A new framework for electronic communications services

1) OBJECTIVE

To review European Union regulation in the telecommunications sector and propose the main elements of a new framework for communications infrastructure and associated services.

2) ACT

Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions of 10 November 1999. Towards a new framework for Electronic Communications infrastructure and associated services - The 1999 Communications Review [COM(1999) 539 final, 10.11.1999 - Not published in the Official Journal].

3) SUMMARY

The liberalisation of Europe's telecommunications market reached its peak on 1 January 1998 with the complete liberalisation of all telecommunications networks and services in virtually all Member States. The developments in technology, innovation in the services being offered, price reductions and improvements in quality brought about by the introduction of competition provided the basis for Europe's transition to the Information Society. The convergence of the telecommunications, broadcasting and IT sectors is reshaping the communications market; in particular the convergence of fixed, mobile, terrestrial and satellite communications, and communication and positioning/location systems. From the point of view of communications infrastructure and related services, convergence makes the traditional separation of regulatory functions between these sectors increasingly inappropriate and calls for a coherent regulatory regime.

In this context, this Communication presents a review of the current regulatory framework for communications and responds to the need for a more horizontal approach to regulation of communications infrastructure revealed in the course of the consultation on convergence. It also takes account of the key ideas in, for example, the consultation on the Radio Spectrum Green Paper, the report on the development of the market for digital television in the European Union and the fifth report on the implementation of the telecommunications regulatory package.

Five principles will underpin the new regulatory framework and govern regulatory action at Community and national level. They are that the future regulation should:

• be based on clearly defined policy objectives,
• be the minimum necessary to meet those objectives (for example by introducing mechanisms to reduce regulation further where policy objectives are achieved by competition),
• further enhance legal certainty in a dynamic market,
• aim to be technologically neutral (not to impose, nor discriminate in favour of the use of a particular type of technology, but ensure that the same service is regulated in an equivalent manner, irrespective of the means by which it is delivered),
• be enforced as closely as possible to the activities being regulated (whether regulation has been agreed globally, regionally or nationally).

Taking into account the five principles, the Commission sees the new regulatory framework structured along the following lines:

• Community sector-specific legislation. This will consist of a Framework Directive identifying general and specific policy objectives, and four specific directives on licensing, access and interconnection, universal service, privacy and data protection. (This represents a substantial simplification of the current framework, reducing the number of legal measures from twenty to six).
• Non-binding accompanying measures.
• Competition rules: greater reliance on the general competition rules of the Treaty, allowing much of the sectoral regulation to be replaced as competition becomes effective.

In parallel, the Directives based on Article 86 of the Treaty will be simplified and codified into one legal measure.

Starting from these general principles, this Communication sets out the Commission's provisional positions on each area of its regulatory policy, and seeks the views of all interested parties on its proposals by 15 February 2000. In the light of the comments received, the Commission will produce proposals to amend the current framework in the first half of 2000.

With regard to binding, sector-specific legislation, the future regulatory framework provides for the elaboration of a new Framework Directive which will, inter alia:

• identify specific policy objectives for Member States,
• guarantee specific consumer rights (for example dispute resolution procedures, emergency call numbers, increased transparency and access to information, etc.),
• ensure an appropriate level of interoperability for communications services and equipment,
• set out the rights, responsibilities, decision making powers and procedures of NRAs (National Regulatory Authorities),
• establish and lay down rules for the new Communications Committee and High Level Communications Group.

The Framework Directive will be accompanied by four specific directives based on Article 95 of the Treaty:

• Directive on authorisations and licensing (including rules for the effective management of, and access to, scarce resources),
• Directive on the provision of universal service, incorporating elements of the current Voice Telephony Directive and Interconnection Directive,
• Directive on access and interconnection (based on the current Interconnection Directive and the TV Standards Directive),
• Directive on data processing and protection of privacy in the electronic communications sector (directive updated and clarified to take account of technological developments.

Competition Law will become increasingly important in this sector and replace much of the sectoral regulation once competition becomes established on the market.

This Communication also proposes substantial amendments to existing legislation designed to deal with problems relevant to the new regulatory framework.

These changes concern the following aspects:

Licences and authorisations

The Commission stresses the need to reduce administrative barriers to market entry with a view to promoting a competitive European market for telecommunications services. In particular, it proposes:

• using general authorisations as the basis for licensing communication networks and services, with specific authorisations reserved for the assignment of radio spectrum and numbers,
• applying a complete and coherent policy framework to communications infrastructure, including broadcasting networks,
• ensuring that the fees for authorisations cover only justifiable and relevant administrative costs,
• continuing to authorise the communications services provided via the Internet in an equivalent manner to other communications services (i.e. no specific regulation for the Internet).

Access and interconnection

In Community legislation, "access" is a generic concept covering all forms of access to publicly available networks and services, whereas "interconnection" refers to the physical and logical linking of networks. Rules for access and interconnection ensure interoperability and are essential to allow competition to become established. The Commission recognises the fundamental importance of the provision of access and interconnection services, and therefore proposes:

• maintaining specific Community measures which cover both access and interconnection, building on the principles set out in the Interconnection Directive and the TV Standards Directive,
• in the case of access to network infrastructure, placing responsibility on National Regulatory Authorities (NRAs) to deal with specific access issues; requiring infrastructure owners with significant market power to negotiate on commercial terms in respect of requests for access; maintaining the possibility of NRA intervention to resolve disputes,
• in the case of interconnection, maintaining the requirement for cost-orientated interconnection in directives (hard law) but interpreting this concept through Commission recommendations,
• drawing up Recommendations on access, where appropriate, in particular a Recommendation to Member States on the technical and economic aspects of local loop unbundling (local loops are the links connecting customers' premises to a telecommunications network). The Commission takes the view that the availability of unbundled access to local loops would strengthen competition and could also speed up the introduction of Internet access services. In this context, it adopted a Recommendation on the interconnection of leased lines on 24 November which, inter alia, encourages Member States to take measures (such as unbundling the local loop and licensing wireless local loops) to increase competition for access to the local network,
• extending the current standardisation framework for telecoms to cover all communications infrastructure and associated services,
• making carrier selection (a form of network access mandatory for fixed networks under the current regulatory framework for interconnection) available to mobile users by placing obligations on mobile operators with significant market power.

Management of radio spectrum

Given the considerable demand for the use of the radio spectrum in a number of sectors such as telecommunications, but also transport, public safety, broadcasting and R&D, the current methods of allocating frequencies and licences are proving inefficient. In the light of the importance of the radio spectrum for the development of communications services, and its limited availability, the Commission takes the view that

• administrative pricing and auctioning of radio spectrum can be a means of ensuring an efficient use of the spectrum,
• the provisions of the current Licensing Directive should be amended to permit Member States to make provision for radio spectrum secondary trading to encourage the efficient use of radio spectrum.

Universal service

The current regulatory framework requires NRAs to place obligations on network operators to ensure that a defined minimum set of services of a specified quality are available to all, independent of their geographical location, at an affordable price. Universal service, as currently defined in Community legislation, includes the provision of voice telephony, fax and voice band data transmission via modems (i.e. access to the Internet).

The Commission recognises the importance of universal service and proposes:

• maintaining the current definition and scope of universal service at this stage (but proposes to define criteria for its possible extension, as well as mechanisms for periodic review),
• developing pricing principles at EU level to ensure the affordability of universal service.

The interests of users and consumers

The current regulatory framework contains a number of provisions which aim to protect the interests of users and consumers in general. There are also a number of horizontal consumer protection directives at European level which apply to all sectors, including telecommunications. In this sector, the Commission proposes:

• updating and clarifying the Telecoms Data Protection Directive to take account of technological developments
• making the extension of the European emergency call number 112 obligatory,
• maintaining and consolidating existing obligations with regard to complaint handling and dispute settlement procedures,
• increasing the transparency of information (particularly on tariffs) for consumers,
• requiring suppliers to publish information on quality of service,
• repealing the Leased Lines Directive 92/44/EC once there is adequate choice of leased lines for all users and leased line prices are competitive.

Numbering, naming and addressing

Current Community legislation identifies elements of a harmonised approach to numbering, naming and addressing, and stresses the importance of guaranteeing Europe-wide end-to-end interconnection of users and interoperability of services. In this connection, the Commission proposes:

• not to pursue specific regulatory measures at this stage, with respect to Internet naming and addressing,
• extending the availability of operator number portability to mobile users, but not to require operator number portability between fixed and mobile networks at this stage.

Specific competition issues

Sector-specific rules, in conjunction with the application of competition rules, facilitate market entry where the incumbent operators continue to have strong positions, and serve to ensure that new entrants can compete effectively. The key issue is therefore to establish the right balance between sector-specific regulation and the competition rules. In particular, it will be appropriate for sector-specific regulation to make more use of competition law concepts like dominant position, under Article 82 of the Treaty, for example in the case of cost-orientation and non-discrimination obligations.

Institutional issues

The regulatory model outlined in this Communication implies increased delegation of decision-making to NRAs with a view to ensuring the implementation of the framework as close as possible to the market in the Member States. The model thus requires a balancing mechanism in the form of greater coordination of the decisions and views of NRAs at European Union level.

In this context, the Commission proposes:

• replacing the existing two telecommunications committees with a new Communications Committee, drawing on the expertise of a new High Level Communications Group involving the Commission and NRAs to help improve the consistent application of Community legislation and maximise the uniform application of national measures;
• reviewing existing legal provisions with a view to strengthening the independence of NRAs, ensuring an effective division of responsibilities between the different institutions at national level, improving cooperation between sector-specific and general competition authorities, requiring transparent decision-making procedures at national level.

Last updated: 02.12.2003