Leg. Dev.: Telecommunications

1 Colum. J. Eur. L. 361 (1995)

Christopher W. Kirkham. J.D./M.I.A. candidate, Columbia University School of Law.

(a) Part II of The Green Paper on the Liberalization of Telecommunications Infrastructure and Cable TV Networks

The European Community has been preparing a flurry of legislation in the telecommunications sector over the past six months. On January 25, 1995 the Commission adopted Part II of The Green Paper on the Liberalization of Telecommunications Infrastructure and Cable TV Networks (COM (94) 682 FINAL). Part I of the Green Paper, adopted October 25, 1994, set out general principles and a proposed timetable for liberalization. In the wake of a Council Resolution of November 17, 1994, confirming the principle of full liberalization of the telecommunications sector by January 1, 1998, Part II considers the substantive issues entailed in designing a regulatory system with full competition in the sector.

The aims of telecommunications infrastructure liberalization are to increase the competitiveness of European industry, establish comparable and effective access to global markets, lower prices, improve services, stimulate investment, encourage innovation and exploit new technologies. The Green Paper promotes these aims while attempting to balance the important economic advantages of liberalization with social safeguards. For example, it seeks to ensure that universal service and employment in the telecommunications sector do not suffer unduly from free market competition.

The paper contemplates that the power of licensing telecommunications infrastructures, networks and services will remain with national authorities working under the unified general framework. It outlines the scope of the foreseen Interconnection Directive, including rights and obligations of providers, common competition rules and dispute resolution procedures. The paper also considers the issue of the convergence of telecommunications and broadcasting, which will be essential for the development of multimedia services.

In addition, the paper concerns itself with social issues in this developing sector. It recommends developing a universal service to guarantee affordable individual consumer access to a defined minimum of services. It also discusses the financial impact upon the general public of liberalizing voice telephony infrastructure, notably the fair distribution of costs of universal service obligations among all market participants. The paper considers limitations, in the public interest, on the extent of future licensing of infrastructure, particularly in light of environmental issues. Finally, it requires that safeguards be introduced to cope with falling  employment in the telecommunications sector, which has dropped about 10% over the last five years.

The Commission intends to complete consultations with interested parties in early 1995 and to have a package of reform measures prepared by the end of the year. The Commission also plans to invoke Article 90 of the Treaty, which provides for a legislative procedure by which the Commission may bypass the Council, to speed up the deregulation process (see the legal basis for the satellite communications directive below). Under the November 17, 1994 resolution, Spain, Portugal, Greece, Ireland and Luxembourg will be granted two to five year transition periods beyond the January 1, 1998 liberalization deadline.

Swift developments in Community telecommunications legislation are more than matched by Member State and private corporate activity in the sector. State privatizations, mergers, acquisitions and partnerships between many global telecommunications companies reflect intensified scrambling to prepare for the full liberalization of telecommunications markets in Europe. The Commission claims it is not concerned about the privatization of national companies such as Deutsche Telekom and France Telecom; the Commission only demands that their national markets be opened to private competition by 1998. This liberalization of the infrastructure of the telecommunications market (which had a 1993 turnover of ECU 102 billion – 3% of the GNP) should ultimately result in a more efficient establishment of high-capacity networks, lower consumer prices and significant general improvement in the competitiveness of European industry.