Leg. Dev.: Cable Liberalization

2 Colum. J. Eur. L. 187 (1995)

Christopher Wyeth Kirkham.

On October 18, 1995, the Commission adopted Commission Directive 95/ 51/EC, 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 (1995 O.J. (L 256)). The measure, enacted through the Commission’s independent powers under Articles 90 and 86 of the EC Treaty, is aimed at further liberalization of the European communications markets. By removing restrictions on the services cable networks may provide, the Commission expects to encourage investment leading to increases in transmission capacity in the European Community. Additionally, the directive requires certain enterprises that simultaneously provide cable and other telecommunications services to separate their financial accounting as between the activities, thereby increasing transparency for auditors investigating improper cross-subsidization.

This measure is the second amendment to Directive 90/388/EEC, which required Member States to open certain telecommunications services to competition (1990 O.J. (L 192)). The first amendment, Directive 94/46/EC, added satellite communications to the scope of liberalized services (1994 O.J. (L 268)).1 This second amendment responds to industry concerns about the effectiveness of the 1990 directive, particularly in the data communications, voice and data services, and value added services sectors. Most Member States currently prohibit cable companies from providing services other than television broadcasting. Such restrictions are generally justified on the grounds of ensuring telecommunications service providers sufficient revenue to develop and maintain universal service. These restrictions, however, keep cable network companies from competing for the provision of growing transmission capacity demands. Current prices for leasing high-capacity lines from telecommunications firms average 1000 % higher than the equivalent service in North America. The Commission suggests that these price discrepancies derive from an abuse of the dominant position by telecommunications service providers, since their exclusive rights remove incentives to increase transmission capacity and reduce costs. The directive notably fails, however, to proscribe similar exclusive broadcasting rights granted to many cable companies. Nevertheless, this directive should induce competition over data transmission capacity, while simultaneously creating new opportunities for interworking cable and other telecommunications networks. Ultimately, the directive is likely to cultivate the development of and access to emerging communications technologies, such as videophones, the internet, and related value added services.

The directive amends Directive 90/388/EEC to include cable television networks, requiring Member States to abolish all restrictions on these networks’ supply of transmission capacity for telecommunications. The sole restriction permitted is one against the supply of voice telephony services, since Member States need not liberalize that sector until 1998. Member States must also authorize the interconnection of cable and telecommunications networks. If an operator possessing exclusive rights to provide public telecommunications also offers cable network infrastructure, the directive requires separate financial accounting of each of these services. Similar requirements are established for operators with exclusive rights to provide cable network infrastructure that also offer telecommunications networks capacity, if its telecommunications turnover exceeds ECU 50 million. By ensuring accounting transparency, the Commission seeks to eliminate cross-subsidization between these sectors that might effect the development of one at the expense of the other. Member States must implement the directive by October 1, 1996.