The electronic communications policy of the European Union

Antonio Alabau Luis Guijarro THE ELECTRONIC COMMUNICATIONS POLICY OF THE EUROPEAN UNION THE ELECTRONIC COMMUNICATIONS POLICY OF THE EUROPEAN UNION Antonio Alabau and Luis Guijarro Antonio Alabau and Luis Guijarro [email protected] [email protected] THE ELECTRONIC COMMUNICATIONS POLICY OF THE EUROPEAN UNION EDITORIAL UNIVERSITAT POLITÈCNICA DE VALÈNCIA First edition 2011 © Of the present edition: Editorial Universitat Politécnica de València www.editorial.upv.es © Antonio Alabau Luis Guijarro Print: Fustabloc S.L. ISBN: 978-84-8363-642-8 Ref. editorial: 2060 Attribution-NonCommercial-NoDerivs 3.0 This work is licensed under a Creative Commons License. You are free to copy, distribute and transmit the work, under the following conditions: you must attribute the work in the manner specified by the author or licensor; you may not use this work for commercial purposes; you may not alter, transform, or build upon this work. Legal code (full license): http://creativecommons.org/licenses/by-nc-nd/3.0/ Printed in Spain Prof. Antonio ALABAU Born in Alfafar (Valencia) in 1947. He got his PhD in Telecommunications Engineering at the Universidad Politécnica de Madrid in 1973, and at the Université Paul Sabatier in Toulouse (France) in 1972, and his MEng in Telecommunications Engineering at the Universidad Politécnica de Madrid in 1969. He retired in 2009, and he was a Professor in Telecommunications Policy at the Universidad Politécnica de Valencia (19962009), Jean Monnet Chair in Telecommunications and Information Society Policy at the European Union (1997-2006), Head of Area of Telecommunications at DRAC Group in Valencia (1989-94). Director at the Electronics and Informatics Corporate Group of the Instituto Nacional de Industria in Madrid (1982-88), Professor at the Higher Technical School of Telecommunications Engineers of Barcelona (1972-82), and Visiting Professor at different Universities in the European Union and the Middle East. Dr. Luis GUIJARRO Born in Xixona (Alicante) in 1970, he got his PhD in Telecommunications Engineering in 1998 and his MEng in Telecommunications Engineering in 1993 at the Universidad Politécnica de Valencia (UPV). He is an Associate Professor in Telecommunications and Information Society Policy at the Higher School of Telecommunications Engineers of the UPV (1995-2010), Assistant to the Jean Monnet Chair in Telecommunications and Information Society Policy at the European Union (1997-2006) and Head of the Strategy and Planning Unit (2004-2006) and Head of the Postgraduate Studies (2006-2007) at the UPV. His research has covered the field of eGovernment, where he has been focused on the standardisation for technical and organisational interoperability; and Telecommunications Policy and Regulation, where he has been focused on techno economical modelling. 5 To our colleagues, responsible for the Telecommunication Policy at the Ministry of Communications and Technology, Syrian Arab Republic, who premiered its first Telecommunications Act in June 2010. Welcome to the Club! 7 TABLE OF CONTENTS PREFACE ................................................................................................................................... 15 CHAPTER 1: INTRODUCTION ................................................................................................... 21! CHAPTER 2: AN OVERVIEW OF THE TELECOMMUNICATIONS POLICY OF THE EUROPEAN UNION .............................................................................................. 27! 1.- INTRODUCTION ........................................................................................................................ 27! 2.- BASIC ASPECTS ABOUT THE EUROPEAN UNION'S ELECTRONIC COMMUNICATIONS POLICY. ................................................................................................. 27! 2.1.- European Union Actions. ................................................................................................... 27! 2.2.- Electronic Communications Policy and Regulation ........................................................... 28! 2.3.- !Legal bases for the development of the Electronic Communications Regulatory Framework. ......................................................................................................................... 29! 3.-!TELECOMMUNICATIONS, ELECTRONIC COMMUNICATIONS AND THE INFORMATION SOCIETY. ....................................................................................................... 30! 3.1.- Telecommunications and Electronic Communications. ..................................................... 30! 3.2.- Convergence. ...................................................................................................................... 32! 3.3.- Telecommunications, Electronic Communications and the Information Society. ............. 34! 3.4.- The role of European Institutions in the Electronic Communications Policy. ................... 34! 4.- THE STAGES OF THE EUROPEAN UNION. .......................................................................... 35! 4.1.- The Jenkins Commission. 1976-1981 and the Thorn Commission 1981-1985. ................ 35! 4.2.- The Delors Commission. 1985-1994. ................................................................................. 36! 4.3.- The Santer Commission. 1995-1999. ................................................................................. 37! 4.4.- The Prodi Commission. 1999 – 2004. ............................................................................... 37! 4.5.- The Barroso Commission. Since 2004 ............................................................................... 39! 5.- !TYPES OF ACTIONS IN THE ELECTRONIC COMMUNICATIONS POLICY .................... 40! 5.1.- The Liberalization process. ................................................................................................ 40! 5.2.- The Harmonisation process of the legislation of Member States. ...................................... 40! 5.3.- Standardization and Certification of Equipment. ............................................................... 41! 5.4.- The corrective measures of free competition. .................................................................... 42! 5.5.- Other aspects of the Electronic Communications Policy. .................................................. 42! 6.- THE STAGES OF THE ELECTRONIC COMMUNICATIONS POLICY. ............................... 43! 6.1.- 1977-1986 Stage. First Steps. ............................................................................................. 43! 6.2.- 1987-1998 Stage. First Regulatory Telecommunications Framework. .............................. 44! 6.3.- 1999-2005 Stage. First reform of the Electronic Communications Policy. ....................... 44! 6.4.- 2005-2010 Stage. Second reform of the Electronic Communications Policy. ................... 45! 7.- CONCLUSIONS .......................................................................................................................... 45! The Electronic Communications Policy of the European Union 8 CHAPTER 3: THE PRELIMINARY STAGES OF THE TELECOMMUNICATIONS POLICY. PERIOD 1977 – 1986 ............................................................................. 49! 1.- INTRODUCTION ........................................................................................................................ 49! 2.- THE INITIAL STEPS OF THE TELECOMMUNICATIONS POLICY. ................................... 49! 2.1.- Background and context ..................................................................................................... 49! 2.2.- The Commission’s initial proposals, September 1980 ....................................................... 51! 2.3.- Parliament Resolution, March 1981 ................................................................................... 52! 2.4.- The Council’s reaction ........................................................................................................ 53! 2.5.- !The situation in Great Britain and in the United States. The issue of British Telecom ...... 53! 2.6.- The Commission’s new proposal, June 1983 ..................................................................... 54! 2.7.- The Commission’s proposal, September 1983 ................................................................... 55! 2.8.- European Parliament Resolution, March 1984 ................................................................... 57! 2.9.- European Commission proposal, May 1984 ....................................................................... 57! 2.10.- European Council agreement, December 1984 .................................................................. 58! 2.11.-!Comments on the initial steps of the Telecommunications Policy ..................................... 59! 3.-!INITIAL TELECOMMUNICATIONS ACTIONS IN THE EUROPEAN COHESION POLICY. ............................................................................................ 59! 3.1.- Regional Policy and Cohesion Policy. Overview ............................................................... 59! 3.2.- Cohesion Objectives in 1984 Telecommunications strategies. .......................................... 61! 4.- CONCLUSIONS ........................................................................................................................... 63! CHAPTER 4: THE START OF THE TELECOMMUNICATIONS STANDARDISATION AND CERTIFICATION POLICY. PERIOD 1977 – 1986 .................................. 67! 1.- INTRODUCTION ........................................................................................................................ 67! 2.- !OVERVIEW OF THE STANDARDISATION AND CERTIFICATION OF TELECOMMUNICATIONS ........................................................................................................ 67! 3.- !SUMMARY OF THE EUROPEAN UNION'S STANDARDISATION AND CERTIFICATION POLICY. ........................................................................................................ 69! 3.1.- The Standardisation Policy in the Treaty of Rome ............................................................. 69! 3.2.- The Technical Standardisation Commitments of the GATT. ............................................. 70! 3.3.- The New Approach of the Community’s Standardisation Policy. ..................................... 70! 3.4.- Technical Standardisation after the Single Act of 1986. .................................................... 73! 3.5.- Overview of the European Union's Certification Policy. ................................................... 75! 3.6.- The Global Certification Approach of the European Union. .............................................. 75! 4.-!STANDARDISATION AND CERTIFICATION IN TELECOMMUNICATIONS DURING THE PERIOD 1977 – 1986. ......................................................................................... 77! 4.1.- The first telecommunications standardisation-related actions. ........................................... 77! 4.2.- The Council's Decision on Standardisation in the field of Information Technologies and Telecommunications, December 1986. ........................................................................ 78! 4.3.-!The start of Certification and the opening up of the terminal market. ............................... 79! 5.- CONCLUSIONS ........................................................................................................................... 81! CHAPTER 5: THE TELECOMMUNICATIONS LIBERALISATION PROCESS. PERIOD 1987 – 1998 ............................................................................................... 85! 1.- INTRODUCTION ........................................................................................................................ 85! 2.-!THE STRATEGY OF 1987. ......................................................................................................... 86! 2.1.- Background and context ..................................................................................................... 86! 2.2.- The Green Paper on Telecommunications, June 1987. ...................................................... 87! 2.3.- !The consultation process of the Green Paper, June 1987. .................................................. 88! 15 PREFACE In his classic argument for economic freedom as a necessary condition for political freedom, Milton Friedman wrote in Capitalism and Freedom (1962), that under certain market circumstances a monopoly may be the most efficient technical solution to meet total demand, and used as an example, an obvious one for himself, the provision of telephone services in a given geographical area. Friedman referred to these cases as "technical monopolies," and wrote that "when technical conditions make a monopoly the natural outcome of competitive market forces, there are only three alternatives that seem available: private monopoly, public monopoly, or public regulation" For Friedman, the three alternatives are unsatisfactory, but in the absence of better alternatives, he recommends choosing "among evils." For Henry Calvert Simons, one of the liberal economists who influenced the founders of the Chicago School, the results of public regulation of monopolies in the U.S. in the early twentieth century were so distasteful that he concluded public monopoly would be a lesser evil, just the opposite of what happened to Walter Eucken, one of the fathers of the German social market economy, who observing public monopoly in German railroads found the results so distasteful that he concluded public regulation would be a lesser evil. In view of these two positions, in principle contrary to what one would expect from the ideological trajectory of Simons and Eucken, Friedman "reluctantly" concluded that "if tolerable, private monopoly may be the least of the evils." No wonder that, for Milton Friedman, telecommunications were a perfect example of technical monopoly during nineteenth and mid-twentieth century, since they met all features that economic theory assigns to the so-called "natural monopolies": decreasing marginal costs with economies of scale and scope, high barriers to entry and exit due to the huge sunk costs, network effects, etc. That is why the preferred option by Friedman, the private monopoly, had been chosen in the U.S., while the telecom monopolies operated for a long time as state monopolies in Europe. In favour of private monopolies, Friedman argues that "if society were static so that the conditions which give rise to a technical monopoly were sure to remain, [he] would have little confidence” that the private monopoly would be the best option. Nevertheless, "in a rapidly changing society, the conditions frequently change, and [he] suspect[ed] that both public regulation and public monopoly are likely to be less responsive to such changes in conditions, to be less readily capable of elimination, than private monopoly.”1 Whatever we may think about the private monopoly "virtues", Friedman’s argument on monopolies in general is pretty solid, at least in two aspects. First, when noting that there may be circumstances where monopoly is the natural outcome of a competitive process aiming at maximum efficiency, and that in this case the portfolio of solutions is rather limited.. And second, we must recognize his insight in pointing out that the dynamics of technology and market may change the conditions that gave rise to natural monopoly, which is precisely what seems to have happened in the case of telecommunications in the last decades. Surely, late in his life, Friedman did not think that telecommunications was a clear case for natural monopoly, and what made him change led, both in the U.S. and in the European Union during the 1980's, to question whether electronic communications should be still regarded as a monopoly, or it was time to open them to competition. As the book that the reader holds in his hands successfully explains, the monopoly status, public or private, remained, to a greater or lesser extent, until the late twentieth century, when the Telecommunications Act of 1996 and Directive 96/1996 culminated decades of reforms, both in the U.S and in the European Union, which sought to prepare the various telecommunications markets to 1 Friedman, Milton, Capitalism and Freedom, Fortieth Anniversary Edition, The University of Chicago Press, 2002, p. 28. The Electronic Communications Policy of the European Union 16 get into a full competition scenario. By those dates, a liberalising policy culminated which had its beginnings in late 1970’s and which had been promoted in all areas of the economy by the triumph of neoliberal ideas that President Reagan and Prime Minister Thatcher implemented, precisely heavily influenced by Milton Friedman’s ideas. This political practice—which seeks to leave economic decisions of resource allocation in the exclusive hands of the market on the ground that it is an optimal mechanism—is still a dominant factor today, even though its application to financial markets has caused the greatest economic crisis since the Great Depression. Be it as it may, we are today, almost twenty-five years after the beginning of the liberalisation process of the European Electronic Communications, at a crossroads. The Regulatory framework erected in 1998 and embodied in the 2002 Directives and in its Review concluded in late 2009, keeps its main focus on the opening of the incumbent operators' networks to new entrants, which hopefully would adopt the so-called "ladder of investment" as a mechanism for the infrastructure deployment, to the extent that it is justified by their progressive capture of market share. In the medium term, it is expected that an evolution will take place from a situation of national markets where incumbent operators keep an important power share, to a Europe-wide market where real, effective and sustainable competition exists; a competitive environment based on private infrastructure owned by major market players, thus eventually eliminating the need for regulation. However, this sole focus on access to traditional incumbent infrastructures is now in question, precisely because of a set of technical and economic factors that have influenced, again, electronic communications, and that we can lump together under the paradigm of Internet, Next Generation Networks and the entire economic fabric that new communications networks enable at a global level, transcending borders and legal and fiscal sovereignty. Leaving aside the shortcomings and inadequacies of the liberalisation process experienced in the European Union—e.g., the absence of a true Electronic Communications Policy of the European Union to provide rigour to what are now twenty-seven different national policies or the constant confrontation between Member states sovereignty and EU supranationality, among other deficiencies that the authors sensibly point out in their conclusions—the fact is that the constant evolution of the sector, in the wake of powerful technological and economic changes, greatly hampers—and maybe even calls into question—the achievement of the objectives that were set at the time and that the new Digital Agenda renews and expands today. These goals—among which, the creation of a single internal market, stimulating investment in infrastructure and increasing competition—are in a sense contradictory, which makes it difficult the design and implementation of appropriate regulatory policies in an environment that is also subject to constant change. Among these difficulties, those related to New Generation Access networks (NGAs) deployment should be emphasized. NGAs will replace the old copper pair networks, which have been the main asset of the incumbents for decades, and the sharing of which has been the main target of the classic regulatory paradigm. The long awaited Commission Recommendation on the regulatory approach to NGAs has just seen the light after a tortuous process that has lasted three years, and the conclusions of which the authors have not been able to incorporate in the book due to the tight editorial schedule. May the following paragraphs contribute to the magnificent work of synthesis and historical survey by Prof. Alabau and Dr. Guijarro at the Chair of Telecommunications Policy and Information Society of the Universidad Politécnica de Valencia, without necessarily assuming that they share what is set out below. As pointed out by Andrea Renda,2 the NGAs and the Single Market are the Achilles’ heel of the Digital Agenda for Europe, an agenda that promises to usher in a new era where European citizens would achieve prosperity, economic growth and productivity through the adoption of new information services and technologies made available by modern high-speed electronic communications 2 Renda, Andrea, NGAs and the single market: the Achilles’ heel of the Digital Agenda, in Monitoring EU Telecoms Policy, NEREC, Madrid, October 2010. Preface 17 infrastructures. Achieving the Digital Single Market, which the Council wants to see materialized before 2015, is the key element of the new strategy and it may be the most significant reform ever undertaken by the Union, since it is estimated that a Digital Single Market can increase European GDP by more than 4%, and provide many dynamic incentives for innovation and new services. While the Digital Agenda does not elaborate on how to achieve these goals in practice, it is quite clear that they are not going to materialize unless a way is found to encourage investment in high-bandwidth infrastructure at the European level. Without a significant NGA deployment, it is not feasible to develop innovative services that are to promote e-inclusion, e-health, continuing education, egovernment, smart grids or cloud computing, which are thought as essential to increase the productivity and efficiency of our economies. Unfortunately, there are still some obstacles to overcome. First, we are far from a Single Market, because, as Commissioner Kroes said, "Europe is still a patchwork of national markets. We do not have lines of trucks at the border, but we are far from a Digital Single Market." The differences in both prices and products in the enlarged EU are so great that we are very far from any convergence process. The fragmentation of national markets hampers NGAs investments because individual markets might not have the critical mass needed for profitable investment within a reasonable time span. Furthermore, a Europe-wide Single Market requires actors deploying infrastructure concurrently in several national markets, something that is not the reality that we observe. Secondly, Member states have taken divergent positions in relation to the NGA Commission Recommendation drafts and in state aid projects to speed NGAs deployment, resulting again in market fragmentation. As an example, the existence of a subset of Member states that have enforced functional separation on the incumbent network has created competition conditions which are very different from one country to another. Moreover, the diversity of measures taken by National Regulatory Authorities while the Commission Recommendation was still under elaboration has contributed even further to this fragmentation. Wireless technology is another development that significantly alters the competitive environment. 4G networks with standards like LTE promise speeds approaching those of today's fixed networks. If they materialise in practice, joint fixed-mobile markets would have to be defined, which would further an additional reform of the EU Regulatory Framework that would take several years. But the mobile platform operators have no the legal certainty needed to plan their deployments since radio spectrum allocation is still a competence of Member states. Finally, in spite of the current acrimonious discussions around the concept of "network neutrality", it is likely that the new broadband infrastructure will evolve into joint service and application platforms, which would require layer-based regulations, following the structure of IP protocols; a regulation that could encourage investment in the physical layer, without being detrimental to sustainable competition in the upper layers. This would require to determine the scope of regulations that ensure the neutrality of these networks and to set the rules of competition in the transport, application and content layers, without forgetting search engines neutrality, non-discrimination across public and private "clouds", and personal data protection in the new digital universe. In short, it is likely that investments in NGAs deployment will not reach the needed volume in the required period unless new entrants are asked to provide a proportionate investment effort, unless neutrality and diversity rules across the Internet ecosystem are not clarified, and unless a consolidation among the European network operators does not take place. Probably only after some consolidation operators will become strong enough players in a market of a size that justifies the expected investment in new networks. The Electronic Communications Policy of the European Union 18 Clearly, with all its shortcomings, the old model of supervised monopolies, whether public or private, was able to provide basic telecommunications services with almost universal coverage over a long enough time, but it seems that the liberalisation process started a couple of decades ago has not yet managed to break the Gordian knot of the introduction of competition without compromising the desirable and necessary investments. We hope that this would be achieved in the coming years; otherwise we may have to rethink the dilemma that Milton Friedman brilliantly exposed, at least as far as physical infrastructures are concerned. Dr. Marcel Coderch-Collell Vice-President. Comisión del Mercado de las Telecomunicaciones. Spain 19 CHAPTER 1 INTRODUCTION 21 CHAPTER 1 INTRODUCTION The book that the reader has in his or her hands —quite possibly, on his or her computer screens— is proof that, as the song says, like a corollary of the First Law of Thermodynamics, "nothing is lost, everything transforms" 3.This, applied to a variety of aspects related to the book. Because ... who was going to tell the European Commission officials that someone, even in 2010, will continue making them blush for the way they have been carrying out liberalization of telecommunications in the entire European Union along twenty years? And ... who was going to say also that this analysis —not reproach— would be so easily accessible on the Internet? Or ... who was going to say to students of telecommunications engineering that they would have on their hands —again, on their screens— the history of telecommunications before the advent of the Internet at home? For in this we agree, that telecommunications were not born with Internet. Or, finally, who was going to tell the first author that a year after his well deserved retirement this text would see the light? Or the second author, who would assume the responsibility to continue the project of discussing EU policy on telecommunications. In short, this book is the result of the strong will of its authors that the recent history of telecommunications policy in the context of the European Union continues to be useful to the group of professionals whose daily work is conditioned to a greater or lesser extent through this process. Maybe this book could have been called: History of the Policy of Electronic Communications in the European Union, but it should be made quite clear that the reason for not doing so has been to avoid giving readers the false impression that it only refers to this sector's past. Far from it! This book endeavours to afford an in-depth analysis of what happened in order to better understand what will happen in the future. Indeed, the Electronic Communications Policy of the European Union has an important and promising future as Electronic Communications themselves, a future that will also be decided during 2010, when developing the work plan of the Commission's initiative called "Digital Agenda for Europe." Yet perhaps you're wondering what exactly Electronic Communications are? After spending one's whole life hearing talk about Telecommunications, the question is quite appropriate and this book tries to answer it. The first thing to remember is that the term Electronic Communications began to be used in European Union documents when the reform of the Telecommunications sector was launched in 1999. The second thing that has to be clarified is that, from the very beginning, the European Union has regarded Telecommunications to only refer to traditional voice and data communications services and networks, but not to radio or television and, of course, neither to Internet nor to the world of content. 3 Drexler, Jorge, “Todo se transforma”, Eco, Warner Music Spain, 2004. The Electronic Communications Policy of the European Union 22 The third point is that the European Union considers Electronic Communications to be the result of adding, to what it had regarded as Telecommunications, other things that it had not regarded as Telecommunications, with the exception of those other things that it still does not regard as Electronic Communications. And all that as a result of technological convergence. It's that clear! That clear? You’ll wonder. Well, what can we say? That is exactly what one deduces from reading the European Union texts. According to the definitions that you'll find in Chapter 2, the European Union regards Electronic Communications to mean the combination of Electronic Communications services and Electronic Communications Networks On the one hand, the European Union considers that Electronic Communications Services does not include either Information Society services, or the services that supply content, or audiovisual media services —in other words radio and television, however they are broadcast. At the same time, it considers that Electronic Communications Services do include voice and data communications services —in other words, traditional telecommunications services. What remains is the controlled ambiguity of the new borderline services, such as Voice over Internet or interactive mobile TV. On the other hand, the European Union regards Electronic Communications Networks to mean any of the transmission systems, regardless of the services that are delivered over them. Now do you get it? This is neither the time nor the place to revive corporatist prejudices but, in our opinion, there was no need for so much waffle. And in this context, what has happened to convergence? You've already seen it in the previous explanations and you'll get the chance to find out if you decide to read on, because if we tell you now, we run the risk of spoiling the plot. This book endeavours to track how Electronic Communications Policy has evolved in the European Union from 1977 until the present time. And to make it easier to understand, its contents are divided into four stages: the preliminary stage between 1977 and 1986, the stage that led to the implementation of full competition between 1987 and 1998, the one that gave rise to the first review of the regulatory framework between 1999 and 2005 and, finally that of the second review of the regulatory framework between 2005 and 2010. Chapter 2 affords an overall perspective of the Electronic Communications Policy in the context of the European Union's evolution. Chapter 3 commences its analysis of the Telecommunications Policy with a summary of its preliminary stage, which ran from 1977 to 1986. Chapter 4 analyses the start of the Telecommunications Standardization and Certification Policy, which also occurred between 1977 and 1986. Chapters 5, 6, 7 and 8 address the period between 1987 and 1998, during which the European Union defined the first Telecommunications Regulatory Framework, which permitted the implementation of full competition. These four chapters examine four complementary aspects. The Liberalization process, the process of Harmonization of the Member States' legislations, the Standardization and Certification process and, last but not least, the Corrective actions on free competition performed during this stage. Chapter 1: Introduction 23 Chapter 9 summarizes the stage from 1999 to 2005, which saw the first review of the Regulatory Framework governing Electronic Communications in the European Union, once full competition was in place. Chapter 10 takes a look to the second review of the Regulatory Framework for Electronic Communications started in 2005 and completed in 2009. Chapter 11 presents what we understand to be the areas of Electronic Communications Policy which the European Union will focus on during the new period 2010-2020, according to the guidelines that strategic documents published in early 2010 have drawn. Chapter 12 is the last and, obviously, contains the Conclusions The book ends with an Appendix that outlines how Telecommunications Policy has evolved throughout the World, and we trust that you find it interesting. As the reader can see, the book constantly refers to documents that the various European institutions have adopted and that, in a commendable show of transparency, have been made publicly available on their websites. In the case of legislation —directives, regulations or decisions— and working documents of the Commission, either published in the Official Journal of the European Union or not, we direct the reader to EUR-Lex 4, where they can be easily obtained given the reference number provided in the footnotes. We fear that the older records are more difficult to locate through the network, but we believe that the stubborn reader will know how to find them. It should be pointed out that this in an update of a previous book published by the Vodafone Foundation Spain in 2007 and was titled "The EU and its Electronic Communications Policy." Chapters 3 to 9 have been taken from it. You may find that, in some parts of this book, the style is rather more that of a report than a critique, and the fact of the matter is that most parts of it were written as and when the events that are described took place and from time to time, the enthusiasm of the occasion may come to light. We must admit that the document is exceedingly dry and we would have found it impossible to write it in one go if we hadn't already spent many years working in this field. It's been a task that the first author first embarked upon in the mid-80's at what was then the Division of Electronics and Informatics of the National Institute of Industry. The subject of this book has become our main activity at the Universidad Politécnica de Valencia. The first author planned a teaching and research project for the Telecommunications Policy Chair at the School of Telecommunications Engineers in 1991 than anyone, except perhaps his own students, understood their relevance. This activity received a boost with the creation of the Jean Monnet Chair in Telecommunications Policy and Information Society in 1999 at the request of the European Commission. The second author then joined the activities of the Chair and in the spring of 2010 he decided to undertake the updating of the book with the hope that the results remain useful to the reader. Thus, for nearly twenty years we have devoted almost exclusively to develop teaching, research and consulting activities on matters related to these EU policies, what we tried to leave written in this book and its predecessors 5,6,7,8. 4 http://eur-lex.europa.eu, visited 15/9/2010. 5 Alabau, A. La Unión Europea y su Política de Telecomunicaciones. Fundación Airtel. Madrid 1998 6 Alabau, A. The European Union and its Information Society Policy. Vodafone Foundation. Madrid 2001 7 Alabau, A. The European Union and its e-government development policy. Vodafone Foundation. Madrid 2004. 8 Alabau, A. The European Union and its Electronic Communications Policy. Vodafone Foundation. Madrid 2007. The Electronic Communications Policy of the European Union 24 Throughout this time, we have received the support of dozens of people, but it would be impossible to list them all without risking leaving one of them out; so our thanks and recognition go to all of them. But if someone was very present when we decided to prepare this document, it was all those who have been working on the implementation process of free competition in the telecommunications sector outside the European Union, like our EuroMediterranean partners, and in particular those responsible for the Ministry of Communications and Technology in Syria, who saw the first Telecommunications Act passed in June 2010, at last!. We want to acknowledge that the many lively discussions we have been fortunate to have with all of them have been tremendously rewarding, so much so that we have changed our view of the Telecommunications Policy and of even the European Union. If any of them found what we have written in this book interesting, the work has been worth it. Chapter 2: An overview of the Telecommunications Policy of the European Union 31 electricity cable systems, to the extent that they are used for the purpose of transmitting signals, networks used for radio and television broadcasting, and cable television networks, irrespective of the type of information conveyed; Electronic communications service: A service normally provided for remuneration17 which consists wholly or mainly in the conveyance of signals on electronic communications networks, including telecommunications services and transmission services in networks used for broadcasting but exclude services providing or exercising editorial control over, content transmitted using electronic communications networks and services; it does not include information society services as defined in Article 1 of Directive 98/34/EC which do not consist wholly or mainly in the conveyance of signals on electronic communications networks. It is also important to remember the definition of Information Society service mentioned in the previous text, which do not appeared in the said Directive 98/34, but rather in Directive 98/4818 which amended it. Information society service: Any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services . On this basis, in 2002, the European Union started to use the term “Electronic Communications Policy” to refer to all issues relative to “electronic communications networks, telecommunications services and transmission services in networks used for broadcasting”, and as clarified, this policy was not to include either “the services providing or exercising editorial control over, content transmitted using electronic communications networks and services”, neither “Information Society services”. Finally, this set of definitions would not be complete without that of “audiovisual media services”, which appears in the Directive19 amending the “Television without frontiers” Directive”: “Audiovisual media service” means a service as defined by Articles 49 and 50 [56 and 57] of the Treaty the principal purpose of which is the provision of moving images with or without sound, in order to inform, entertain or educate, to the general public by electronic communications networks within the meaning of Article 2(a) of Directive 2002/21/EC of the European Parliament and of the Council” You'll realize how hard it is to make the broad definition of Telecommunications of the ITU compatible with the Electronic Communications Networks and Services definitions used by the European Union in its policies. In our opinion, there are three reasons for this, namely strategic, legal and customary reasons. As regards strategic reasons, it is quite clear that, from the very start, the European Union associated the term Telecommunications to telephone and data transmission, i.e., the services that operators were providing on a monopolistic basis. It is also clear that by changing the name to Electronic Communications, the scope of action was expanded to include other aspects which had not been included in these European strategies at first. 17 The mention of remuneration stems from the definition of Service that is given in article 85 of the Treaty: Services shall be considered to be 'services' within the meaning of this Treaty where they are normally provided for remuneration, insofar as they are not governed by the provisions relating to freedom of movement for goods, capital and persons. 18 Directive 98/48/EC of the European Parliament and of the Council of 20 July 1998 amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations. OJ L 217. 5 September 1998. P 18. 19 Directive 2007/65/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities. OJ L 332. 18 December 2007. P 27. The Electronic Communications Policy of the European Union 32 The legal reasons follow a similar course. The restrictive Telecommunications Networks definition used in the first package of Directives that made up the 1998 Regulatory Framework justified the creation of new definitions in order to include the networks used for radio and television broadcasts. And, finally, the change in the definition may also have been impacted by customary reasons, since the use of the term Telecommunications is rather more a custom of Continental Europe than of the English-speaking world, which has had a heavy influence on the European Union's Electronic Communications Policy. Though this is just a subjective interpretation. The fact is that after the 2002 reform, the European Union started to formally use the term Electronic Communications to define all actions carried out in this sector. 3.2.- Convergence. One of the most popular terms in the European Union's Electronic Communications Policy is Convergence. Even though it is widely used, in our opinion, it is not very clearly explained in community documents. It is often repeated, over and over again, that the digitalization of equipment and development of services is driving the convergence of the Telecommunications, Information Technology, including its contents, and Audiovisual sectors. Therefore, the regulatory efforts and policies of the European Union must follow this direction. This argument is repeated, with emphasis on Why this must be done, yet without being very clear about How to achieve such objectives. We will explain our opinion on this Convergence matter, based on the definitions included in the previous section. Our explanation will set off from the past situation to better describe the future. As you already know, from their very outset, the three sectors in question, Telecommunications, Information Technology and Audiovisual, came into being and developed independently, each with their own specific Networks, Services and Regulatory Framework. The Convergence process in these three sectors is the result of technological evolution. The gradual replacement of traditional electromechanical and analogue technologies by digital technologies gave rise to this approach. However, with this initial idea and due to the elasticity of the Convergence concept, all sorts of opinions were put forward, which were not backed up by a rigorous approach at times. So to make the situation easier to understand, the impact of the generic convergence process on Networks, Services and Regulatory Frameworks in the three sectors must be analysed separately. In the Networks field, the convergence process took place in the communications infrastructures used in each of the aforesaid sectors. The use of digital transmission systems reduced the differences between voice, data and image communications to an issue of each networks' communication capacity. In Services, the first step in this process started with the arrival of the Internet and the removal of traditional barriers between telecommunication services. In the new digitalized world, the possibility of delivering telephony or television services over the Internet again posed a communication capacity problem. The second step in the convergence of Services came with interactive digital television, which contributed to blur the frontiers between traditional services. The potential for users and audiovisual service providers to interact once more raised an issue of communication capacity. Chapter 2: An overview of the Telecommunications Policy of the European Union 33 And the third step in the Services convergence process appeared with 3G mobile telephony services, with one same handset capable of providing all services: telephony, Internet and television. Finally, and not surprisingly, the Regulatory Frameworks which were used to regulate each sector would also be affected by the convergence phenomenon, resulting in the main scenario for confusion. The arrival of free competition in the Telecommunications sector in 1998 prompted the brightest of players to think that maybe the time had come to lift all the regulatory barriers in all sectors, leaving it to the market to impose its own rules. Luckily, good sense prevailed. Since then, everyone has started talking about Convergence, specially politicians, as usually occurs whenever the Commission manages to coin a word that catches on. The results of the process are described throughout this book. However, if one follows the definitions included in the main Directives used to regulate each sector, which have been included in the previous section, the situation can be further explained. We are referring to the following definitions: • Communications Networks • Electronic Communications Services • Information Society Services • Audiovisual Media Services Here is a short description of the Regulatory Frameworks which regulate each of the elements included in the said definitions, describing how they are affected by the convergence process. Communications Networks, regardless of the type of Service being transported, are subject to the Regulatory Framework of Electronic Communications with regard to infrastructures. In this case, the convergence process has been completed, derived from the package of Directives adopted before 1998. Electronic Communications Services, which basically include the usual voice and data Telecommunications Services, are subject to the Regulatory Framework of Electronic Communications. In this case, there can be no talk of true convergence of anything with anything else. Information Society Services are not subject to any type of specific sector Regulatory Framework, only to the general provisions, such as the data protection, electronic signature, electronic commerce and tax Directives. In this case there has been no convergence either. Finally, Audiovisual Media Services will be subject to the Regulatory Framework derived from the audiovisual media services Directive, as described in Chapter 10. As in the previous case, there has been no convergence by now, unless one deems it to mean that the Directive extends the former legal framework governing television broadcasts to any other type of service that falls under the definition of an audiovisual media service, whatever the communications network used for broadcasting purposes. Thus, there has been Convergence in the Network Regulatory Framework, but it has yet to happen in the Services Framework. The rest is empty speech. All in all, this is our interpretation of the current state of convergence that seems to prevail in all actions of the Commission. However, the convergence can be regarded as substantial if we analyse the fact that the European Commission has placed since 2005 the responsibility of Electronic Communications and Audiovisual Policies under the same umbrella. The Electronic Communications Policy of the European Union 34 3.3.- Telecommunications, Electronic Communications and the Information Society. It is also worthwhile clarifying how the European Institutions have first addressed the concept of Telecommunications and later the concept of Electronic Communications with the Information Society. In European strategies, Telecommunications were mentioned first and the Information Society was defined at a later stage. As we will explain later on in this book, until free competition came into force in 1998, Telecommunications and the Information Society were viewed as different activities and the concern for the elimination of monopolies was a priority required for the exploitation of new opportunities derived from the use of the Internet. Not until the year 2000, with the arrival of the Prodi Commission and the celebration of the Council of Europe in Lisbon, did the European Commission put the strategy of the Information Society before the Telecommunications strategy, which had already been considered as an integral part of the latter. Truly, Telecommunications had already been liberalized, while the Information Strategies were yet to be implemented. This situation happened again with the Barroso Commission in 2004. Thus, after 2000, the eEurope initiatives and i2010 strategy for the development of the Information Society, included the Electronic Communications Policy in their contents. The new Barroso Commission, which took over in 2010, has launched its strategy for promoting the development of the Information Society under the name, so unfortunate in our view, of Digital Agenda. In this new initiative the Electronic Communications Policy has been weakened, being diluted in a series of proposals designed to "Stimulate the convergence of information and telecommunications technologies driving the internet revolution", which should possibly be interpreted as a sign of maturity. 3.4.- The role of European Institutions in the Electronic Communications Policy. The European Commission's activities related to its Electronic Communications Policy are shared by the Directorate General of the Information Society and Media 20 and the Directorate General of Competition21 and, to a lesser extent, the Directorate General of Enterprise and Industry22. If one had to define the responsibilities of the two first Directorates General, the DG Information Society and Media would be responsible for the strategic actions, while the DG Competition would be responsible for operating actions, although this would not be 100% clear since we are talking about the European Union. Finally, the DG Enterprise and Industry would be in charge of the aspects involving the technical standardization of electronic equipment. In the Council of the European Union, the activities related to the Electronic Communications Policy are handled by the Council of Ministers of Transport, Telecommunications and Energy23, which holds specific meetings devoted to Telecommunications issues. 20 European Commission. DG Information Society and Media http://ec.europa.eu/dgs/information_society/index_en.htm, visited 8/9/2010. 21 European Commission. DG Competition http://ec.europa.eu/comm/competition/index_en.html, visited 8/9/2010. 22 European Commission. DG Enterprise and Industry http://ec.europa.eu/enterprise/index_en.htm, visited 8/9/2010. 23 Council of the European Union. Transport, Telecommunications and Energy. http://www.consilium.europa.eu/cms3_applications/applications/newsRoom/loadBook.asp?BID=87&LANG=7&cmsid=354, visited 8/9/2010. Chapter 2: An overview of the Telecommunications Policy of the European Union 35 Finally, in the European Parliament, the body responsible for studying and reporting on Electronic Communications-related matters is the Committee on Industry, Research and Energy (ITRE24), which is in charge of the matters involving the Information Society and information technologies, among others. In addition, the Committee on Internal Market and Consumer Protection (IMCO25), deals with some issues related to this area. 4.- THE STAGES OF THE EUROPEAN UNION. A framework of reference that must be taken into account in the analysis of any Community action and, evidently, of the development of the Telecommunications Policy, is that which refers to the European Union26 and, in particular, to the different stages of the Commission's management. Here is an overview of the said stages. 4.1.- The Jenkins Commission. 1976-1981 and the Thorn Commission 1981-1985. After its first twenty years of existence and as a result of the first enlargement, which included the problematic incorporation of Great Britain, Ireland and Denmark, the European Community, under the regulatory framework of the Treaty of Rome of 1957, required an indepth review of its objectives and actions. In order to address different political and institutional matters, the Summit of Heads of State and Government in Paris December 1974, commissioned Leo Tindemans to produce a report on the future of the European Community, which was presented at the beginning of 197627, and outlined the need for political and strategic reforms. This Report is now regarded as one of the points of reference in the subsequent reforms of the Treaty. As regards economic issues, Europe was starting to suffer from the consequences of the oil crisis during the mid 70's, and was finding it hard to react. In this case, the Summit of Heads of State and Government asked the Commission to prepare a White Paper on the Internal Market, which would be presented in 1985. In addition, as regards the Telecommunications issues, during the presidency of Ronald Reagan in 1982, the United States courts issued a decision which led to the dismantling of the AT&T Group. Similarly, in Great Britain, in 1981 and 1984 Margaret Thatcher managed to have Parliament pass the Telecommunications Acts that brought competition into the sector. In all the other Member States, telecommunications had, since the turn of the century, been operated as a monopoly, under the supervision of their respective governments. 24 European Parliament. Committee on Industry, Research and Energy. ITRE http://www.europarl.europa.eu/committees/itre_home_en.htm, visited 8/9/2010. 25 European Parliament. Committee on Internal Market and Consumer Protection. IMCO http://www.europarl.europa.eu/committees/imco_home_en.htm, visited 8/9/2010. 26 History of the European Union. http://europa.eu/abc/history/index_en.htm, visited 8/9/2010. 27 Tindemans Report http://ec.europa.eu/economy_finance/emu_history/documentation/chapter8/19751229fr037repleotindemans.pdf, visited 27/10/2010. The Electronic Communications Policy of the European Union 36 4.2.- The Delors Commission. 1985-1994. President Delors spent two terms as head of the European Commission, between 1985 and 1990 and between 1990 and 1994. Both terms were crucial for the development of the European Community and it was during these periods that the keys to the project to develop the Information Society appeared. During Delors' mandate, the Commission adopted the White Paper on the Internal Market28 and unveiled it to the Council of Europe in Milan on 28th-29th June 1985. In September 1985, the Intergovernmental Conference began holding meetings to address the amendment of the Treaty of Rome, which would be finally signed in February 1986 and was to be known as the Single European Act. The reforms made to the Treaty by the Single European Act of 1986 had a major impact on the Telecommunications Policy and signalled the start of the process that would lead to the sector's liberalization. Following the approval of the Single Act and the establishment of the goal of implementing the single market from 1993 onwards, the European Community broached the next reform of the Treaty, the goal being to achieve political and monetary Union. During 1991, the meetings of the Intergovernmental Conference started again, which led to the signing of the Treaty of Maastricht in February 1992, creating the European Union as it is known now. The Treaty of Maastricht brought in the joint decision procedure, under which the European Parliament can participate with the Council in most of the Community legislative process. Finally, during the last year of President Delors’ term and in the middle of a new major economic crisis, the Commission published the White Paper on Growth, Competitiveness and Employment29, in which it proposed the launch of the Information Society development process, emulating the process then underway in the United States and thus keeping one step ahead of the Member States' possible reactions in this field. A detailed analysis of these matters will be given later on in this book. The period in question witnessed one of the greatest geopolitical changes in Europe since the end of the Second World War, namely the fall of the Berlin wall and the gradual disappearance of totalitarian regimes in the Central and Eastern European countries. This situation would also be taken into account in the Information Society development process. Other outstanding events during this period included the Uruguay Round negotiations, leading to the signing of the new General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade and Services (GATS30) and the start of the negotiations for the application of the GATS to the telecommunications services sector. It was during this period that the European Union passed the first regulatory telecommunications framework, which would lead to the implementation of free competition in 1998. 28 COM(85) 310. White Paper on the achievement of the internal market. Brussels 14 June 1985. 29COM(93) 700 White Paper on growth, competitiveness, and employment: The challenges and ways forward into the 21st century. Brussels, 5 December 1993. 30 GATS. General Agreement on Trade in Services. http://www.wto.org/english/tratop_e/serv_e/serv_e.htm, visite 27/10/2010. Chapter 2: An overview of the Telecommunications Policy of the European Union 37 4.3.- The Santer Commission. 1995-1999. In January 1995, Jaques Santer took over the presidency of the European Commission. The major issue raised during his period was the agreement of the future expansion of the European Union and gradual integration of the Central and Eastern European Countries. Tackling this situation entailed amending the Treaty again and addressing the different economic problems derived from the future expansion. The Intergovernmental Conference was held again and in 1997 the Treaty of Amsterdam, which would come into force in May 1999. The Commission and Council worked hand in hand to design an economic framework for the future of the Union, which would be announced as the Agenda 2000 and which would be approved by the Council of Europe in Berlin on 24th and 25th March, 1999. However, by then the Santer Commission no longer existed. The Commission had tendered its resignation to the Parliament on 15th March 1999, nine months after the end of the official term. During this period, telecommunications issues remained the responsibility of Commissioner Martin Bangemann, who had been a member of the Commission since 1989, first as the head of Industry and Trade and later as the head of Telecommunications and the Information Society. As for Telecommunications, one of the Commission's key objectives during this period was to finish designing the regulatory framework that would allow full competition to be implemented in this sector from January 1998, on the date agreed with the United States within the World Trade Organization framework. After launching the new Information Society idea in 1993, the Commission delegated the responsibility for taking action in this field upon its respective DC’s, without showing much enthusiasm for ensuring effective coordination between them31. 4.4.- The Prodi Commission. 1999 – 2004. The European Parliament approved the appointment of Romano Prodi as President of the Commission on 5th May, 1999, even though the new Commission did not take office until 15th September, when it received the approval of the European Parliament, a period when the Union was going through a delicate moment. Doubts had been cast on the European Commission's credibility by institutional crisis of 1999, the food problems prompted by the measures adopted by the EC in the wake of the mad cow disease, which was in full swing, the contradictions derived from the Kosovo war were still fresh in people’s minds and the economic crisis started to threaten Europe. In addition, the dates for the major expansion of 2004 were very near. When the new members of the Prodi Commission took office, they had to try to find enough energy to cope with the difficult situation that they had inherited from their predecessors. At the start of 2000, the Commission published a document in which it outlined its Strategic Objectives for the period 2000-200532 , including two key ones: creating a more dynamic European Union to regain world leadership and addressing the reforms of the Treaty for the expansion of the Union. 31 Alabau A. The European Union and its Information Society Policy. Ed Vodafone Madrid 2002 32 COM(2000)154. Strategic Objectives for 2000-2995. Shaping the new Europe. Brussels, 9 February 2000. OJ C 81. 21 March 2000. P. 1 The Electronic Communications Policy of the European Union 38 As a consequence of these proposals, the Commission started the internal reform process33, began to prepare the publication of a White Paper on Governance in Europe34,35, laid the foundations for the reform of its Technological Research and Development Policy36 , and fully embraced the project for the creation of the Information Society that it had inherited from its predecessors in an unhealthy state. From then on, the Commission made great efforts to relaunch the Information Society development project. It was during this stage that the Treaty of Nice was signed, in 2000, and work on drafting the proposal for a European Constitution went ahead. There is no denying that one of the most decisive aspects of this stage was the expansion of the European Union in May 2004, from 15 to 25 Member States. The Lisbon Strategy. In 1999, the European Union needed an exciting and revitalizing project, not only to raise its spirits but also to set itself specific objectives towards which to allocate its effort and resources over the next few years. In this context, the Portuguese presidency of the European Union, during the first semester of 2000, decided to hold an Extraordinary Council in Lisbon, addressing employment, economic reform and social cohesion and got busy preparing for the meeting. The main purpose of this meeting would be to define the objectives of one of the strategies of the Union's socio-economic policies. The euphoria prompted by the dawn of the new millennium and the Internet bubble were two major contributions to the said objective. From among the many documents drafted in the Council’s preparatory phase, one worthy of mention is a first and very early proposal that the Portuguese Presidency37put forward in January 2000, in which it stated that the new strategic objective for the next decade should make the European Union the “most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”; This phrase is now famous and has become an emblem of the European Union. Simultaneously, the European Commission presented its proposals in a document38 in February, and the Council of Europe was finally held in Lisbon during March 2000. The Conclusions of the Presidency39 of this Council meeting became a point of reference for the European Union's subsequent actions. In this sense, the Council decided to devote all its future spring meetings to evaluating the follow-up of what would later be called the Lisbon Strategy. It was at the European Council of Lisbon that the eEurope initiative for the development of the Information Society was unveiled, and it was the Council of Santa Maria da Feira40, held in June 2000, that approved the Action Plan of the eEurope initiative41 which was revised again in 2002. 33 COM(2000) 200. White Paper on Reforming the Commission. Brussels 5 April 2000. 34 SEC(2000) 1547. Commission working document. White Paper on Governance in Europe. Brussels, 11 October 2000. 35 COM(2001) 428. European governance. A White Paper. Brussels, 25 July 2001. 36 COM(2000) 6. Towards a European Research Area. Brussels, 18 January 2000 37 Council of the European Union, Doc Ref. 5256/00. Document from the Presidency. Employment, Economic Reforms and Social Cohesion Lisbon, January 2000 38 Council of the European Union. Ref nº 6602/00. Preparation of the European Council of Lisbon. Contribution of the European Commission to the Special European Council of Lisbon. Brussels, 28 February 2002 39 European Council of Lisbon. Conclusions of the Presidency. Lisbon, 24-25 March 2000. http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/00100-r1.en0.htm, visited 8/9/2010 40 Conclusions of the Presidency. European Council of Santa María de Feira. 19 and 20 June 2000 http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/00200-r1.en0.htm, visited 8/9/2010 41 eEurope 2002. Action Plan. Prepared by the Commission for the European Council of Santa María de Feira. Brussels, 14 June 2000 Chapter 2: An overview of the Telecommunications Policy of the European Union 39 In the telecommunications field, in 1999 the Commission had begun to revise the regulatory framework, which would lead it to adopt the package of Directives in 2002 with the first reform of the sector, including the change of name to Electronic Communications. This period also saw the strategic Internet crisis of 2000, as well as the telecommunications sector investment crisis, which went on until 2004. 4.5.- The Barroso Commission. Since 2004. When Jose Manuel Barroso took over as President of the European Commission in November 2004, it was clear that attaining the Lisbon objectives was going to be a difficult task and the European Union would require another strong dose of objectives and illusions that would drive it to achieve effective results for the creation of employment and growth of the European economy. This period did not start with satisfactory results in terms of exciting objectives, due to the proposal for a European Constitution having been rejected in the French and The Netherlands referendums in 2005. In addition, the much wanted European cohesion suffered a hard blow as result of the protectionist measures that the Member States were going to start implementing on behalf of their main strategic industries. All in all, the telecommunications operators had already reached a point of no return on the road to free competition. In this context, in June 2005, the Commission presented its i2010 strategy42 for the development of the Information Society, which would include its Electronic Communications Policy. During 2005, the Commission began the second review of the Electronic Communications regulatory framework, in order to further convergence between voice and data telecommunications and the audiovisual sector. This review completed in 2009 with the approval of the Revised Regulatory Framework in late 2009. Abandoned the Treaty establishing a Constitution for Europe of 2004, negotiations resumed that led to the signing of the Lisbon Treaty on December 13, 2007, which finally came into force on December 1, 2009. Most of the institutional innovations that were agreed at the European Constitution remain in the Lisbon Treaty, while the changes in the voting system were postponed and additional exclusion clauses were granted in some policy areas to certain Member States. If the stage Barroso did not have a good start, even worse would be the end of his first term and frightening was the beginning of his second term in September 2009. In autumn 2008 the financial crisis, which had started in the U.S., exploded with all its virulence on this side of the Atlantic. The Barroso Commission then proposed an countercyclical approach by injecting 200,000 million Euros to boost demand and confidence in the economy, which took the name of European Economic Recovery Plan43. But the results of this approach were not as expected, or at least expected by investors, since the spring of 2010, during the writing of the book, the crisis had spread and affected the Member states' public accounts, forcing them to undertake drastic plans to reduce public spending and investment. 42 COM(2005) 229. i2010 – A European Information Society for growth and employment. Brussels, 1 June 2005 43 COM(2008) 800. An European Economic Recovery Plan. Brussels, 26 November 2008. The Electronic Communications Policy of the European Union 40 In this new context, the Commission presented in March 2010, the new strategy that would replace the Lisbon Strategy. ‘Europe 2020’44 was named and it materialised, in the field of Information Society, through the Digital Agenda initiative45. 5.- TYPES OF ACTIONS IN THE ELECTRONIC COMMUNICATIONS POLICY All the actions carried out by the European Institutions throughout the different stages of development of the Telecommunications and Electronic Communications Policy can be classified in four main areas, in line with the nature of their objectives: Liberalization, Harmonisation, Standardization and Corrective Measures. 5.1.- The Liberalization process. The first and main purpose of the European Union's Telecommunications Policy was to liberalize the sector, in other words, to bring full competition to the European Union's equipment and services markets. Although this process first appeared in the 1980 and 1984 strategies, it could not be implemented until the Single Act entered into force in 1986. The Commission, acting as the guardian of the Treaties, played the leading role in all actions that led to the liberalization of the market for handsets, services and infrastructures. For this purpose, the Commission availed itself of the extraordinary powers bestowed upon it by the Treaty in article 106 (then, article 90), and, based on these powers, adopted a set of Directives on its own. During this Liberalization process, it must be said that both the Council and, subsequently, the European Parliament, which are the European Union's true legislative authorities, played a secondary role, only being given the chance to express their agreement or disagreement with the Commission's actions, but never adopting the Directives that led to the implementation of the full competition system. This is now history, but it led to major discussions, obtaining all sorts of praise and criticism from different players. The main point of controversy focused on the liberalization of infrastructures. This was a crucial point upon which not all Member States agreed, as is explained later on. At the end of the day, one wonders whether the same results might not have been reached with the ordinary legislative process, without having to resort to the extraordinary powers laid down in article 106 and without upsetting the balance of powers between the European Institutions. This might have been possible, but without a doubt, the dialectical effort and time period required would have been greater. What is certain is that the whole process was conducted lawfully, in line with European Community law. The Liberalization process was almost fully implemented during the 1987-1998 period, so in the review that started in 1999, the Commission's main task was to bring together, in a single Directive, all the directives adopted during this period, and this new Directive which would be adopted in the regulatory package of 2002. 5.2.- The Harmonisation process of the legislation of Member States. As the sector was steadily deregulated, it became necessary for services run on a competitive basis to coexist with others that were still operated on a monopoly basis and on which the former had to 44 COM(2010) 2020. Europe 2020. A European strategy for smart, sustainable and inclusive growth. Brussels, 3 March 2010. 45 COM(2010) 245. A Digital Agenda for Europe. Brussels, 19 May 2010. 47 CHAPTER 3 THE PRELIMINARY STAGES OF THE TELECOMMUNICATIONS POLICY. PERIOD 1977 – 1986 49 CHAPTER 3 THE PRELIMINARY STAGES OF THE TELECOMMUNICATIONS POLICY. PERIOD 1977 – 1986 1.- INTRODUCTION The objective of this Chapter is to analyse the initial steps of the European Union’s Telecommunications Policy from the publication of the first documents at the end of the 1970s, to the adoption of the Single European Act of 1986, which made the necessary reforms to the Treaty Establishing the European Community thus enabling the implementation of free competition in this sector. Firstly we will analyse the Commission’s initial proposals and the Council’s reaction to such initiatives. Although this involves a distant period of time we believe that it is necessary to understand it in order to comprehend the events that followed. At that time, the jurisdiction relating to telecommunications rested with the Member States and this situation was not questioned by the European Institutions with the result that the first actions in this sector were largely of an Industrial Policy nature aimed at the creation of a single market for electronic handsets and at the harmonisation of new services. Secondly, it was also thought that it would be interesting for this Chapter to include a review of the early telecommunications-related actions carried out in the context of the European Cohesion Policy, particularly in its Regional development strategies which made it possible to improve network coverage and telecommunications services in the most disadvantaged areas of the European Community. It was undoubtedly a question of demonstrating the conviction that citizens throughout Europe had an equal right to access telecommunications networks and services. 2.- THE INITIAL STEPS OF THE TELECOMMUNICATIONS POLICY. 2.1.- Background and context In order to analyse the European Community’s initial actions with regards to telecommunications it makes sense to start with two important European events: the industrial crisis in the second half of the 1970s and the Institutional crisis during the same period which occurred as a result, among other things, of enlarging the Community and the accession of the United Kingdom, Denmark and Ireland. Where Telecommunications are concerned47, the first actions date back to early 1977 with the first Council Declaration48 on this matter. Subsequently, in December of that same year, the Commission, in collaboration with the Member States, created a Working Group to study the situation of future telecommunications networks. Likewise, the Summit of Heads of State and Government which took 47 Noam, E. Telecommunications in Europe. Oxford University Press. Oxford 1992 48 Déclaration du Conseil concernant les organismes chargés dans les États membres des services de télécommunications. JO C 11 de 15 Janvier 1977. P. 3 The Electronic Communications Policy of the European Union 50 place in Strasbourg in June 197949 asked the Commission to prepare a report on the matter. As a result of both initiatives, in September 1980, the Commission produced and submitted the first telecommunications proposal to the Council50. Where the industrial crisis was concerned, the European Community thought about the need to act in specific economic sectors, one of them being that of new Information Technologies. From the middle of the 1970s onwards, the Commission presented the Council with various proposals for action in the field of Information Technology. Specific mention must be made of the fact that at the June 1979 Summit of Strasbourg, the Commission was tasked with producing a paper containing proposed actions. In accordance with this request the Commission produced a report which it submitted at the Summit of Dublin in November 197951. As a result of these proposals, the first Community actions in the area of computing and microelectronics were carried out52 . Where the Institutional crisis was concerned, the difficulties in achieving economic and monetary union in the Community foreseen in the Barre Plan in 196953, as well as the budgetary problems derived from its enlargement, among other things54, forced the Council to ask the Commission, in May 1980, to prepare an Action Plan which would allow it to get out of the aforementioned impasse. As such, in June 1981, the Commission, as a result of the Council mandate, published a proposal which considered the need to carry out a far-reaching institutional reform in the European Community55. This proposal would subsequently lead to the preparation of the 1985 White Paper on Completing the Internal Market56 and, would eventually result in the signing of the Single European Act in 198657 which was the first major revision of the Treaty Establishing the European Community. The White Paper presented by the Commission to the Council contained, among other things, the proposals to implement an industrial policy taking advantage of the size of the internal market and the advisability of carrying out actions in disadvantaged areas. These ideas also featured in the documents that the Commission prepared concerning telecommunications at the same time. Where the Commission’s support for Research and Development activities was concerned, it must be remembered that, at that time, vice president Davignon, under pressure from companies in the sector looking for support, helped come up with the term precompetitive research and proceeded to create, in Archimedes 25, the Information Technology and Telecommunications Task Force out of the Directorate General III: Industry, which would be responsible for managing, firstly, the ESPRIT programme and then the RACE programme, both arising out of the first microelectronics research programme in 198258, 59. 49 European Council. Strasbourg 21-22 June 1979. http://aei.pitt.edu/1394/01/strasbourg_june_1979.pdf, visited 8/9/2010. 50COM(80) 422. Recommandations Concernant les Télécommunications. Bruxelles, 1 Septembre 1980 51 COM(79) 650. European society faced with the challenge of new information technologies. A Community response. Brussels, 23 November 1979 52 Carpentier, M. et al. Les Télécommunications en liberté surveillée. Ed. Lavoisier, Paris 1991 53 Plan Barre. Commission Memorandum to the Council on the co-ordination of economic policies and monetary co-operation within the Community. Secretariat of the Commission. 12 February 1969. http://ec.europa.eu/economy_finance/emu_history/documentation/chapter2/19690212en015coordineconpoli.pdf, visited 28/10/2010. 54 European Commission. Historical documentation of EMU and the Euro http://ec.europa.eu/economy_finance/emu_history/documentation.htm, visited 28/10/2010. 55 COM(81) 300. Rapport de la Commission sur le mandat de 30 mai 1980. Luxemburg, 24 juin 1981. Bulletin des Communautés européennes. 1981, n° Supplément 1/81, p. 5 56 COM(85) 310. Communication of the Commission to the Council. White Paper on the achievement of the internal market. Brussels, 14 June 1985. 57 European Single Act. OJ L 169. 29 June 1987. 58 COM(80) 513. New Information Technologies. First Commission report. Brussels, 1 September 1980 59 Ungerer, H.et al. Telecommunications in Europe. Office for Official Publications of the European Communities 1988 Chapter 3: The preliminary stages of the Telecommunications Policy. Period 1977 – 1986 51 At that time, in Great Britain, Margaret Thatcher’s Conservative government had passed the British Telecommunications Act 198160 and started creating British Telecom61 out of the State-owned Telecommunications Company. The process to privatize both public telecommunication companies was to be launched immediately: the recently created British Telecom, which looked after domestic telecommunications services and Cable & Wireless62, deeply-rooted in telecommunications with overseas territories. With the participation of Cable & Wireless, the banking group Barclays and the company British Petroleum, Mercury was created, which would subsequently belong entirely to Cable & Wireless. In this context and overseen by the British government, a duopoly was created to operate telecommunication services, and the new Telecommunications Act 1984 was passed63. In the United States, the federal government’s legal action against AT&T was being hotly debated64,65. The consequences of the ruling in favour of the government’s demands were to include the disbanding of the AT&T group in 1982, the creation of a group of bell regional companies so as to continue to exploit intrastate communications according to the rules on monopolies, the relaunch of AT&T in the long distance communication market and the consolidation of its international reputation, with the US government’s help66,67. Where Europe was concerned, it must be remembered that the relationship between the Community Institutions was, at that time, governed by the Treaty of Rome, with a Council on Ministers that was strong but required to make decisions unanimously, a Commission with no jurisdiction in industrial or commercial matters and a very weak Parliament which served as the Council’s consultative body. This was the context in which the Commission first presented the Council with a plan of action relating to telecommunications. 2.2.- The Commission’s initial proposals, September 1980 In a document written in 197968 for the Dublin Summit of Heads of State and Government, the Commission proposed, among other measures for achieving the Community’s economic and industrial revival, carrying out the following actions in the area of telecommunications: ““That the Community: - use the normative powers of the Community to create a homogeneous European public market for telematic equipment and services through council decisions that: . commit the telecommunications administrations to introduce common harmonised services ... from 1983 and to purchase for them only harmonised equipment from 1985 . establish the principle of an Open Community market for terminals, in which private industry can compete . initiate in 1981 a first phase of action by the telecommunications administrations to enlarge their potential sources of supply... 60 British Telecommunications Act 1981, 27 July 1981. Ed. HMSO. London 61 The historical development of BT. http://www.btplc.com/Thegroup/BTsHistory/History.htm, visited 8/9/2010. 62 Cable and Wireless. A History. http://www.porthcurno.org.uk/page.php?id=104, visited 28/10/2010. 63 Telecommunications Act 1984. 12 April 1984. HMSO. London 64 Temin, P. The Fall of the Bell System. Ed. Cambridge University Press, Cambridge 1987 65 Kellog, K. et al.. Federal Telecommunications Law. Little, Brown and Co. Boston, 1992 66 Richonier, M. Les Métamorphoses de L´Europe. Ed. Flamarion, Paris 1985 67 Sapronov, W. Telecommunications and the law. Computer Science Press. Rockville, 1988 68 COM(79) 650. European society faced with the challenge of new information technologies. A Community response. Brussels, 23 November 1979 The Electronic Communications Policy of the European Union 52 . commit the public administrations of Member States from 1983 to buy informatics equipment and software only when it conforms to common standards. As a consequence of the above, the Summit asked the Commission to continue studying this matter which led to the Commission presenting the Council, in September 1980, with a report69 entitled “Recommendations concerning Telecommunications” which contained an initial set of proposals for Community actions in this area. This was the first proposal submitted to the Council that dealt specifically with telecommunications, despite the fact that in the document the Commission referred to analysis work which had been taking place since 1977. This report drew attention to the growing importance of telecommunications in the Community’s economic development and highlighted the huge market potential of the handsets which would be required to access the future telematics services. The Commission emphasized the need to coordinate the actions carried out by the Member States with the objective of harmonising them across the Community. In this document, the Commission proposed to the Council the adoption of a set of recommendations which are summarized in Table 3.1 below. Table 3.1 TELECOMMUNICATIONS PROPOSAL 1980 ACTION PLAN A Implementation of harmonization actions in the field of telecommunications in the following aspects : - Creation of a range of telematics services harmonized across the Community - Creation of a dynamic Community market for the new generations of telecommunications equipment B Creation of a Community market for telematics equipment C Implementation of the first phase of the opening up of the public telecommunications markets D Creation of a joint committee, involving the Commission and the telecommunications administrations to monitor the progress of this programme, identify the industrial policy issues and put forward the associated plans of action 2.3.- Parliament Resolution, March 1981 The European Parliament was also consulted by the Council on the subject of the Commission’s proposals and in April 1981 it adopted a Resolution70 based on a report produced by its economic and monetary Commission71 . 69 COM(80) 422. Recommandations concernant les Telecommunications. Bruxelles, 1 Septembre 1980 70 Résolution du 27 avril 1981, portant avis du Parlement européen sur les recommandations de la Commission des Communautes européenes au Conseil concernant les Telecommunications. OJ C 144, 7 May 1981. pp.71-75 71 Doccument 1-138/81. Rapport fait au nom de la Commission economique et monetaire concernat les Telecommunications. Parlement Européen. Documments de Séance. 27 Avril 1981 Chapter 3: The preliminary stages of the Telecommunications Policy. Period 1977 – 1986 53 In the text of its Resolution, the Parliament agreed with the Commission’s proposals, however it also considered them to be insufficient, expressing itself in the following manner: " approves the general objectives described by the Commission", " would have preferred the Commission to have used the instrument of the Directives instead of the Recommendations, in this field in which energetic actions must be adopted urgently." Where the proposals concerning the handset market for new telematics applications were concerned, the Parliament went further than the Commission’s proposals and stated that it was necessary to reach total liberalization: "unreservedly approves the objective of creating an open and competitive market in which all users have, throughout Europe, the chance to freely purchase or rent any type of telematic terminal, both from private suppliers and from the administrations, as well as to connect them to public networks" Finally, the Parliament addressed the Council advising it to act: "hopes that the Council, aware of our delay and of the need to react fast and vigorously, approves the Commission's proposals " 2.4.- The Council’s reaction The measures proposed by the Commission implied the beginning of interference in the Member States’ traditional jurisdiction in the area of telecommunications and the operation of networks and services by monopolies. Of the set of proposals put forward by the Commission, that which met with the greatest opposition from the Member States was that which referred to the creation of a Community handset market. The Council blocked this Commission proposal although it carried out the remaining points of this initiative. The initiative to perform sector harmonization actions and that concerning the opening up of public telecommunications equipment markets later resulted in Council Recommendations72 ,73, which were adopted in November 1984. It is worth highlighting that in the 1980 proposal, the Commission neither specifically mentioned the services market, nor questioned the business models of telecommunications administrations in the Member States. 2.5.- The situation in Great Britain and in the United States. The issue of British Telecom In Great Britain, in April 1981, the British Telecommunications Act had been passed establishing the creation of the company British Telecom out of the telecommunications administration, as well as its privatization. 72 Council Recommendation 84/549/EEC of 12 November 1984 concerning the implementation of harmonization in the field of telecommunications. OJ L 298. 16 November 1984. P. 49 73 Council Recommendation 84/550/EEC of 12 November 1984 concerning the first phase of opening up access to public telecommunications contracts. OJ L 298. 16 November 1984. P. 49 The Electronic Communications Policy of the European Union 54 As a result of the enactment of this law, the first disputes concerning the introduction of free competition in the telecommunication services market started to emerge. The so-called British Telecom case is well known, and fully explained in the literature74. In this case the Commission found in favour of a British company which considered its interests to be damaged by the British Telecoms decisions which prevented it from carrying out business related to forwarding international telegrams from London which had originated from other Member States. From then on, the first disagreements between the Commission, which was in favour of implementing free competition in the telecommunications sector, and the Member States who were determined to continue maintaining the telecommunication administrations monopoly in their respective countries emerged. The Commission’s proceedings against British Telecom for abusing a dominant position75 and the Republic of Italy’s appeal against the Commission at the European Court of Justice76 clearly illustrated these discrepancies. The Court of Justice’s ruling of March 198577 not only found in the Commission’s favour but clearly established that from then on competition rules would apply to telecommunications administrations given the commercial nature of their activity. It must be remembered that at that time the United States government’s lawsuit against the AT&T group was before the US courts which was to end in August 1982, with the ruling which led to the dismantling of this telecommunications group78. In this context, the fact that a change in the way telecommunications had been traditionally managed throughout the world, and particularly in the United States and Great Britain, was possible represented a worry for the Member States of the European Community sitting on the Council and at the same time it was an incentive for the Commission. 2.6.- The Commission’s new proposal, June 1983 In view of the little success of its 1980 proposal, in June 1983 on the occasion of the Summit of Heads of State and Government which was to be held in Stuttgart, the Commission submitted a new Report concerning telecommunications79. This document once again discussed the importance of telecommunications for European economic recovery and highlighted the importance of using the European dimension of these markets. Likewise, the Commission emphasized the difficulty of reaping the benefits of this European arena and warned that: 74 Noam, E. Telecommunications in Europe. Ed. Oxford University Press, Oxford, 1992 7582/861/EEC: Commission Decision of 10 December 1982 relating to a proceeding under Article 86 of the EEC Treaty (IV/29.877 - British Telecommunications). OJ L 360. 21 December 1982. P. 36 76 Case 41/83. Italian Republic v Commission of the European Communities. Court of Justice 1983. 77 Judgment of the Court of 20 March 1985. - Italian Republic v Commission of the European Communities. - Abuse of a dominant position (Article 86) - Public undertakings (Article 90) - International agreements (Article 234) - Article 222 - Article 190 of the Treaty. - Case 41/83. 78 Taske, P. After Divestiture. Ed. State University of New York Press. Albany 1990 79 COM(83) 329. Télécommunications. Bruxelles, le 6 juin 1983 Chapter 3: The preliminary stages of the Telecommunications Policy. Period 1977 – 1986 55 ".. the problem is precisely that it is up to the ten Member States, through their PTTs, to determine... what should be on offer in the field of telecommunications: what networks and what services?, In what quantity?, At what cost?, How soon?. If the Community were to limit itself this time to intervening in a pragmatic and ad hoc way, there would be strong fears that it would be completely ineffectual as has been the case in the past." In order to break the stalemate of this situation the Commission put forward a series of proposals and said that: “1. The second area of thought .... relates to the setting-up of a European telecommunications body. 2. Since the Commission does not itself possess the necessary skills for bringing these tasks to a satisfactory conclusion, a specialized Community could provide a suitable structure for: - taking Community decisions. - negotiating in international organisations on the basis of a joint position - facilitating cooperation within the Community in this field. 3. This body... placed under the authority of the Commission, ....would be instructed to submit an initial policy report in December 1983 and its final conclusions in March 1984.” These Commission proposals which were made from a weak position were also disregarded by the Council; the benefit of creating a Telecommunications Body, as proposed by the Commission, was not considered. It must be remembered that the Conference of European Postal and Telecommunications Administration – CEPT80, had existed since 1959 and had been coordinating the PTTs in European countries. In the aforementioned European Council what was known as the “Solemn Stuttgart Declaration”81 took place in which the Commission was asked to produce a report on what was to be the White Paper on completing the Internal Market82 prior to the Single European Act. 2.7.- The Commission’s proposal, September 1983 In view of the Council’s unenthusiastic attitude, in September 1983, the Commission submitted a new Telecommunications proposal83 . In this document the Commission once again emphasized the same arguments that had been used in the past in the following terms: " The telecommunications industry offers an infrastructure that is essential for the development of countless aspects of information technologies. 80 CEPT. http://www.cept.org/, visited 8/9/2010. 81 Solemn Declaration of the European Union. Stuttgart 19 June 1983. http://aei.pitt.edu/1788/01/stuttgart_declaration_1983.pdf, visited 8/9/2010. 82 COM(85) 310. Communication of the Commission to the Council. White Paper on the achievement of the internal market. Brussels, 14 June 1985 83 COM(83) 573. Communication de la Commission au Conseil sur les Télécommunications. Lignes d´Action. Bruxelles, le 29 Septembre 1983 The Electronic Communications Policy of the European Union 56 During the period 1983-1993, the telecommunications equipment sector, together with the services sector, will become one of the biggest sectors of industry. A telecommunications strategy oriented towards the future should create a space for telecommunications and telematic markets on a Community level" In order to implement these objectives, and in accordance with the "spirit of Stuttgart to develop new Community policies", the Commission proposed to the Council the adoption of the Action Plan which appears in Table 3.2. Table 3.2 TELECOMMUNICATIONS PROPOSALS 1983 and 1984 ACTION PLAN A Establish medium and long-term telecommunications objectives within the Community B Definition and implementation of joint research and development action in telecommunications. C Expansion of handset market and implementation of joint Community actions at international forums. D Joint development of the international part of the future telecommunications infrastructure in the Community. E Extensive use of modern telecommunication techniques to progress and develop the most disadvantaged areas of the Community. F Progressive expansion of the area of the communication equipment markets controlled by network operators’ purchases. These new Commission proposals contained some of those that featured in the 1980 proposal along with others from general policy documents the Commission was preparing at the time. One of these new proposals, specifically that referring to the use of telecommunications techniques to progress and develop the most disadvantaged areas of the Community, appears here as a consequence of the reform of the 1984 ERDF Regulations84, which created the role of the Community Programme for Regional Development and would subsequently lead to the STAR Programme. In this context, the Council could not put off considering the Commission proposals to carry out actions in the area of telecommunications any longer, however, it seemed risky to allow the Commission to act on its own and lose control of the possible results. Instead of the Telecommunications Body proposed by the Commission, in November 1983, the Council created the Senior Officials Group on Telecommunications – SOG-T85. The Commission accepted the collaboration of the SOG-T until, as a consequence of the Single European Act, it had the necessary jurisdiction to act on its own and implement its own proposals. From then on, the Commission could dispense with the collaboration of such a senior Group. 84 Council Regulation (EEC) No 1787/84 of 19 June 1984 on the European Regional Development Fund. OJ L 169, 28 June 1984 85 Decision of the Council of Ministers of Industry on the creation of a Seniors Officials Group of Telecommunications (SOG-T). Brussels, 4 November 1983 Chapter 3: The preliminary stages of the Telecommunications Policy. Period 1977 – 1986 63 the Member States, through their telecommunications operators, received financial support which helped to finance improvements to their infrastructures and networks. Likewise, it must be said that the assistance received by private companies to jointly finance their projects was not only less but, generally, thinly distributed among projects with a limited scope at a time when technological progress quickly led to obsolescence. 4.- CONCLUSIONS This Chapter has reviewed the European Institutions’ initial steps towards defining a Telecommunications Policy at a time in which telecommunications were still managed under a monopoly controlled by the Member States. It has also looked at the early attempts to avoid what has today become known as digital divide, which involved including the improvement of telecommunications networks and services in the most disadvantaged areas of the Community in the Regional Development Policy objectives. The study of this initial period will be completed by the analysis of the Standardisation Policy and its application to telecommunications equipment which is addressed in the next Chapter. 65 CHAPTER 4 THE START OF THE TELECOMMUNICATIONS STANDARDISATION AND CERTIFICATION POLICY. PERIOD 1977 – 1986 67 CHAPTER 4 THE START OF THE TELECOMMUNICATIONS STANDARDISATION AND CERTIFICATION POLICY. PERIOD 1977 – 1986 1.- INTRODUCTION This Chapter looks at the start of the actions related to the Standardisation and Certification of terminal equipment as part of the European Union's Telecommunications Policy during the period 1977 – 1986. The creation of the single market encouraged the development of a European Community Standardisation Policy, which was also applied to the telecommunications sector. This Chapter starts by analysing the general aspects of the Standardisation Policy that the European Community designed during the said period, with the purpose of creating a single market. The prominence of European Standards, versus those being developed by Member States, and the CE marking, were the major achievements of the said actions. It goes on to examine the evolution of specific standardisation and certification actions in the telecommunications sector within the framework of the first directions of the Telecommunications Policy described in the previous Chapter. 2.- OVERVIEW OF THE STANDARDISATION AND CERTIFICATION OF TELECOMMUNICATIONS The drafting of telecommunications standards and recommendations goes back to the origins of this sector. The first patents for telephones and other related equipment, the specific nature of telecommunications networks and the need for the interoperation of their different distributed elements soon underscored the need to unify the technical characteristics of the different items of equipment used. As soon as it became possible to interconnect the telecommunications networks owned by different companies, with the purpose of providing national and international services, the use of common technical specifications was no longer only advisable, but necessary so as guarantee the interoperation of different systems. The birth of the International Telegraphic Union in 1865 and its subsequent transformation into the International Telecommunications Union (ITU) 102,103, was a response to these needs. 102 ITU History http://www.itu.int/es/history/Pages/default.aspx, visited 8/9/2010. 103 Macpherson, A. International Telecommunication Standards Organizations. Artech House. London 1990 The Electronic Communications Policy of the European Union 68 The recognition of the ITU in 1947 as a Specialized Agency of the United Nations endorsed this situation and guaranteed the continuity of its actions. It is well known and acknowledged that the ITU, and in particular that of its former committees, the CCITT and CCIR, contributed enormously to the drafting of technical and functional Recommendations which have been used as the base for the development of global telecommunications equipment and services. However, the specific nature of the management of telecommunications businesses in Europe, mostly based on national monopolistic regimes, drove the development of national standards for their specific application in each of the Member States, in parallel to the drafting of international Recommendations. In many cases, these National Standards were merely a translation of the ITU Recommendations. However, the technological evolution and economic and social progress of the different countries led the respective administrations to consider themselves under the obligation to add certain specific characteristics to these international recommendations, and also to demand their compliance in all telecommunications activities performed in their territory. Consequently the first decades of the second half of the 20th century witnessed an upsurge in the standardisation activities of the different European States, giving rise to logical differences between the standards drafted by each country. Not only were these national standards regarded as beneficial for the development of telecommunications services, but also as vital for the development and progress of the equipment supply industry of national operators. Furthermore, this situation was coherent with the existence of national monopolies for the supply of equipment and operation of services. Likewise, this was not specific to the telecommunications sector and, to a greater or lesser extent, was also to be seen in other sectors of economic and industrial activity. With the globalization of economic activities, in particular, within the framework of the different editions of the General Agreement on Tariffs and Trade – GATT104, the use of standards for benchmarking the characteristics of the products being marketed became widespread, and there began to be concern that the use of national standards might hinder international trade. In any case, this situation did not have an impact on services, in particular, on telecommunications services, for a long period of time, for obvious reasons. When the European Union started to deal with the issues in the telecommunications sector, firstly with the aim of relaunching the equipment industry and subsequently with the idea of opening up the services market to competition, the standardisation issues began to grow in importance. Striking a balance between the need to define a standardisation policy capable of guaranteeing the consolidation of a single European market and permitting the interconnection of equipment, networks and services from different providers, and the need to respect the principles of free competition, was the objective of the actions in this field as an integral part of the Telecommunications Policy of the European Community. The actions during the period 1980-1986 marked the start of the European Standardisation Policy, geared towards strengthening of the industrial development of telecommunications under a monopolistic regime, as described below. In this context, the telecommunications actions were aimed at applying the Community's general standardisation guidelines to the terminals market. The following sections analyse the Community Institutions' main actions during this period, but first it would be useful to recall the general framework of the European Union's Telecommunications Standardisation and Certification Policy in which such actions took place. 104 GATT. A brief history http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm, visited 28/10/2010. Chapter 4: The start of the Telecommunications Standardisation and Certification Policy. Period 1977 – 1986 69 3.- SUMMARY OF THE EUROPEAN UNION'S STANDARDISATION AND CERTIFICATION POLICY. 3.1.- The Standardisation Policy in the Treaty of Rome Article 2 of the Treaty of Rome described the missions and aims of the European Community. Article 2. The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing the common policies or activities referred to in Articles 3 and 3a, to promote throughout the Community a harmonious and balanced development of economic activities, sustainable and non-inflationary growth respecting the environment, a high degree of convergence of economic performance, a high level of employment and of social protection, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States. Everyone knows that the Community's goals, as described in the Treaty, did not include any that referred to any activity related to the industry or other standardisation activities either per se or as part of other Community policies. Nonetheless, the Treaty did explicitly refer to free trade and free competition objectives as being the cornerstones of the common market. Article 3 clearly mentioned these issues: Article 3. For the purposes set out in Article 2, the activities of the Community shall include, as provided by this Treaty and in accordance with the timetable set out therein: a) the elimination as between Member States, of customs duties and quantitative restrictions on the import and export of goods, and of all other measures having equivalent effect; …… g) a system ensuring that competition in the common market is not distorted; h) the approximation of the laws of the Member States to the extent; The elimination of measures having equivalent effect can be interpreted as including the prohibition of any obligation to comply with technical standards or regulations that might hinder the free circulation of goods. The main body of the Treaty fully described the aforesaid principles, in particular those that referred to the free movement of goods, elimination of quantitative restrictions and approximation of national laws. The free movement of goods between Member States, explained in Article 9 (now Art. 28), was based on the creation of a Customs Union and the elimination of charges having an equivalent effect to the custom duties. The said elimination of quantitative restrictions between Member States, dealt with in Articles 30 (now Art. 34) and subsequent articles, prohibited quantitative restrictions affecting exports or measures having an equivalent effect. Finally, Article 100 (now Art. 115) mentioned that the The Electronic Communications Policy of the European Union 70 Council could issue Directives for the approximation of such provisions laid down by law, regulation or administrative action in Member States as directly affect the establishment of the common market. The industrial crisis of the mid 70’s prompted the Member States to make further use of national standards, which they regarded as true technical barriers, in order to protect their own industries from products from other European Community countries. Therefore, the use of the so-called “equivalent measures” was later to become a standard practice. The European Institutions' efforts to implement the technical harmonisation process and develop common standards throughout the Community were clearly not effective enough to counteract the Member States' actions aimed at protecting their national interests. 3.2.- The Technical Standardisation Commitments of the GATT. At this stage of the analysis of the European Community's standardisation actions, reference must be made to the commitments derived from the signing of the General Agreement on Tariffs and Trade – GATT, in 1979. All the Member States had signed the GATT in 1979, following the Tokyo Round negotiations that lasted from 1973 to 1979, producing the new framework for regulating international trade, which replaced the old GATT that dated back to 1967. The 1979 GATT document105 included the Agreement on Technical Barriers to Trade. With the view to fostering international trade and contributing to remove any technical barriers capable of hindering it, the countries that signed the agreement undertook to implement a series of rules that would be based on the following principles, among others: • Elimination of standards or regulations that might act as barriers to international trade. • Predominance of international standards over national standards. • In the event of the absence of an international standard, establishment of clear procedures for informing the Agreement's other signatory countries about one country's intentions to develop national technical regulations or standards. • Fair application of conformity tests, for national products and products from the Agreement's other signatory countries. • Invitation to accept the conformity certificates issued by institutions from other countries. Surprisingly, the technical standardisation and certification commitments between the European Community's Member States stemmed more from they had signed the GATT than from their membership of the Community. The Community Institutions were fully aware of this fact and geared all their efforts over the next few years to transforming what until then had been GATT commitments, into Community laws. 3.3.- The New Approach of the Community’s Standardisation Policy. Within the framework of the Treaty of Rome, one of the main principles of the Community’s actions for the achievement of the common market was the approximation of the laws of the Member States and Article 115 of the Treaty was the instrument used in this area. It must be said that the European institutions' initial actions in terms of technical standardisation were timid and inefficient. Thus, the 105 Agreement on Technical Barriers to Trade. GATT 1979 Chapter 4: The start of the Telecommunications Standardisation and Certification Policy. Period 1977 – 1986 71 problems that arose in approximating national laws in the standardisation field106,107 and, in particular, the industrial crisis of the 70’s, fostered a conviction that more vigorous action was required in this field. Following a proposal from the Commission108 , in March 1983 the Council adopted Directive 83/189/EC, laying down a procedure for the provision of information in the field of technical standards and regulations109. This served as the basis for what would later be called the “New Approach in the European Community's Technical Harmonisation and Standardisation Policy". The document in question basically enshrines the spirit of the 1979 GATT Agreement on Technical Barriers to Trade, moving ahead with new standardisation action reporting procedures. Moreover, this was the first Community document to include the definitions of technical specifications, standards and technical regulations, which were word-for-word matches of the GATT definitions, as shown below: ““Technical Specification: A specification contained in a document which lays down the characteristics required of a product such as levels of quality, performance, safety or dimensions, including the requirements applicable to the product as regards terminology, symbols, testing and test methods, packaging, marking or labelling.” Standard: Document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is not mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method. Technical regulation: Document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method. Under this Directive, Member States were obliged, inter alia, to: • Inform the Commission and all other Member States of national standard drafting programmes every three months. • Invite the Commission and all other Member States to participate in the national standard drafting processes. • Inform the Commission and all other Member States of all proposed national standards. • Refrain from starting to draft national standards while European standards were being drafted. • Inform the Commission of any national project to draft technical regulations, except in the case of a simple transposition of an International or European standard. • Suspend the application of technical regulations if the Commission or another Member State considers that such application is a barrier to free trade. 106 Agreement of the Council of 28 May 1969 on the Status Quo. OJ C 76. 17 June 1969. P. 9 107 Agreement amending the Council Agreement of 28 May 1969 on the Status Quo. DO C 15 March 1973. P. 3 108 Council Directive proposal laying down a procedure for the provision of information in the field of technical standards and regulations. OJ C 253. 1 October 1980. P. 2 109Council Directive 83/189/EEC of 28 March 1983 laying down a procedure for the provision of information in the field of technical standards and regulations. OJ L 109. 26 April 1983. P. 8. The Electronic Communications Policy of the European Union 72 • Creation of a Standing Committee formed of representatives of the Member States and chaired by a representative of the Commission, to follow up the objectives of this Directive. Accordingly, on 13 November, 1984 the European Commission signed an Agreement on General Guidelines for Cooperation with the European standardisation organizations, the CEN110 and CENELEC111. This Directive was first amended112 in 1998 so as to expand its scope of application to agricultural products and further strengthen the established information procedure. Subsequently, the Directive was amended in 1994 for the second time and for the same purpose113. Meanwhile, the Council made headway in drawing up the European Standardisation Policy. At its meeting on 7 May 1985, the Council approved a Resolution114 on the New Approach to Technical Harmonisation and Standards, which included the Conclusions on Standardisation approved at a previous Council meeting held on 16 July 1984, laying down guidelines for the Community's technical harmonisation and standardisation policy. The Council put forward and adopted the following principles in these documents: “- agreement by the Member States to keep a constant check on the technical regulations which are applied - whether de jure or de facto - on their territory so as to withdraw those which are obsolete or unnecessary; - agreement by the Member States to ensure the mutual recognition of the results of tests and the establishment, where necessary, of harmonized rules as regards the operation of certification bodies; - agreement to early Community consultation at an appropriate level, in accordance with the objectives of Directive 189/83/EEC where major national regulatory initiatives or procedures might have adverse repercussions on the operation of the internal market; - extension of the Community practice in matters of technical harmonisation of entrusting the task of defining the technical characteristics of products to standards, preferably European but if necessary national, where the conditions necessary for this purpose, particularly as regards health protection and safety, are fulfilled; - a very rapid strengthening of the capacity to standardize, preferably at European level, with a view to facilitating on the one hand harmonisation of legislation by the Community and on the other industrial development, particularly in the field of new technologies....” The full text can be found in the many papers and documents published at the time115. 110 CEN. European Committee for Standardisation. http://www.cen.eu/, visited 28/10/2010. 111 CENELEC. European Committee for Electrotechnical Standardization. http://www.cenelec.eu/, visited 28/10/2010. 112 Council Directive 88/182/EEC of 22 March 1988 amending Directive 83/189/EEC laying down a procedure for the provision of information in the field of technical standards and regulations. OJ L 81. 26 March 1988. 75 113Directive 94/10/EC of the European Parliament and the Council of 23 March 1994 materially amending for the second time Directive 83/189/EEC laying down a procedure for the provision of information in the field of technical standards and regulations. OJ L 100. 19 April 1994. P. 30 114 Council Resolution of 7 May 1985, on the new approach on harmonisation and technical standards. DO C 136. 4 June 1985. P. 1 115 Nicolas, F. Common standards for enterprises. Ed. Commission of the European Communities. Brussels 1994. Chapter 4: The start of the Telecommunications Standardisation and Certification Policy. Period 1977 – 1986 79 (b) on the basis of international standardisation activities: - the European standards institutions and specialized technical bodies in the information technology and telecommunications sector shall be invited to establish European standards, European prestandards or telecommunications functional specifications having recourse, if necessary, to the drafting of functional standards, to ensure the precision required by users for exchange of information and data and systems interoperability. ……… - the same bodies shall be invited to prepare technical specifications which may form the basis of European standards or European prestandards in the absence of, or as a contribution to the production of, agreed international standards for the exchange of information and data and systems interoperability; (c) measures to facilitate the application of the standards and functional specifications, in particular by means of coordinating Member States' activities in: - the verification of the conformity of products and services to the standards and functional specifications on the basis of test requirements specified; - the certification of conformity to standards and functional specifications in accordance with properly harmonized procedures. (d) promotion of the application of standards and functional specifications relating to information technology and telecommunications in public sector orders and technical regulations. The importance of this Council Decision is undeniable. First of all, it reproduced many of the contents of Directive 83/189/EC and, secondly, it sought to put the spirit of the New Approach to standardisation and certification into the information technology and telecommunications sector. The fact that this Decision was not restricted solely and exclusively to telecommunications was by no means a coincidence. The Community Institutions were expanding the spectrum of their concerns both towards telecommunications and towards information technologies, in order to allow the CEPT and CEN/CENELEC to act freely, albeit each in their respective fields. This manner of tackling the problem could be regarded as a premonition of the future creation of the ETSI as a European telecommunications standardisation body, which, as will be seen later on, relied on the work of the CEPT, while moving the CEN and CENELEC out of the picture. This Decision was a fine example of the praiseworthy subtlety with which the Community Institutions tend to weave their strategies and, in this case, cannot be criticized. As expected, the Commission drafted a report on the development of the objectives of this Decision, which it published in 1995132 4.3.- The start of Certification and the opening up of the terminal market. Creating a common terminal market first entailed tackling the problems involved in the certification process required in each Member State. It should be remembered that, at the time, telecommunications services were operated as a monopoly and the telecommunications Administrations were responsible for purchasing the terminals that were then rented to subscribers. Any terminal equipment marketed by a Member State would thus require the certificate issued by the authorities, in accordance with a series of specific criteria. 132 COM(95) 39. Report from the Commission to the Council and the European Parliament on Standardization in the field of Information Technology and Telecommunications - 19921993 Report. Brussels, 23 Mars 1995. The Electronic Communications Policy of the European Union 80 However, any approximation in matters concerning the certification processes of Member States required the implementation of widely accepted technical standards. In part, this problem had been addressed within the framework of the CEPT. In July 1984, the Commission and the CEPT had signed a memorandum of understanding, whereby the CEPT would draft a common set of standards and specifications for the certification of telecommunications equipment in the European Community. Subsequently, in November 1985, the parties signed an agreement in Copenhagen whereby certain recommendations issued by the CEPT would be raised to the category of European Telecommunications Standards – NET, and the signatory countries agreed to use them. This agreement was to serve as the basis for the Community’s telecommunications standardisation policy and led to the creation of the ETSI in 1988. So to start tackling the problem posed by the mutual recognition terminal equipment certification, in July 1986 the Council adopted Directive 86/361/EC 133. This Directive laid the foundations base for mutual certification practices, establishing a timetable for achieving these goals. Any procedure of this kind called for technical standards and conformity specifications that were common to and recognized by all the Member States, and this could only be achieved within the framework of the CEPT agreements, as described in the previous section. After this had been solved, the mutual certification process could be addressed. The following contents of the Directive are worth highlighting: Article 4 The Commission shall: 1. draw up each year, after consulting the Committee referred to in Article 5 and with due regard to the general programme of standardisation in the information technology sector: - a list of international standards and international technical specifications in telecommunications to be harmonized, - a list of terminal equipment for which common conformity specifications should be drafted as a matter of priority, on the basis above all of the essential requirements, - a timetable for this work; 2. request the CEPT to draw up the common conformity specifications in the form of NETs, within the specified time limits; in so doing the latter shall, when appropriate, consult other specialized standardisation organizations such as the European Committee for Standardisation (CEN) and the European Committee for Electrotechnical Standardisation (CENELEC). And further on added: Article 6 1. For the purposes of this Directive, a 'NET' shall be regarded as the equivalent of the common conformity specification. Reference to NETs shall be published in the Official Journal of the European Communities. … … 133 Council Directive 86/361/EEC of 24 July 1986 on the initial stage of the mutual recognition of type approval for telecommunications terminal equipment. OJ L 217. 5 August 1986. P. 21 Chapter 4: The start of the Telecommunications Standardisation and Certification Policy. Period 1977 – 1986 81 3. The common conformity specifications shall be used in all Member States by the competent authorities for any verification demanded for type approval purposes of the relevant terminal equipment. Article 7 … … 4. Member States shall ensure that telecommunications administrations use common conformity specifications when purchasing terminal equipment covered by such specifications … … In November 1990 and February 1993, the Official Journal of the European Communities published the list of NET Standards134,135 referred to in Directive 86/361/EC. The analysis of the certification-related actions carried out during the first stage would not be complete without mentioning the certification laboratory programme, also known as the Conformance Testing Services – CTS programme136. In 1985 the Commission launched the CTS-1 programme, designed to guarantee the availability of laboratories capable of carrying out the tests required for certifying compliance with the telecommunications standards. The purpose of these actions was to contribute, with community funds, to funding the creation of laboratories capable of certifying compliance with European standards in the information technology and telecommunications fields. Therefore, whenever a European standard was adopted, there would be at least two laboratories in different countries capable of carrying out the tests. The programme was further supported by the adoption of the aforementioned Decision 87/95/EC, which enabled the Commission to launch subsequent editions. 5.- CONCLUSIONS This analysis of the application of the Standardisation and Certification Policy to the Telecommunications sector concludes the study of the preliminary stages of the European Union's Telecommunications Policy in the period 1977 – 1986. The entry into force of the first reform of the Treaty, in July 1987, marked the start of the fundamental stage of the Telecommunications Policy, which would end with the implementation of free competition in 1998. This period will be analysed in the next four Chapters. 134 Recommendation about the European Telecommunication Standards (NET). OJ C 210. 14 November 1990. P.2 135 European Telecommunication Standards (NET) Application of the Directive 86/361. OJ C 53. 24 February 1993. P. 6. 136 Standardization in information technology and telecommunications. Commission of the European Communities. November 1990 83 CHAPTER 5 THE TELECOMMUNICATIONS LIBERALISATION PROCESS. PERIOD 1987 – 1998 85 CHAPTER 5 THE TELECOMMUNICATIONS LIBERALISATION PROCESS. PERIOD 1987 – 1998 1.- INTRODUCTION This Chapter begins the analysis of the most important stage in the evolution of the Telecommunications Policy in the European Union, corresponding to the period between 1987 and 1998. After the Single Act came into force in July 1987, the European Community started the process for the progressive implementation of free competition in the telecommunications sector, which would reach its climax on 1st January 1998. Even though a long time has passed, it is a very interesting period of time for anyone who wants to learn exactly how the European Union defined its Telecommunications Policy and to find the keys to many of the problems which are currently hard to understand. Therefore, this period takes up four Chapters of this book, which will independently and thoroughly analyse the liberalisation process, the process of harmonising the laws of the Member States, the standardisation and certification strategy and, finally, the corrective measures applied to free competition, introduced during the said period. This Chapter will provide an in-depth analysis of the liberalisation of telecommunications in the European Union, i.e., the way in which the telecommunications monopolies were dismantled and the introduction of free competition for the operation of services and infrastructures. This stage was led by the European Commission, which was determined to include telecommunications within the framework of the single market. The Chapter starts with a look at the initial strategy proposed by the Commission in 1987, which led to the liberalisation of terminals, value added services and leased lines. Secondly, it analyses the events that took place in 1993, since this was one of the crucial moments in the period in question. This was an eminently political stage that resulted in the removal of any obstacles liable to prevent the completion of the process. The third and last part of the Chapter reviews the events from 1995 and until free competition came into force in 1998. You should not worry if you cannot find information about some of the events that took place during this period of time, because they will most likely be explained in the next few Chapters, which will be structured in the same way as the analysis of the Liberalisation process that follows. The Electronic Communications Policy of the European Union 86 2.- THE STRATEGY OF 1987. 2.1.- Background and context The approval of the Single Act in 1986 brought with it a series of amendments to the Treaty of Rome, which would be vital in the development of the community Telecommunications Policy. The creation of the single market was one of the main objectives of the Community, as described in Article 8A (currently Art. 26), which consolidated its powers to progressively establish the single market and guarantee the free circulation of goods, services, people and capitals. In addition, so as to avoid institutional blockage problems in the attainment of the objectives described in Article 8A (currently Art. 26), the Council implemented the qualified majority voting system, which was stipulated in Article 100A (currently Art. 114). The Parliament went from being a mere consultation body to become a body which cooperated with the Council in the legislation activities, allowing it to automatically receive the proposals from the Commission, without having to wait for the Council to seek its opinion. The result was that this reform the strengthened the Commission's position, enabling it to modify its telecommunications strategy and focus it on the lifting of barriers liable to hinder the development of the single market, i.e., the monopolies in the sector. In the mid 80’s, the situation in the United States, which is described in Appendix I, was the outcome of the dismantlement of the AT&T Group. Meanwhile in Great Britain, the passing of the Telecommunications Act in 1984 had led to the creation of OFTEL, forerunner of the current OFCOM, as the body responsible for supervising the application of telecommunications regulations, with the liberalisation of value added services and the start of the operation of the duopoly for the operation of voice telephony services. Evidently, all other countries in the Community were not unaware of the aforesaid events. 1986 also saw the start of the GATT negotiations in Punta del Este, Uruguay, which addressed the need to open up the services markets, in particular, telecommunications services, to international trade. Likewise, the Commission had reorganised its structures to carry on with the preparation of the single European market. This is when it reorganised the DG XIII with the former Directorate General XIII and the “Information Technology and Telecommunications” Task Force. The DG XIII was the forerunner of the current DG Information Society and Media. It was within this context that the Commission began to prepare the telecommunications strategy, and this time it did so without liaising with the Council or its Senior Officials Group-Telecommunications (SOG-T) and its Analysis and Research Group (GAP). Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 87 2.2.- The Green Paper on Telecommunications, June 1987. This situation led to the new telecommunications proposal presented by the Commission in June 1987, in the form of a consultation document titled: “Towards a dynamic European economy. Green Paper on the development of the common market for telecommunications services and equipment”137. The Commission drafted this document without the help of any external body, in particular without the Senior Officials Group-Telecommunications (SOG-T) that the Council had set up some years ago. Many years after the publication of the Green Paper, its contents, in particular, Chapter X, continued to provide the keys to the Commission's activities during that period and it surprising to see just how determined it was to carry them out and was aware of the fact that it had the legal means to do so, in accordance with the new European constitutional order approved by all the Member States in 1986. In my opinion, the Green Paper of 1987 remains one of the best elements of all the documents we are analysing and I am proud to say that I still have my original copy, which is one of my most prized professional possessions. In spite of everything, the Commission knew that it would run into difficulties in the process that had been started, as shown in the text of the document. Section 4.3 of Chapter 10 reads as follows: "The proposals aims at progressively introducing full Community-wide competition to the terminal equipment market, and as far as possible and as justified at this stage to telecommunication services. In pursuing the implementation of these proposals, and the lifting of existing restrictions, the Commission will take full account of the fact that the competition rules the Treaty apply to the Telecommunications Administrations, in particular to the extent that they engage in commercial activities. It may use, as appropriate, its mandate under article 90(3) of the Treaty to promote, synchronise and accelerate the on-going transformation." (underlined as in the original) This paragraph probably went unnoticed to most readers. In the light of subsequent events, one can assume that the Commission was determined to start liberalising the sector and, evidently, was ready to use all tools within its reach to achieve it. Table 5.1 summarises the proposals that the Commission made in the Green Paper, which would become its main lines of action in the telecommunications policy. 137 COM(87) 290. Towards a Dynamic European Economy, Green Paper on the development of the common market for telecommunications services and equipment. Brussels, 30 June 1987. The Electronic Communications Policy of the European Union 88 Table 5.1 GREEN PAPER ON THE DEVELOPMENT OF THE COMMON MARKET FOR TELECOMMUNICATIONS SERVICES AND EQUIPMENT, 1987 ACTION PLAN A Acceptance of continued exclusive or special rights of the Administrations regarding operation of the network infrastructure. B Acceptance of continued exclusive or special rights of the Administrations regarding certain basic services. C Unrestricted provision of all other services. D Strict requirements regarding standards for the infrastructure and services provided by the Administrations in order to create Community-wide interoperability. E Clear definition of requirements imposed by Administrations on providers of competitive services for use of the network. Development of the ONP. F Free, unrestricted provision of terminal equipment within and between Member States. G Separation of regulatory and operational activities of networks and services. H Strict continuous review of activities of Administrations, as required to prevent abuses. I Strict continuous review of activities of private service providers, as required to prevent abuse. J Application of the Community's Common Commercial Policy to Telecommunications. Adoption of common positions in the GATT negotiations. 2.3.- The consultation process of the Green Paper, June 1987. The Commission organised a consultation of the sector's main economic players about the proposals set out in the Green Paper. Surprisingly, the list of answers to the consultation published by the Commission includes organisations and institutions from very different backgrounds, although all treated on an equal footing, such as the SOG-T, the Government of the United States, User Associations, the European Space Agency and IBM, up to a total of 51 bodies138. At no time does the document say that the Parliament's opinion was sought and it was not until 1988 that it expressed its opinion when the Commission sent the Parliament its conclusions about the consultation process. On the basis of these results, in February 1998 the Commission issued a Communication titled: “Towards a competitive community-wide telecommunications market in 1992 implementing the Green Paper on the development of the common market for telecommunications services and equipment; state of discussions and proposals by the Commission".139. This document underscored the objectives of the Community's telecommunications policy and summarised the opinions gathered during the consultation process. 138 XIII/41 (88). Reactions to the Green Paper. Analysis of reactions submitted to the CEC. Brussels, January 1988 139 COM(88) 48. Towards a competitive community-wide; telecommunications market in 1992 implementing the green paper on the development of the common market for telecommunications services and equipment; state of discussions and proposals by the Commission. Brussels, 8 February 1988. Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 95 Article 8 gave telecommunications organizations' customers bound by a contract with more than one year to run to terminate the contract. Article 9 asked Member States to inform the Commission on the application of this Directive. Article 10 said that in 1992, the Commission would carry out an overall assessment of the situation in the telecommunications sector in relation to the aims of this Directive. Likewise, in 1994 the Commission would assess the effects of the measures referred to in Article 3. Finally, Article 11 stated that the Directive was addressed to the Member States, as usual. 2.10.- The reactions to the publication of the Service Directive. Following the publication of this Directive, various Member States - Spain, Italy and Belgium – lodged an appeal with the Court of Justice, as they disagreed with its contents150 . The Report for the Hearing prepared by the judge rapporteur in this case stated the following: - The appeal lodged by Spain, with the support of France, applied for the annulment of the Directive in relation to Article 2 insofar as it affected special rights and also in relation to articles 8 and 9. - The appeal lodged by Italy applied for the full annulment of articles 2, 4 and 8. - The appeal lodged by Belgium applied for the annulment of the whole Directive. The Court of Justice published its Judgment on 17th November 1992151 , and the contents of points 35 and 36 should be highlighted: "35.- The Court has held that the mere fact of creating a dominant position by granting exclusive rights within the meaning of Article 90(1) of the Treaty is not as such incompatible with Article 86 (see, in particular, the judgment in Case C-179/90 Merci Convenzionali Porto di Genova [1991] ECR I-5889, paragraph 16). 36.- However, the Court has also held that the extension of the monopoly on the establishment and operation of the telephone network to the market in telephone equipment, without any objective justification, was prohibited as such by Article 86, or by Article 90(1) in conjunction with Article 86, where that extension resulted from a State measure, thus leading to the elimination of competition (judgment in Case C18/88 GB-Inno-BM [1991] ECR I-5941, paragraph 24). The same conclusion necessarily follows where the monopoly on establishment and operation extends to the market in telecommunications services". It should be remembered that Article 86 (currently Art. 102) referred to the control of a dominant position in the Community. In its Judgment, the Court decided to: - Annul any reference to the regulation of special rights. 150C-271/90, C-281/90 and C-289/90. Kingdom of Spain, Kingdom of Belgium and Italian Republic v Commission of the European Communities. - Competition in the markets for telecommunications services. Luxembourg September – October 1990. 151 Judgment of the Court of 17 November 1992. - Kingdom of Spain, Kingdom of Belgium and Italian Republic v Commission of the European Communities. - Competition in the markets for telecommunications services. - Joined cases C-271/90, C-281/90 and C-289/90. Luxembourg, 17 November 1992. The Electronic Communications Policy of the European Union 96 - Annul Article 8 (contracts conditions) - Dismiss the rest of the appeal. The Judgment of the European Court of Justice clearly cast no shadow of doubt on the Commission's course of action, giving it free rein to abolish the monopolies in the voice telephony services sector. However, the text of the Judgment seems to infer that exclusive rights, i.e., monopolies, for the operation of telecommunications infrastructures, could be maintained, which would mean that it would be the Member States and not the Commission who had the powers over how such infrastructures were established and operated, partly due to the fact that they would not be covered by Article 7A (currently Art. 26) of the Treaty, on the free circulation of goods and services in the case of telecommunications equipment and services. In my opinion, this part of the Judgment could have been vitally important for the subsequent development of the Community Telecommunications Policy if all the Member States had decided to maintain their powers over telecommunications infrastructure-related decisions. As will be seen later in the light of subsequent events in the liberalisation process, nobody lodged any further serious appeals or took advantage of the potential advantages derived from the judgment. Everyone preferred to let the Commission play the bad guy. Last but not least, in September 1991 the Commission published a lengthy document with a broad set of Directives on the application of the rules of competition to the telecommunications sector152. 2.11.- Article 90 (currently Art. 106) of the Treaty. Given its bearing on the development of telecommunications, it is worthwhile reproducing the contents of Article 90 (currently Art. 106) of the Treaty of Rome. This Article is to be found in the following part of the Treaty of Rome: Part Three: Community Policies, Title I: Common Rules, Chapter I: Rules on Competition, Section One: Rules applying to undertakings. Article 90 (currently art. 106) reads as follows: “1.- In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in this Treaty, in particular to those rules provided for in Article 12 and Articles 81 to 89. 2.- Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Community. 15291/C 233/02. Guidelines on the applications of EEC competition rules in the telecommunications. OJ C 233, 6 September 1991. P.2 Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 97 3.- The Commission shall ensure the application of the provisions of this Article and shall, where necessary, address appropriate directives or decisions to Member States. 2.12.- Comments on the results of the 1987 strategy. The introduction of free competition in the telecommunications services market was clearly an outcome of the agreement reached by the Member States when they signed the Single Act and its subsequent amendments, and not the result of a specific negotiation process. Both in drafting the Green Paper and in its subsequent activities, the Commission showed that it was perfectly acquainted with the scope of its prerogatives and was prepared to exercise them in order to ensure the liberalisation of the sector and, in short, the introduction of telecommunications in the single market and in the new economic framework that would arise from the signing of the GATT. Throughout this process, the Commission took an energetic approach that led it to ignore all the other Community Institutions more than it should have done, and to pay far more attention than necessary to the sector's economic players. The Council and the Member States made it quite clear in their actions that they wished to protect and maintain their powers with regard to telecommunications matters and, in particular, regarding services. Despite being treated so inconsiderately by the Commission, the Parliament shows that it was powerless to take part in processes as important as the liberalisation of telecommunications. Finally, the Court of Justice backed the Commission in its proposals for the liberalisation of telecommunications services, and allowed it to extend this decision to voice telephony services. Likewise, the Court left the Infrastructure-related decisions in the hands of the Member States. The development and putting into practice of the 1987 strategy thus represented a major success for the Commission in its role as the guardian of the Treaties. Had the Commission not been involved, it most likely would have been impossible to have abolished the telecommunications monopolies and, in particular, the services monopolies, in such a short period of time. 3.- THE DECISIONS OF 1993. 3.1.- Background and context In Article 10 of the Service Directive, the Commission undertook to carry out a global reassessment of the situation of the telecommunications service sector in 1992, and it did so. After the publication of the Green Paper in 1987 and before starting with the said reassessment of the sector, other events had occurred which will be summarised in this section. During 1991, Great Britain reviewed the voice telephony duopoly and made the decision to fully liberalise the sector153. 153 Competition and Choice: Telecommunications Policy for the 1990s. HMSO, London 1991 The Electronic Communications Policy of the European Union 98 In view of the situation of the regional operating companies (RBOC´s) in the United States, there was a likelihood of a future review of the situation reached as a result of the dismantling of Bell System in 1982 and the possible lifting of the operating restrictions still in place. On the world trade scene, the negotiations of the Uruguay Round of the GATT were at an advanced stage and were oriented to including telecommunications services in the world services trade. Finally, the economic agents with interests in the telecommunications sector had increased, both in number and specific weight, since the Commission's consultation in 1988 and were obviously lobbying far stronger for the full liberalisation of the sector. As regards the structure of the European Community, the agreement that would lead to the Treaty on European Union was signed on 7th February 1992 in Maastricht, and came into force after 3rd November 1993. Article 189 B (currently Art. 294) of this new reform would bestow upon the Parliament co-decision powers in legislative processes and further extended the Commission's powers In this context, the Commission began preparing the 1993 telecommunications strategy, which is described in the next few sections. 3.2.- The review of the sector’s situation. Throughout 1991, the Commission ordered two studies on the evolution of the telecommunications sector up to 2010. The first study was of a technical-strategic nature and was titled "Telecommunications Issues and Options. 1992-2010"154. The second study was of a technicaleconomic nature and was titled "Performance of the Telecommunications Sector up to 2010 under Different Regulatory and Market Options"155. Although these studies are not analysed in in-depth here, it must be mentioned that the Commission used them to justify some of the proposals in its report. The decisions taken on the basis of the contents of these studies were so important that it is worth bearing them in mind and seeing later on just how right they were in their conclusions. However, other aspects that did not appear in any reference documentation also had a major bearing on the drafting of the Commission’s Report. One of the keys to everything that happened at the time lay in infrastructures and not so much in voice telephony services, which were both run as a monopoly in many Member States. The liberalisation of infrastructures had widespread appeal: - The companies that provided value-added services companies, in particular data communication services, and the new paging and mobile telephony services were not very comfortable having to use the infrastructures supplied by the telecommunications administrations, who very often were their direct competitors. 154 Arthur D. Little. XIII/328/92. Telecommunications. Issues and Options. 1992-2010. Report commissioned by the Commission. October 1991 155 Analysys. Performance of the Telecommunications Sector up to 2010 under Different Regulatory and Market Options. Report commissioned by the Commission. November 1991 Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 99 - The companies interested in operating new services over cable TV networks were keen to use these infrastructures to provide the subscriber loop. - The supply of infrastructure for deploying satellite-based point-to-point lines was mature enough for there to be an interest in offering such services independently from the traditional monopolies. - The owners of communications infrastructures, electricity utilities, services and railroad companies were interested in establishing their own networks, also independently of the telecommunications operators. - And the Commission itself, determined to promote trans-European networks, doubted the feasibility of its projects because the only interlocutors in many countries continued to be the telecommunications authorities, which were in a very difficult situation as a result of the Commission’s own decisions. Yet it did not seem possible to liberalise infrastructures without first liberalising voice telephony services. Therefore the voice telephony sector had to be liberalised. 3.3.- The Commission's Review, October 1992. As scheduled, in October 1992 the Commission published156 a review of the situation in the telecommunications sector, under the mandate included in article 10 of its Service Directive and article 8 of the ONP Framework Directive. The document was divided into two very different parts. The first part of the document was very similar to other reviews that the Commission had published in previous years, and ran through all the actions that had been carried out since the publication of the 1984 telecommunications strategy. The document was not brilliant, yet it was correct. The second part outlined the four options that the Commission asked the sector to consider as to the path that should be followed and which would serve as the basis for the future telecommunications policy. Surprisingly, many of the arguments used by the Commission to present the options proposed were very poor. The way in which the proposals were phrased seems to indicate that conflicting opinion existed within the Commission as to how the telecommunications-related actions should be carried out. These matters will be addressed later on. The Commission analysed the four options as follows. “Option 1: Freezing of the liberalisation process (which was started by the Green Paper and the Commission Directive 90/388), and maintain in effect the status quo. Option 2: Introducing extensive regulation of both tariffs and investments at the Community level in order to overcome the bottlenecks and in particular the surcharge on intra-Community tariffs. Option 3: The liberalisation of all voice telephony, i.e., international (inside and outside the Community) and national calls. 156 SEC(92) 1048. 1992 Review of the Situation in the Telecommunications Services Sector. Brussels, 21 October 1992. The Electronic Communications Policy of the European Union 100 Option 4: An intermediate option of opening to competition voice telephony between Member States”. In the next few paragraphs of the document, the Commission described the contents of these alternatives. In our opinion, the pages on which the Commission outlined the advantages and disadvantages of the proposed options were undeniably of the poorest quality of any Community telecommunications policy documents. They were simply dreadful! The text clearly shows that the Commission was not interested in option 1 at all, nor was it not very keen on option 2. As for options 3 and 4, the matter was more subtle. The Commission proposed them in equal terms, thereby underscoring the strong internal disagreement between one part that upheld the idea of full liberalisation and another faction that only wanted to liberalise telephone services and transnational infrastructures between Member States. However, the arguments in favour of option 4 were more coherent than those in option 3, (one could swear that they were written by a completely different person). The Commission’s document stated its preference for option 4: "Option 4 is fully compatible with existing policy and law since it is a continuation of the policy adopted by the Council and confirmed by the European Court of Justice". Further on, it added the following: "..The Commission ... considers that Option 4 seems better suited than others to the fundamental objectives of the Community in this policy area" Yet the document provided a clear warning about the true intentions of the Commission. The arguments in favour of option 1 included a warning that is valid for all other options, except for option 3: "Option 1 does not necessarily guarantee legal security because it could be attacked before the Court. Commission Directive 90/388 considered the exclusive rights for telephony incompatible with the Treaty and that its maintenance could only be justified on an exceptional basis under article 90 (2). If the Commission would consider that the conditions for this exception are not fulfilled for certain telephony services, its maintenance would therefore not be legally justified". (underlined by the author) The solution chosen by the Commission to settle its disagreements was to launch a consultation about all the options. The commitment it had made in Directive 90/388 was simply to “carry out a global reassessment of the situation of the telecommunications service sector in relation to the objectives established by this Directive" and nowhere did it mention the consultation process. The Commission, which tended to make its own decisions energetically and coherently, this time preferred to ascertain the opinion of the sector's key players before submitting its proposals to the Council and Parliament. In our opinion, by doing so it guaranteed that the most pro-liberalisation option, i.e., option 3, would succeed. The Commission gave a 3-month deadline, until 31st January 1993, for the submission of opinions. Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 101 3.4.- The Council Resolution of November 1992. At the meeting held on 19th November 1992, the Council issued a draft Resolution, which was finally adopted on 19th December157, acknowledging receipt of the Commission’s Review. Some aspects of this Resolution are highly significant because they highlight how the Council reacted to the Commission's initiative to organise a consultation of the sector's players, ignoring the usual procedure, which would have involved making a proposal to the Council so that it could make the final decision. The Council had the following to say about this: "Whereas the Commission has presented to the Council a communication in which it assesses the situation of the telecommunications sector... that the Commission has sought the opinion of the Member States about the aforementioned communication and the proposals contained therein..." The text clearly shows that the Council did not refer to, nor of course seem to accept, any sort of consultation of any parties other than the governments of the Member States. The Council went on to say: "EMPHASISES: that a political agreement that fully involves the Council and the European Parliament will constitute the best support for the application of the future Community telecommunications policy." Furthermore, so as to reinforce its participation in the decision-making process, it called on the Commission to do several things, including the following: "CALL ON THE COMMISSION: to liaise closely with the Member States in this regard, in particular with the national regulatory officials by setting up a high-level ad hoc committee" Finally, it tried to make clear its wishes to continue with the process: "WELCOMES: the Commission's intention to present a report at the next meeting of the Council of Telecommunications Ministers, and indicates that the Council will then determine how the work should continue". 3.5.- The European Parliament Resolution of April 1993. Despite the fact that the European Parliament had not been formally asked to express its opinion, it finally gave its opinion on the Commission’s document. In this regard, on 23rd April 1993, six months 157 Press release nº 10085/92. Session nº 1620 Council of Ministers. Telecommunications Council Resolution on the evaluation of the Telecommunications Sector on the Community. Brussels, 19 November 1992. The Electronic Communications Policy of the European Union 102 after the publication of the document and almost three months after the end of the consultation rounds, the Parliament adopted a Resolution that would be published on 31st May 1993158. Finally, on 12th February 1993, the Parliament adopted two Resolutions, the first one on the service sector in the internal market and secondly, on the role of the public sector in the completion of the internal market159. In the document on the service sector, the Parliament expressed its opinion about the liberalisation of the services market: "4. Supports the Commission's intention to fulfil its special duties in the framework of competition policy regarding the service sector, and more actively so the more decisive influence the State has as an economic operator in shaping the marketplace. "5. Asks the Commission to continue with its policy of opening the market and liberalising the public services sector, taking into account the special importance of applying the principle of subsidiarity so as to take account of the differences that exist in the traditional structures of the Member States." In the document on the Public Sector, the Parliament was even clearer about the liberalisation of sectors run as monopolies: "Calls on the Commission, within the framework of the competition policy, to make special efforts to defend the principle of freedom of access to the public service sectors following compliance of criteria of economic accessibility for all EU citizens, quality of the service and internalisation of environmental costs." These texts offer no doubt that this time the Parliament favoured the liberalisation of services. In this context, with the foregoing declarations, the Parliament adopted its Resolution on the Commission’s Review on the consultation process. The text in the Resolution depicts the Parliament's position on the proposed options, and it stated as follows: "Calls on the Commission to: a) to increase its checks on, and assess the impact of, the implementation by all the Member States of existing Directives, in particular Directive 90/388/EEC on telecommunications services, so as to prevent distortion of competition as a result of varying degrees of observance, and to take any necessary enforcement action as appropriate. b) to submit as early as possible a more detailed study in the form of a Green Paper of the implications of liberalization in the provision of telecommunications infrastructures, including private infrastructure for corporate networks and third party infrastructure. c) to prepare, in the light of such a study, the necessary measures to secure an opening up to competition of intra-Community vocal telephony (Option 4 in the Commission Communication) before the end of 1997. 158European Parliament Resolution of 20 April 1993 on the Commission's 1992 review of the situation in the telecommunications services sector. OJ C 150. 31 May 1993. P. 39. 159 European Parliament Resolution of 12 February 1993 on the service sector in the internal market. European Parliament Resolution of 12 February 1993 on the role of the public sector in the completion of the internal market. OJ C 72. 15 March 1993. P. 159. Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 103 d) to carry out a rigorous analysis of all the results of the above-mentioned liberalization of intra-Community vocal telephony and, if these turn out to be fully satisfactory and greater convergence is arrived at in the situation of the telecommunications sectors in the various Member States, to adopt appropriate measures to liberalize all vocal telephony (Option 3) before the year 2000." Even though it called for caution, the Parliament also agreed with the “official” position maintained by the Commission, and it went further by once more expressing its criticism of the attitude of the Member States and, in particular, of the Council. This Resolution had little time to have any effect on the Commission's conclusions, because only eight days after it was adopted, the Commission published a document with the conclusions of the consultation process. 3.6.- The Commission's Communication to the Council and Parliament on the consultation, April 1993. On 28th April 1993, the Commission issued a Communication160 to the Council and European Parliament on the consultation on the review of the situation in the telecommunications services sector. In this lengthy, 50-plus page document, the Commission, proposed the future lines of the Community’s Telecommunications Policy, after having explained how the consultation was carried out and summarised the opinions received. One might say that this document was as important as the Green Paper of 1987. In the first pages of the document, the Commission wrote: "While the Commission, in its Communication, expressed an initial preference for Option 4, this did not prejudge the outcome of the consultation. Indeed, the oral and written comments received by the Commission have helped it to refine and re-focus on the areas in which further action is most appropriate and urgent". After presenting its assessment of the results of the consultation, the Commission added: "There is general acceptance that, beyond the first phase of consolidation of the current regulatory framework, the longer term trend towards full liberalisation of public voice telephony, represented by Option 3, is inevitable and necessary as a result of technological and market developments. Full liberalisation before the end of the decade was generally held to be a realistic timescale." The Commission was happy to announce that option 3 had been victorious in the consultation process, thus settling any internal disagreements on this matter. One might be surprised to see how quickly the Commission accepted the fact that its official proposal had not been chosen in the consultation process, unless one interpreted this fact as evidence that it had decided to seek the opinion of the sector's economic players to settle its own internal differences. Should this have been the case, then the Commission managed to get the sector to say what it considered inappropriate to say itself. This is a very good example of how clever the Commission can be at times. 160 COM(93) 159. Communication to the Council and European Parliament on the consultation on the review of the situation in the telecommunications services sector. Brussels 28 April 1993. The Electronic Communications Policy of the European Union 104 In the last chapter of the document, the Commission outlined a series of proposals that it referred to as the “Key Factors” for the development of the future regulatory environment and which we believe to be the essence of the 1993 Telecommunications strategy. In this case, the Commission said: "On the basis of the consultations, the Commission considers the following lines of action as the best way of moving forward towards a regulatory environment for the future" Table 5.2 shows summarises the lines of action proposed by the Commission. Table 5.2 THE COMMISSION'S PROPOSALS, 1993 ACTION PLAN A Consolidation of the current regulatory framework. B Common definition of the Universal Service principles. C Development of a framework for interconnection agreements. D Definition of principles for access charges. E Independence of Telecommunications Organisations. F Ensuring Social and Regional Cohesion G Preparing the Environment for Trans-European Networks. H Working Out a Balanced Approach to Infrastructure Provision. I Ensuring a Balanced International Environment. J Developing the Balance Between National and Community Regulation. In short, the Commission established its future master lines of action of the Telecommunications Policy in this document. The document included the schedule of actions that would lead to the full liberalisation of public voice telephony services before 1st January 1998. In an annex to its Communication, the Commission included a draft Resolution of the Council which, if adopted, would lead to the full recognition of the Commission's proposals regarding the new guidelines on Community telecommunications policy, including the full liberalisation of telecommunications services. In the text of this draft Resolution, the Commission proposed that the Council accept the results of the consultation, recognise as key factors in the development of future regulatory policy those proposed by the Commission, and note the timetable proposed by the Commission for the implementation of such measures. Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 111 Strangely enough, the group did not include any representatives of the Member States or the European Parliament, contrary to the instructions of the European Council. The Bangemann group completed the mission with which it had been entrusted. However, rather than “determining the priorities and defining the modes of action”, the group drafted a highly ideological document in favour of the privatisation of the sector, clearly marking the role to be played by each agent in the telecommunications sector, as follows. First of all, in calling it “Europe and the Global Information Society”, the expert group was hinting at Vice President Al Gore, who had announced the creation of the Global Information Infrastructure in Buenos Aires weeks before the presentation of the Bangemann Report. The United States had globalised its Information Infrastructure and Europe was keen to globalise its Information Society in the same way. The first page of the Report summarised the contents of the text: "This Report urges the European Union to put its faith in market mechanisms as the motive power to carry us into the Information Age. This means that actions must be taken at the European level and by Member States to strike down entrenched positions which put Europe at a competitive disadvantage: - it means fostering an entrepreneurial mentality to enable the emergence of new dynamic sectors of the economy - it means developing a common regulatory approach to bring forth a competitive, Europe-wide, market for information services - it does NOT mean more public money, financial assistance, subsidies, dirigisme, or protectionism. (the underlined text appears in italics in the original document) In addition to its specific recommendations, the Group proposes an Action Plan of concrete initiatives based on a partnership between the private and public sectors to carry Europe forward into the information society." The text was short and clear and left no doubt about the opinions of the authors, including the Commission chairing the group and which was in favour of the full liberalisation of the sector. There follows a short description of the most important aspects in the contents of the text. The text had the following to say about the role of Telecommunications Operators - TOs: TOs relieved of political constraints, such as: * subsidising public functions * external R&D activities * contributions to land planning and management objectives * the burden to carry alone the responsibilities of universal service.” As for the role of member States, it had to say the following: The Group recommends Member States to accelerate the ongoing process of liberalisation of the telecom sector by: The Electronic Communications Policy of the European Union 112 * opening up to competition infrastructures and services still in the monopoly area * removing non-commercial political burdens and budgetary constraints imposed on telecommunications operators * setting clear timetables and deadlines for implementation of practical measures to achieve these goals As regards the role of the private sector: “The Group believes the creation of the information society in Europe should be entrusted to the private sector and to market forces. Private capital will be available to fund new telecoms services and infrastructures providing that the different elements of this Report's Action Plan are implemented … As for the role of the European Institutions responsible for telecommunications policy: “A proper regulatory framework designed to achieve: * market regulation to enable and to protect competition; * a predictable environment to make possible strategic planning and investment”. The Group recommends the establishment at the European level of an authority whose terms of reference will require a prompt attention. The European standardisation process should be reviewed in order to increase its speed and responsiveness to markets. Another of this report's proposals was the establishment of an “Authority” that would be responsible for the enforcement of the telecommunications regulatory framework in the European Union. Finally, the group proposed launching a set of ten applications with a demonstration function to promote their use. These applications would establish the basis for the construction of the Information Society in Europe. As scheduled, the Report was presented to the European Council in Corfu on 24th-25th June 1994 and finally accepted with some minor changes178. As for the mandate to the Community Institutions to complete the telecommunications regulatory framework, the European Council of Corfu invited the Council and European Parliament to adopt, before the end of the year, measures in the areas in which proposals already existed, and proposed that the Commission create a programme to cover the remaining measures required for completing the regulatory framework. The Commission had got the European Council to tell it what it wanted to be told and it quickly got on with complying with its mandate, turning the contents of the Bangemann Report into the doctrine that had to be followed. Once again, it got its way. 178Conclusion of the Corfu European Council, 24-25 June 1994. Bulletin of the European Union nº 6, June 1994. P. 7 Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 113 4.5.- The Communication: “Europe’s way to the Information Society, July 1994 Following the publication of the Bangemann Report, on 19th July 1994 the Commission approved a Communication titled: “Europe's way to the Information Society. Action Plan”179. The introduction of this document went through the events described in the previous sections. When talking about the Bangemann Report and the conclusions of the Corfu Council, it said the following: The Commission fully supports these conclusions. It welcomes the European Council's invitations (a) to the Council and the European Parliament to adopt before the end of this year measures already proposed by the Commission and (b) to itself to establish a work programme for the remaining measures needed at the Community level. Further on, it added: “This Communication presents an overview of the Commission's work programme on the information society. The Commission's response covers four areas: - the regulatory and legal framework, for which new proposals will be made, in particular regarding telecommunications infrastructure and services, on the protection of intellectual property rights and of privacy, on media concentration, as well as the updating of the "rules of the game" for the free movement of TV broadcast in the Community; - networks, basic services, applications, and content, where there is a need to bring the parties concerned together in order to stimulate the development of applications in the areas proposed by the High Level Group and endorsed by the European Council; social, societal and cultural aspects, including the linguistic and cultural dimensions of the information society stressed by the European Council; and - promotion of the information society in order to increase public awareness and support. The Commission invites the Council and the European Parliament, as well as the Social and Economic Committee and the Committee of Regions, to debate the issues and give political backing to the development of this action plan. Among other issues, the document addressed the regulatory and legal framework and, in particular, the Liberalisation of Infrastructures. The Commission stated the following: The Bangemann group's report recommends that Member States accelerate the ongoing liberalisation of the telecom sector. It is now appropriate to seek agreement on the principle of infrastructure liberalisation in the telecommunications sector, together with clear dates for its implementation. These efforts would complement the agreement on full service liberalisation according to Council Resolution of July 1993. A Communication will be presented in September on the approach proposed. 179 COM(94) 347. Europe's Way to the Information Society - An Action Plan. Brussels, 19 July 1994 The Electronic Communications Policy of the European Union 114 The second step will be for the Commission to publish a Green Paper on infrastructure by the end of the year. This will be open to a broad consultation process on the conditions for general liberalisation of infrastructure for the provision of public telecom services. What the Commission was proposing posed a slight formal problem (the solution to which is explained below), namely on how to propose to the Council the “agreement on the start of the liberalisation of infrastructures in the telecommunications sector”, in other words, the definition of the timetable. The Commission was determined to speed up the process as much as possible because more than a year had passed since the last Council Resolution mentioned above, and which had been devoted to legitimising its position through the intervention of higher authorities. In relation to the telecommunications infrastructures, in its July 1993 Resolution the Council had backed the Commission's intention to publish a Green Paper before 1st January 1995. So if the Commission published the Green Paper directly, it would be forced to submit it to consultation before presenting its proposals to the Council. It would have too rude to have submitted a specific liberalisation timetable to public consultation before it had been accepted by the Council. Yet before it could publish the Green Paper on Infrastructures, the Commission needed the Council to first legitimise the basic principles set forth in the Bangemann Report, and had to find the way to do so. It did not seem right to prepare a specific Communication to the Council to address the Infrastructure Liberalisation timetable without taking into account the Green Paper. In any case, the Commission did prepare the Communication, titled “Part One of the Green Paper on the Liberalisation of Telecommunications Infrastructures and Cable television networks. Principles and Timetable”. Subsequently it would publish Part Two and the real contents of the Green Paper on Telecommunications Infrastructures. It must be added that the Commission's document also included the Bangemann group's proposal for the establishment at European level of an “Authority”, mentioning the need for an in-depth analysis of its powers. In this regard, the Commission stated that a specific proposal would have to be submitted during 1996. In addition, the Commission's last proposal, entitled “Promotion of the Information Society” would lead to the creation of an Information Society "information and promotion” office which, surprisingly, was not under the responsibility of the department of Vice President Bangemann. The office was known by its initials, ISPO, which stood for Information Society Project Office180. Finally, complying with the Council's request, in April 1994 the Commission had published the Green Paper on personal and mobile communications181, and after the pertinent consultation process, it announced the results in November 1994182. 180 Communication of Mr Bangemann to the Commission. The Structures of Coordination and Consultation for the Society of the Information. Brussels, February 1995. 181 COM (94) 145. Towards the personal communications environment. Green Paper on a common approach in the field of mobile and personal communications in the European Union. Brussels, 27 April 1994 182 COM (94) 492. Communication to the European Parliament and the Council of the consultation on the Green paper on mobile and personal communications. Proposal for a Council Resolution on the further development mobile and personal communications in the European Union. Brussels, 23 November 1994 Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 115 4.6.- The Council's Agreement on the Information Society, September 1994. On 28th September 1994, the German presidency called a joint Council of Telecommunications/Industry Ministers183, for the purposes of analysing the document drafted by the Commission, which was titled “Europe’s way to the Information Society - An action Plan”. It was the first time since July 1993 that the ministers met to deal with the matters regarding the liberalisation of the telecommunications sector. Meanwhile they had held two other meetings, in December 1993 and May 1994, to deal with other matters184,185. The Commission's proposal aimed to convince the Council to agree to speed up the liberalisation process, as suggested by the Bangemann Group, so that the results could be presented at the Essen Summit, scheduled for the first week of December, at the end of the German presidency. As explained in the previous sections, so many things had happened behind the Council’s back over the last fourteen months that they were bound to surface during the meeting. And surface they did. In the debate that followed, the ministers took sides, some siding with the Commission and arguing for the immediate establishment of a timetable for a quick liberalisation, while others preferred to wait for the complete publication of the Green Paper before making a decision in that respect. Judging by the words of its spokesman, the Commission was not too happy about this. The original version of the text on the press release is an interesting document, since the Commission’s Spokesman produced a crude and ill-mannered account of the meeting, which was published the day after the Council meeting186. “Le Conseil a adopté des conclusions soulignant l´importance des changements structurels à venir..... “La pomme de la discorde était une phrase relative à la libéralisation des infrastructures. Personne n´a contesté qu´il faut cette libéralisation, mais les ministres ont mis quatre heures pour mettre noir sur blanc l´annonce que déja le prochain Conseil du 17 novembre pourrait “décider sur les principes de la libéralisation et établir un calendrier claire”. .......... “L´Espagne menait la fronde des délégations estimant qu´il est prématuré de fixer des calendriers précis. Bien qu´appuyée par le Portugal, la Grece et la Belgique, l´Espagne se sentait souvent seule et se planait d´être traité comme un accusé ou comme élève retardé. Il est vrai que son argumentation principale semblait formaliste. Puisque la Commission avait promis un Livre Vert avant la fin de l´année, il convenait d´attendre avant de décider sur la libéralisation.” Similarly, in the agreement adopted in May 1994, the Council referred to this as follows: “Takes note that the Commission will present, before 1 November 1994, Part One of the Green Paper on the Liberalisation of telecommunications Infrastructures, which should allow the Council to examine and, if possible, approve the principles of the liberalisation of 183Press release. Council 94/197 of Ministers Telecommunications. Agreement of the Council about the document of the Commission: Europe's way to the Information Society. Brussels, 28 September 1994 184 Press release. Council 93/224 of Ministers of Telecommunications. Brussels, 7 December 1993 185 Press release. Council 94/99 of Ministers of Telecommunications. Brussels, 30 May 1994 186 Communiqué de Presse du Porte parole de la Commission. Réunion du Conseil du 28/9/94. RAPID Réf. BIO/94/241/1. Bruxelles, 29 Septembre 1994 The Electronic Communications Policy of the European Union 116 infrastructures and draw up a precise timetable. Part Two of the Green Paper will be presented before 1 January 1995”. During the meeting, the Council congratulated itself on the G7 ministerial meeting to be held on 25-26 February in Brussels, and invited the Commission to deal with the preparations. 4.7.- The European Parliament's Resolution on the Information Society, November 1994 On 30th November 1994, the European Parliament adopted a Resolution on the Commission's document on the Information Society187, in accordance with a report issued by it Economic, Financial and Industrial Policy Committee. The contents of the document were in tune with the discourse of the Information Society and, in our opinion, were in line with the Commission's opinions. Point 34 talks about infrastructures, as follows: “ 34.- Supports the objective of infrastructure liberalization whilst stressing that this must be based on a broad consensus and take into account the general interest, the public service role performed by telecommunications and the length of time required to implement the necessary changes" Also worth highlighting is the fact, that in another section of the Resolution, the Parliament expressed the following: “16.- Considers that Community-wide rules will have to be defined for the following: . licensing. . interconnections . access to network services . guarantee of universal service . charging . security of operation and protection of networks . protection and remuneration of intellectual property . cryptography . protection of private and personal information . consumer protection 17.- ....and calls for the formulation at Community level of uniform rules for the control of concentrations with regard to both infrastructures and basic services and applications... 18.- Warns ... against the substantial risks (inconsistency, delay, extra cost and inefficiency) that handling these matters nationally ... would entail and therefore advocates the creation of a European regulatory authority with, along the lines of the Federal Communication Committee, exclusive responsibility for ensuring compliance with the rules referred to above; Coming from the European Parliament, this statement is quite a surprising one, not so much because of the logic of its proposals but rather because how easily it appeared to be relinquishing a parcel of sovereignty with imposing any sort of conditions or demanding anything in return; all the more so 187A4-0073/94. Resolution of the European Parliament about the Commission Communication: Europe's way to the Information Society. Strasbourg, 30 November 1994. OJ C 363. 19 December 1994. P. 11. Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 117 when the Parliament, using its Codecision powers, had embarked on a comitology crusade, a common practice in which issues that ought to broached by the Institutions were dealt with in Committees188. Apparently the Parliament was ill-advised in that respect, because it does not seem to know that the FCC of the United States does not have exclusive powers, shares its tasks with the Utilities Commissions of the States of the Union, and is subject to the American system of institutional equilibrium (moreover, the FCC is not a Committee, but rather a Commission). As for the G-7 meeting, and, far from questioning the reasons for holding the meeting, the European Parliament adopted a very clear position: “29.- .Considers that the European Parliament should be officially represented at the coming G7 conference on the information society". With this Resolution, the Parliament seemed to be taking sides with the Commission in its method of implementing the new Telecommunications Policy. 4.8.- Part One of the Green Paper on the liberalisation of infrastructures, October 1994. As announced, the Commission published Part One of the Green Paper on the Liberalisation of telecommunications infrastructures and cable television networks on 25th October189. In this document, the Commission again ran through the well-known arguments on the importance and need to quickly remove any obstacles to the implementation of free competition in telecommunications infrastructures, as required to achieve the objectives of building the Information Society in Europe. The Commission proposed dividing the liberalisation timetable into two stages, as follows: “The first stage would therefore involve the immediate lifting of the remaining restrictions on the use of own or third party infrastructures already authorised in the Member States.... “The second stage involves licensing providers of new infrastructures for liberalised services and the full use of such new, and existing, infrastructures for the provision of public voice telephony service, once liberalised....” However, the keys to this document appeared in Section VII.- Proposed framework for action, which provided a detailed, but somewhat incomplete, description of the Commission's intentions. The document reads as follows: “...The two-stage process envisaged therefore would lead to the immediate removal of restrictions on the use of own or third party infrastructure authorised in Member States in the following areas: 1.- For the delivery of satellite communications services 2.- For the provisions of all terrestrial communication services already liberalised (including use of cable television infrastructure for this purpose) 188 Duverger, M. Europe des Hommes: Une Métamorphose Inachevée Ed Odile Jacob. Paris 1994 189 COM(94) 440. Green Paper on the liberalisation of telecommunications infrastructure and cable television networks: Part One - Principles and timetable. Brussels, 25 October 1994 The Electronic Communications Policy of the European Union 118 This concerns voice and data services for corporate networks and closed user groups, as well as all the others telecommunications services, other than the provision of voice telephony services to the general public. 3.- To provide links, including microwave links, within the mobile network, for the provision of mobile communications services. ........ “Based on this approach, it is considered that, in order to implement objectives 1 to 3 set out above, the necessary amendments to Directive 90/388 can be prepared now to lift existing restrictions.” “As regards the liberalisation of infrastructure for the voice telephony service for the general public after 1 January 1998, additional safeguards relating to the availability and use of infrastructure...will be required. They will be addressed in the second part of the Green Paper.” So the Commission was announcing that, in order to carry out its action plan, it was prepared to make use of the prerogatives enshrined in Article 90 (currently Art. 106) of the Treaty and on the basis of making amendments to its Directive 90/388. In fact, it had already started to do so. On 13th October 1994, between the previous Council meeting and the publication of part one of the Green Paper, the Commission had adopted the first amendment to Directive 90/388, “in particular with regard to satellite communications" and had quickly published it in the Official Journal on 19th October 1994190, a week before the publication of part one of the Green Paper, and which come into force twenty days after its publication. Clearly, the Commission was not prepared to submit to the consideration of the Council, and much less so to the Parliament, anything that had to do with fundamental decisions in the infrastructure liberalisation process, other than to keep up appearances. The plan was finally and openly announced in the document that presented the conclusions of the consultation on the Green Paper on Infrastructures. 4.9.- The Council Resolution on Part One of the Green Paper on Infrastructures, November 1994 The Council of Telecommunications Ministers held a meeting to examine part one of the Green Paper on Infrastructures in Brussels on 17 November 1994. In the Resolution approved during the meeting, the Council approved the presentation of part one of the Green Paper, titled “Principles and Timetable”. Likewise, it acknowledged the Commission' intentions of publishing part two part before the end of 1994, and of launching a public consultation, and asked the Commission to report on the outcome of the consultation both to the Council and the Parliament191. 190 Commission Directive 94/46/EC of 13 October 1994 amending Directive 88/301/EEC and Directive 90/388/EEC in particular with regard to satellite communications. Brussels, 13 October 1994. OJ L 268, 19 October 1994, P. 15 191Council Resolution on Part One of the Green Paper on the liberalisation of telecommunications infrastructure and cable television networks. 22 December 1994. OJ C 379. 31 December 1994. Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 119 Once again, the Council pointed out that any decisions adopted with respect to telecommunications infrastructures should comply with the commitment made in December 1989. This commitment established the need to achieve a balance between the liberalisation decisions and the actions for the harmonisation of the sector. However, that political agreement also led to the tasks being distributed between the Commission and Council, which led to the adoption of two basic Directives: The Commission's Services Directive 90/38 and the Council's ONP Framework Directive 90/387. The sentence being referred to could be interpreted as meaning that the Council acknowledged the Commission's intention to resort to amending Directive 90/388 and, in short, accepting the inevitable. In this regard, the communiqué read out by the Commission's spokesman at the end of the meeting said that192. “The Commission has submitted (to the Council) a declaration indicating that it will continue assuming its obligations in the field of its powers, wherever it considers there to be any obstacles to competition identified in the green paper. Commissioner Van Miert indicated to the Council that such decisions will be made after consulting the Council and, in this respect, recalled that is the project to liberalize cable TV for the services already liberalized is almost ready.” Not long after, on 21st December, the Commission approved another amendment to Directive 90/388, regarding the lifting of restrictions on the use of cable television networks for the provision of telecommunications services after 1st January 1996193. The Commission had started quite an uncommon consultation process with the publication of the draft version of the Official Journal194. This occurred weeks after the completion of the consultation process on part two of the Green Paper. The fact that the Commission was once again resorting to Article 90 (currenly Art. 106) to deal with an issue that was being negotiated with the Council, on the very eve of a consultation process, was yet another instance of its high-handed attitude, and of its distrust of the rest of the Institutions to carry out something about which everyone seem to agree. The contents of the Commission's Programme for 1995, which was presented to the Parliament in February 1995, left no doubt about this195. 4.10.- Part Two of the Green Paper on Infrastructures, January1995 Finally, on 25th January 1995, the Commission issued a Communication with Part Two of the Green Paper on Infrastructures196. This document should have appeared at the end of December 1994, but it had to wait until the new Commission presided by J. Santer, and which the Parliament took longer than expected to approve, took office. The document was more than 140 pages long and, apart from the specific aspects of telecommunications infrastructures, it broached many other matters that had already appeared in the document that the Commission published in 1993197. 192Press release. Spokesman of the European. European Council of 18 November 1994. RAPID Ref. BIO/94/300. Brussels, 19 November 1994 193 Press release of the meeting of the Commission of 20 December 1994. RAPID. Ref. IP/94/1262. Brussels, 21 December 1994 194 Proposed amendment to Directive 90/388. OJ C 76. 28 March 1995. P. 8 OJ C 76, 28 March 1995. P 8 195 COM(95) 26. Commission' s work programme for 1995. Brussels 15 February 1995 196 COM(94) 682. Green paper on the liberalisation of telecommunications infrastructure and cable television networks - Part II - A common approach to the provision of infrastructure for telecommunications in the European Union. Brussels, 25 January 1995 197 COM(93) 159. Communication to the Council and European Parliament on the consultation on the review of the situation in the telecommunications services sector. Brussels 28 April 1993. The Electronic Communications Policy of the European Union 120 Table 5.3 summarises the lines of action proposed in the document, which could be called the “Telecommunications Strategy of 1995”. Table 5.3 GREEN PAPER ON INFRASTRUCTURES ACTION PROPOSALS A Removal of special and exclusive rights over the use of infrastructure for the provision of telecommunications services. B Safeguarding and developing the Universal Service C Interconnection and interoperability. D Licensing. E Ensuring fair competition. F Access and rights of way. G Action in neighbouring fields (data protection, audiovisual, ...). H Social and societal impact. I Global approach to infrastructure and ensuring fair access to third country markets J Future evolution of the regulatory environment. Towards the Information Society. One of the key aspects about which the sector's players were consulted had to do with the scope of the Universal Service Obligations, its estimated cost and the financing formulas. It must be remembered that the Commission and Council had already started to address these issues in 1993198,199. In our opinion, the Universal Service issues were complex, given the contradictions involved: reestablishing the balance that was lost when the monopolies were broken up, at the expense of imposing upon the new operators obligations that had to be compatible with the rules of free competition. Added to this was the fact that the Telecommunications Administrations had been weakened by the Commission's courses of action. The Bangemann Group had declared that the Telecommunications Operators wished to be freed from “contributing towards territorial planning and management objectives and having to shoulder, alone, responsibility for the universal service”. Meanwhile the Parliament cleverly proposed that the problems of financing the Universal Service could be solved by using public funds200. The document was submitted to a consultation which barely lasted two months, so as to ascertain the opinions of the sector's players without further ado. 198 COM(93) 543. Developing universal service for telecommunications in a competitive environment. Brussels, 15 November 1993 199 Presidency conclusions. Essen European Council 9-10 December 1994. Bulletin of the European Union nº 12. December 1994. P. 7 200 A4-0111/95. Report on the Green Paper on the liberalisation of telecommunications infrastructure. Part II. Economic and Monetary Affairs Committee European Parliament. 15 May 1995 Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 127 The Service Directive specified that it did not apply to satellite communications. Likewise, the Terminals Directive only applied to terminal equipment, regardless of the network to which they were connected, but not to satellite communications earth station equipment. However, as a result of its 1987 Telecommunications strategy, the Commission had started to analyse the development of the common satellite communications service and equipment market by publishing a Green Paper in November 1990209, a few months after the adoption of the Service Directive. In this document, the Commission analysed the state of satellite communications regulations and broached the need to draw up a programme for the development of the market of this type of communications. As on similar occasions, it organised a consultation and then issued a report with its conclusions. In its meeting on 4th November 1991, the Council210 analysed the Commission's proposal and, during the meetings held on 18th-19th December 1991211, it approved a Resolution in which it consented to the general objectives proposed by the Commission, inviting it to present proposals on specific measures to open up the market in the telecommunications sector to competition. Once it had received the Council's approval, the Commission drafted and approved a draft Directive that would not followed the ordinary procedure, but instead involve making amendments to its own services and terminals Directives. Since the Commission had already received authorisation from the Council, it merely consulted the Parliament on this document and the Economic and Social Committee, which approved the Commission's proposal. After this, the Commission was able to publish its Directive. The new Directive amended the Terminal Directive as follows: Article 1 Directive 88/301/EEC is hereby amended as follows: (a) The last sentence of the first indent is replaced by the following: 'Terminal equipment also means satellite earth station equipment'. This amendment resulted in the earth station equipment telecommunications market being opened to competition. As regards the Service Directive, restrictions on its application were amended as follows: Article 2 Directive 90/388/EEC is hereby amended as follows: 1. Article 1 is amended as follows: (b) Paragraph 2 is replaced by the following: '2. This Directive shall not apply to the telex service or to terrestrial mobile radiocommunications.' Evidently, Article 2 of the Directive clearly expressed that its application excluded the voice telephony service. These amendments allowed the Commission to start applying free competition to services other than those originally envisaged, and directly, using the powers bestowed upon it in Article 90 (currently Art. 106) of the Treaty. This course of action was to be the procedure that it followed in the implementing full competition in the sector, as explained next. 209 COM(90) 490. Green paper on a common approach in the field of satellite communications in the European community. Brussels 20 November 1990 210 Press release nº 8944/91. Council of Ministers Telecommunications. Brussels 4 November 1991. 211 Press release nº 10391/91. Council of Ministers Telecommunications. Brussels 18 -19 December 1991 The Electronic Communications Policy of the European Union 128 4.16.- The Directive on the liberalisation of cable TV network infrastructures, October 1995. One of the first regulations adopted to achieve the objectives of the 1995 strategy was the Directive which opened up the cable television networks to competition for the provision of liberalised services. On 28th March 1995, before presenting the document with the conclusions on the consultation of the Green Paper on Infrastructures, the Commission published in the Official Journal the announcement of its draft Directive on the use of cable TV networks for the provision of telecommunications services212. The idea was to amend the Commission Directive 90/388/EC, using the prerogative of Article 90 (currently art. 106) of the Treaty. The essence of this proposal for a Directive was to bring forward to 1st January 1995 the date for the liberalisation of cable TV infrastructures for all services already subject to free competition. The Council acknowledged this announcement at its meeting in June 1995, and invited the Commission to take account of any proposals that it received from the Member States. In relation to this proposal for a Directive, the European Parliament issued an opinion213 in which it opposed the Commission's intentions, even though it initially agreed with these terms. At the end of this unusual consultation period, on 18th October 1995 the Commission adopted its Directive 95/51, the essential parts of which were almost identical to those of its proposal214. The amendments made to Directive 90/388/EC basically affected the content of Article 4, adding the following text: Article 1 Directive 90/388/EEC is hereby amended as follows: … … 2. In Article 4, the following is inserted after the second paragraph:’ Member States shall: abolish all restrictions on the supply of transmission capacity by cable TV networks and allow the use of cable networks for the provision of telecommunications services, other than voice telephony; - ensure that interconnection of cable TV networks with the public telecommunications network is authorized for such purpose, in particular interconnection with leased lines, and that the restrictions on the direct interconnection of cable TV networks by cable TV operators are abolished.` This Directive clearly began to apply the contents of the 1995 Telecommunications strategy, as envisaged. Yet not everyone agreed, in particular the governments of Spain and Portugal, who lodged an appeal before the Court of Justice months later. Portugal requested the application of a transition period for enforcing the Directive and it protested against the obligation to apply it before 1st January 1996. 212 95/C 76/06. Announcement of a proposal of a Directive amending the Commission Directive 90/388 with regard to the abolition of the restrictions on the use of cable television networks. OJ 78. 28 May 1995. P. 8. 213 Resolution of the European Parliament about the proposal of a Commission Directive amending the Commission Directive 90/388 with regard to the abolition of the restrictions on the use of cable television networks. OJ C 166, 3 July 1995. 214 Commission Directive 95/51/EC of 18 October 1995 amending Directive 90/388/EEC with regard to the abolition of the restrictions on the use of cable television networks for the provision of already liberalized telecommunications services. OJ L 256. 26 October 1995. P. 49 Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 129 After free competition had entered into force, the Commission adopted a new Directive215 with regard to cable TV, establishing that operators with a dominant position in the telephony market would have to separate any activities in the cable sector into independent legal entities. 4.17.- The Directive for the liberalisation of mobile communications services, January 1996. In our opinion, the way that the European Institutions and the Member States have approached mobile communications has been exemplary and is surely one of the keys to the success of GSM. Mobile communications had been explicitly excluded from the scope of application of Directive 90/388. Meanwhile, the Commission was in the midst of the analysis process, with the publication of a Green Paper and the conclusions of the sector consultation process mentioned above. In the document, the Commission proposed to the Council the following: “Before 1 January 1996: - Fully apply the Treaty competition rules and, if necessary, amend Directive 90/388/CEE to remove all of the sector's exclusive and special rights” At its June 1995 meeting, the Council of Ministers examined the Commission's proposal and initially agreed with its contents. As in previous cases, the Council stated the following in its Resolution216: “INVITES the Commission to propose to the European Parliament and the Council measures which will contribute to the achievement of the priority objectives and principal additional action referred to above” Once again, the Council was expressing the opinion that it should be the democratic and representative bodies that ought to make the decisions on this matter, an opinion that was clearly not shared by the Commission, which was quite willing to resort, once more, to the prerogatives set forth in Article 90 (currently Art. 106) of the Treaty to open up the mobile communications market to competition by amending the Services Directive. Therefore, barely two months later, in August 1995, the Commission published its draft Directive217 and officially consulted the Parliament, which adopted a Resolution in this respect. But there is little point in going into these documents in detail, because they fully supported the Commission's proposals. Finally, on 16th January 1996 the Official Journal published Commission Directive 96/2 amending Directive 90/388/EEC with regard to mobile and personal communications218 thus achieving the foreseen objectives of opening up mobile communications to free competition Since this was an amendment of the Service Directive, the new text reworded art 1.2, which now reads as follows: Article 1 (2) is replaced by the following:'2. This Directive shall not apply to telex.` 215 Commission Directive 1999/64/EC of 23 June 1999 amending Directive 90/388/EEC in order to ensure that telecommunications networks and cable TV networks owned by a single operator are separate legal entities. OJ L 175. 10 July 1999. P. 39 216 Council Resolution of 29 June 1995 on the new development of the personal and mobile communications in the European Union. OJ C 188, 22 July 1995. P. 2 217 Draft Commission Directive amending Commission Directive 90/388/EEC with regard to mobile and personal communications. OJ C 197. 1 August 1995 218 Commission Directive 96/2/EC of 16 January 1996 amending Directive 90/388/EEC with regard to mobile and personal communications. OJ L 20. 26 January 1996. The Electronic Communications Policy of the European Union 130 However, the Directive added other provisions such as: - Prohibiting member States to limit the number of licenses if frequencies are available - Authorising mobile communications operators to implement their own infrastructures. - Guaranteeing the interconnection of mobile networks with public telecommunications networks. 4.18.- The Directive on the liberalisation of infrastructures and implementation of full competition, March 1996. Finally, on 13th March 1996, the Commission adopted Directive 96/19219 amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets; services and infrastructures. This was be the last step in the legislative process, so all the telecommunications services markets, including voice telephony and telex, were now open to competition. Likewise, all exclusive rights linked to infrastructures were abolished. As usual in the cases mentioned in the previous sections, the Commission published a Draft Directive220 in October 1995 and submitted it to a public consultation. Similarly, the Council had addressed this issue during its first meeting following the publication of the Commission's proposal221, which took place during the Spanish presidency. The Council was already familiar with the decisions that the Commission intended to adopt, because the two Institutions had reached a political agreement months before on the liberalisation of voice telephony and infrastructures, after 1st January 1998, with the aforementioned exceptions. However, not all of its members were of the same opinion, so the Council asked the Commission to take into account any proposals that it might receive from the Member States. Likewise, in the light of the proposals presented by the Commission in this Directive, and which clearly referred to harmonisation matters, the Council asked the Commission to respect its powers and those of the Parliament. The text in the Directive adopted by the Commission read as follows: Article 1 Directive 90/388/EEC is amended as follows:2. Article 2 is replaced by the following: 'Article 2 1. Member States shall withdraw all those measures which grant: (a) exclusive rights for the provision of telecommunications services, including the establishment and the provision of telecommunications networks required for the provision of such services; or 219 Commission Directive 96/19/EC of 13 March 1996 amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets. OJ L 74, 22 March 1996. P. 13 220 Notice by the Commission concerning a draft Directive amending Commission Directive 90/388/EEC regarding the implementation of full competition in telecommunications markets. OJ C 263, 10 October 1995. P. 6 221 Press release nº 12025/95. Council of Telecommunications Brussels 27 November 1995 Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 131 (b) special rights which limit to two or more the number of undertakings authorized to provide such telecommunications services or to establish or provide such networks, otherwise than according to objective, proportional and non-discriminatory criteria; or (c) special rights which designate, otherwise than according to objective, proportional and nondiscriminatory several competing undertakings to provide such telecommunications services or to establish or provide such networks. This Directive not only removed special and exclusive rights, but also adopted a series of measures with regard to licensing, interconnection, universal service, numbering and rights of way, all matters specific to the harmonisation of telecommunications. In spite of this, and in what was to be the last Directive in which it used the prerogatives of Article 90 (currently art. 106), the Commission could not resist the temptation to broach matters for which the Council and Parliament were the responsible for regulating. In the long list of legal reasons that precedes the text of the Directive, the Commission made great efforts to point out that, in all the aforementioned issues (licenses, interconnection, universal service, numbering and rights of way), there might be reminiscences of the monopoly era liable to affect the development of full competition. In this regard, it was true that they would be affected by Article 90(1) of the Treaty, which prohibits Member States from adopting or maintain measures that are contrary to the rules of the Treaty. Yet what is debatable is whether the Commission had to become involved in these matters in accordance with the prerogative described in section 3 of the Article 90. Obviously, the Commission decided that it had to, and did. In our opinion, by including in the text of its Directive measures that affected the Harmonisation policy and development of the ONP, the Commission was expressing its great distrust of the Parliament's and Council's ability to solve these matters properly within the framework of their powers. In other words, right up to the last second, the Commission was determined to supervise even the slightest detail of the new rules that were going to govern the telecommunications market from then on. One of the measures adopted by the Commission referred to Universal Service, and while the scope of this service was still being debated, the Commission settled the question convincingly. Article 1 included the following definitions: '- "public telecommunications network" means a telecommunications network used inter alia for the provision of public telecommunications services; - "public telecommunications service" means a telecommunications service available to the public`. Article 3 established the following: Article 3 is replaced by the following: 'Article 3As regards voice telephony and the provision of public telecommunications networks, Member States shall, no later than 1 January 1997, notify to the Commission, before implementation, any licensing or declaration procedure which is aimed at compliance with: - essential requirements, or - trade regulations relating to conditions of permanence, availability and quality of the service, or The Electronic Communications Policy of the European Union 132 - financial obligations with regard to universal service, according to the principles set out in Article 4c. ........... The whole of these conditions shall form a set of public-service specifications and shall be objective, non-discriminatory, proportionate and transparent. .......... As regards packetor circuit-switched data services, Member States shall abolish the adopted set of public-service specifications. They may replace these by the declaration procedures or general authorizations referred to in Article 2.` And Article 4 mentioned that: Article 4cWithout prejudice to the harmonization by the European Parliament and the Council in the framework of ONP, any national scheme which is necessary to share the net cost of the provision of universal service obligations entrusted to the telecommunications organizations, with other organizations whether it consists of a system of supplementary charges or a universal service fund, shall: (a) apply only to undertakings providing public telecommunications networks” Even though the text in this last paragraph is not very clear, it is understandable if it is explained. The proposal for a Directive presented by the Commission included the following sentence: "the universal service obligations....shall: a) apply only to undertakings providing voice telephony services or public telecommunications networks.” The Commission's intentions left no doubt as to the scope of the universal service obligations. The European Parliament did not like this limitation and so proposed an alternative wording in its Resolution: "the universal service obligations....shall: a) apply to all undertakings providing telecommunications services or networks. The text proposed by the Parliament not only did not limit the universal service obligations to voice telephony services, but neither did it require that the network being used to provide such services should be ambiguously defined as a "public telecommunications network". The Commission ended up agreeing to change its original proposal, though its contents would be practically the same. In short, the Commission made the decision to limit the universal obligations service alone, so as to prevent the Council from establishing the scope of such obligations in one of the telecommunications harmonisation Directives, as part of the efforts to develop the ONP. Chapter 5: The Telecommunications Liberalisation Process. Period 1987 – 1998 133 4.19.- The separation of Telecommunications business and Television businesses. Due to the digitalisation of networks, the liberalisation of infrastructures and the possibility of providing different types of services with these infrastructures, in 1999 the Commission was forced to adopt a new Directive222 that once again amended Directive 90/388, in order to separate the telecommunications and television business, and did so as follows: “Each Member State shall ensure that no telecommunications organisation operates its cable TV network using the same legal entity as it uses for its public telecommunications network, when such organisation: (a) is controlled by that Member State or benefits from special rights; and (b) is dominant in a substantial part of the common market in the provision of public telecommunications networks and public voice telephony services; and (c) operates a cable TV network established under special or exclusive right in the same geographic area." This Directive marked the end of the liberalisation process on the eve of the start of the review of sector's regulatory framework, which will be explained later on. 4.20.- The Commission's use of Article 90 (currently Art. 106) of the Treaty. As explained throughout this document, the Commission resorted to Article 90 (currently Art. 106) of the Treaty as a way to complete the liberalisation of the telecommunications market. The Commission used this extraordinary procedure in May 1988 to open the terminals market to competition and in 1990 to start opening up the services market. Later on, the Commission's words and actions made it quite clear that it intended to continue using this procedure whenever it deemed it necessary. In this regard, the previous sections have already shown that the Commission acted in line with its proposals and completed the liberalisation process by making use of these special prerogatives. In our opinion, with these actions, the Commission shouldered the responsibility for creating dangerous parallel circuits in order to legitimise its decisions. The Economic and Social Committee said the same thing in its February 1995 Opinion on the Green Paper on Infrastructures, stating that such practices set “a dangerous precedent that may well call into question Europe's decision-making procedures”223. Similarly, even though using Article 90 is lawful according to the provisions of the Treaty, what is doubtful is whether the Commission was entitled to apply this legal provision so arbitrarily. So it is worth pointing out how this extraordinary privilege might be used in the future, beyond the field of Telecommunications. The wording of Article 90 seems to imply that it could be applied to any 222 Commission Directive 1999/64/EC of 23 June 1999 amending Directive 90/388/EEC in order to ensure that telecommunications networks and cable TV networks owned by a single operator are separate legal entities. OJ L 175. 10 July 1990 223 Opinion of the European Economic and Social Committee: Europe's Way to the Information Society and Part I of the Green Paper on the liberalisation of telecommunications infrastructure and cable television networks. Brussels, 23 February 1995. OJ C 110. 2 May 1995. P. 11. The Electronic Communications Policy of the European Union 134 public services and other general interest activities managed by the States that might be of some economic interest. If this were so, the Commission could use Article 90 as a tool for dismantling, on its own, what remains of the Public Sector, and that would be a very serious matter indeed. In this regard, the European Parliament has issued a harsh warning to the Commission about its use of Article 90. In its Resolution on the Commission's Work Programme for 1995224, the Parliament referred to Public Services in the following terms225 “I.- that the Commission only consider the application of Article 90(3) of the Treaty in exceptional cases and after having requested the opinion of the Parliament, and waive its use in any other matters that can be addressed in a Directive” The Resolutions adopted by the Parliament with regard to the string of proposed amendments to Directive 90/388 also explicitly referred to the use of Article 90 as follows: “2.- Points out, however, even if the procedure set forth in art. 90(3) is justified as a means of avoid regulatory obstacles to competition, is not, however, intended to replace the legislative instruments provided for by the EC Treaty, and in particular art. 100A, to determine the rules of operation of an economic sector of the Union.” In spite of everything, the Parliament finally accepted the Commission's use of the prerogative. 4.21.- Comments on the actions carried out after 1995. The contents of the previous sections all show that it was the Commission alone which proposed and executed the 1995 strategy, and to a much larger extent than in previous cases. During this period, the publication of the different Commission Directives that amended Directive 90/388, almost brought to an end the legislative developments that would lead to the implementation of full competition after 1st January 1998. One outstanding issue was the proposal to create a European Telecommunications Regulatory Authority and, in this regard, the Commission had received the results of a study commissioned from a consultancy226. We now know that the Commission did not see this wish come true, and by express wish of the Member States. As envisaged, the Commission left the Council and Parliament to deal with the legislative tasks regarding the harmonisation of national laws for the provision of telecommunications services, through the re-adaptation of the ONP Framework Directive. 5.- CONCLUSIONS This Chapter has analysed how the European Union's telecommunications equipment, services and infrastructures market were liberalised. The next Chapters will continue with the analysis of the other aspects that marked the period 1987 – 1998. 224 COM(95)26. COM(95)26. Commission' s work programme for 1995. 15 February 1995. 225 Resolution of the European Parliament on the Commission' s work programme for 1995. Bulletin of the European Union. Supplement 1/95. 1995 226 NERA. Issues associated with the creation of an European Regulatory Authority for telecommunications. Study commissioned by the European Commission. 1997 135 CHAPTER 6 THE HARMONISATION OF THE MEMBER STATES' LAWS WITHIN THE FIRST REGULATORY TELECOMMUNICATIONS FRAMEWORK. PERIOD 1987 – 1998 Chapter 6: The Harmonisation of the Member States' Laws within the first Regulatory Telecommunications Framework. Period 1987 – 1998 143 not ask the GAP to study the application of ONP to Leased lines, mentioning that it would draft a specific Directive itself, as appointed by the Council. Even though the GAP was not asked to do so by the Commission, it did draft its own Proposal on the Application of ONP to Dedicated Lines (leased lines)232, also presenting its Proposal for the Application of ONP to Public Data Networks233; The GAP did not have enough time to present its Proposal for the Application of ONP to ISDN lines that the Commission asked for, because it would soon be replaced by the ONP Committee. If one interprets the contents of this document, the Commission clearly intended to control the ONP definition process. The Commission made no attempt to hide its discomfort with the presence and participation of the GAP in this process, which it considered its own. With the backing of the new ONP Committee, the Commission entrusted a consulting firm with the task of preparing a study on the application of ONP to ISDN. From then on, the Commission was to entrust similar studies on the application of ONP to external consultancies. On 15th December 1988, two days after the presentation of the said document, the Commission issued a Press Release234 in which it announced its intentions to proceed with the preparation of a proposal for a Council Directive on ONP, as well as announcing that it would adopt a Commission Directive to open Value Added Services up to competition. Days later, just after Christmas, on 5th January 1989, the Commission would present the first proposal for a Directive on ONP235 and a second proposal on 1st August236. By then, the Commission had already got its own way. 2.6.- The Council's “Political Agreement”, December 1989. As it had announced at the end of 1988, the Commission had adopted, though not published, a Directive on the liberalisation of services, in accordance with Article 90.3 (currently art. 106.3) of the Treaty. Likewise, the Commission had presented to the Council a proposal for a Directive on the harmonisation of conditions of access to telecommunications networks and the definition of ONP. Two legislative instruments that would deal with two complementary aspects of the telecommunications sector: liberalisation and harmonisation. Finally, the Commission and Council reached an agreement on how to carry out this process, including their respective roles. This information is also mentioned in the previous Chapter. On 7th December 1989, during a session of the Council of Ministers, the publication of both Directives was approved. The text of the Press Release237 published by the Council after the meeting reads as follows: 232 GAP (SOG-T). Proposal of the GAP regarding the Open Network Provision (ONP) on leased lines in the Community. Brussels 1 January 1990.. 233 GAP (SOG-T). Proposal of the GAP regarding the Open Network provision (ONP) on public data networks of the Community. Brussels 24 January 1990. 234 Press release of the Commission P-147. The Commission adopts two important decisions on telecommunications. Brussels 15 December 1988. 235 COM(88) 825. Proposal for a Council Directive on the establishment of the internal market for telecommunications services through the implementation of open network provision (ONP). Brussels 5 January 1989. OJ C 39. 16 February 1989. P. 8. 236 COM(89) 325. Revised proposal for a Council Directive on the establishment of the internal market for telecommunications services through the implementation of open network provision (O N P). Brussels, 1 August 1989. OJ C 236. 14 September 1989. P. 5 237 Press release nº 10479/89. Council of Ministers Telecommunications. Development of the internal market of the telecommunications services. Brussels 7 December 1989. The Electronic Communications Policy of the European Union 144 "The Council, after discussing the basis of a draft global commitment of Presidency on the liberalisation of telecommunications services and the provision of an open telecommunications network, has reached a political agreement about a common position on the proposal for a Directive on open network provision in the Community (ONP). In doing so, the Council has taken a decisive step towards the establishment of an open telecommunications market. With regard to the first of the matters mentioned, it has been recalled that the Commission has adopted a Directive under article 90.3 of the Treaty, on competition in the telecommunication services markets." This meeting is usually presented as the one where a “political agreement” was reached on how to achieve the liberalisation and harmonisation of telecommunications services. The fact is that this decision was very important since it clearly marked the limits for the role of each Institution during the transformation of the sector: The Commission would be in charge of the Liberalisation process and, whenever it deemed it necessary, apply Article 90.3 (currently art. 106.3) of the Treaty, while the Council would be in charge of the Harmonisation of the laws of Member States within the ONP framework. Finally, the two Directives appeared in a single issue of the Official Journal of the European Community on 27th July 1990, dated as having been adopted on 28th June, yet neither made any reference to the other, which is quite surprising. 2.7.- The ONP Framework Council Directive 90/387, June 1990. In accordance with the Commission's proposals, on 28th June 1990, the Council adopted Directive 90/387/EEC on the establishment of the internal market for telecommunications services through the implementation of open network provision238, otherwise known as the ONP Framework Directive. The same day, the Commission adopted Directive 90/388/EC on the competition in the markets for telecommunications services, known as the Service Directive239. This section summarises the highlights of the ONP Framework Directive. Article 1 clearly defined the objectives of the Directive, in the following terms: Article 1 1. This Directive concerns the harmonization of conditions for open and efficient access to and use of public telecommunications networks and, where applicable, public telecommunications services Article 2 defined the terms used in the document. 10. 'open network provision conditions' means the conditions, harmonized according to the provisions of this Directive, which concern the open and efficient access to public 238 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. OJ L 192. 24 July 1990. P. 1. 239 Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services. OJ L 192. 24 July 1990. P. 10. Chapter 6: The Harmonisation of the Member States' Laws within the first Regulatory Telecommunications Framework. Period 1987 – 1998 145 telecommunications networks and, where applicable, public telecommunications services and the efficient use of those networks and services. Article 3 mentioned the conditions to be met by Open Network Provision. It also established that: 2. Open network provision conditions must not restrict access to public telecommunications networks or public telecommunications services, except for reasons based on essential requirements, within the framework of Community law, 3. Open network provision conditions may not allow for any additional restrictions on the use of the public telecommunications networks and/or public telecommunications services except the restrictions which may be derived from the exercise of special or exclusive rights granted by Member States and which are compatible with Community law. Article 4 established the stages for the definition of the conditions of Open Network Provision and the work programme. This Article refers to Annexes 1, 2, and 3 of the Directive. Article 5 referred to the standardisation process in the following terms: 1. Reference to European standards drawn up as a basis for harmonized technical interfaces and/or service features for open network provision according to Article 4 (4) (c) shall be published in the Official Journal of the European Communities as suitable for open network provision. Article 6 established that specific directives would be adopted for the application of the open network provision conditions, drafted in accordance with the standard procedures. Article 7, albeit not very clearly, referred to the mutual recognition of licenses by Member States for the provision of telecommunications services. Its text included the following sentence: The Council, acting in accordance with Article 100a of the Treaty, taking Article 8c of the Treaty into consideration, shall, where required, adopt measures for harmonizing declaration and/or licensing procedures for the provision of services via public telecommunications networks, with a view to establishing conditions in which there would be mutual recognition of declaration and/or licensing procedures. Article 8 read as follows: During 1992 the Council, on the basis of a report which the Commission shall submit to the European Parliament and the Council, shall review progress on harmonization and any restrictions on access to telecommunications networks and services still remaining, the effects of those restrictions on the operation of the internal telecommunications market, and measures which could be taken to remove those restrictions, in conformity with Community law, taking account of technological development and in accordance with the procedure provided for under Article 100b of the Treaty Articles 9 and 10 mentioned the creation and running of an Advisory Committee for the development of ONP: The Electronic Communications Policy of the European Union 146 Article 9 1. The Commission shall be assisted by a committee of a advisory nature composed of the representatives of the Member States and chaired by the representative of the Commission. The committee shall, in particular, consult the representatives of the telecommunications organizations, the users, the consumers, the manufacturers and the service providers. It shall lay down its rules of procedure. Articles 11 and 12 referred to the actions to be taken by the Member States for the application of the Directive, establishing 11th January 1991 as the deadline for the transposition by Member States. The text in the Directive included three Annexes with the following titles: Annex I: Areas for which open network provision conditions may be drawn up. Annex II: Reference framework for drawing up proposals on open network provision conditions. Annex III: Guidelines for implementation of the framework Directive up to 31 December 1992. 2.8.- The development of the ONP Framework Directive. Article 4 of the ONP Framework Directive indicated the path for the application of the Open Network Provision concepts. Firstly, the sectors of application of the ONP concepts were established, as shown in Annex 1 of the Directive. The sectors included the following: • Leased lines. • Data transmission services through packet switching networks and circuits. • Integrated Services Digital Network, ISDN. • Voice telephony services. • Telex services. • Mobile services. and, subsequently: • New network services and access to the new network intelligence functions. • Access to the broadband network. Secondly, the Commission was ordered to draft an annual work programme with the activities to be carried out in collaboration with the ONP Committee created in article 9 of the Directive. Thirdly, the method for tackling the application of ONP principles to each sector was mentioned, as described next. • Specific sector analysis. Chapter 6: The Harmonisation of the Member States' Laws within the first Regulatory Telecommunications Framework. Period 1987 – 1998 147 • Drafting of a study by an independent organisation. • Discussion by the ONP Committee. • Drafting of a proposal by the Commission. • Further consultation of the ONP Committee. • Drafting of a proposal for the adoption of a measure by the Council. Annex 3 established a work calendar until 31st December 1992, which basically involved the following: • Adoption of Directives on Leased Lines and Voice Telephony. • Adoption by the Council, before 1st July 1991, of a Recommendation on the application of ONP principles to packet and circuit switched data transmission services. • Adoption by the Council, before 1st July 1992, of a recommendation on the application of the ONP principles to ISDN. • Study during 1992, with a view to the adoption of a Directive on the application of ONP to packet and circuit switched data transmission services. • Subsequent study of a proposal for a Directive on the application of ONP to ISDN. Finally, article 7 of the ONP Framework Directive gave the Council the authority to adopt measures for the harmonisation of procedures for authorising the provision of services over public telecommunications networks, in other words, it permitted the adoption of measures for regulating the licensing of new telecommunications operators. 2.9.- The Work Programme of the ONP Committee for 1991, 1992 and 1993. In December 1990, the Commission published the ONP Work Programme for 1991, in accordance with the indications of the Directive240. This programme provided further information about the contents of Annex 3 of the ONP Framework Directive and mentioned the method required to start the activities for the development of the actions. During 1991, the actions were carried out, which mainly involved the following: • The publication of a proposal for a Council Directive on Leased Lines. • The publication of a proposal for a Council Recommendation on the application of ONP to packet-switched data transmission networks. • The preparation of a draft proposal on a Council Recommendation for the application of ONP to ISDN. • The drafting of an Analysis Report on the application of ONP to Voice Telephony. • The drafting of a proposal for a Directive on the establishment of a single European license for telecommunications operators, in accordance with the information included in Article 7 of the ONP Framework Directive. 240 ONPCOM 90-24 bis. Open Network Provision. Work Programme for 1991 for the development of ONP conditions. Brussels, 19 December 1990 The Electronic Communications Policy of the European Union 148 Subsequently, in December 1991, the ONP Work Programme for 1992 was published, as indicated in the Directive241 . This document included the state of progress of the work carried out during 1991. Likewise, the document described the status of the studies requested by the Commission and which were scheduled for completion in 1992, as well as the studies that it planned to commission that year. The main activities carried out during 1992 were as follows: • Adoption of a Council Directive on the application of ONP to Leased Lines242. • Adoption of the Council Recommendation on the harmonised provision of a minimum set of packet-switched data transmission services, in accordance with the principles of open network provision243 . • Adoption of a Council Resolution on the provision of harmonized integrated services digital network access arrangements and a minimum set of ISDN offerings in accordance with open network provision principles244. • Publication of a Proposal for a Directive on the application of ONP to Voice Telephony. This Directive would not be adopted until December 1995245. • Drafting of a Proposal for a Directive on the Single Community License. Also worth pointing out is that, during 1992, the Commission started the status review process, as indicated in article 8 of the ONP Framework Directive, as well as its review of the sector liberalisation process, in accordance with the article 10 of the Service Directive. The consequences of the conclusions of this review would not start to be felt until 1994. The next sections take a brief look at the development and contents of the Directive on the application of ONP to Leased Lines and Voice Telephony and the Recommendations on ONP in Data Networks and ISDN. Finally, in December 1992, the ONP Work Programme for 1993 was published246. This document included all information about the state of progress of the work carried out during 1992, the status of the studies requested by the Commission and which were scheduled for completion in 1993, as well as the studies that it planned to commission that year. The main activities carried out during 1993 were the following: • Analysis of the level of application by Member States of the ONP regulations already adopted (leased lines, Packet networks and ISDN), which were scheduled to enter into force before June 1993. • Analysis of the essential telecommunications requirements and their relation with ONP. 241 ONPCOM 91-77. Open Network Provision. Work Programme for 1992. Commission of the European Communities. DG XIII. Brussels, 10 December, 1991 242 Council Directive 92/44/EEC of 5 June 1992 on the application of open network provision to leased lines. OJ L 165. 19 June 1992. P 27 243 Council Recommendation 92/382/EEC: of 5 June 1992 on the harmonized provision of a minimum set of packet-switched data services (PSDS) in accordance with open network provision (ONP) principles. OJ L 200. 18 July 1992. P. 1 244 Council Recommendation 92/383/EEC of 5 June 1992 on the provision of harmonized integrated services digital network (ISDN) access arrangements and a minimum set of ISDN offerings in accordance with open network provision (ONP) principles. OJ L 200. 18 July 1992. P. 10 245 Directive 95/62/EC of the European Parliament and of the Council of 13 December 1995 on the application of open network provision (ONP) to voice telephony. OJ L 321. 30 December 1995. P. 6. 246 ONPCOM 92-55 ONP. 1993 Work Programme. Commission of the European Communities. DG XIII. Brussels, 3 December, 1992 Chapter 6: The Harmonisation of the Member States' Laws within the first Regulatory Telecommunications Framework. Period 1987 – 1998 149 • Analysis of the consequences of the liberalisation revision process and its consequences on the harmonisation process and ONP. • Evolution of ONP in relation to the Green Paper on mobile telecommunications. • Drafting and publication of the list of ONP reference standards. 2.10.- Comments on the development of ONP during the 1987 strategy. The ONP concept was formulated and started to be developed was started during the period in which the 1987 strategy was executed. As already explained in the previous sections, this process was clearly marked by the stabilisation of the instruments that would be involved in shaping Telecommunications Policy in the Community. In June 1987, the sector was controlled by the so-called Telecommunications Administrations, acting as telecommunications operators in each of the Member States under a monopolistic regime. The harmonisation process seemed inevitable due to the application of Community Law. To an extent, it was a sort of mechanism for regulating “fair play” between the operators when they began competing with one another to provide value added services, mostly of a trans-frontier nature. One could say that, instead of being a mechanism to allow the Telecommunications Administrations to control access by new operators to the telecommunications services market, ONP became an instrument that the Commission used to try to prevent the Telecommunications Administrations from controlling access by new operators to the marker for such services. Throughout this period, the ONP name and acronym remained unchanged, although its contents did change. 3.- DEVELOPMENT OF THE ONP FRAMEWORK DIRECTIVE. As stated above, when the ONP Framework Directive had been adopted, the Commission proceeded to apply it to certain services, as indicated in Annex I of the Directive. This section provides an in-depth analysis both of the drafting process and the contents of the regulations adopted to apply ONP to the following services: • Leased lines. • Data transmission services through Packet Switching Networks • Integrated Services Digital Network, ISDN. • Voice telephony services. The Electronic Communications Policy of the European Union 150 3.1.- Directive on the application of ONP to Leased Lines, June 1992. The first type of services to which ONP conditions were applied were Leased Lines, through the adoption of a Directive247 in June 1992. The reason for this decision was the strategic interest of leased lines vis-à-vis the development of two types of networks and services: • Private voice or data networks. • Value Added Services, in particular, packet-switched data transmission services. In other words, networks and services that, under Community regulations, could be managed and offered by entities other than the Telecommunications Organisations, for both for private use and operation as a competitive service. Furthermore, the Directive laid down the conditions under which the use of telecommunications lines could be leased for the establishment of such networks and services, both in the different States and throughout the Community. The fact is that the characteristics and requirements in either case matched in many aspects, although there were some substantial differences, as explained next. On the one hand, in the case of the use of leased lines for the establishment of Private Networks, the interest in applying the ONP philosophy lay mainly in the establishment of conditions regarding the availability of such lines, including the definition of their technical characteristics, quality and, evidently, the tariff criteria. Clearly, the Directive broadly addressed these aspects. On the other hand, the use of leased lines to provide Value-Added Services also brought into play certain competition-related issues. The aim was to define the method for ensuring equal opportunities for all players in the operation of such services, both for the Telecommunications Organisations, which owned the lines, and the third party companies that leased them. The Directive did not solve this issue properly, because it did not even address it directly. Part of the Directive on Leased Lines was drafted at the same time as the DG XIII consolidated its position and its Telecommunications Policy vis-à-vis the Member States and their Telecommunications Administrations. The first document on the application of ONP to leased lines was drafted and presented by the Analysis and Forecasting Group – GAP of the SOG-T in January 1989248, quite a long time before the ONP Framework Directive was adopted in June 1990. After the pertinent consultation procedure, this document served as the basis for the Commission to draft a proposal for a Directive published in February 1991. After making a few, yet major amendments to the proposal, the Council adopted Directive 92/44/EC in June 1992, ordering Member States to adopt the measures necessary to comply with it before June 1993. It is worth spotlighting some of the aspects that were included in the Commission's proposal for the Directive, but which were not included in the text that was finally adopted by the Council. Doing so 247 Council Directive 92/44/EEC of 5 June 1992 on the application of open network provision to leased lines. OJ L 165. 19 June 1992. P. 27 248 GAP (SOG-T). Proposal of the GAP regarding the Open Network Provision (ONP) on the leased lines in the Community. Brussels 11 January 1990. Chapter 6: The Harmonisation of the Member States' Laws within the first Regulatory Telecommunications Framework. Period 1987 – 1998 151 will illustrate the aforementioned discrepancies regarding the method of ensuring free competition and equal opportunities in the use of telecommunications lines. In the proposal for a Directive drafted by the Commission in February 1991249 the problem involved in regulating competition was addressed as explained below. Firstly, article 2 defined "Equivalent Transmission Capacity" and "Competitive Services", as follows: "Equivalent Transmission Capacity: the transmission capacity equivalent to the leased lines that a telecommunications organisation uses for the provision of competitive services, and that it does not supply to other users". "Competitive Services: any services for which special or exclusive rights have not or cannot be granted, pursuant to the Community law" Secondly, article 3 included the following paragraph: " Member States shall ensure that information... concerning the equivalent transmission capacity that the telecommunications organisations use for the provision of their competitive services. Member States shall make this information available to the Commission, if asked to do so". None of these references were included in the Directive adopted by the Council, so one supposes that it decided that the problem of regulating competition in the provision of liberalised services between Telecommunications Bodies and its future competitors would be addressed later on. 3.2.- Comments on the ONP Directive on Leased Lines This section summarises the highlights of Directive 92/44250, on the application of open network provision to leased lines, which was finally approved in June 1992. Article 1 of the Directive article defined the scope of application in the following terms: Article 1 Scope This Directive concerns the harmonization of conditions for open and efficient access to and use of the leased lines provided to users on public telecommunications networks, and the availability throughout the Community of a minimum set of leased lines with harmonized technical characteristics The next articles indicated the type of information that would have to be offered to users, mentioning the characteristics and conditions for use of the said lines, indicating that tariffs would have to be set in line with costs. Article 6 said that: 249 COM(91) 30. Proposal for a Council Directive on the application of open network provision to leased lines. Brussels 14 February 1991. OJ C 58. 7 March 1991. P. 10 250 Council Directive 92/44/EEC of 5 June 1992 on the application of open network provision to leased lines. OJ L 165. 19 June 1992. P. 27 The Electronic Communications Policy of the European Union 152 Article 6 Access conditions, usage conditions and essential requirements 1. Without prejudice to Articles 2 and 3 of Directive 90/388/EEC, Member States shall ensure that when access to and usage of leased lines is restricted, these restrictions are aimed only at ensuring compliance with the essential requirements, compatible with Community law, and are imposed by the national regulatory authorities through regulatory means. No technical restrictions shall be introduced or maintained for the intercommunication of leased lines and public telecommunications networks As regards the type of lines, the Directive established that the Member States had to ensure that telecommunications organisations supplied the following: • Ordinary quality broadband voice lines. • Special quality voice lines. • Digital 64 Kbit/s lines. • Non-structured digital 2.048 Kbit/s lines. • Structured digital 2.048 Kbit/s lines. This Directive led to the first practical application of the ONP concept to a telecommunications service. In accordance with the document's provisions, the Member States had to transpose the contents of this Directive into their own legislation before 5th June, 1993. Later on, following the Directive's instructions, the Commission published different additional texts on the application of this Directive251. With the advent of full competition the Directive had to be amended, as is explained later on in this Chapter. 3.3.- The Council's Recommendation on the application of ONP to packet switching data transmission services. The second sector where the ONP principles were to be applied was the packet switching data transmission services sector. In this case, the situation was completely different to leased lines, as explained next. Packet switching data transmission services had been operated as a monopoly since they were launched at the start of the 80’s, and had then started to be regarded as Value Added Services and, as a consequence, could be operated on a competitive basis. In our opinion, the Commission sought two goals in applying ONP principles to these services. On the one hand, it was trying to harmonise, throughout Europe, a set of basic characteristics of services that already existed, but which presented important differences in each of the Member States. Thus, it was a considerable ex post effort, although it was not effective enough. On the other hand, it wanted any new services that appeared in the Member States, as a result of the market being opened up to competition, to have a guaranteed minimum set of specifications so as to 251 Telecommunications: open network provision for leased lines. OJ C 277, 15 October 1993. P. 4 Chapter 9: First Review of Telecommunications Policy. Period 1999 - 2005 255 The reader will note that interest in convergence was suddenly focused on specific aspects related to convergence between digital television and mobile communications which is where all the technological and economic expectations of the sector were placed. In accordance with the Council's mandate, the Commission adopted a Communication 525 in June 2002 entitled: Towards a full roll-out of third-generation mobile communications. Although this was not fully within the European Council's jurisdiction, it did make it possible to salvage the situation by dealing with a matter of interest. With things as they were, the Seville European Council526 asked the Commission for the report again, requesting it in Barcelona in the following terms: “54.- … invites the Commission to report back to the Copenhagen European Council on this issues and on the remaining barriers to open platforms in digital television and third generation mobiles communications, ….” Neither was the Commission able to present this report to the Copenhagen European Council which took place in December 2002, but it did begin a public consultation527 around this time on convergence which would last until February 2003. As usual, after the replies received from the sector528, the Commission published its conclusions in its Communication COM(2003) 410529 of July 2003. This document dealt with fundamental aspects that made it possible to focus the problem and which are worth analysing in detail in order to understand them better. The Council Meeting of Telecommunications Ministers of November 2003530 echoed the situation described by the Commission in its Communication COM(2003) 410 on obstacles for general access to digital television and third-generation mobile communications services and asked the Commission to carry out a public consultation. Up until then Community institutions had simply raised the problem without finding a solution to it. 7.6.- The Interoperability of Interactive Digital TV services One specific aspect of convergence is the interoperability of interactive digital television services, the analysis of which will be dealt with in this section. It will firstly be necessary to review European strategy on digital television in order to better understand the situation. In 1999 the Commission had also looked at the problem of transition to digital television in its Communication COM(1999) 657531 on audiovisual policy in the digital era. 525 COM(2002) 301. Towards a full roll-out of third generation of Mobile communications. Brussels, 11 June 2002. 526 Presidency Conclusions. Sevilla European Council. 21-22 June 2002. http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/72638.pdf , visited 27/10/2010. 527 Commission staff working document on barriers to widespread access to new services and applications of information society trough open platforms in digital television and third generation mobile communications. 528 List of comments on the commission staff working document on "Barriers to widespread access to new services and applications of the information society through open platforms in digital television and third generation mobile communications", submitted in response to the public consultation http://ec.europa.eu/information_society/policy/ecomm/library/public_consult/barriers_to_widespread_access/index_en.htm, visited 8/9/2010. 529 COM(2003) 410. On the barriers to widespread access to new services and applications on the information society though open platforms in digital television and third generation of mobile communications. Brussels, 9 July 2003. 530 2543 Council meeting. Transport, telecommunications and energy. Brussels, 20 November 2003. http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/trans/77963.pdf , visited 27/10/2010. 531 COM(1999) 657 Principles and guidelines for community’s audiovisual policy in the digital age. Brussels 14 December 1999. The Electronic Communications Policy of the European Union 256 It was in 2003 when the Commission, in its Communication COM(2003) 541532 on the transition to digital broadcasting, fully covered the transition from analogue to digital television urging Member States to publish their national strategies in this field, a matter it would return to in 2005 in its Communication COM(2005) 204533 on the acceleration of the transition from analogue to digital broadcasting. This document includes the dates 2010 and 2012 for carrying out what is known as the “switchover”. Within such a context, the strategy of the interoperability of digital television and one of the basic aspects which is technical standards is considered in this document. As analysed previously in this Chapter when referring to Standardisation Policy, Article 18.3 of Framework Directive 2002/21 tackled the problem of regulating the interoperability of digital television allowing the Commission to impose the use of technical standards if the market was not able to do so voluntarily. Consequently, in order to adopt a decision on this matter, the Commission carried out the public consultation534 of March 2004 on interoperability in digital TV services. As is customary, the Commission published a new Communication535 in July 2004 with the result of the consultation together with a working document attached536. In its document on public consultation, the Commission concluded that the imposition of compulsory standards in line with Article 18.2 of the Framework Directive was not justified and agreed to monitor the situation’s development. Likewise, the Commission proposed the creation of a Working Group to analyse this matter, in particular the application of MHP specifications537 (Media Home Platform), proposed by the DVB project538 (Digital Video Broadcasting). The Commission announced that it would monitor the situation in 2005. The Council of Telecommunications Ministers seconded the proposals of the Commission in a document of conclusions adopted in its meeting on 9 December 2004539 The Commission published a new Communication540 in February 2006 in which it reported on the evolution of the digital television interoperability situation in 2005 and restated in its conclusions that it did not consider the imposition of compulsory standards appropriate, making a series of coordination proposals with the participation of Member States and the sector in order to promote the voluntary adoption of open standards that would guarantee the interoperability of interactive digital television services in the European Union. This was therefore the situation of the main aspects on convergence when the second review of the 2005 Electronic Communications Policy began, all of which will be analysed in the following chapter. The reader might ask what had happened with convergence. The opinion here is almost nothing. 532 COM(2003) 541. On the transition for analogue to digital broadcasting. Brusels, 17 September 2003 533 COM(2005) 204. On accelerating the transition from analogue to digital broadcasting. Brussels, 24 may 2005. 534 SEC(2004) 346. Commission staff working paper on interoperability of digital interactive television services. Brussels 18 March 2003. 535 COM(2004) 541. On interoperability of digital interactive television services. Brussels, 30 July 2004. 536 SEC(2004) 1028 Commission staff working paper on interoperability of digital interactive television services. Brussels 30 July 2004. 537 MHP Media Home platform website http://www.mhp.org/ , visited 8/9/2010. 538 DVB Digital Video Broadcasting project website http://www.dvb.org/ , visited 8/9/2010. 539 Press release. 2629th Council meeting. Transport, telecommunications and energy. Brussels, 9-10 December 2004. http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/trans/83037.pdf , visited 27/10/2010. 540 COM(2006) 37. On reviewing the interoperability on digital interactive television services pursuant the Communication COM(2004) of 30 July 2004. Brussels, 2 February 2006 Chapter 9: First Review of Telecommunications Policy. Period 1999 - 2005 257 7.7.- Group of European Telecommunications Regulators This analysis of this stage of the Electronic Communications Policy of the European Union needs to be completed by commenting on the Group of European Telecommunications Regulators. The reader is reminded that the Commission had managed to achieve that the Harmonisation Directives adopted before 1998 would make mention of a possible European Regulatory Authority for Telecommunications, leaving its possible taking into consideration for later. The Commission therefore commissioned a study in order to analyse the viability of this proposal. The final study report541 of more than 250 pages was published in October 1999 on the eve of the beginning of the review process referred to here and concluded by saying that there was no consensus on the Commission's proposal to create a European Telecommunications Regulator, as a result of which the consultants recommended that the Commission settle for intensifying the coordination of Telecommunications Regulatory Authorities in the Member States, which is what they did. The Commission adopted a Decision542 on this matter resulting in the creation of the European Regulators Group for electronic communications networks and services, as a consultative group within the Commission and linked to the Member States’ Regulatory Authorities. In 2004, the Commission adopted a new Decision543 which altered the scope of the previous one in order to allow the participation in debates of representatives from candidate countries. Since then the Group has been developing its functions and advising the Commission, with its work available online544. The Commission would need to be aware of the Member States’ commitment to their functions, responsibilities and prerogatives according to the Treaty and its respective Constitutions. With regard to telecommunications, the Commission tried three times to obtain the voluntary surrender of some of these powers and was met with a no on all three occasions. The first time was in 1992 when it proposed mutual recognition of telecommunications licences, the second time in 1998 when it proposed the centralisation of radio spectrum's management powers and the third in 1999 in the proposal to create an Electronic Communications Regulatory Authority commented on above. And it is in the equilibrium between sovereignty and supranationality where the true essence of the European Union lies. 8.- CONCLUSIONS As analysed in this chapter the electronic communications regulatory framework review process was carried out to schedule and in 2002 the new package of Directives was adopted as well as other legal acts which the Member States had to incorporate in their laws before the middle of 2003. As indicated in previous sections, it was between 1999 and 2005 when the European Union started to prepare an Electronic Communications Policy which went beyond the adoption of a relevant regulatory framework so that it could be incorporated in Member States’ laws. 541 Eurostrategies /Cullen International. Final Report on the possible added value of European Regulatory Authority for Telecommunications. Prepared for the European Commission. October 1999. 542 Commission Decision 2002/267/CE, of 29 July 2002, establishing the European Regulators Group for electronic communications networks and services. OJ L 200. 30 July 2002. P. 38 543 Commission Decision 2004/641/CE of 14 September 2004, amending Decision 2002/267 establishing the European Regulators Group for electronic communications networks and services. OJ L 293. 16 September 2004. P. 30 544 European Regulators Group http://erg.eu.int , visited 8/9/2010. The Electronic Communications Policy of the European Union 258 From the Commission came a broadening in the field of activity of the Electronic Communications Policy to cover certain aspects resulting from the provisions in the 2002 package of Directives, such as the coordination of radio spectrum actions or the adoption of decisions relating to the interoperability of new services. In these cases the Commission acted according to the provisions of the current regulatory framework. However, together with the above are other aspects in the European Union's Electronic Communications Policy in which the Commission's proposals only arise from the importance of the matter and their interest in being present in it. These are namely mobile communications proposals which, in the absence of a regulatory framework justifying them, are nothing more than good intentions. It is possible to say something like this about the use of the term Convergence. With regard to this, the aim has been to start the book by clarifying in Chapter 2 its meaning and the present situation according to current regulatory framework. This Chapter has also attempted to explain the specific activities on the convergence objectives that appear in the regulations adopted from 1999-2005. However, the reader should be aware that the term Convergence remains both profuse and vague in the Commission's documents, helping to create an environment of hopeful confusion that provides little clarity and understanding of the European Union's Electronic Communications Policy. But also the Directives of the 2002 package set a date for their reconsideration. During 2005, the Commission was going to begin a new review of the electronic communications regulatory framework, the evolution of which will be looked at in the next Chapter. 259 CHAPTER 10 THE SECOND REVIEW OF THE ELECTRONIC COMMUNICATIONS POLICY PERIOD 2005 - 2010 261 CHAPTER 10 THE SECOND REVIEW OF THE ELECTRONIC COMMUNICATIONS POLICY. PERIOD 2005-2010 1.- INTRODUCTION The purpose of this chapter is to analyze the Electronic Communications Policy review process launched in 2005 under the provisions of the package of Directives of 2002 and concluded with the approval of the Modified Regulatory Framework in late 2009. Almost a decade after the introduction of full competition it may be said that the Electronic Communications sector was entering a phase of maturity. Consequently, the European institutions embarked on a new review of this Community Policy not so much to carry out in-depth reviews of the Regulatory Framework in force as to elaborate on those strategic issues which enable to broaden their objectives. The Chapter starts by summarising the reference framework of which this review forms part. Then it analyses the Regulatory Framework review process from 2005 to 2010. Finally, it briefly covers certain aspects of the Audiovisual Services Policy status and its possible convergence with the Electronic Communications Policy. 2.- REFERENCE FRAMEWORK 2.1.- Strategic Aspects of the 2005 Review The Directives in the 2002 package stipulated that in 2005 the Commission had to report on the progress of the Electronic Communications Regulatory Framework, and that was exactly what it did. As we will see in the following sections, the new Barroso Commission, which had started work at the end of 2004, carried out the mandate in the context of its new objectives. It must be pointed out that within the new structure of the Community executive, the responsibility for Information Society Policy and Audiovisual and Media Policy fell to the same member of the Commission, in this case Commissioner Vivian Reding, who was responsible for Audiovisual and Media Policy in the Prodi Commission. This measure was going to guarantee the adoption of common approaches to both policies which had until then evolved independently. This must undoubtedly be the policy convergence referred to in the i2010 strategy which we will discuss later. Meanwhile, progress in technology and services was starting to fulfil the convergence forecasts which had been predicted as early as 1997. As such, the new review process was to centre around two key factors, firstly updating the traditional Electronic Communications Policy, and secondly, trying to find regulatory solutions for the new audiovisual services. In this context, the term convergence was going to continue to hang around. The Electronic Communications Policy of the European Union 262 The declaration of principles concerning the Commission’s future policy was defined in the i2010 strategy for Information Society development. 2.2.- Electronic Communications Policy review process in the i2010 Strategy As we have stated on previous occasions, following the introduction of free competition in this sector, the European Union's Electronic Communications Policy became part of its Information Society Development Policy. Exactly as happened in 2000 with the eEurope 2002 initiative, the Commission announced the launch of the Electronic Communications Regulatory Framework review process in the June 2005 Communication545,546 announcing its new i2010 strategy547 for the development of the Information Society The i2010 strategy defined the following objectives for the period 2006-2010: Objective 1: A Single European Information Space offering affordable and secure high bandwidth communications, rich and diverse content and digital services. Objective 2: World class performance in research and innovation in ICT by closing the gap with Europe’s leading competitors. Objective 3: An Information Society that is inclusive, provides high quality public services and promotes quality of life The activities related to the Regulation concern Objective 1 above, and in this respect the Commission announced the following kinds of action to be performed: “The digital convergence of information society and media services, networks and devices is finally becoming an everyday reality: ICT will become smarter, smaller, safer, faster, always connected and easier to use, with content moving to three-dimensional multimedia formats. Proactive policies are needed to respond to the fundamental changes in technology. Digital convergence requires policy convergence and a willingness to adapt regulatory frameworks where needed so they are consistent with the emerging digital economy. ….. Digital convergence calls for a consistent system of rules for information society and media. In this area, the internal market is governed by a wide set of rules covering e.g. audiovisual media, digital television, on-line trading, intellectual property rights and support measures for the creation and circulation of European content … A key element of the renewed Lisbon partnership for growth and jobs, i2010 will build towards an integrated approach to information society and audio-visual media policies in the EU. ….. 545 COM(2005) 229. i2010 – A European Information Society for growth and employment. Brussels, 1 June 2005 546 SEC(2005) 717. i2010 – A European Information Society for growth and employment. Extended Impact Assessment. Brussels, 1 June 2005 547 i2010 Website http://ec.europa.eu/information_society/eeurope/i2010, visited 7/9/2010. Chapter 10: The Second Review of the Electronic Communications Policy. Period 2005-2010 263 In summary, the i2010 agenda on the Single European Information Space will accelerate the economic pay-off from digital convergence by the following measures: Review the electronic communications regulatory framework (2006), including defining an efficient spectrum management strategy (2005) Create a consistent internal market framework for information society and media services by • modernising the legal framework for audio-visual services, starting with a Commission proposal in 2005 for revising the Television Without Frontiers Directive • analysing and making any necessary adaptations to the community acquis affecting information society and media services (2007) • actively promote fast and efficient implementation of the existing and updated acquis governing the information society and media services Continued support for the creation and circulation of European content Define and implement a strategy for a secure European Information Society (2006) Identify and promote targeted actions on interoperability, particularly digital rights management (2006/2007) It was, then, quite clear what the Commission’s priorities were going to be in this new phase: • Review the electronic communications regulatory framework (2006), including defining an efficient spectrum management strategy (2005) • Modernise the legal framework for audio-visual services, starting with a Commission proposal in 2005 for revising the Television Without Frontiers Directive In line with the aforementioned approach, the Commission launched, on the one hand the Electronic Communications regulatory framework review process just as it had been planned, and on the other, it renewed the actions it had been carrying out in the Audiovisual sector. The following sections analyse the status of these two elements. 3.- THE 2005 ELECTRONIC COMMUNICATIONS REGULATORY FRAMEWORK REVIEW PROCESS 3.1.- Summary of the 2002 Electronic Communications Regulatory Framework. As analysed in the previous Chapter, the Electronic Communications Regulatory Framework adopted in 2002548 consisted of the following regulations: 1. The Commission Directive consolidating the liberalisation process • Commission Directive 2002/77, on competition549 548 European Commission. EU Policy and Regulations http://ec.europa.eu/information_society/policy/ecomm/current, visited 7/9/2010. The Electronic Communications Policy of the European Union 264 2. The Parliament and Council Directives amending those concerning the harmonisation of national telecommunications legislations. • Directive 2002/21 on the regulatory framework550 • Directive 2002/19 on access and interconnection551 • Directive 2002/20 on authorisation552 • Directive 2002/22 on universal service553 • Directive 2002/58 on privacy and electronic communications554 3. The Commission Recommendation on markets. • Commission Recommendation on electronic communication markets555. 4. The radio spectrum decisions • Decision 676/2002 on a regulatory framework for the radio spectrum policy556 • Commission Decision 622/2002 on the Radio Spectrum Policy Group557. 3.2.- 2002 Regulatory Framework follow-up mechanisms The 2002 Directives package stated that the Commission should examine the implementation of the Directives and report back to the European Parliament and Council a maximum of three years after the implementation date, in other words, during 2005, and that is what it did. It must be pointed out that the Universal Service Directive also stated that the Commission had to embark on an evaluation of the scope of the universal service within just two years of the implementation date in July 2003, which the Commission also fulfilled. The Decision on the Radio Spectrum also stipulated that the Commission should report back to the Parliament and Council on the activities carried out and the measures adopted in relation to the contents of this Decision on an annual basis. As was customary, the Commission published the reports concerning the status and progress of the process of implementing the new Regulatory. Up until 2004, the aforementioned reports were published in the closing months of the year, but from 2005-2006 onwards, the Commission decided to 549 Commission Directive 2002/77 of 16 September 2002 on competition in the markets for electronic communications networks and services. OJ L 249. 17 September 2002. P. 21 550 Directive 2002/21 of the European Parliament and of the Council , of 7 March 2002, on a common regulatory framework for electronic communications networks and services. (Framework Directive). OJ L 108. 24 April 2002. P. 33 551 Directive 2002/19 of the European Parliament and of the Council, of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities. (Access Directive). OJ L 108. 24 April 2002. P. 7 552 Directive 2002/20 of the European Parliament and of the Council, of 7 March 2002, on the authorisation of the electronic communications networks and services. (Authorisation Directive). OJ L 1008, 24 April 2002. P. 21 553 Directive 2002/22 of the European Parliament and the Council, of 7 March 2002, on universal service and users´ rights relating the electronic communications networks and services. (Universal service Directive) OJ L 108 24 April 2002. P. 51 554 Directive 2002/58, of the European parliament and of the Council, of 12 July 2002, concerning of processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications). OJ L 201, 31 July 2002. P. 37 555 Commission Recommendation (2003/311) of 11 February 2003, on relevant product and service markets within the electronic communications sector susceptible of ex ante regulation in accordance with Directive 2002/21/CE of the European parliament and of the Council on a common regulatory framework for electronic communications networks and services . OJ L 114, 8 May 2003. P.45. 556 Decision 676/2002/CE of the European Parliament and the Council, of 7 March 2002, on a regulatory framework for radio spectrum policy on the European Community (Radio spectrum Decision). OJ L 108, 24 April 2002. P.1 557 Commission Decision 622/2002, of 26 June 2002, establishing a Radio Spectrum Policy Group. OJ L 198, 27 July 2002. P 49 Chapter 10: The Second Review of the Electronic Communications Policy. Period 2005-2010 271 Regulatory Framework mandated the creation of the Body of European Regulators Electronic Communications (BEREC, Regulation 1211/2009). The Regulation entered into force 20 days after its publication in the Official Journal of the EU. On January 28, 2010, the BEREC was established and on May 31, 2010, the Council approved that the Office of BEREC would be based in Riga. In early 2010, BEREC published the "Work Programme 2010" for public consultation. Regarding the third point, the new Framework did not modified the articles on the review procedures. Thus, the time periods specified in the 2002 Framework should apply, so that the first Review report should be submitted to the European Parliament and the Council within three years, i.e. by the end of 2012. 3.7.- Summary of the Modified Regulatory Framework. In this section, the main changes that the "Better Regulation" and "Citizens’ Rights" Directives introduced on the 2002 Regulatory Framework are summarised. The interested reader is invited to consult the consolidated version of the Regulatory Framework compiled by the DG Information Society and Media services and published in 2010, without normative value580. “Better Regulation” Directive As we noted, the “Better Regulation” Directive—referred to simply as "the Directive" in the following paragraphs—introduced amendments in the Framework, Authorisation and Access Directives. The Framework Directive established a harmonised framework for the regulation. In particular, it laid down the tasks of NRAs and established a set of procedures to ensure the harmonised implementation of this framework across the EU. Chapter II, National Regulatory Authorities, draw the institutional architecture of Regulatory Framework, which had been based on the balance between NRAs and the Commission. The Directive includes in Article 3 the charge to the Member States to endow NRA with "adequate financial and human resources", which had been a concern during the codecision procedure. It also incorporates the BEREC within this institutional architecture, urging the NRA to support and take into account the BEREC, while forcing the Commission to take into account the opinion of the BEREC in the notification procedures under Article 7. Chapter III, Tasks of NRAs, contains the Regulatory principles, such as the promotion of competition, the development of the internal market and the promotion of the interests of citizens, and the Regulatory powers of the Member States in respect of issues like radio frequency management or colocation of network elements. In this chapter, the Directive introduces the principle of flexible use of those frequency bands available for electronic communications services, subject to restrictions only when they are justified and bearing in mind that the restrictions being in force shall be reviewed within five years from May 2011. The directive inserts a new Chapter IIIa, Security and Integrity of networks and services. In the chapter, Member States are entrusted to ensure that operators take appropriate security and integrity measures on the networks and services, and ENISA is entrusted to adopt technical implementing measures with a view to harmonising the above measures, based on the notifications of a brach of security or loss of integrity from the NRAs. 580 European Commission, “Regulatory Framework for electronic Communications in the European Union. Situation in December 2009. doi: 10.2759/24096. The Electronic Communications Policy of the European Union 272 Finally, Chapter IV, General Provisions, defines the basics of market definition and analysis, and of standardisation and harmonisation. In the chapter, the Directive, as regards the procedure for the definition of markets (Art. 15), describes the role of BEREC in the publication of the Recommendation on relevant markets by the Commission. In addition, it inserts an Article 21a instructing Member States to notify the rules on penalties applicable to infringements of national provisions implementing the Modified Regulatory Framework. The Authorisation Directive aimed at harmonising and simplifying authorisation rules and conditions in order to facilitate the provision of electronic communications. It was based on the principle that this provision could only be subjected to a general authorization. The Directive, while keeping the principle of general authorisation regime, introduces a number of modifications to comply with the political agreements reached during the codecision procedure. In particular, the Directive requires Member States that the rights of use for radio frequencies are granted through not only open, transparent and non-discriminatory procedures, but also objective and proportionate, thus attempting to eliminate unnecessary barriers (Art. 5). It also requires that the procedure that Member States should follow when they decided to limit the number of frequency licenses be followed also if they decide to extend the duration of existing licenses (Art. 7). And it finally adds, within the obligation of providing information by the operators to the NRA, that information necessary to ensure efficient spectrum use (Art. 11). Finally, the Access Directive defined the rights and obligations of operators and undertakings seeking interconnection and/or access to their networks or associated facilities. Such obligations should result from the market analysis carried out in accordance with the provisions of the Framework Directive. These obligations were contained in Chapter III, Obligations on operators and market review procedures, and were the obligations of transparency, non-discrimination, accounting separation, those relating to access to resources, and price control and cost accounting (Arts. 9 to 13). Basically, the Directive adds the obligation (Art. 13a) of functional separation, when the existing obligations have failed to achieve effective competition. And it provides the details for the procedure and content of the proposal submitted by the NRA to the Commission. With regard to the obligations relating to access to resources (Art. 12), it is interesting to note how the directive reflected the debate on Next Generation Access Networks, which we will deal in the next chapter. Indeed, the Directive provides that the assessment by the NRAs on whether to impose such obligations shall, in addition to what is considered in the 2002 Directive, (1) in relation to the facility owner's initial investment, take into account of any public investment made, and (2) in relation to the need to safeguard competition in the long term, pay "particular attention to economically efficient infrastructure based competition." "Citizens Rights" Directive The "Citizens’ rights Directive"—in the following paragraphs, referred to simply as "the Directive"— basically introduced amendments to the Universal Service Directive and the Directive on Privacy. The Universal Service Directive aims to “ensure the availability throughout the Community of goodquality publicly available services through effective competition and choice and to deal with circumstances in which the needs of endusers are not satisfactorily met by the market"(Article 1). In Chapter II, Universal service obligations, the Directive lists those obligations, namely the provision of access at a fixed location and provision of telephone services (Article 4), directory enquiry services and directories (Article 5 ), public pay telephones (Article 6), measures for disabled end-users (Article 7) and the affordability of tariffs (Article 9). It also establishes the powers of the NRA in the control of expenditure (Article 10), quality of service (Article 11), costing (Article 12) and financing (Article 13) of universal service obligations, which were virtually unchanged during the Review of the Regulatory Framework . Article 15 establishes the procedure for reviewing the scope of universal service. Chapter III, Regulatory controls, was significantly reduced, on the understanding that all obligations on operators, although having significant market power, should no longer be imposed directly through Chapter 10: The Second Review of the Electronic Communications Policy. Period 2005-2010 273 the Directives but imposed by NRAs under the general procedure of market review set out in the Framework Directive. Chapter IV, End-user interest and rights, was the part of the Universal Service Directive that extended the most during the Review of the Framework. So it was with the minimum content of contracts for subscribing to services providing connection to a public communications network (Art. 20), with the publication of comparable information on prices by operators and third parties for the sake of transparency (Art. 21); with the publication of information on quality of service (Art. 22), which was extended by providing NRA with authority to set minimum quality of service requirements; with emergency services (Art. 26), which became unconditional committed to provide information on the location of people; and with the change of provider (Article 30), which reduced to one working day the delay for number activation. Finally, the Directive on Privacy and electronic communications aims to "ensure an equivalent level of protection […] the right to privacy and confidentiality, with respect to the processing of personal data in the electronic communication sector and to ensure the free movement of such data and of electronic communication equipment and services in the Community."(Art. 1). Recall that the general legislation on protection of personal data and was already harmonised by Directive 95/46/EC. The Directive on Privacy is not structured into chapters, but enumerates articles addressing relevant aspects of security and confidentiality: the security of data processing (Art. 4), for which the Directive introduces a notification procedure for personal data breaches at the national level and the request to ENISA to ensure consistency in implementing security measures; the processing of traffic data (Art. 6); the itemised billing (Art. 7); the identification of the calling and connected line (Art. 8); the processing of location data (Art. 9); and unsolicited communications (Art. 13), for which the Directive strengthens users protection, by asking Member states to lay down rules on penalties applicable to negligent providers. 3.8.- The Review of the Recommendation on relevant market Another basic element of the Regulatory Framework review process we are referring to is that concerning the review of the Electronic Communications Markets. As stated in the previous Chapter, as part of the 2002 Regulatory Framework, the Commission introduced a Recommendation581 concerning the relevant markets which should be taken into consideration by the Member States. In line with article 15 of the Framework Directive, the scope of this Recommendation should be periodically reviewed. With this in mind, in February 2006, the Commission published a Communication582 on the market review process which was accompanied by a bulky annexe583 summarising the situation of each of the relevant markets in every Member State of the European Union. In June 2006, the Commission launched a Public Consultation process, which closed in October of that year. The Commission submitted, as part of this process, a working paper584 which contained a draft Recommendation and a justification for the new list of relevant markets. The new list reduced the 581 Commission Recommendation 2003/311, of 11 February 2003 on relevant product and service markets within electronic communications sector susceptible of ex ante regulation in accordance with Directive 2002/21/CE of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services. OJ L 114, 8 May 2003. P. 45 582 COM(2006) 28. Market review under EU regulatory framework. Consolidating the internal market of electronic communications. Brussels, 6 February 2006 583 SEC(2006) 86. Annexes accompanying the Communication COM(2006) 28 on Market Reviews under the EU Regulatory Framework - Consolidating the internal market for electronic communications. Brussels, 6 February 2006. 584 SEC(2006) 837. Public Consultation on a Draft Commission Recommendation on Relevant Product and Service Markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communication networks and services (Second edition). Brussels, 28 June 2006 The Electronic Communications Policy of the European Union 274 number of markets compared to the 2003 Recommendation list and, as we have seen, would be incorporated as an element of the 2007 Reform Proposals. What was not yet clear at this time for the Commission was how to deal with the regulation, if necessary, of the networks that came to be called New Generation Access Networks (NGAs). Although the Commission relegated this matter to future revisions of the Recommendation, it should address this specific issue in 2008, as discussed in the next chapter, by means of a specific Recommendation. In December 2007, the Commission adopted the Recommendation on relevant markets585, accompanied by an explanatory note586, consisting of the updated working paper that had been submitted to Public consultation. As to how to address the NGA regulation, the Commission had made progress in understanding the problem, but it had not come up with a proposal for a solution. And in relation to future reviews of the Recommendation, it kept being subject to Article 15 of the Modified Framework Directive. 3.9.- Regulation on international roaming The European Commission’s interest in roaming-related issues is long established and dates back to the start of 2000 as the reader will probably know. The DG Competition, as part of its anti-trust activities has persistently followed the evolution of this service587. At the beginning of 2000, the Commission launched a Consultation process concerning roaming services, the results of which were made public at the end of that same year588. It was to continue talking about this subject and about the high prices of roaming services until 2006 when the Commission had no choice but to echo the discontentment of the users and make the situation clear by publishing information about the prices charged by the different operators on the Internet 589 . At the same time, the Commission launched a series of Public Consultations aimed at securing the approval of a European Regulation to regulate tariffs for this service. It must be remembered that the wholesale international roaming market was one of the relevant markets included by the Commission in the list of eighteen which were suggested to the Member States in its 2003 Recommendation590, specifically the seventeenth: 17.- The domestic wholesale international roaming market on public mobile telephony networks. Nevertheless, the Commission proposal went much further given that it sought to tackle the regulation of the retail roaming market, which was not in any way planned. 585 Commission Recommendation of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services [notified under document number C(2007)5406]. OJ L 344, 28 December 2007. P. 65. 586 SEC(2007)1483. Accompanying document to the Commission Recommendation on Relevant Product and Service Markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services (Second edition). Brussels, xxx. 587 Sector Inquiries. Roaming http://ec.europa.eu/competition/sectors/telecommunications/archive/inquiries/roaming/index.html, visited 7/9/2010. 588 European Commission. DG Competition. Working document on the initial Finding of the sector inquiry into mobile Roaming charges. http://ec.europa.eu/competition/sectors/telecommunications/archive/inquiries/roaming/working_document_on_initial_results.pdf, visited 7/9/2010. 589European Commission. International Roaming tariffs http://ec.europa.eu/information_society/activities/roaming/index_en.htm, visited 7/9/2010. 590 Commission Recommendation 2003/311, 0f 11 February 2003 on relevant product and service markets within electronic communications sector susceptible of ex ante regulation in accordance with Directive 2002/21/CE of the European Parliament and of the Council on a common regulatory framework for electronic communications network and services. OJ L 114, 8 May 2003. P. 45 http://europa.eu.int/eur-lex/pri/en/oj/dat/2003/l_114/l_11420030508en00450049.pdf Chapter 10: The Second Review of the Electronic Communications Policy. Period 2005-2010 275 The first consultation took place in February 2006, as a result of which the Commission published a document591 containing the results of the opinions received and proposing a solution consisting of the Parliament and Council’s future adoption of a Regulation that would permanently resolve the issue for which the sector’s opinion was once again being asked. The Commission proposed that the tariffs for roaming services be put on the same level as national and international calls. The Commission proposal followed the procedural steps used to achieve the local loop unbundling. The Commission argued that there was sufficient legal basis to do it given that it was a measure aimed at developing the internal market stipulated in article 14 (now Art. 26) of the Treaty as established in article 95 (now Art. 114) of the same text. On this occasion, the Commission met with the opposition of the operators who considered a substantial part of their business to be at risk, and of certain Regulatory Authorities in the Member States which considered that it interfered with their authority. However, the Commission did, as could be expected, have the users’ approval. In July 2006, the Commission adopted the Proposal for a Regulation592, accompanied by a corresponding Impact Assessment593, which was forwarded to the Parliament and the Council for discussion and approval, following the associated co-decision procedure. The Regulation594 was published in the Official Journal in June 2007. It was established, firstly, a maximum average wholesale charge that the operator of a visited network may levy from the operator of a roaming customer’s home network, and secondly, a retail rate, called Eurotariff, any roaming call could not exceed. These maximum rates would be applicable from August 30, 2007, with further declines within one and two years. The Regulation itself set to expire on June 30, 2010, while instructing the Commission to review the operation of Regulation and report to Parliament and the Council by December 30, 2008. More specifically, the Regulation stated where to focus in this review. In addition to following the evolution of prices of voice communication services, the Review would follow the tariffs for data services “including SMS and MMS, and shall, if appropriate, include recommendations regarding the need to regulate these services”. Finally, it would assess whether “there is need to extend the duration of this Regulation”. So the Commission showed their cards with regard to what might be called the second battle of roaming. As planned, the Commission prepared the review of Regulation through, inter alia, benchmarking reports produced by the ERG Group. So, the Commission launched a Public Consultation in May 2008, while making public a study on data roaming services that would be published in June 2008. In September 2008, the Commission adopted a Communication595 which comprised the results of the Consultation and the Proposal for a Regulation596 amending the 2007 Regulation, enclosing a corresponding Impact Assessment597. In the Communication, the Commission noted the broad support received for its three goals: the extension of voice regulation beyond 2010, regulation of SMS 591 Second phase of consolation on a proposal for Regulation on mobile roaming services in the single marker. Brussels 2 April 2006 http://ec.europa.eu/information_society/activities/roaming/regulation/archives/2nd_phase/index_en.htm, visited 7/9/2010. 592 COM(2006) 382. Proposal for a Regulation of the European Parliament and of the Council on roaming on public mobile networks within the Community and amending Directive 2002/21EC on a common regulatory framework for electronic communications networks and services. Brussels xxx 593 SEC(2006) 926. Executive Summary - Impact assessment of policy options in relation to a Commission proposal for a Regulation of the EuropeanParliament and of the Council on roaming on public mobile networks within the Community. Brussels, 12 June 2006. 594 Regulation (EC) No 717/2007 of the European Parliament and of the Council of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/E. OJ L 171 of 20 June 2007. P. 32. 595 COM(2008) 579. Outcome of the review of the functioning of Regulation (EC) No 717/2007 of the European Parliament and of the Council of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC. Brussels, 23 September 2008. 596 COM(2008) 580. Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 717/2007 on roaming on public mobile telephone networks within the Community and Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services. Brussels, 23 September 2008. 597 SEC(2008) 2490. Summary of the impact assessment. Brussels, 23 September 2008. The Electronic Communications Policy of the European Union 276 roaming, especially wholesale, and regulation of data roaming services. The Commission's proposals for each of these objectives were: to extend voice wholesale and retail regulation until 2013, with progressive reduction of the maximum rates, regulation of SMS roaming at wholesale and retail levels, and introducing a wholesale safeguard mechanism to combat bill shock for data roaming service and a maximum average wholesale. The Regulation598 amending the 2007 Regulation was published in the Official Journal in June 2009 and gathered the Commission’s proposals. This time, the Regulation was extended for two years and it set out the review process, which should be undertaken by the Commission by June 2011 and which left open the possibility that, as a result of the review, other regulatory remedies, in addition to price control, may be used. Note how the Commission, being the only occassion when it acts as a true Regulatory Authoriry, seems to give forceful example to the NRAs. 3.10 .- The review of the scope of Universal Service. This review process has been carried out under the provisions of the Universal Service Directive, although in the last stage, the scope of debate has been extended, as shown below. Indeed, Article 15 of Universal service Directive stated that the Commission must periodically review the scope of the universal service and requested that the first review take place within two years of the Directive’s implementation date which was 25th July 2003. In accordance with the above, in May 2005, the Commission began the Directive revision process; particularly that concerning the scope of the Universal Service sector for which it published a Communication599 which started a consultation process with the sector. The Communication was accompanied by a working document on Commission services600 which completed its contents. Following considerable analysis of the situation, the Commission raised the following questions in its Communication: “Comments are invited on, inter alia, the following longer-term issues: (a) Taking into account existing and expected technological developments, should universal service at some point in future separate the access to infrastructure element from the service provision element and address only access to the communications infrastructure, on the grounds that competitive provision of services, (e.g., telephone service provided using Voice over IP) will ensure their availability and affordability? (b) In as much as consumers are increasingly mobile while using communications services, should universal service continue to address access at a fixed location, or should it address access at any location (including access while on the move)? (c) With widespread affordable access to mobile communications, the demand for public payphones is declining. Is it still appropriate to include provisions on public payphones, and as they are currently conceived, within the scope of universal service? 598 Regulation (EC) No 544/2009 of the European Parliament and of the Council of 18 June 2009 amending Regulation (EC) No 717/2007 on roaming on public mobile telephone networks within the Community and Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services. OJ L 167 of 29 June 2009. P. 12. 599 COM(2005) 203 On the Review of the Scope of Universal Service in accordance with Article 15 of Directive 2002/22/EC. 600 SEC(2005) 660. Review of the Scope of Universal Service in accordance with Article 15 of Directive 2002/22/EC. [Document text truncated for crawler view.]