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Infringement proceedings in the field of electronic communications: What are the issues at stake?

Commission Européenne - MEMO/05/242   07/07/2005

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MEMO/05/242

Brussels, 7 July 2005

Infringement proceedings in the field of electronic communications: What are the issues at stake?

(see also IP/05/875)

What is the EU regulatory framework for electronic communications?

The EU regulatory framework for electronic communications came into force in 2002 and consists of five Directives:

  • Framework Directive: outlines the general principles, objectives and procedures;
  • Authorisation Directive: replaces individual licences by general authorisations to provide communications services;
  • Access and Interconnection Directive: sets out rules for a multi-carrier marketplace, ensuring access to networks & services, interoperability, and so on;
  • Universal Service Directive: guarantees basic rights for consumers and minimum levels of availability and affordability;
  • e-Privacy or Data Protection: covers protection of privacy and personal data communicated over public networks.

What are the regulatory principles of the EU regulatory framework for electronic communications?

The liberalisation of telecommunications, completed in 1998, was generally considered a marked success. Opening up formerly monopolistic markets led to dramatically lowered prices and improved services for both consumers and business, boosting Europe’s communications industry and creating economic growth.

Continuous technological innovation, however, overtook the telecoms regulatory regime. Digitisation now allows many kinds of content to be delivered over different networks. The Internet has become a global infrastructure for a range of electronic communications services. Information and communications technologies are converging, opening up considerable possibilities for new industries and services.

The EU regulatory framework for electronic communications tackles this technological convergence and extends and adapts the benefits of liberalisation to electronic communications in general.

Based on the experience of telecoms liberalisation, policy makers believe that extending competition and ensuring opportunity and reward for innovative companies is the key to promoting technological advance. So why regulate? Why not let market forces alone generate growth in the e-communications sector?

The difficulty is that Europe’s telecommunications industry originated in state-run monopolies, leaving a legacy of imperfect competitive conditions.

Continued regulation is therefore essential for as long as these former monopolists have market power, to ensure a level playing field for new market entrants.

Another reason is that market forces alone may lead to the exclusion of some social groups from essential public services. The new regulatory system therefore recognises a universal service obligation to ensure basic services at affordable prices to all in cases where the market alone does not provide.

There are therefore a number of key principles underlying the Directives of the EU regulatory framework for electronic communications:

  • Cutting red tape: A general authorisation procedure for operators to enter new markets replaces individual licences. This drastically cuts red tape for enterprises, which no longer face frustrating delays as national regulators check compliance with licence conditions.
  • Light regulation: The framework builds upon general concepts of competition law, as applied to normally functioning markets. Regulation is seen as essentially a temporary phenomenon, required to make the transition from the formerly monopolistic telecommunications industry to a fully functioning market system. To develop in the short term, new market entrants need regulatory support to gain access to the networks of incumbent operators and to provide the benefits to end users which the market would offer if it were effectively competitive. However, as the sector evolves, operators will increasingly build their own infrastructures and compete more effectively. As normal market conditions develop, regulation can be rolled back, and competition law, as applied to industry in general, will replace sector-specific intervention.
  • Technological neutrality: Regulation now refers to "electronic communications” - not “telecommunications". The same principles now apply regardless of which kind of existing or potentially new technology is involved. This “technological neutrality” is essential to provide the necessary flexibility to deal with emerging technologies and their convergence in fields such as media, internet and mobile communications.
  • Consistency across the European market: Operators need to be assured that their investments can be planned in a stable regulatory environment, consistent and predictable throughout the EU’s Single Market. Such a regime allows companies to operate on a scale which only a European-wide market can provide. The regulatory framework establishes new processes permitting collaboration among the national regulatory authorities of the Member States and between national authorities and the Commission. This extensive collaboration plays a key role in achieving the necessary coherence within the regulatory process at European level. In key areas, each Member State submits their draft national measures to the Commission and to other national authorities for consideration, and discusses common approaches in the European Regulator’s Group, established by the Commission in 2002. In this way, a consistent approach is developed throughout the single market while permitting maximum flexibility to deal with national markets and conditions.

What are the issues at stake in this new round of infringement procedures regarding the implementation of the EU regulatory framework for electronic communications?

This new round of infringement procedures concerns issues where the national legislator implemented the EU rules on electronic communications, but did do so incorrectly. The following issues are at stake:

(1) Independence of national telecommunications regulators

Principle

It is a basic principle of EC law in general and of the 2002 regulatory framework in particular that Member States must make sure that an authority performing regulatory tasks is separate to and independent of any electronic communications operator. In particular, Member States that own electronic communications operators must clearly separate the regulatory tasks from the state's ownership activities.

Problem

The Finnish state owns several electronic communications operators. The ownership of these operators is handled by the Ministry of Communications. However, the same ministry is also responsible for defining what electronic communications markets the national regulatory authority should analyse, in case there is a need to deviate from the Commission's Recommendation on such markets.

Commission action

The European Commission believes that placing such tasks within the same ministry is against the Framework Directive. It has therefore decided to send a letter of formal notice to Finland.

(2) Number Portability

Principle

Number portability is a key facilitator of consumer choice and effective competition. It ensures that subscribers of one operator can retain their telephone number when they change to a different operator. The 2002 EU regulatory framework requires implementation of number portability for fixed services as well as for mobile services.

Problem

Number portability is not available in the Czech Republic for subscribers of mobile services. According to Czech law, operators are required to provide this service for subscribers of mobile services six months after the regulator has enacted a measure specifying the technical conditions for implementation. This was to be done by end of June 2005 at the latest. No such measure has yet been adopted, and provision of number portability for subscribers of mobile services may thus only become available in the Czech Republic from January 2006 onwards.

At present, in Latvia neither subscribers of mobile telephone services nor subscribers of fixed line services enjoy the right to retain their numbers when switching to a new operator. According to Latvian law, operators are required to ensure availability of this service only as of 1 December 2005.

Number portability is not available in Poland for the subscribers of both fixed and mobile services. It emerges from the reply of the Polish authorities to the letter of formal notice sent in March this year that some steps have been taken in order to ensure that eventually all subscribers in Poland will be able to have their number(s) ported while changing the service provider. However, as a result of a number of decisions taken by the national regulatory authority, number portability may only become available in practice from October 2005 for subscribers of mobile services and from January 2006 in case of fixed services.

Slovenia has failed to ensure the availability of number portability for subscribers of either fixed or mobile services.

Commission action

In addition to infringement proceedings on this subject opened against Latvia, Malta and Poland earlier this year (see IP/05/430), the Commission now decided to send letters of formal notice to the Czech Republic and Slovenia, which also failed to comply with this obligation. Since the Commission is determined to ensure the provision of number portability in all Member States as soon as possible, it furthermore decided to address a reasoned opinion to Latvia and Poland inviting them to remedy the situation, which is the last step within the infringement procedure before bringing an action before the Court of Justice.

(3) Single European emergency number 112

Principle

With more than 100 million cross-border trips annually in Europe, it is important that users are able to call a single European emergency number free of charge from any telephone, including public pay telephones. EU legislation (the Universal Service Directive) therefore introduced “112” as the single European emergency number which is available in all but one Member State (see IP/05/430).

Problem

Following a letter of formal notice sent to Poland in March 2005 for failure to ensure effective availability of “112”, the Polish authorities did take some steps towards ensuring that all end-users of public telephone services can call the emergency number “112”. On 5 April 2005 the Council of Ministers urged the relevant authorities to take meaningful steps and a number of emergency answering centres have been established for handling calls to current national emergency numbers. However, as stated in the reply to the letter of formal notice, full implementation of the provisions concerning “112” can only be ensured by the end of August 2005 at the earliest.

Commission action

Since the Commission is determined to make “112” available throughout the Single Market, it has decided to send a reasoned opinion to Poland, which is the last step before bringing an action before the Court of Justice.

(4) Universal Service Designation

Principle

The provision of a defined minimum set of services to all end users at affordable prices is one of the main objectives of the Universal Service Directive. Inter alia it seeks to provide access to telephone and functional internet services at a fixed location, directory enquiry services as well as public pay telephones in certain regions and for a certain category of users who under purely commercial conditions would be excluded from this services (for example low-income users or users with disabilities). To this end, Member States may designate one or more undertakings providing universal service in part or all of its national territory while respecting certain principles. Thus the designation mechanism must be efficient, objective, transparent and non-discriminatory, and no undertaking should a priori be excluded from designation by the mechanism put in place. Moreover, the designation method shall ensure that universal service obligations are fulfilled in the most efficient fashion and at the lowest possible prices.

Problem

Hungarian law provides that only those undertakings capable of providing all components of the universal services basket can participate in the designation process. This results in the exclusion of undertakings capable of providing only one or more element(s) of the set of universal services.

Finnish law automatically assigns the dominant operator, or if no such operator exists, the operator with the highest market shares, of each local area as the operator responsible for ensuring basic telephony access.

Commission action

In the two cases mentioned above, where Member States appear to exclude certain operators from being designated to provide universal services, the Commission has decided to open infringement proceedings by sending letters of formal notice to Hungary and Finland.

(5) Directories/Directory Enquiry Services

Principle

Comprehensive directories and a directory enquiry service comprising all listed telephone subscribers and their numbers (fixed and mobile) clearly are of enormous advantage for all of us in everyday life. In view of this, these services form part of the universal service and their provision in all Member States is mandatory under EC law.

Problem

In the Czech Republic no comprehensive printed directory comprising all fixed and mobile subscribers is available and the existing online directory does not contain numbers of any mobile subscribers. The telephone directory enquiry service does not provide numbers of mobile subscribers.

Despite several actions taken by the Greek national regulatory authority including a decision imposing fines in December 2004 on operators who did not provide their subscribers’ data, a comprehensive directory and a directory enquiry service comprising all fixed and mobile subscribers are not available in Greece.

A comprehensive printed directory and a telephone directory enquiry service are also unavailable in France. This problem already existed under the previous regulatory framework. The French government has transposed all the necessary legal provisions to make these services available, in accordance with the new Universal Service Directive. Nevertheless, these services have not been implemented yet. Furthermore, according to information available to the Commission services, requirements that operators must make available their database of customers to service providers are not being respected.

In Latvia, the existing printed directory comprises information about customers of the fixed incumbent operator only. The existing online directory does not contain numbers of mobile subscribers. Furthermore, the telephone directory enquiry service of the incumbent operator is not in a position to provide numbers of subscribers of all other providers of voice telephony services.

In Lithuania, neither the printed nor the online directory of the incumbent fixed network operator contains numbers of mobile subscribers. The telephone directory enquiry service is not in a position to provide numbers of subscribers of all mobile network operators.

No comprehensive directory is available in Malta. The existing on-line directory contains subscribers of the only fixed line telephony operator, but it does not contain mobile subscribers.

No comprehensive directory as well as no comprehensive telephone directory enquiry service is available in Poland. While telephone directory enquiry services have been made available by each of the service providers, they are limited to their own respective list of subscribers. Moreover, the fixed incumbent’s enquiry service is incomplete with regard to both fixed and mobile numbers.

In Slovakia, neither the fixed incumbent’s printed directory nor its online directory contains numbers of mobile subscribers. The fixed incumbent’s telephone directory enquiry service cannot provide numbers of subscribers of the largest mobile network operator. Finally, the telephone directory enquiry services of the two mobile network operators are limited to their own respective lists of subscribers.

Commission action:

The Commission has opened infringement proceedings against eight Member States, where a directory and/or a telephone directory enquiry service, comprising all fixed and mobile subscribers is not yet available.

(6) Transition to the new regulatory framework for electronic communications

Principle

In order to avoid any kind of legal vacuum, the Framework Directive provides that obligations imposed on operators under the previous regulatory framework should be maintained until determinations have been made in accordance with the new rules on market review. Such legal certainty is crucial for private investment decisions and for the development of competition.

Problem

In Slovenia, several obligations imposed on undertakings under the previous regime have ceased to exist without a relevant determination being made in accordance with the new regulatory framework.

Commission action

The Commission decided to initiate the first step of the infringement procedure by sending a letter of formal notice to Slovenia.

What happened to the other cases opened against ten Member States earlier this year?

The Commission decided to open infringement proceedings against ten Member States earlier this year because their legislation had been found to be incompatible with EC law or was not applied in practice (see IP/05/430).

Member States were given two months to respond to the Commission’s concerns. In some instances this deadline only elapsed recently. The Commission services are currently examining the responses received. In most of the cases this includes a complex legal analysis. In such cases, the Commission has not yet taken a decision whether to proceed with the case, but will do so at one of its forthcoming meetings.

On the other hand, two proceedings have been closed, following new legislation enabling full protection against spam in Malta and following publication of a wholesale unbundling offer in Poland.
A complete overview of the state of non-conformity and incorrect application cases can be found on the implementation and enforcement website of the Information Society and Media DG:

http://ec.europa.eu/information_society/topics/ecomm/all_about/implementation_enforcement/index_en.htm

What happened to earlier cases the Commission had opened for non-communication of national implementing legislation?

At an earlier stage, the Commission had launched proceedings against those Member States that had not timely adopted legislation necessary to transpose the new framework into national law (see IP/04/510). Such proceedings were also opened against new Member States end of 2004.

After judgements of the Court of Justice in March and April 2005, Belgium and Luxembourg have recently completed their transposition process. Following formal notification of the new laws, the Commission has decided to close these proceedings. Similar proceedings concerning the Czech Republic were also closed. On the other hand, the Commission decided to open an infringement proceeding against the United Kingdom since up to now no transposition measures for the territory of Gibraltar, to which the framework also applies under the UK Accession Treaty, were communicated to the Commission.

At present, proceedings for incomplete transposition are still pending before the Court of Justice as regards Greece (C-250/04, C-252/04, C-253/04, C-254/04 and C-475/04) and France (C-31/05). Non-communication cases are no longer pending against any new Member State. The Commission is, however, scrutinising the conformity with the requirements of the new framework of the national legislation in place.
A complete overview of the state of non-communication cases can be found on the implementation and enforcement website of the Information Society and Media DG:

http://ec.europa.eu/information_society/policy/ecomm/implementation_enforcement/index_en.htm


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