Bid to separate telecoms roles of EU ministries

Date: 09/11/1995

By Fiona McHugh

EU government ministries involved in the day-to-day running of telecoms businesses will be stripped of their regulatory function if the European Commission gets its way.

New measures included in a draft revised version of the Open Network Provision (ONP) Framework Directive insist that the two roles - often performed by the same Post, Telegraph and Telecommunications (PTT) department - should be separated.

The move was welcomed by privatised operators, who have long been concerned that governments could use regulatory power to bolster dominant positions enjoyed by state-owned operators even after Europe's telecoms market is fully opened up in 1998.

Governments which would be both defendants and judges could not be expected to deliver fair verdicts, they say.

Robin Seaman of British Telecom said the move was “absolutely right”, adding: “If the regulator, which is there to ensure a level playing field, is also one of the main players, then it is unlikely to perform its duty properly.”

But a public telecoms operator representative refuted that, saying there was no need for independent regulatory bodies. “There is absolutely no evidence to show that independent regulators are more fair, or indeed to suggest that governments are unfair,” he said.

While this directive does not set up an entirely independent regulatory body, like OFTEL in the UK, it does put more ground between the two roles currently played by most EU governments by saying the two should be performed by separate ministries, preferably housed in different buildings.

The aim is to ensure that the long-awaited liberalisation of the telecoms market, due in 1998, is not frustrated by governments with commercial interests in state-owned telecoms operators which would be in a position to shut rival companies out of the market.

During the 1980s, telecoms operators such as Deutsche Telecom and France Telecom, and not governments, decided who could do what with whose network. In 1990, however, the Commission decided that public operators could no longer regulate telecoms markets and that task was taken over mainly by national governments.

But because they often own large parts of public telecoms operations, the Commission now feels it must go one step further by separating governments' two conflicting roles.

“Some ministries may be involved in promoting the telecoms operator, some may even receive money from that operator. Whenever that is the case, this directive says, the two roles in government should be separated,” explains a high-level Commission official.

At the moment, different types of regulatory models exist. OFTEL, the UK regulatory body, is totally independent, the French DGT is semi-independent, but in other member states such as Belgium the regulatory body is run by the government.

A separate directive reviewing a 1992 ONP Leased Lines Directive relaxes certain requirements which the Commission feels increased competition makes redundant.

For instance, companies will no longer be forced to publish tariff changes for leased lines in advance. “We believe that a competitive environment will ensure price control,” said the Commission official.

The draft revised directive also suggests certain standards for high-speed leased lines, but these standards are not made mandatory.

Both directives, which are due to be adopted by the Commission next week, are being updated to account for increased competition in the telecoms market.

The originals date back to 1988 when state-owned operators had an exclusive right to provide telecoms services. Several of these services have already been liberalised and the rest should be in 1998.