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

Commission Européenne - MEMO/05/478   14/12/2005

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MEMO/05/478

Brussels, 14 December 2005

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

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 Directive: 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 notable 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 significant 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 national regulatory authority submits its 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.

How often has the Commission already launched infringement proceedings against Member States under the 2002 regulatory framework for electronic communications?
In total, since the entry into force of the regulatory framework for electronic communications in 2002, the Commission has opened proceedings under Article 226 of the EC Treaty against 23 EU Member States in more than 50 cases due to failure to implement correctly the regulatory framework.

What are the issues at stake in the December 2005 round of infringement procedures?

1. Powers of National Regulatory Authorities (NRAs)

Principle

The EU electronic communications directives entrust powers to the NRAs so that they can effectively regulate markets. National legislation should not restrict NRAs in performing their tasks under the electronic communications framework. On the other hand, regulatory burdens should be kept to the strict minimum necessary.

Problem

In Germany, the Commission is of the opinion that the German Telecommunications Law does not provide the NRA with all the discretionary power required by the Universal Service Directive to enable the NRA to regulate end-user markets.

In Poland, the Commission has decided to pursue the procedure with regard to the non-conformity of a number of provisions in the Polish law with the Framework Directive and has moved to the reasoned opinion stage. The issues covered concern the suspensive effect of an appeal against NRA decisions, imposition of facility-sharing and co-location requirements, burdensome financial reporting requirements imposed on all undertakings, including small and medium-sized enterprises, and the requirement for subscribers to have a written contract with an operator in order to benefit from all the rights to which they are entitled.

In Finland, the NRA does not have the necessary powers to impose regulation where appropriate on the termination of fixed to mobile calls.

Commission action

After analyzing the official responses to the letters of formal notice, the Commission will now send reasoned opinions to Germany, Poland and Finland. The Member States concerned now have two months to respond to the Commission’s concerns.

On the other hand, a case in Spain was closed following additional transposition measures which included the completion of the set of remedies at the NRAs disposal.

2. 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 the relevant markets have been reviewed under the new framework. Such legal certainty is crucial for private investment decisions and for the development of competition.

Problem

Sweden has failed to ensure the maintenance of transitional market safeguard regulations from the previous framework until market analyses have been completed.

In Slovenia, several regulatory obligations imposed on undertakings under the previous regime have expired without the NRA having decided in a market review whether similar obligations should be maintained in accordance with the new regulatory framework.

In Estonia, obligations based on the old Telecommunications Act and imposed for fixed telephony, mobile telephony, interconnection and leased lines will cease to exist by the end of the year irrespective of whether the market reviews under the new framework had been completed.

Commission action

In the case of Sweden, following the sending of a reasoned opinion in July, the Commission has decided to refer the case to the European Court of Justice. The case will be lodged with the Court in three months time if the market review process has not been completed as envisaged.

Cases against Slovenia and Estonia are still pending.

3. Reference unbundling offer

New Member States had to implement a number of starting conditions which included ensuring that specific regulatory obligations were in place by the date of accession. The existence of an appropriate reference interconnection offer was one such condition. The Commission has decided to close a proceeding against Malta with regard to the incorrect application of Regulation 2882/2000 and the lack of a reference unbundling offer (RUO - enabling alternative providers to use the incumbent’s access lines to offer services to customers). Following the publication of the RUO by Malta’s fixed incumbent operator, these are now available in all 25 Member States.

4. Single European emergency number 112

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. The use of “112” as the single European emergency number is provided for by the Universal Service Directive.

Following full implementation of the provisions concerning “112” in Poland, the Commission is closing the infringement procedure against that country. This means that 112 is now available in all 25 Member States.

5. 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 provided in all EU15 Member States but at the moment is not available in six of the new Member States.

Number portability is not available in the Czech Republic for subscribers of mobile services, and mobile number portability is not expected to be in place before mid January 2006.

In Lithuania, number portability is not available for the subscribers of mobile publicly available telephone services. Moreover, due to the temporary direct call forwarding solution that is currently used as a substitute for number portability, SMS (short message service) and MMS (multimedia message service) messages cannot reach the ported mobile number of a subscriber

Number portability is not available in Poland for subscribers to either fixed or mobile services. It emerges from the Polish authorities’ reply to the Commission’s reasoned opinion that some steps have been taken to ensure that eventually all subscribers in Poland will be able to retain their numbers when they change to a different service provider. However, this is still in its pilot phase.

Commission action

The Commission has sent a letter of formal notice to Lithuania and a reasoned opinion to the Czech Republic. It has decided to refer Poland’s case to the European Court of Justice. The case will be lodged with the Court in three months’ time if the promised corrective action is not taken.

Infringement proceedings are also pending against Latvia, Malta and Slovenia.

6. Directories/Directory Enquiry Services

Principle

Comprehensive directories and a directory enquiry service comprising all listed telephone subscribers and their numbers (fixed and mobile) are clearly indispensable 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 ten of the 25 Member States comprehensive directories and/or directory enquiry services are not yet available.

In the Czech Republic no comprehensive 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, a comprehensive directory and a directory enquiry service comprising all fixed and mobile subscribers are not available in Greece.

A comprehensive directory and a telephone directory enquiry service are also unavailable in France. This problem already existed under the previous regulatory framework. The French authorities have put the necessary legal provisions in place for these services to be made available, in accordance with the new Universal Service Directive, and several directory enquiry services have commenced operations. Nevertheless, 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 and a comprehensive service is still not available.

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

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

Neither a comprehensive directory nor a comprehensive directory enquiry service is available in Poland. While telephone directory enquiry services have been made available by each of the service providers, these are limited to their own respective lists of subscribers. Moreover, the fixed incumbent’s enquiry service is incomplete with regard to both fixed and mobile numbers.

In Slovakia, the designated operator’s directory does not contain numbers of mobile subscribers, and its directory enquiry service cannot provide numbers of subscribers of the largest mobile network operator. Furthermore, the telephone directory enquiry services of the two mobile network operators are limited to their own respective lists of subscribers.

In the United Kingdom, there is no comprehensive directory containing the number of fixed and mobile subscribers.

In Portugal, according to information available to the Commission services, a comprehensive directory and directory enquiry service, comprising all fixed and mobile subscribers of all publicly available telephone services is not available. It appears that the directory of the universal service provider does not include subscribers of one of the mobile publicly available telephone service providers.

In Cyprus, the directory that is published provides numbers for fixed and mobile subscribers but not for those of the second mobile operator (not owned by the fixed telephony operator).

Commission action

The Commission has sent letters of formal notice to the United Kingdom, Portugal and Cyprus.

The Commission has sent reasoned opinions to the other seven Member States, where a directory and/or a telephone directory enquiry service, comprising all fixed and mobile subscribers, is not yet available.

These Member States now have two months to respond to the Commission’s concerns.

The Commission closed the case against Lithuania following the very recent publication of a comprehensive subscribers’ directory.

7. e-Privacy

Principle

The Directive on Privacy and Electronic Communications (e-Privacy Directive) sets out EU-wide rules for the protection of privacy and personal data in mobile and fixed communications, including the Internet. EU Member States are required to ban unsolicited communication (also called spam). The ePrivacy Directive only allows an exception from the opt-in principle (where consumers indicate that they want to receive information) in cases when electronic contact details are obtained from customers in the context of a sale. In such a case, the same person may use these electronic contact details for direct marketing of similar products provided, however, that customers can opt out easily.

Problem

The Czech Republic’s law contains an incorrect exception from the opt-in principle. It allows the processing of personal data even where these are acquired from a public directory. It also allows processing of data other than for marketing similar products and services and provides that a customer’s refusal to allow such data processing may only be stated in writing. This is not in line with the regulatory framework.

Commission action

The Commission has opened proceedings by sending a letter of formal notice to the Czech Republic. The Czech Republic now has two months to respond to the Commission’s concerns.

Similar proceedings against Austria are now closed following recent amendments to the Austrian Telecommunications Act.

Proceedings against Spain were closed following amendments to comply with data protection requirements relating to calling line identification (CLI).

Further proceedings are pending against Germany, Latvia and Slovakia.

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 adopted legislation necessary to transpose the new framework into national law in a timely manner.

After judgements of the European Court of Justice, the pending cases against France have been closed. Proceedings against Greece remain pending before the ECJ.

On the other hand, the Commission has now sent a reasoned opinion to 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.

Where can I find further information on pending infringement proceedings concerning the electronic communications sector?
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/policy/ecomm/implementation_enforcement/index_en.htm


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