3) and 4(1) and (2))

7. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation – Application

(European Parliament and Council Regulation No 2887/2000, Arts 3(3) and 4(1) and 3))

8. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation – Application

(European Parliament and Council Regulation No 2887/2000, Arts 3(3) and 4(1); Council Directive 90/387, Art. 5a(3))

9. Approximation of laws – Telecommunications sector – Unbundled access to the local loop – Regulation No 2887/2000 – Principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation – Monitoring by the national regulatory authorities

(European Parliament and Council Regulation No 2887/2000, Arts 3(3) and 4)

Summary

1. The principle that rates for unbundled access to the local loop are to be set on the basis of cost orientation, laid down in Article 3(3) of Regulation No 2887/2000 on unbundled access to the local loop, does not follow the rules of an open competitive market driven by the rules of supply and demand, in the context of which rates for access to the local loop are to be fixed freely on the basis of free competition. On the other hand, in the course of the gradual opening of the telecommunications market to competition, this principle requires notified operators to set the rates for access to the local loop in accordance with the costs incurred in putting it in place, while deriving a reasonable return from the setting of those rates in order to ensure the long‑term development and upgrading of existing telecommunications infrastructures.

(see paras 60-61, 64, 69)

2. The interest on the capital invested and the depreciation of the fixed assets deployed for the initial implementation of the local loop are among the costs to be taken into account in accordance with the principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation, laid down in Article 3(3) of Regulation No 2887/2000 on unbundled access to the local loop.

In fixing the tariffs for unbundled access to the local loop, account must be taken of the costs which the notified operator had to incur for the investments made in putting its local infrastructures in place. In that regard, the interest on the capital invested represents the revenue which would have been earned on that capital had it not been invested in the local loop while the interest on loans represents the cost of the debt incurred in connection with investments made in the initial implementation of the local loop. The depreciation of the fixed assets deployed for the construction of the local network, the taking into account of which makes it possible to catch the loss in real value of those assets, relates to the investments made by the notified operator in the initial implementation of the local loop and, consequently, falls within the operating costs which need to be taken into account in accordance with the pricing principle laid down in Article 3(3) of Regulation No 2887/2000.

(see paras 72, 77-80, 84, operative part 1)

3. When applying the principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation, laid down in Article 3(3) of Regulation No 2887/2000 on unbundled access to the local loop, in order to determine the calculation basis of the costs of the notified operator, the national regulatory authorities have to take account of actual costs, namely costs already paid by the notified operator and forward‑looking costs, the latter being based, where relevant, on an estimation of the costs of replacing the network or certain parts thereof.

In that regard, the calculation basis of costs cannot be based exclusively either on the costs which represent the construction ex nihilo by an operator, other than the notified operator, of a new local access infrastructure for the provision of equivalent telecommunications services (‘the current cost’) or on the costs actually incurred by the notified operator and taking account of depreciation already made (‘the historic cost’).

The taking into account of only one or other of those bases is likely to call into question the aim of that regulation, namely to intensify competition through the setting of harmonised conditions for unbundled access to the local loop, in order to foster the competitive provision of a wide range of electronic communications services.

First, the possibility for the notified operator to base the calculation basis of costs exclusively on the current costs of its investments enables it to choose those which could enable it to set the rates as high as possible and not to take account of pricing elements which would favour beneficiaries, thereby circumventing the rules concerning the setting of rates for unbundled access to the local loop on the basis of cost-orientation.

Secondly, if the cost calculation basis were based exclusively on historic costs, which, depending of the age of the network, could potentially lead to account being taken of an almost entirely depreciated network and thus result in a very low tariff, the notified operator would be faced with unjustified disadvantages which is precisely what Regulation No 2887/2000 seeks to prevent.

(see paras 86, 98, 104, 108-109, 119, operative part 2)

4. Pursuant to Article 4(2)(b) of Regulation No 2887/2000 on unbundled access to the local loop, the national regulatory authority may request notified operators to supply relevant information on the documents justifying the costs taken into account when applying the principle that rates for unbundled access to the local loop are to be set on the basis of cost‑orientation. Since Community law does not contain any provision concerning the accounting documents to be checked, it is the task of the national regulatory authorities alone, in accordance with the law applicable, to examine whether, for the purposes of cost accounting, the documents produced are the most appropriate ones.

In the absence of evidence to establish to the required legal standard that the Community legislature opted for either a bottom-up or a top-down accounting mode 1, it is for the national regulatory authorities, on the basis of the applicable law, to choose the cost accounting method which they deem most appropriate in a specific case. Accordingly, when national regulatory authorities are applying the principle that rates for unbundled access to the local loop are to be set on the basis of cost‑orientation, Community law does not preclude them, in the absence of complete and comprehensible accounting documents, from determining the costs on the basis of an analytical bottom-up or top‑down cost model.

(see paras 127, 131-132, 134, operative parts 3-4)

5. The possibility granted to the Member States, in Article 1(4) of Regulation No 2887/2000 on unbundled access to the local loop, to adopt detailed national measures cannot render inapplicable the principle that rates for unbundled access to the local loop are to be set on the basis of cost‑orientation as laid down in Article 3(3) of that regulation. That possibility of maintaining in force or introducing measures containing more detailed provisions authorises the Member States to lay down provisions of national law giving concrete expression to the principle that rates for access to the local loop are to be set on the basis of cost‑orientation, in the context of the discretion which the Member States enjoy in the field, but, in any event, that discretion cannot derogate from the principles and limits laid down in Article 1(4) of the regulation.

(see paras 143, 146, 150, operative part 5)

6. It is apparent from Article 4(1) and (2) of Regulation No 2887/2000 on unbundled access to the local loop that, when examining the rates of notified operators for the provision of unbundled access to their local loop in light of the pricing principle laid down in Article 3(3) of that regulation, the national regulatory authorities have a broad discretion concerning the assessment of the various aspects of those tariffs, including the discretion to change prices, and thus the proposed tariffs. That broad discretion also relates to the costs incurred by notified operators, such as interest on invested capital and depreciation of fixed assets, the calculation basis of those costs and the cost accounting models used to prove them.

(see para. 159, operative part 6)

7. It is a matter solely for the Member States, within the context of their procedural autonomy, to determine, in accordance with the principles of equivalence and effectiveness of judicial protection, the competent court, the nature of the dispute and, consequently, the detailed rules of judicial review with respect to decisions of the national regulatory authorities concerning the authorisation of rates of notified operators for unbundled access to their local loop. In those circumstances, the national courts must ensure that the obligations resulting from Regulation No 2887/2000 on unbundled access to the local loop regarding unbundled access to the local loop by means of procedures consistent with the pricing principle laid down in Article 3(3) of that regulation are in fact complied with in transparent, fair and non-discriminatory conditions.

(see para. 170, operative part 7)

8. Article 4(1) of Regulation No 2887/2000 on unbundled access to the local loop, read in conjunction with Article 5a(3) of Council Directive 90/387 on the establishment of the internal market for telecommunications services through the implementation of open network provision, as amended by Directive 97/51, requires that the national courts interpret and apply the domestic rules of procedure governing the bringing of appeals in such a way that a decision of the national regulatory authority concerning the authorisation of rates for unbundled access to the local loop may be challenged before the courts, not only by the undertaking to which such a decision is addressed but also by beneficiaries, within the meaning of that regulation, whose rights are potentially affected by it.

(see para. 178, operative part 8)

9. Regulation No 2887/2000 on unbundled access to the local loop must be interpreted as meaning that, during the procedure supervising the pricing for unbundled access to the local loop conducted by a national regulatory authority pursuant to Article 4 of that regulation, it is for the notified operator to provide the evidence that its rates respect the principle that rates are to be set on the basis of cost‑orientation. On the other hand, it is for the Member States to allocate the burden of proof between the national regulatory authority which made the decision to authorise the rates of the notified operator and the beneficiary challenging that decision. It is also for the Member States to establish, in accordance with their rules of procedure and the Community principles of effectiveness and equivalence of judicial protection, the rules on the allocation of that burden of proof when a decision of the national regulatory authority authorising the rates of a notified operator for unbundled access to its local loop is challenged before the courts.

(see para. 192, operative part 9)