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New round of infringement proceedings under the EU telecoms rules: What are the issues?

European Commission - MEMO/08/67   31/01/2008

Other available languages: none

MEMO/08/67

Brussels, 31 January 2008

New round of infringement proceedings under the EU telecoms rules: What are the issues?

How many infringement proceedings against Member States has the Commission already launched under the 2002 telecoms rules?

In total, since the EU telecoms rules entered into force, the Commission has opened proceedings under Article 226 of the EC Treaty, for some 95 cases of failure to correctly implement the rules. These concern all 27 Member States, including Bulgaria and Romania. Many of them have since been closed while 10 cases are pending before the European Court of Justice.

What are the issues at stake in the January 2008 round of infringement proceedings?

1. Independence of the National Regulatory Authority (NRA)

Principle

It is a basic principle of European law and of the EU telecoms rules in particular, that Member States must ensure that an authority performing regulatory tasks is separate and independent from any operator it regulates. In particular, Member States that have a shareholding in telecoms operators must clearly separate the regulatory tasks from the state's ownership and/or control activities in order to guarantee the impartiality of the national regulatory authority's decisions and consequently to ensure a level playing field for all operators. Independent regulators are the backbone of an effective regulatory system. and this is why the Commission is enforcing regulatory independence vigorously. The Telecoms Reform proposals announced on 13 November 2007 aim to strengthen further the independence of national telecoms regulators.

Problem

In Poland, following adoption of the law on state personnel on 24 August 2006, the President of the Polish Council of Ministers has unlimited discretion to dismiss the head of the national regulatory authority. At the same time, a clear term of office (tenure) for the regulator together with the limited list of circumstances in which s/he could be dismissed was removed from the Polish telecommunications law. This undermines the effectiveness of the Polish regulator, considering that the Polish government controls significant shareholdings in a number of telecoms companies.

In Luxembourg, the Commission is investigating concerns over the lack of effective structural separation between the regulatory and ownership functions in this country.

A letter of formal notice was sent to Slovakia in April 2005 for various discrepancies of the national law with the EU Framework Directive. Though national legislation has since been amended, the national authorities initially failed to address the separation of the Ministry of Transport, Post and Telecoms’ regulatory function from the activities associated with ownership or control of the incumbent operator. This issue has more recently been resolved, since the Ministry’s shareholding in the incumbent was moved to the Ministry for Economy thus ensuring the separation of regulatory and management functions.

Commission action

The Commission is taking Poland to the European Court of Justice, while opening a case against Luxembourg and closing the one against Slovakia.

2. Broadband retail regulation

Principle

In principle, new obligations on operators can only be imposed by national regulatory authorities following a proper market analysis. This market analysis ensures that any lack of competitiveness in the market concerned is properly determined before the regulator imposes any remedy.

Problem

Since May 2006, the Polish telecoms regulator has required operators to submit retail tariffs of all services provided for approval, including retail tariffs for specific broadband services (which are not currently recommended for ex-ante regulation by the Commission). This therefore constitutes a new obligation on the operator imposed without carrying out a proper market analysis.

Commission Action

Since Poland has not addressed the Commission’s concerns, a reasoned opinion was sent, the second stage of an infringement proceeding.

3. Rights of way

Principle

The EU Framework Directive and the EU Authorisation Directives stipulate that when a relevant authority considers granting the right to install facilities (such as ducts, cables and masts) in public places, for an undertaking that is authorised to provide public communications networks, it must act transparently using publicly available procedures. These must be applied without discrimination, and without delay, and must follow the principles of transparency.

Problem

Following a complaint, the procedure for granting rights in Cyprus to install facilities for the mobile sector have either not been fully applied or additional measures are needed to enable their correct implementation. A letter of formal notice was therefore sent in March 2007.

Commission action

Since Cyprus has not addressed the Commission’s concerns, a reasoned opinion was sent.

4. Designation of the Universal Service Provider

Principle

The EU's Universal Service Directive stipulates that when Member States designate an undertaking as having universal service obligations in order to ensure the availability of basic communications services at an affordable price, it must be done using an efficient, objective, transparency and non-discriminatory designation mechanism whereby no undertaking is a priori excluded from being designated. Moreover, when ensuring the provision of universal service, Member States must seek to minimize market distortions while safeguarding the public interest.

Problem

In Portugal, the telecoms incumbent was originally designated as the universal service provider and given a concession valid for 30 years. This concession will expire in 2025. Therefore, operators other than the incumbent appear to be a priori excluded for the provision of the universal service. The Portuguese authorities recently announced their intention to initiate a universal service designation process, under the new law of 2004, in accordance with the provisions of the Universal Service Directive. However, they still have not launched a public consultation on this issue, which was the first step foreseen.

Commission action

A reasoned opinion has consequently been sent to Portugal.

5. Universal service financing

Principle

The EU's Universal Service Directive stipulates that national regulatory authorities may consider financing the universal service, on request, if the provision of this service represents an unfair burden on undertakings designated to provide it. National regulatory authorities must also calculate the net costs of such a service.

Problem

Despite some amendments adopted in Belgium in response to the letter of formal notice, the unfair burden assessment and the calculation of the net costs, in particular with regard to social tariffs, still do not comply with the requirements of the Directive.

Commission action

The Commission is therefore taking Belgium to the European Court of Justice.

6. Consumer contracts

Principle

The EU's Universal Service Directive gives subscribers the right to withdraw from their contracts without penalty upon notice of proposed modifications in their contracts. Subscribers shall be given adequate notice, not shorter than one month, ahead of any such modifications and shall be informed at the same time of their right to withdraw, without penalty, from such contracts if they do not accept the new conditions.

Problem

In Poland, this provision has not been correctly transposed into national legislation. The Polish law gives customers the right to withdraw from their contracts upon notice of any change in the standard terms and conditions. This right to consumers is also valid even when adjustments to the contracts are necessary in view of legal or regulatory changes. Moreover, customers also retain the right to withdraw from the contracts even when contractual changes are imposed in their favour. This has a wider scope than the provisions in the EU's Universal Service Directive and hence seems to be disproportionate.

Commission action

The Commission is therefore sending Poland a letter of formal notice.

7. Failure to carry out market reviews

Principle

One of the cornerstones of the EU telecoms rules is the process of market analysis and review of ex-ante obligations. National telecoms regulators must notify their findings for assessment by the Commission before implementing the proposed measures.

Problem

A number of national telecoms regulators had failed to timely notify the Commission of the first telecoms market reviews as required by the EU rules. However, the problems have now been rectified and the Commission considers that all Member States except Bulgaria and Romania have substantially completed the first round of market reviews.

Commission action

The pending cases against Belgium, Denmark, Germany, Luxembourg, Latvia and Portugal were therefore closed.

8. "Must-carry" obligations

Principle

“Must-carry” rules make it compulsory for network operators (such as cable companies or telecoms operators) to carry specified radio and TV broadcast channels and services where a significant number of end-users of such infrastructure use them as their principal means to receive radio and TV broadcasts.

Member States may, under the EU’s Universal Service Directive, lay down reasonable "must-carry" obligations for the transmission of specified broadcast channels and services on the network operators under their jurisdiction, for legitimate public policy reasons. However, such obligations should only be imposed where they are:

- strictly necessary to meet clearly defined general interest objectives,

- proportionate and transparent,

- and subject to periodic review.

Problem

Following a number of complaints and detailed examination, the Commission had started infringement proceedings against several Member States including Belgium.

In view of emerging competition between different delivery platforms for broadcasting content, making "must-carry" rules proportional would also ensure that end-users have more freedom of choice among channels, since network operators would base their choice of channels more on end-user demands rather than purely on their "must-carry" obligations.

Commission action

The case against Belgium was closed because relevant legislation concerning the must-carry regime for cable operators in the French speaking community was annulled by the Constitutional Court.

Where can I find further information on pending infringement proceedings concerning the electronic communications sector?
A complete overview of cases under the EU telecoms rules 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/

ANNEX

What is the EU regulatory framework for electronic communications?

The EU regulatory framework for electronic communications (EU Telecoms Rules) 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 and services, interoperability, etc.

- 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

Where can one find more information about the Commission’s Telecoms Reform Proposals of November 2007?

The Commission adopted proposals for a reform of the EU telecoms rules on 13 November. With the reform, the Commission wants to enable citizens, wherever they live and wherever they travel in the EU, to benefit from better and cheaper communication services, whether they use mobile phones, fast broadband internet connections or cable TV. To achieve this, the Commission proposes strengthening consumer rights; giving consumers more choice by reinforcing competition between telecoms operators; promoting investment into new communication infrastructures, in particular by freeing radio spectrum for wireless broadband services; and making communication networks more reliable and more secure, especially in case of viruses and other cyber-attacks. A new European Telecom Market Authority will support the Commission and national telecoms regulators in ensuring that market rules and consumer regulation are applied consistently, independently and without protectionism in all 27 EU Member States.

A complete overview of the electronic communications framework and policy including details of the reform proposals can be found on DG Information Society and Media's electronic communications website:

http://ec.europa.eu/information_society/policy/ecomm/


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