What alternatives are there to the NRA
Sixth report on the implementation of the telecommunications reform package
Find out how far regulation of telecommunications in the European Union has progressed since the last relevant communication was adopted.
2) LEGAL ACT
Communication from the Commission of 7 December 2000 - Sixth report on the implementation of the telecommunications reform package [COM (2000) 814 final - not published in the Official Journal]
Background and goal
In March 2000, the Lisbon European Council set the European Union (EU) the goal for the next decade of becoming the most competitive and dynamic knowledge-based economy in the world. A prerequisite for this main objective is a fully integrated and liberalized telecommunications market, which should be created by the swift adoption of the new regulatory framework for telecommunications. In this context, this Commission report focuses on the areas that need improvement, so that optimal conditions are in place for the development of a vibrant, competitive information society in Europe.
To this end, the report, which follows the report published by the Commission in 1999,
- provide an overview of the most important developments in the telecommunications market;
- analyze the application of the basic rules of the current legal framework;
- Draw conclusions on the achievement of the objectives of the eEurope initiative set by the European Council in Lisbon in March 2000 and in Feira in June 2000.
The report is as of October 16, 2000. Most of the data on the telecommunications market comes directly from national regulators.
Assessment of the implementation of the legislation
- National Regulatory Authorities (NRA)
NRAs play an important role in the implementation of the telecommunications regulatory framework as they bear most of the responsibility for its implementation. Therefore, particular attention should be paid to the question of their real powers. In this regard, the report notes that in four countries (Belgium, France, Germany, Luxembourg) there still seems to be a lack of powers, particularly as regards the ability of NRAs to intervene in interconnection disputes. In contrast, in three Member States (Greece, Austria, Ireland) the competences of the NRAs have been expanded. Finally, in two countries (Spain and Sweden), the NRA is still reluctant to exercise its interconnection powers to the full.
On the issue of the resources that NRAs need to carry out their functions, the lack of funding and human resources remains a problem for some NRAs (Belgium, Greece and Italy). The right to appeal against the decisions of the NRA now exists in all Member States. In most cases, however, it still takes a relatively long time to reach a judicial decision.
The last report highlighted the large divergences between national licensing systems, costly conditions, lengthy procedures and high fees in some Member States. As a result, there are still problems of complexity and procedural time, even though the introduction of new services requires simplification and acceleration of the approval process.
In most Member States, the European approval guidelines are complied with insofar as individual approvals are only required when it comes to the provision of voice telephony services or networks or the allocation of scarce resources. Belgian, German and French operators complain above all about the amount of work and time involved in extending an existing regional permit to another region.
An improvement can be observed in Belgium. Here a provision has been repealed that goes beyond European regulations, i.e. the obligation to contribute to research and development activities. France is now the only Member State to impose such an obligation. Greece has yet to introduce the licensing conditions for voice telephony in order to adapt its system in time for the liberalization planned for January 2001.
In some Member States, the operators are dissatisfied with the level of the fees to be paid for a permit. However, little progress has been made on this issue since the Fifth Report, with the exception of France, where there has been a significant reduction in annual wages.
Notable improvements have been made in this area, in particular the entry into force of numerous interconnection agreements with incumbent operators. Significant difficulties remain, however, for new entrants who are still having difficulty in obtaining adequate interconnection quickly. Furthermore, high interconnection tariffs and low tariffs for the incumbent's end-users reduce the profit margins of new entrants and impede competition. Some aspects remain to be addressed, in particular:
- the rejection of negotiations by the incumbent operators and the use of resources to which the market entrants attribute suspensive effect;
- the reluctance to exercise the powers of surveillance of the interconnection market conferred on NRAs in some Member States.
- Settlement of disputes: The Luxembourg legal framework does not, for example, allow decisions to be taken to resolve disputes. In Germany, the NRA is not entitled to make interconnection decisions on its own initiative and can therefore not intervene to prevent disputes.
Local connection competition
There have been significant changes in this area since the Fifth Report, when the Commission presented a proposal in July 2000 for a regulation on local loop unbundling. Full local loop unbundling is currently more or less the case in six Member States (Denmark, Germany, the Netherlands, Austria, Finland and Sweden). In these countries the co-location conditions, especially the slow reaction of the incumbent operator, can represent obstacles for new entrants.
- Universal service and consumer aspects
As already stated in the Fifth Report, the provision of a high quality universal service in the EU seems guaranteed and presents few difficulties. Necessary improvements relate to the creation and provision of a universal directory to improve the quality of directory inquiries. In France and Sweden this service is not yet available due to disagreement between the incumbent and other operators. The Commission's report identifies this as a matter of concern given the growing number of other operators and the impending unbundling.
In terms of consumer protection and the promotion of user interests, the inadequate coordination between NRAs and other consumer protection organizations remains problematic. Given these conditions, it is difficult to identify trends at EU level and to identify priorities for action. In the light of the available data, there still seem to be significant discrepancies between Member States with regard to the quality of key components of the fixed telephone service, e.g. the deadline for providing the initial connection, troubleshooting or answering calls to operators or directory assistance services.
Most Member States have a dispute resolution office or agency that deals with consumer complaints in the telecommunications sector. In the rest of the world, the general trend is to turn to general consumer protection organizations for telecommunications disputes.
The market for wireless services has developed significantly over the past year. For example, coverage - the ratio between the number of participants and the total population - rose by 63% on average in the EU. The growth rate was particularly pronounced in Germany and Greece, where the number of participants more than doubled in one year.
As regards the management of the national frequency band plans, no significant problems were mentioned. However, no plan has yet been established in Luxembourg; in Greece and Italy there were transparency problems.
The granting of licenses for third-generation cellular networks now appears to have got off to a good start in the Community. As of October 16, 2000, 3G licenses had been granted in five Member States (Germany, Spain, the Netherlands, Finland, the United Kingdom); in another five countries (Belgium, Italy, Austria, Portugal, Sweden) this process should be completed by the end of 2000.
Fixed voice telephony tariffs continue to decrease regardless of the length of the call or the time of day. From August 1999 to August 2000, incumbents' average monthly domestic call spending decreased by 4.6% for private users and 10.5% for businesses. The result is that, in terms of collective bargaining, the liberalization benefited companies more than consumers.
Data show that there has been some tariff reorganization in Member States, i.e. a reduction in international and long-distance prices and an increase in local and leased line tariffs. Incidentally, the end-user tariffs for public voice telephony services are still regulated in most of the Member States. Price caps have been introduced in the majority of Member States to ensure affordable prices for telephone services and to make incumbents more efficient. Finally, it should be noted that incumbents tend to respond to increasing competitive pressures by adjusting average tariffs for specific customer groups or for services that are least competitive.
In its fifth report, the Commission indicated that cost accounting remains one of the most problematic areas. The NRA are responsible for ensuring that the operators' cost accounting systems are suitable for the purposes of the EU directives. Some progress seems to have been made over the past year in terms of both the audit of the operators and the definition of specific implementing measures at national level.
Despite this encouraging development, Member States still have concerns about the introduction of concrete, operational cost accounting systems that allow a review of accounting segregation and cost-based tariffs. This appears in part to be due to inadequate transposition of Community legislation into national law.
The Commission attaches particular importance to the rapid provision of leased lines at cost-oriented tariffs in order to make the provision of Internet services more cost-effective. The standard tariffs (without discount) have fallen considerably since August 1997, i.e. after the liberalization of the infrastructure. Nevertheless, the price reductions in areas where there are no - or only a few - alternatives to the infrastructure of the incumbent operator are less spectacular. Here, too, new market participants encounter difficulties if they want to obtain leased lines within a reasonable period of time.
The complete liberalization of the telecommunications market includes the final introduction of operator selection, pre-selection and number portability.
Call-dependent operator selection is possible for long-distance and international calls in all Member States except Greece. Operator selection for calls to mobile subscribers is available in all Member States except Finland and for local calls in seven countries. Operator pre-selection (BVA) for long-distance and international calls is available in almost all Member States. BVA for calls to mobile subscribers is available in most Member States, BVA for local calls is or is currently implemented in six Member States.
Geographical numbers are transferable in all Member States with the exception of Greece, Ireland and Portugal, which have been granted a transitional period for full market liberalization. The portability of non-geographical numbers is also offered in all countries except Greece, France, Luxembourg and Portugal.
The data also show that number portability charges vary widely from one Member State to another. In Belgium, France, Ireland, Italy, Luxembourg and Sweden, users do not need to pay any fees. The single European emergency number "112" has been introduced in all Member States and no significant difficulties in using it have been reported.
Most of the problems identified in the Fifth Report in this area have not been resolved. Market access was delayed due to the large number of competent authorities, especially at the local level. The operators are still worried about town planning, environmental protection and health regulations when installing antennas.
The non-discrimination principle is still not respected by the authorities of one Member State - Luxembourg - where only the incumbent operator is authorized to lay cables. In another country (Greece), the incumbent is reported to have better access to public routes than new entrants.
In some countries, particularly Belgium, Spain and Italy, waiting times for rights of way to be granted remain a problem. In Luxembourg, entrants are still denied rights of way.
Fees create difficulties in some Member States, partly due to different approaches by city administrations (Italy, Ireland) or inconsistent application of the law (Belgium). Another cause for concern is that in some Member States city governments are going to market themselves and building their own network, but at the same time have the authority to decide on rights of way for entrants. Therefore, discrimination against new market participants by the city administrations is to be feared.
In order to maintain consumer confidence in the reliability and integrity of telecommunications equipment, particular attention must be paid to data protection regulations. Measures and functions to guarantee data protection, in particular the suppression of call forwarding, provisions on unsolicited calls and the display of the caller's number, are available in almost all Member States, but are not always regulated.
Traffic data is deleted immediately after the call in eleven EU countries or saved in an anonymous form. In France, Luxembourg and the Netherlands there is no obligation to delete the data. Furthermore, in most Member States, participants are entitled to remain anonymous free of charge and not be included in the list of participants.
The Internet services market has seen strong growth in most Member States over the past year. The number of internet service providers has also increased in most Member States: in several countries there are at least 100 local or national internet service providers and in some there are even several hundred. The number of Internet servers increased in all Member States and across the Union by an average of 33% between July 1999 and January 2000. However, internet usage varies greatly from country to country, ranging from a small percentage of the population (less than 10% in Greece) to more than 50% in Denmark and Sweden. In the other countries, the average coverage rate is around 25%. However, the report said that the results of both Internet server numbers and usage levels remained below those of the United States.
- The aim of the eEurope initiative
The eEurope initiative enhanced Europe's strengths in telecommunications, in particular mobile services and the "Internet on the move" capabilities. However, as the report confirms, Member States build their strengths when the coverage is up to 70%, but at least 39% Internet connections via leased lines, formerly one of Europe's weaknesses, have increased significantly for three reasons:
- Liberalization of the local access network;
- Adoption of the necessary regulations for the implementation of the EU regulation on the unbundling of the local loop;
- Reduction in leased line prices.
The prospects are encouraging for almost all market segments. There is more choice in the end customer market as the number of operators has increased significantly. The range of voice telephony services was around 80% larger than in the previous year. Overall, a constant rate reduction can be observed for private users and companies, although the new rates for certain calls and leased lines led to a price increase. For large customers, leased line prices continue to fall overall, primarily as a result of competition.
Substantial progress has been made in implementing the current European legal framework. In this context, the NRA's influence on the markets has been confirmed more and more. The European Commission believes that the Member States should continue to give the NRAs full regulatory powers and provide them with the necessary human and financial resources.
However, action is still needed in several areas to ensure implementation of the legal framework.
- Licensing: The procedures are still cumbersome and in some cases associated with strict requirements and high fees. Newcomers to the market encounter difficulties when they want immediate interconnection on reasonable terms.
- Mobile communications market: The issuing of licenses for third-generation services had been going on for some time, but only in 2001 in five countries. However, it is uncertain whether all of these countries will be able to set up their network in time for the start of services in early 2002, in line with the Community decision.
- The tariff reorganization is not complete in all Member States, so incumbent operators can sometimes cross-subsidize certain tariffs to limit the profit margins of new entrants.
- Operator pre-selection is widespread in most Member States and allows entrants to reach the end-user via the incumbent's local access network. However, newcomers to the market are rarely able to provide the full range of local, long-distance and international calls to mobile subscribers.
- Local loop unbundling colocation: there is such a lack of space in some Member States that regulators have to intervene to find practical solutions. In other countries, measures by the regulatory authority are evidently necessary to avoid incumbent operators hindering competition.
- Leased lines: Despite the general tariff reduction, the excessively long delivery times determined by the established operators call the economic activity of new market participants into question.
- Internet: Technical and legal developments promise a satisfactory development of Internet coverage in Europe. However, there is cause for concern that in several Member States newcomers do not yet have access to the ADSL high-speed services of the incumbents or that these are offered at excessive tariffs.
4) implementation measures
5) more work
Communication from the Commission of 19 November 2003: "Electronic communications in Europe - Regulation and markets 2003 - Report on the implementation of the EU reform package for electronic communications" [COM (2003) 715 final - Not published in the Official Journal]
Communication from the Commission of 3 December 2002 - Eighth Report on the Implementation of the Telecommunications Reform Package - Regulation and Markets 2002 [COM (2002) 695 final - not published in the Official Journal].
Communication from the Commission of 26 November 2001 - Seventh Report on the Implementation of the Telecommunications Reform Package [COM (2001) 706 final - not published in the Official Journal].
Last change: 09/12/2005
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