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Brussels, 20 December 2001

Telecommunications: Commission takes action against Greece, Portugal and Germany on opening of the local loop

The European Commission has decided to open infringement proceedings against Greece, Portugal and Germany for failing to ensure that competitors are offered shared access to the local loop. The Regulation on unbundling of the local loop, adopted a year ago by the European Parliament and the Council, was designed to bring more competition to the provision of local broadband access. One of the options under the Regulation is for new entrants to offer 'DSL' (digital subscriber line) services for broadband access over the local telephone network while the incumbent continues to provide voice services over the same connection ('shared access'). There has been considerable movement on this issue in the Member States since the Seventh Implementation Report. This is a first step towards securing effective implementation of the Regulation in all fifteen Member States. Further legal action could be taken at a later stage on other aspects of the Regulation.

Mr. Erkki Liikanen said, "Today's decision is only a first step in order to ensure effective implementation of the Regulation on unbundled access in all fifteen Member States. If there are further problems, additional legal action could be taken in due course."

At the Lisbon European Council 2000 European leaders agreed to introduce greater competition in local access networks to foster the use of the Internet in Europe. In particular they called for the unbundling of the local loop as of the beginning of January 2001. The legal framework to that effect was adopted by means of a Regulation on unbundling adopted in December 2000. This measure, completed by the recent adoption of the new regulatory package for Telecoms (see IP/01/1801), means that most of the Lisbon agenda for the Information Society, as set out in the eEurope Action Plan, is now well in place.

Implementation of the Regulation on local loop unbundling(1) to permit high-speed Internet access has so far been disappointing. This was one of the messages from the Commission in its Seventh Implementation Report(2) (see IP/01/1679 of 28 November 2001). In connection with the presentation of that report, Commissioner Erkki Liikanen gave Member States notice that he was scrutinising their implementation of the obligation to ensure the effective offering of shared access by their respective incumbent operators.

Under the Regulation, operators with significant market power had to publish from 31 December 2000, and keep updated, a reference offer (RUO) for unbundled access to their local loops and related facilities. The Annex to the Regulation sets out a minimum list of items to be included in a RUO, including conditions for shared access.

The Regulation is directly applicable in all Member States and action can thus be brought before the national courts by any interested party. The Regulation also requires regulatory authorities to ensure that notified operators comply with their obligation under the Regulation.

There has in recent weeks, and in particular since the Seventh Report, been enormous activity by the Member States in relation to unbundling, with two in particular ensuring publication of an offer for shared access by their incumbents. Where on the other hand intervention by the regulatory authorities has until now failed to ensure that shared access is offered in the RUO of the operators concerned, the European Commission has decided to open infringement proceedings. Letters of formal notice will be sent to Portugal, Greece, and Germany.

In the case of Portugal the reference offer for shared access does not include tariffs for the service, and therefore cannot be regarded as a full offer. In Greece an offer for shared access has not yet been published. The Commission believes that proceedings should be brought against these countries for failure to ensure the offer of a shared access service to which the market is entitled.

In the case of Germany, the Seventh Report showed that while the incumbent already had 1.2 million customers for its high-speed Internet access service, neither shared access nor wholesale access to the incumbent's DSL service were offered. Even though a significant number of local loops have been fully unbundled, the great majority are used not for the provision of high-speed access but rather for voice telephony. The first mover advantage that this represents is very worrying in terms of the risk of foreclosure of competition in broadband access. This concern is borne out by the recent finding by the German Monopoly Commission (Monopolkommission) that virtually all DSL lines in Germany are currently held by the incumbent (99% at end 2000 and estimated virtual 100% at end 2001), leading to a new monopoly situation in this market. The Monopoly Commission points precisely to line-sharing as the means of opening competition in this market segment (Wettbewerbsentwicklung bei Telekommunikation und Post 2001: Unsicherheit und Stillstand, 6 December 2001,

The Member States concerned are requested to respond to the Commission's concerns within two months. This is the first stage of infringement procedures under Article 226 of the Treaty.

In the run-up to the Spring European Council in Barcelona, the Commission is currently studying how to further foster wide access to broadband across the European Union. It believes in particular that all means of access to end customers for the provision of broadband services must be open in accordance with Community law. The Commission has given the market time to deal with the complex issues involved in unbundling local loops. The current financial downturn and the difficulties experienced by some new entrants will not be accepted as a reason for delaying access to these services.

(1)Regulation 2887/2000 of the European Parliament and the Council of 18 December 2000 on unbundled access to the local loop, OJ L 336, 30/12/2000, p. 4

(2) Seventh Report on the Implementation of the Telecommunications Regulatory Package, COM(2001) 706 of 26 November 2001

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