The EU regulatory framework in telecommunications: A critical analysis

Telecommunications Policy

Volumn 22, Issue 7, 1998, Pages 571-592

  Kiessling, T ^a   Blondeel, Y ^b  

^a Network Planning at Global One   (Belgium)

^b Research Park   (Belgium)

Author keywords

[No Author keywords available]

Indexed keywords

LAWS AND LEGISLATION; PUBLIC POLICY; TELECOMMUNICATION SERVICES;

PRO-COMPETITIVE NUMBERING POLICY;

TELECOMMUNICATION CONTROL;

EID: 0032136739     PISSN: 03085961     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0308-5961(98)00036-6     Document Type: Article

References (122)

1. Some Member States with less developed/very small networks have been granted additional implementation periods up to January 2001. See Section 'Introducing competition'.
2. We have limited this paper to core issues. Excluded from the analysis are, for example, standardization policy in telecommunications and strategic alliances. For the latter subject, see Kiessling, T. and Johnson, G., Strategic alliances in telecommunications and media-an economic analysis of recent European commission decisions. In: eds S. McDonald, G. Madden and M. Salamon, Telecommunications and Socio-Economic Development, Elsevier, Amsterdam, 1998.
3. This set of core objectives is reflected in a number of European Commission policy documents. For example Commission of the European Communities, Green Paper on the Development of the Common Market for Telecommunications Services and Equipment. COM(87) 290 final, 30 June 1987, Summary Report.
4. Currently, the main EU level regulatory authority is the European Commission - this could be supplemented in the future by a European Regulatory Authority (ERA). See section 'Conclusions and Policy Recommendations'.
5. Taschdjian, M., Alternative models of telecommunications policy: services competition versus infrastructure Competition. Twenty-Fifth Annual Telecommunications Policy Research Conference, Alexandria, 27-29, September 1997.
6. It has been argued that the US long-distance market in the 1980s was characterized by technical inefficiencies in the form of over-capacities. Egan, B. L., US telecommunications deregulation, implications for industry structure and social welfare. Telecommunications Policy.
7. In the USA, infrastructure-based entry was encouraged in the 1980s by a system of regulated long-distance tariffs that considerably exceeded cost. Profitability of entry was further increased by discounts on access charges which entrants had to pay the local telephone companies. Bolter, W. G., Telecommunications Policy for the 1990s and Beyond, ed. M. E. Sharpe. Armonk, New York, 1990, p. 265.
8. Brock, G. W., The Telecommunications Industry, Harvard Economic Studies, Harvard, 1981, pp. 228-229.
9. In the UK, since the beginning of the 90s the government has encouraged the construction of local access infrastructure by giving local operators certain commercial advantages. See Section 'Numbering Policy'.
10. See section 'Interconnection'. Some countries, including Germany and Finland, additionally stipulate network unbundling as a means to maximize utilization of existing infrastructure.
11. For an overview, see Perrucci, A. and Cimatoribus, M., Competition, convergence and asymmetry in telecommunications regulation'. Telecommunications Policy, 1997, 21 (6), 493-512.
12. Schankerman, M., Symmetric regulation for competitive telecommunications. Information Economics and Policy, 1996, 8, 5.
13. The Commission found that the exclusive distribution rights violated Art. 3 (f) EC Treaty that stipulates the construction of a competition-oriented economic system in the European Community.
14. Commission of the European Communities, Directive of 16 May 1988 on competition in the markets in telecommunications equipment. OJ L 131 (88/301/EEC), 1988, Point 13, 75.
15. European Court of Justice, Decision of 19 March 1991 - France against the Commission of the European Communities, Case C 202/88 (19.3.1991).
16. See section 'Introducing Competition' for details.
17. By imposing liberalization measures in telecommunications against Member States' will, DGIV risks to lose Member States' support for competition policy measures in other industry sectors. Furthermore, the Commissioner for Competition Policy risks his re-nomination by the Member States if he provokes a fundamental dissent.
18. Art. 90 allows the Commission to abolish entry barriers as explained above. Art. 85 has been repeatedly used by the Commission to authorize or block operator alliances, including Global One, Unisource and Concert. Kiessling T. and Johnson G. op cit Ref 3.
19. Council of the European Union, Council Directive of 5 June 1992, for the introduction of open network provision for leased lines. OJ L 165 (92/44/EC), 1992.
20. Council of the European Union, Council Directive of 13 December 1995 on the application of open network provision (ONP) to voice telephony. OJ L 321/6 (95/62/EC), 1995.
21. European Parliament and Council of the European Union, Directive 97/33/EC of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP). OJ L 199/32 (97/33/EC, 26.7.7), 1997.
22. European Parliament and Council of the European Union, Directive 97/13/EC of 10 April 1997 on a common framework for general authorizations and individual licenses in the field of telecommunications services. OJ L 117/15 (97/13/EC, 7.5.97), 1997.
23. The European Parliament is taking an increasingly active role in telecommunications policy making, based on the co-decision procedure with the European Council which was introduced by the Maastricht Treaty on the European Union in 1992.
24. Council of the European Union, Directive of 28 June 1990 on the establishment of the internal market for telecommunications services through the implementation of open network provision. OJ L 192/1 (90/387/EEC, 24.07.90), 1990. Furthermore, the Council in the late 1980s and 1990s has passed important regulation in the area of Trans-European Networks and subsidy programs (RACE and ACTS programs).
25. European Parliament and Council of the European Union op cit Ref 20.
26. European Parliament and Council of the European Union op cit Ref 19.
27. Analysys, Network Europe: Telecoms Policy to 2000. Analysys Publications, Cambridge, 1994, p. 8f.
28. Cornmission of the European Communities op cit, Ref 3, Summary Report.
29. Garfinkel, L., The growth of competition in the US long-distance industry. Telecommunications Policy, 1993, 324.
30. Brock, Gerald W. op cit Ref 7, 227.
31. Naoe, S., Japan's telecommunications industry. Telecommunications Policy, July 1994, 18 (8), 651-657.
32. Commission of the European Communities, Directive of 28 June 1990 on competition in the markets for telecommunications services. OJ L 192/10 (90/388/EEC), 1990.
33. Examples include services which contain a voice service element, but are not voice telephony as narrowly defined by the Services Directive, for example voice to closed user groups, videotelephony or videoconferencing. In the early 1990s, many Member States still maintained exclusive rights for the provision of such services.
34. Commission of the European Communities, Directive of 18 October 1995 amending Directive 90/388/EEC with regard to the abolition of the restrictions on the use of cable television networks for the provision of already liberalized telecommunications services. OJ L 256 (95/51/EC), 1995.
35. Commission of the European Communities, Directive of 13 March 1996 amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets. OJ L 74/13 (96/19/EC), 1996, Art. 1.
36. Commission of the European Communities, Decision of 4 October 1995 - GSM radiotelephony services in Italy. OJ L 280/49 (23.11.1995).
37. Commission of the European Communities, Commission Directive 96/2/EC of 16 January 1996 amending Directive 90/388/EEC with regard to mobile and personal communications. OJ L 20/59 (96/2/EC), 1996.
38. Commission of the European Communities op cit Ref 33, Art. 1.
39. Telecom Markets, 1992, 25 June 1992, 1-2.
40. Schenker, J.L., 'EC Gives In To Pressure'. Communications Week International, 5 April 1993.
41. Council of the European Union, Resolution of 22 July 1993 on the review of the situation in the telecommunications sector and the need for further development in that market. OJ C 213/1 (93/C 213/01), 1993.
42. Commission of the European Communities op cit Ref 32.
43. Arthur, D. Little International, 'Cable Review - Study on the competition implications in telecommunications and multimedia markets of (a) joint provision of cable and telecoms networks by a single dominant operator and (b) restrictions on the use of telecommunications networks for the provision of cable television services', 1997.
44. Blau, J., Brussels U-turn provides boost for Telekom's cable strategy. Communications Week International, 15 December 1997, 33.
45. Commission of the European Communities, Draft Directive amending Directive 90/388/EEC with regard to its effective application in a multimedia environment, by legally separating the provision of telecommunications and cable TV networks owned by a single operator. 16 December 1997.
46. An example is the Netherlands, where the Dutch PTT was obliged at the end of 1997 to divest its cable network activities.
47. Commission of the European Communities op cit Ref 23, 117/15.
48. For the fully distributed cost approach, see Federal Communications Commission, Revision of Tariff (Telpack), 61 FCC 2d 587, 1976; Faulhaber, G.R., Telecommunications in Turmoil. Ballinger, Cambridge, MA, 1987, pp. 51-52.
49. For the incremental cost approach, see Schankerman, M., Symmetric regulation for competitive telecommunications.' op cit Ref 10, 3-23.
50. In 1988, the Commission suggested for the first time 'the progressive implementation of the general principle that telecommunications tariffs should follow overall cost trends'. Commission of the European Communities, Communication on the implementation of the Green Paper on the development of the common market for telecommunications services and equipment. COM(88)48, 2 February 1988.
51. For example, Council of the European Union op cit Ref 17, 165/32, Art. 10 (1); European Parliament and Council of the European Union op cit Ref 24, Art. 7.
52. The Commission has repeatedly acknowledged the usefulness of price caps and floors as a means to improve cost-orientation. Commission of the European Communities, Towards Cost Orientation and the Adjustment of Pricing Structures. Telecommunications Tariffs in the Community. Communication from the Commission, SEC(92) 1050 final, 1992, 16. Since Member States have different price levels to start with, in the beginning price caps could differ between countries. However, since the cost base of the underlying transmission and switching functions does not vary substantially, price caps should subsequently converge.
53. Council of the European Union, Council Directive on the application of open network provision (ONP) to voice telephony. Draft Common Position. DGXIII/F/1/PS/ cp3, 14 May 1993.
54. Austin, M.T., Europe's ONP Bargain. What's in it for the user? Telecommunications Policy, 1994, 18(2), 97-113.
55. Council of the European Union op cit Ref 48.
56. Council of the European Union op cit Ref 18, 321/6, Art 13 (2).
57. For example, in France supplementary remuneration over and above interconnection charges for historic tariff imbalances are only applicable until (at the latest) the end of 2000.
58. Commission of the European Communities, Guidelines on the application of EEC competition rules in the telecommunications sector. OJ 233 (91/C 233/02), 1991, 2-26. Art. 86 prohibits abuses by undertakings of a dominant position within the common market.
59. Commission of the European Communities OJ 233 (91/C 233/02), op cit Ref 55, section V., 85. Art. 85 prohibits agreements between undertakings which have as their objective or effect the prevention or distortion of competition within the common market.
60. Amory, B., Le droit des télécoms: une Europe à deux vitesses. Forum du Droit et des Affaires, 1994, Paris.
61. Torres, A., Commission queries telecoms operators prices in GEN deal. Reuters News, 4 May 1995.
62. Commission of the European Communities, Commission services clear the Global European Network agreement. Press Release IP/97/242.
63. Süddeutsche Zeitung of 20/21 April 1991.
64. Sir Leon Brittan, EC Commissioner responsible for competition. Communications Week International, 15 October 1990, 8.
65. In the case of an international telephone call, only the operator in the country where the call originates collects money from the customer. This operator then compensates its counterpart in the country of destination for the delivery of the call to the addressee.
66. Amory, B., Telecommunications in the European Communities: the new regulatory framework. University of Namur. Unpublished manuscript, 1991, 12.
67. Molony, D., Accounting rate battle hots up as EC plans to intervene. Communications Week International, 24 November 1997, 1 and 42.
68. European Commission, Settlement reached with Belgacom on the publication of telephone directories - ITT withdraws complaint. Press Release IP/97/292, 11 April 1997.
69. The European Parliament and the Council of the European Union, Common Position (EC) No 34/96 adopted by the Council on 18 June 1996 with a view to adopting Directive 96/ .../EC of the European Parliament and of the Council of the European Union on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of open network provision (ONP). OJ C 220/13 (96/C 220/ 03, 29.7.1996), 1996.
70. The European Parliament and the Council of the European Union op cit Ref 24.
71. The long-distance operator is only granted the right to special access by the Voice Telephony Directive (Ref 53). Special access is not clearly defined at this time, but gives the requesting party the opportunity to obtain the specific access conditions it needs as long as its request is 'reasonable'.
72. The European Parliament and the Council of the European Union op cit Ref 24, Art. 4 (2) and Annex 1.
73. The Commission has not defined if the market share is to be measured in revenue or volume, e.g. traffic minutes.
74. Art. 4(2) stipulates that all reasonable requests for network access must be met and Art. 6 contains a non-discrimination requirement.
75. Oftel, Identification of significant market power for the purposes of the EU Interconnection Directive, http://www.oftel.gov. uk/competition-/smpi1197.htm, November 1997.
76. Only recently has the Commission attempted to impose the actual interconnection prices in the form of EU-wide benchmark prices. Commission of the European Communities, Commission Recommendation on Interconnection in a liberalised telecommunications market. Part 1 - Interconnection Pricing. 15 October 1997, 24 and 31.
77. See also Public Network, EC Watch, 20 October 1997.
78. Analysys 1998 - A New Era for EU Telecoms Regulation. Analysys Publications, Cambridge, 1996, p. 48.
79. WIK and European-American Center for Policy Analysis, Network Interconnection in the Domain of ONP. Study for DGXIII of the European Commission, Final Report, November 1994, p. 30f.
80. The European Parliament and the Council of the European Union op cit Ref 24, Art. 7, 5 and Annex VII.
81. See for example France Telecom, Services d'Interconnexion. Catalogue de France Télécom, April 1997.
82. WIK and European-American Center for Policy Analysis op cit Ref 75, Recommendation 19, 35.
83. The European Parliament and the Council of the European Union op cit Ref 24, Preamble, (10). The recommendation to set interconnection tariffs according to long-run average incremental cost is restricted to operators with significant market power, since competitive operators have an incentive to do so anyway.
84. Commission of the European Communities op cit Ref 73, 24 and 31.
85. Commission of the European Communities, Towards a European numbering environment, COM (96) 590, 20 November 1996.
86. Commission of the European Communities, Common Position adopted by the Council with a view to adopting Directive 98/ /EC of the European Parliament and of the Council amending Directive 97/33/EC with regard to Operator Number Portability and Carrier Pre-Selection. Interinstitutional File No 97/0250 (COD), January 1998.
87. See section 'Introducing competition' for a list of such countries.
88. Commission of the European Communities op cit Ref 81, 29.
89. Molony, D, Oftel lobbies MEPs over equal access. Communications Week International, 24 November 1997, 9.
90. Crandall, R. W., After the Breakup. U.S. Telecommunications in a More Competitive Area. Brookings Washington DC, 1991, p. 61.
91. Kiessling, T., Market structure, standardization and exploitation of demand and innovation potentials in Telecommunications. Information Economics and Policy, 1998, forthcoming.
92. Such services are for example provided by COLT. COLT Webside, www.colt-telecom.com.
93. The European Parliament and the Council of the European Union Op cit Ref 23.
94. Kruse, J., Access to the frequency spectrum. In: Kommunikation ohne Monopole, ed. Ernst-Joachim Mestmäcker. Nomos, Baden-Baden, 1995, 449-472.
95. European Parliament and Council of the European Union op cit Ref 23, Art. 2 and Art. 3.
96. However, as noted above, any limitation of the number of licenses on the grounds of scarce frequencies and numbering resources have to be critically evaluated.
97. The European Parliament and the Council of the European Union op cit Ref 23, Section IV.
98. Commission of the European Communities, Proposal for a European Parliament and Council Directive on a Common Framework for general authorisations and individual licences in the field of telecommunications services. COM (95) 545, 14 November 1995.
99. Commission of the European Communities, Proposal for a Council Directive on the mutual recognition of licences and other national authorisations to operate telecommunications services, including the establishment of a Single Community Telecommunications Licence and the setting up of a Community Telecoms Committee. COM(92)254, 25 September 1992.
100. Analysis op cit Ref 25, 33-34.
101. Commission of the European Communities op cit Ref 33.
102. European Parliament and Council of the European Union op cit Ref 19.
103. Common Position (EC) No 27/97 adopted by the Council on 9 June 1997 with a view to adopting Directive 97//EC of the European Parliament and of the Council on the application of open network provision (ONP) to voice telephony and on universal service for telecommunications in a competitive environment, OJ C 234, 9.6.1997.
104. Commission of the European Communities, Green Paper on the Liberalisation of Telecommunications Infrastructure and Cable Television Networks, Part II. COM(94)682 final, 25 January 1995.
105. European Parliament and Council of the European Union op cit Ref 19, Art. 5 (1).
106. Commission of the European Communities, Communication from the Commission on assessment criteria for national schemes for the costing and financing of universal service in telecommunications and guidelines for the Member States on operation of such schemes. COM(96) 608 final, 1996, 7.
107. Analysys op cit Ref 74, chapter 3.4.2.
108. European Parliament and Council of the European Union op cit Ref 19, Annex 3.
109. European Parliament and Council of the European Union op cit Ref 19, Art. 5 (2).
110. Commission of the European Communities op cit Ref 100, 85.
111. There are indications that particularly the more advanced Member States are concerned that such a universal service fund would become a new permanent transfer mechanism which obliges them to channel subsidies to less advanced countries.
112. The following scenarios illustrate the difference. In both cases, the competing operator bills the customer. In the case of terminating access, a competing operator provides the access part of the customer connection, interconnects to a predefined interconnection point on the incumbents' network, and pays the incumbent for terminating the call. In the case of originating access, the incumbent provides the access and interconnects to the operator's long-distance network who pays for the access.
113. Commission of the European Communities op cit Ref 102, 16.
114. WIK, Costing and Financing Universal Service Obligations in a Competitive Telecommunications Environment in the European Union, Study for DGXIII of the European Commission. Bad Honnef, October 1997, Executive Summary, 3.
115. Commission of the European Communities, Communication by the Commission to the European Parliament and the Council on the Status and Implementation of Directive 90/388/EC on Competition in the Market for Telecommunications Services. COM 95/113, 4 April 1995.
116. This can be illustrated by the draft process of Commission Communication COM 95/113 (see Ref 111) that evaluates the Member State implementation record of EU level policy measures in telecommunications. Between the first drafts circulated in 1992 and the final version issued in 1995, most of the Commission's findings of unsatisfactory implementation of directives has been removed from the Communication as a result of Member States' resistance.
117. This viewpoint has been expressed by Commission officials and policy observers alike. Public Network Europe, EU regulation: 'Judgement day approaches'. Public Network Europe, 1997, 7(11), 32;
118. Espicom, European Telecoms Regulation, Leveling the Playing Field. Espicom Business Intelligence Publications Limited, London, 1997, p. 48.
119. For example in DGIV or in DGXIII. None of these DGs currently has an explicit mandate to act as an EU-level telecommunications regulator, DGIV being responsible for Competition Policy and DGXIII's role essentially being limited to the production of the regulatory core directives in telecommunications.
120. The latter has repeatedly been called for since the beginning of the 1900s. Mansell, R., Trans-European Telecommunication: User Perspectives on the Prospects and Problems. European Network for Communication & Information Perspectives, Montpellier, 1993. WIK and European-American Center for Policy Analysis op cit Ref 75. Public Network Europe op cit Ref 113, 32.
121. European Communities, Treaty Establishing the European Community as Amended by Subsequent Treaties, Rome, 25 March, 1957, Art. 2 in conjunction with Art. 4.
122. In contrast, at the same time the Federal Communications Commission in the USA had between 200 and 250 staff working in the area of federal telecommunications regulation (this estimation includes the Common Carriers Bureau, the International Bureau and the Office for Plans and Policy).