Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Directive amending Council Directives 90/387/EEC and 92/44/EEC for the purpose of adaptation to a competitive environment in telecommunications` ()

(96/C 204/05)

On 28 March 1996, the Council decided to consult the Economic and Social Committee, under Article 100a of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 10 April 1996. The Rapporteur was Mr von Schwerin.

At its 335th Plenary Session (meeting of 25 April 1996), the Committee adopted the following Opinion by 99 votes to two with 13 abstentions.

1. Introduction

1.1. The EU's policy on open network provision (ONP) is based on Article 7a of the Treaty establishing the European Community, which regulates the freedom to provide services.

1.2. The Commission Green Paper of 30 June 1987 on telecommunications services and equipment introduced open network provision (ONP) as a policy concept.

1.3. This policy concept was implemented by Council Directive 90/387/EEC of 28 June 1990 on the establishment of the internal market for telecommunications services through the implementation of open network provision ().

1.4. The ONP Directive on leased lines (Council Directive 92/44/EEC of 5 June 1992 on the application of open network provision to leased lines () and the proposal for a Directive on voice telephony () lay down minimum conditions for the provision of a minimum set of services for all users in the EU.

1.5. The recommended conditions are specified in two ONP Recommendations (Recommendation 92/382/EEC of 5 June 1992 on the harmonized provision of a minimum set of packet-switched data services (), and Recommendation 92/383/EEC of 5 June 1992 on the provision of harmonized ISDN access arrangements and a minimum set of ISDN offerings ().

1.6. A group of top industrialists convened by Commissioner Bangemann presented the Corfu European Council meeting of 24 and 25 June 1994 with a report entitled 'Europe and the global information society` in which the interconnection of networks and interoperability of services and applications was regarded as a priority EU objective.

1.7. The Commission communication on Europe's way to the information society - an action plan (COM(94) 347 final) emphasizes the importance of the ONP policy in connection with the introduction of competition in the EU.

2. Commission proposal for a European Parliament and Council Directive amending Directive 90/387/EEC for the purpose of adaptation to a competitive environment in telecommunications

2.1. General comments on the amendment of Directive 90/387/EEC

2.1.1. The Economic and Social Committee recognizes the importance of the ONP provisions and the need to amend Directive 90/387/EEC because of changes in the competitive environment. The Committee stresses that ONP is vitally important for developing economic activity in Europe, for improving European industry's competitiveness, for safeguarding and creating jobs and for furthering consumer interests, not only in urban areas but also in rural and thinly populated areas.

2.1.2. The Council has set 1 January 1998 as the date on which all telecommunications networks and services are to be liberalized (albeit with transitional periods for some Member States). Consequently the aim of the Commission proposal is to update the framework ONP Directive 90/387/EEC.

2.1.3. The proposed Directive expressly states that the national regulatory authorities must be independent. Accordingly, Member States holding a stake in a telecommunications organization or exercising a significant degree of control over such an organization have to ensure that the regulatory functions are effectively separated from activities associated with ownership or control.

2.2. Specific comments

2.2.1. Article 1 of Directive 90/387/EEC

2.2.1.1. The Committee welcomes the extension of the framework Directive's objectives. It thinks, however, that the second indent of Article 1(3) should read as follows:

'- ensuring the availability of good quality services at realistic prices,`.

2.2.1.2. The prices and charges for the universal service have an all important role to play in connection with the launch of the information society. Therefore, the framework Directive should take account of the social aspects of telecommunications.

2.2.2. Article 2 of Directive 90/387/EEC

2.2.2.1. The Committee would urge the Commission to reconsider and clarify its definitions of 'public` and 'universal service`.

2.2.2.2. The definition of 'public` must distinguish closed user groups and corporate networks. The Commission drew attention to this in its communication to the European Parliament and the Council on the status and implementation of the services Directive (), in which it defined 'for the public` as follows: 'a service for the public is a service available to all members of the public on the same basis`. This view is shared by the Committee.

2.2.2.3. The ESC considers the universal service to be a key factor in connection with tomorrow's information society. The form taken by the universal service will help to shape our working and living conditions, the type and level of employment, the ability of European firms to innovate and hence Europe's position as a centre of economic activity.

2.2.2.4. Users expect a comprehensive universal service which is developed according to their needs, which takes account of the development of society in Europe and which does not merely provide a minimum standard. Apart from furnishing a modern definition of universal services as they stand at present, it is necessary to continually develop the universal services on offer within the framework of a dialogue between the different groups in society. The definition of universal service should be expanded accordingly.

2.2.3. Article 5a of Directive 90/387/

EEC

2.2.3.1. The Committee expressly welcomes the principle that regulator and operator functions are to be kept separate. In accordance with the principle of subsidiarity, the national regulatory authorities have an essential role to play in implementing the EU's liberalization policy. This means that the Commission has to urge the Member States to provide the national regulatory authorities with the financial, material and human resources which they require for the performance of their duties.

3. Commission proposal for a European Parliament and Council Directive amending Directive 92/44/EEC for the purpose of adaptation to a competitive environment in telecommunications

3.1. General comments

3.1.1. This proposal also makes amendments to existing ONP provisions, bringing them into line with the liberalized environment that is to apply from 1998. The Committee endorses this policy, with due regard to the Council Resolution of 18 September 1995 on the implementation of the future regulatory framework for telecommunications ().

3.1.2. According to the revised Directive on leased lines, all users are to have access to a minimum set of leased lines from at least one operator. The Commission proposal stipulates that obligations are to be imposed only on operators with significant market power.

3.1.3. The tariff principles are also to be changed. The principle of cost orientation is to be relaxed for the provision of leased lines once the market becomes competitive.

3.2. Specific comments

3.2.1. Tenth recital

3.2.1.1. An organization with a 25 % market share within the territory of a Member State in which it operates is assumed to enjoy significant market power. The former monopolies will fall into this category indefinitely. The Committee thinks that the Commission's approach contradicts its ways of thinking on competition. The figure used as the basis for the Commission's assumption is not a suitable dividing line.

3.2.2. Article 1 of Directive 92/44/EEC

3.2.2.1. The Committee thinks that it is the Commission's task to establish and develop the rules and regulations which guarantee the efficient transmission of information at low cost throughout the area covered. Initially this will depend on the creation of conditions which permit fair competition. Thus, the Commission quite rightly stressed in Part II of its Green Paper (COM(94) 682 final) that 'open access to the facilities of public telecommunications infrastructure providers will be fundamental in establishing an effective, competitive environment for telecommunications infrastructure and services within the Information Society`.

3.2.2.2. The Committee thinks, however, that competition cannot ultimately be fair unless all providers of telecommunications infrastructure have the same rights and obligations in proportion to their area of activity. In accordance with the principle of equal treatment, this Directive should also apply to organizations without significant market power. This is the only way to translate into reality the Commission's underlying belief that there must be competition.

3.2.2.3. Member States in which liberalization has already been introduced either in full or in part need not withdraw measures if they conform with the legal provisions of the EU.

3.2.3. Article 10 of Directive 92/44/EEC

3.2.3.1. In the Committee's opinion the cost orientation principle must be applied flexibly. Thus, the Commission could consider rebates or concessionary tariffs for certain purposes or certain groups where it was in the public interest.

4. Conclusions

4.1. The Committee recognizes that Directives 90/387/EEC and 92/44/EEC need to be amended, and agrees in the main with the Commission proposals. However, it would be pleased if the Commission could take account of the proposals and comments made in the present Opinion.

4.2. The Committee thinks that if competition is to be safeguarded and the rules governing competition applied in full, the ONP provisions must be binding on all providers in order to ensure equal opportunity and the existence of proper competition.

Done at Brussels, 25 April 1996.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No C 62, 1. 3. 1996, p. 3.

() OJ No L 192, 24. 7. 1990.

() OJ No L 165, 19. 6. 1992.

() OJ No C 122, 18. 5. 1995.

() OJ No L 200, 18. 7. 1992.

() OJ No C 258, 3. 10. 1995.

() Communication by the Commission to the European Parliament and the Council on the status and implementation of Directive 90/388/EEC on competition in the markets for telecommunications services (OJ No C 275, 20. 10. 1995, p. 2).