Title:Analyse the development of EU telecommunications policy since the mid-1980s.How has the EU been able to determine the construction of the industry and its services?

Introduction

Single market and free motion of goods and services are the overarching policies of the Community. Accomplishment of these ends required Community action in many countries, including the telecommunications sector. The telecommunications industry is different from other sectors in that it historically has been “characterised by the being of monopoly entities owned or controlled by the Member States which have besides been entrusted chiefly with public service functions.” [ 1 ]

This position of telecommunications as an stray sector non susceptible to liberalization has been bit by bit altering – “over the past decennary peculiarly, ordinance of the sector has been reviewed and revised in response to dramatic technological alteration, the increased importance of the sector for service-based and information-dependant economic activity and the acknowledgment in peculiar by policy shapers that the electronic communications sector might non be a ‘natural monopoly’ , ie one in which merely one operator could last on an economic basis.” [ 2 ] In major portion, this alteration came as a consequence of liberalization reforms spearheaded by the European Community.

To liberalize the industry, the push of the Community’s attack was directed at the “establishment of [ … ] three nucleus elements: liberalization through the usage of competition Torahs [ … ] , harmonization [ … ] , and standardization ( to cut down proficient barriers to entry ) .” [ 3 ] The overall implicit in attack has been ‘competition where possible, ordinance where necessary’ . [ 4 ]

The below analysis will therefore dressed ore on the three countries of Community action: harmonization, standardization and close interplay between telecommunications industry and competition jurisprudence.

1. Harmonization of Industry

The chief focal point of Community harmonization in the country of telecommunications has been liberalization of the markets characterised by being of ( province ) monopolies and puting down conditions for efficient competition in this country. Reducing menaces to competition clearly formed the basis of the Community’s attack.

The telecoms industry in the EU until some 10-20 old ages ago merely existed in the signifier of individual, state-owned projects resembling all the negative features associated with the deficiency of competition. Denationalization and liberalization could merely win if some land regulations aimed at guaranting the ex-monopolists do non prosecute in smothering out rivals and new entrants, were laid down.

In add-on, because of its technological complexness, mutuality, and the ensuing demand for a tighter regulative control, the telecoms industry was ever to be a really tough market, characterised by high economic and regulative barriers to entry.

On top of that, the industry is inter-operable with available synergisms of certain services and operations that make it advantageous for companies to unify or organize joint ventures ( but that can besides hold some competition-restricting effects ) . This increased the likeliness of anti-competitive behavior and demanded robust Community-wide attack. In add-on to safeguarding competition, entree to communications services and plurality of the media have besides been recognised as of import factors for harmonization. [ 5 ]

Walden observes that “ [ o ] Ne of the historic myths of telecommunications liberalisation was that it would originate through market deregulating [ … ] . To day of the month, nevertheless, the world has been rather the antonym. The telecommunications sector has become a to a great extent regulated sector in order to guarantee the passage to competition… ” [ 6 ]

Equally early as 1987, the Commission published the Green Paper [ 7 ] naming for a more decisive attack to ordinance of the telecommunications industry. This was at the clip when telecoms were still an stray, monopolised market, missing the whole overplus of today’s subsets such as digital telecasting and nomadic telephone.

After a period of treatment, the Directive on competition in the markets for telecommunications services [ 8 ] was adopted, which proved to be a major measure in the de-regulation of the telecommunications industry. The Directing “required Member States to get rid of particular and sole rights for the proviso of certain telecommunications services” . [ 9 ] The Directive was later amended several times to include the latest emerging subsets of the industry: orbiters, [ 10 ] overseas telegram telecasting, [ 11 ] Mobiles [ 12 ] and, after some transitional period, all sorts of voice telephone. [ 13 ]

In 2002, these piece-meal harmonization efforts were consolidated in Competition Directive. [ 14 ] The Directive applies to electronic communications services ( ECSs ) and electronic communications webs ( ECNs ) , including nomadic and satellite webs and Television broadcast medium. The cardinal commissariats of the Directive prohibit Member States from allowing sole rights to supply ECSs and ECNs [ 15 ] and necessitate that any mandate for the proviso of these services shall be based on non-discriminatory, proportionate, nonsubjective and crystalline standards. [ 16 ]

On the substantial ordinance forepart, in 1999 the Commission published Communication [ 17 ] in which it observed the turning usage of synergisms, globalization of engineerings and markets, and the turning function of the Internet and digital engineerings, including digital Television. The Commission took a position that ordinance demands to be adjusted to include these new developments. The Commission besides acknowledged that, substantively, such ordinance should be technologically-neutral and employ lower limit of ordinance necessary to accomplish the aims. [ 18 ] The Commission besides decided to follow the Framework Directive and whole scope of other steps, including heightening the competition regulations so that most of the ordinance in this country can be advanced from that angle. [ 19 ]

This model attack presently consists of “a general ‘framework’ Directive [ [ 20 ] ] and four specific Directives on mandate, entree and interconnectedness, cosmopolitan service and informations protection.” [ 21 ] The chief transition of the Directive is that transmittal webs and services shall come under individual regulative umbrella. [ 22 ] Independent and impartial National Regulatory Authorities ( NRAs ) shall be set up to overview the application of the regulations in the industry. NRAs have an aim of advancing competition, lending to the development of the internal market and safeguarding the involvements of EU citizens. [ 23 ] The Commission is entrusted with the undertaking of pulling up a list of criterions and specifications to function as a footing for harmonization. [ 24 ] To let full inter-operability, the Member States shall promote digital synergistic telecasting service suppliers and equipment makers to utilize an Application Program Interface ( API ) . API proprietors shall be encouraged to supply relevant information on just, sensible and non-discriminatory ( FRAND ) footings to further inter-operability. [ 25 ]

From the other four ‘satellite’ directives, the three lay down the model regulating entree and interconnectedness, mandate and cosmopolitan service. “The Access Directive [ [ 26 ] ] harmonises how Member States regulate the commercial relationships between providers of public communications webs and services.” [ 27 ] The Directive establishes a system leting entree to and interconnectedness of webs and guaranting there are no anticompetitive barriers with NRAs playing a supervisory and commanding map.

“The Authorisation Directive [ [ 28 ] ] moves the electronic communications industry off from a licensing system towards one of mandate. The general regulation is that the proviso of electronic communications webs or services may merely be capable to a general mandate and non an single license [ … ] In kernel, the general mandate allows projects to: ( I ) provide electronic communications services and webs ; ( two ) apply for rights of manner ; ( three ) negotiate interconnectedness anyplace in the Community ; and ( four ) have the chance to be a supplier of Universal Services.” [ 29 ]

“The Universal Service Directive places considerable accent upon the rights of the consumer.” [ 30 ] All information associating to monetary values and duties must be made available to the populace. [ 31 ] “The Universal Service Directive [ 32 ] purposes to guarantee the handiness of good quality electronic communications services [ including the usage of the populace telephone web at a fixed location, cyberspace services and public telephone directories services [ 33 ] ] at an low-cost price.” [ 34 ] Importantly, Article 9 requires Member States to oversee the monetary values charged by service suppliers and Article 10 requires Member States to guarantee that proviso of services is non capable to roll uping and binding.

In parallel with ordinance of services, the Community action was taking topographic point to modulate the telecommunications equipment market. “The liberalization of the European telecommunications equipment market began in the late eightiess with the acceptance of the Terminal Equipment Directive.” [ 35 ] The Directive [ 36 ] required the backdown of the barriers on importing, selling and care of the telecommunications terminal equipment. The Directive did non cover the wireless equipment, such as nomadic phones but Radio Terminal Equipment Directive [ 37 ] extended its commissariats to mobile equipment.

The statute law passed by the Community establishments laid down a house foundation for liberalization of the telecoms market, bettering the inter-operability, and safeguarding the involvements of the consumers.

2. Standardization Procedure

Standards play cardinal function in the telecommunications industry – they allow telephone French telephones to be connected to telephone webs in the European Union and users to pass on with each other. “Standards are [ besides ] critical to the procedure of liberalising the market.” [ 38 ]

This can be illustrated by an illustration in the nomadic telephone sector. The current Community-wide recognized criterion is GSM, [ 39 ] which is a 2nd coevals digital nomadic telephone criterion developed in the early 1980s to enable nomadic rolling within the EU and approved by the Commission. By 2006, the criterion has been adopted in 213 states worldwide. [ 40 ] Another criterion adopted in the EU is WCDMA [ 41 ] which is one of the chief criterions for the execution of 3G nomadic telephone launched in 2001. WCDMA engineering is increasing in importance and its gross revenues are turning at a faster rate than gross revenues of 2G French telephones. The importance of standardization in this country is guaranting a harmonised, inter-operable attack for the benefit of makers and consumers.

The Commission acknowledged the benefits of European standardization in the Guidelines on the application of competition regulations in the telecommunications sector. [ 42 ] While promoting this procedure, the Commission besides warned that any standardization understandings have to be capable to warrants that competition would non be restricted, for illustration by favoritism against private services suppliers and cross-subsidisation. Such warrants would be indispensable conditions for the granting of an freedom under the competition regulations to the standard-setting administrations.

This addresses the issue of anti-competitive hold-up common in the standardization country where criterions owners basking the absolute control over engineering that everyone else in the industry has to utilize, order whatever conditions of allowing such engineerings as they deem fit. The Commission hence warned that preemptive precautions have to be taken by criterions puting administrations to screen the industry from the maltreatment of standard-holders. This could be done by necessitating the members to allow licenses to all interested parties on non-discriminatory footings.

Within Europe, the European Telecommunications Standards Institute ( ETSI ) is chiefly responsible for the telecommunications standardization procedure. ETSI, after a long period of treatments with the Commission ( turn toing chiefly the issue of ‘hold-ups’ ) was recognised as a European Standards Institute by the Community. [ 43 ] ETSI was straight responsible for the development of the GSM criterion and is active in developing the WCDMA standardization procedure through its engagement in 3GPP, administration, set up by 7 criterions organic structures, including ETSI.

To turn to Commission’s concerns to standardization, ETSI operates a rigorous Intellectual Property Rights Policy ( IPR Policy ) [ 44 ] puting out members’ rights and duties and the rights of 3rd parties. Clause 3 provides that ETSI’s aims are guaranting that criterions are based on solutions which best meet the aims of the telecommunications sector and guaranting that IPR holder of the criterion makes it available to all 3rd parties. Clause 6.1 of the IPR Policy addressed the concerns of the Commission and provides that IPRs covering the adoptive criterions must be licensed to 3rd parties on just, sensible and non-discriminatory ( FRAND ) footings.

3. Intervention and Control

Another powerful tool exercised by the Commission to progress competition in the telecoms country is commanding the laterality of the telecoms and oversing amalgamation activities of the telecoms and the pricing and merchandising patterns of the industry participants “through behavioral and structural controls. The former have been imposed both in ex ante legislative instruments, every bit good as ex station determinations enforcing behavioral projects as conditions for the blessing of certain commercial agreements.” [ 45 ]

The seminal determination in this country was reached by the Commission in 1982 against BT: [ 46 ] happening maltreatment of laterality by running a strategy forbiding private companies from directing and having telex messages abroad.

In the country of telecoms, cooperation oftentimes takes the signifier of making a joint venture for a peculiar new subset of the industry, such as cyberspace or digital Television, to using the synergisms. Because of the oftentimes monolithic size of the participants, such understandings seldom escape the examination by the Commission.

The the mentioned Guidelines [ 47 ] on the application of the competition regulations in the sector, the Commission besides recognised the importance of understandings between telecom operators in heightening economic benefits and go throughing them on to the consumers which would do them eligible for Article 85 ( 3 ) freedom but stressed out once more that it is crucially of import such cooperation does non make barriers to entry to 3rd parties and extinguish competition – such understandings will non be exempted under Article 85 ( 3 ) .

For illustration, in Atlas, [ 48 ] which concerned the proposed joint venture between France Telecom ( FT ) and Deutsche Telecom ( DT ) , the Commission found that such JV would conflict Article 81 ( forbiding understandings between projects holding an object or consequence prohibiting or curtailing competition ) because it would extinguish competition between FT and DT in France and Germany and Europe-wide. [ 49 ]

By contrast, in British Interactive Broadcasting/Open, [ 50 ] the Commission provided a negative clearance to BskyB, BT Holdings, Midland Bank and Matsushita for the creative activity of BiB JV. BiB was to supply digital synergistic telecasting and assorted other ( e-mail, cyberspace ) services to clients in the UK. The Commission cleared the proposed JV but imposed a figure of duties including duty to provide conditional entree on FRAND footings and a figure of others competition-boosting conditions.

Another country of the Commission’s frequent intercession is undertaking inordinate pricing issues. This is really of import in the context of telecoms and their comparative strength towards potency or recent market entrants. In 1998, the Commission published Practice refering inordinate pricing in Telecommunications. [ 51 ] The Commission stated that appraisal of costs of services in telecommunications is really hard because many operators until really late were publically owned, but the state of affairs should alter.

The Commission adopted a goal-oriented attack in this country – the end being leveling inordinate monetary values for the benefit of the consumers. For illustration, inDeutsche Telekom[ 52 ] suppliers of corporate services lodged ailments against DT duties. The Commission found that duties constituted a price-cost squeezing on rivals. The Commission invited DT to reason more favorable understandings on entree to the populace telephone web with rivals. The later agreed duties were reduced by 38 % to 78 % which of class benefited the concluding consumers.

Another illustration of the Commission’s finding to size up the unjust pricing patterns isITT Promedia /Belgacom,[ 53 ] where Belgacom charged inordinate monetary values for entree by telephone directories publishing houses to subscriber informations. Belgacom charged a monetary value equal to “34 % of the turnover of the directory publishing houses and 200BF per line of data” . The concluding colony footings required that “ [ vitamin D ] irectory publishing houses in Belgium will be charged a monetary value which is set in such a manner that Belgacom can retrieve the costs it incurs in the aggregation, intervention and proviso of the subscriber informations required for publication intents, plus a sensible net income border. This cost-oriented attack will take to a really significant decrease of more than 90 % in the sum originally charged to telephone directory publishers.” It should be noted that proceedings at the national degree were non conveying any positive consequences because of the strength of Belgacom which was free to order whatever footings it deemed fit and refused to co-operate. The intercession by the Commission really rapidly resolved this issue, once more, with a touchable consequences of profiting the concluding consumers.

These instances besides show that in the field of telecommunications, the Commission uses the cost-price analysis significance that if the monetary values of the services greatly exceed the costs of supplying the services – such difference will be deemed inordinate. Where this is non possible, the Commission will use a comparative market analysis in order to measure the possible maltreatment.

Decision

Since 1980s, the telecommunications industry underwent dramatic transmutation characterised by the major technological developments and liberalization of the tight national regulative governments. The alteration is genuinely astonishing as merely some 20 old ages ago telecoms were viewed as a ‘natural monopoly’ non susceptible to liberalization.

The great technological promotions have extended the boundary lines of the industry and with the coming of Internet and digital communications – it is everyone’s conjecture what else is in the grapevine for telecoms industry. It is difficult to believe of an industry today that one manner or another is non interlinked with telecommunications. From the technological side, the industry is besides developing fast: merely as an illustration, fixed and nomadic communications will shortly be merged – BT is already developing an endeavor solution offering one phone, one figure and one measure for office and nomadic phones with all the advantages of the fixed web and important nest eggs in costs. [ 54 ]

These transmutations would non be possible unless technological developments went in analogue with the liberalization of the telecoms markets, making the most favorable conditions for technological reforms and set uping a competitory, inter-operable and consumer-catering market.

This undertaking required the Community-wide attack because marginalised reforms carried out in Member States would bring forth a assorted set of consequences, endangering the unvarying liberalization attack and profiting merely a part of EU citizens.

Community ordinance in the country of telecoms has chiefly concentrated on three country: making and safeguarding the free market conditions in the industry, advancing the standardization procedure to let the interconnectivity and joint declaration of the technological challenges and following liberalization steps aimed at constructing a strong competitory substructure in the telecoms markets for the benefit of the consumers. On top of that, the European Commission exercises its powers to command and oversee the behavior of the telecommunications industry participants oftentimes leting it to halt the anti-competitive behavior before it even started, which adds efficiency to the Community ordinance in this country.

CCCCoooo

Bibliography

Literature

S. Kamall,Telecommunications Policy, Cartermill International, London 1996.

Butterwroths Competition Law, Vol. 3, Media and Communications subdivision, edited by P. Crowther, Issue 55, published in March 2004.

I. Walden,Telecommunications Law and Industry,2neodymiumedition, edited by I. Walden and J. Angel, OUP 2005.

A. Tarrant, ‘Significant market power and laterality in the ordinance of telecommunications markets’ , ( 2000 ) 7ECLR320.

European Telecommunications Standards Institute Intellectual Property Policy available at hypertext transfer protocol: //www.etsi.com/legal/ipr_a.htm

P. Awde, ‘A Single Network Can Bring Efficiency and Savings’ , published in FT 21 June 2006, available at www.ft.com/cms/s/d5e7d5f0-0125-11db-af16-0000779e2340, dwp_uuid=c2382502-ff75-11da-93a0-0000779e2340.html

hypertext transfer protocol: //www.gsmworld.com/about/index.shtml

hypertext transfer protocol: //www.gsmworld.com/news/press_2006/press06_29.shtml

Legislation

COM ( 1987 ) 290 ( concluding ) , Towards a dynamic European economic system: Green Paper on the development of the common market for telecommunications services and equipment.

COM ( 1999 ) 539, Towards a new model for electronic communications substructure and associated services.

Competition Policy Newsletter June 1998, no 2

Commission Decision 92/400/EEC

Directing 90/388/EEC

Directing 94/46/EC

Directing 95/51/EC

Directing 96/2/EC

Directing 96/19/EC

Directing 2002/77/EC

Directing 2002/21/EC

Directing 2002/19/EC

Directing 2002/20/EC

Directing 2002/22/EC

Directing 88/301/EEC

Directing 99/5/EC

Directing 98/34/EC

Cases

BT,Decision 82/861, OJ [ 1982 ] 360/36.

Atlas, Decision 96/546, OJ [ 1996 ] L 239/23.

British Interactive Broadcasting/Open, OJ 1999 L312/1.

IP/97/292

IP/96/975

1