Leg. Dev.: Full Competition in Telecommunications Markets

2 Colum. J. Eur. L. 392 (1996)

Christopher Wyeth Kirkham.
Rajesh Swaminathan.

On March 13, 1996, the Commission adopted Commission Directive 96/191EC amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets (1996 O.J. (L 74)). With this Directive the Commission has enacted all the legislation necessary to implement the Council’s unanimous 1993 call for the liberalization of all public voice telephony services by January 1, 1998.23Adopted under Article 90 of the EC Treaty, the measure significantly amends Directive 90/388/EEC24 to include voice telephony services, infrastructure, and alternative network providers.

Under the new Directive, Member States must withdraw all measures granting special and exclusive rights that may restrict competition in the telecommunications sector, other than in accordance with objective, proportional and non-discriminatory criteria (Article 1(2)(1)). The deadline for implementation of this requirement is July 1, 1996 for all services, with the exception of special and exclusive rights for voice telephony and for the establishment and provision of public telecommunications networks, the deadline for which is January 1, 1998. Member States with less developed networks may apply for a five-year extension for meeting these deadlines. Member States with very small networks may be granted an additional two years (Article 1(2)(2)).

The Directive also contains language reflecting the principles of the ONP Framework Directive,25 in particular regarding efforts to ensure interconnectivity between networks. Exclusive rights to establish and provide directory services must be eliminated. Furthermore, the measure requires that any national scheme necessary for sharing the net cost of universal service obligations entrusted to telecommunications organizations shall only apply to undertakings providing public telecommunications networks. Such schemes must allocate the respective burden to each undertaking according to criteria that are objective, non- discriminatory and in accordance with the principle of proportionality. Member States shall have their telecommunications organizations rebalance tariffs to bring them in line with the actual costs of service provision by January 1, 1998. Additional periods may be granted to Member States who cannot achieve such financial rebalancing by the target date (Article 1(6)).

The Directive restricts Member States from discriminating between providers of public telecommunications networks with regard to granting rights of way for the provision of such networks (Article 1(6)). If an undertaking provides telecommunications services alongside other non-telecommunications services for which it is granted special rights, the undertaking must keep separate financial accounts for its telecommunications activities as soon as it achieves a turnover of more than ECU 50 million in the relevant telecommunications market (Article 1(8)). The Regulation entered into force April 11, 1996 (Article 3). Telecommunications has become one of the largest and most profitable global economic sectors. Revenue of $505 billion was reached in 1992 for public telecommunications services worldwide, while telecommunications equipment market revenue was $120 billion in the same year.26 In 1993, the 25 largest public telecommunications operators in the developed world were more profitable than the 100 largest commercial banks.27 The hope is that opening up national telecommunications markets to competition will lead to increases in the size of the European market, while simultaneously improving the competitiveness of European telecommunications firms in the global market. These European efforts, combined with parallel attempts to re-rationalize U.S. regulatory structures under the Telecommunications Act of 1996,28 reflect the growing international frenzy to maintain hold on the constantly evolving telecommunications sector.