Telecoms liberalisation decisions on hold

Date: 05/12/1996

PORTUGAL, Greece and Luxembourg will have to wait until early next year for the European Commission's verdict on demands for their national telecom companies to be given more time to adjust to liberalisation.

Portugal and Greece can in theory ask the Commission for an extra five years to implement key measures designed to boost telecoms competition, while Luxembourg has the option of an extra two years' grace.

Portugal is set to be first in line, with a decision on its application now expected in mid-January. The remaining decisions will follow within four weeks. Officials say all the work on the Portuguese dossier is complete, but texts have still to be translated and the Commission agenda is crowded in the run-up to Christmas.

All three countries can expect their demands to be significantly trimmed in line with the decision taken on Ireland's bid for a delay late last month, said a senior Commission official this week.

“It is clear that the Irish decision has set a trend. It will be difficult to go beyond the year 2000 for anyone. However, in each case we must take special factors into account,” he said.

The Irish government argued for its state operator Telecom Eireann (TE) to be given more time in three main areas - main voice-telephony and underlying networks, the liberalisation of networks in sectors already opened up to competition and direct international interconnection for mobile networks.

But Dublin only won significant concessions in the last of these three categories, with the Commission conceding that TE's international traffic could collapse if other mobile phone companies were allowed into the market before the national phone company had time to rebalance its charges by increasing rates for local calls and reducing them for international ones.

Rival operators will therefore be banned from mobile interconnection until January 1999, a year earlier than the Irish government demanded but almost three years after the original deadline set by the Commission.

Dublin's call for an extra three years to open up alternative networks was, however, given short shrift by the Commission, which sanctioned only a one-year delay until July 1997.

Portugal can expect a similarly rough ride even though it has identified alternative networks as the Achilles' heel of its national telecom company.

Lisbon has asked for an extra two years to open up alternative networks and warned that its business customers will vote with their feet if they are offered tailor-made networks by rivals.

It claims the national phone company could lose 124 million ecu over five years from fresh competition and this would endanger its ability to meet universal service obligations.

But the Commission's view appears to be that increased competition should result in overall market growth, making everyone a winner without penalising the existing monopoly operator. “On alternative infrastructures, the Commission wants to see an early liberalisation,” said the official.

Luxembourg's demands for an extra two years before opening up telephony and alternative infrastructure to competition are also viewed with scepticism by Commission officials.

The Grand Duchy argues that its small, lucrative market is ripe for cherry picking by rivals, but competition officials say the fact it enjoys the highest revenues per line in the Union offers it ample opportunity to boost earnings rather than lose them.

They also suggest that Greece might as well wave goodbye to its demand to delay competition in its main voice-telephony market until 2003, despite claims by Athens that voice-telephony is still the main cash cow of its business and would suffer disproportionately if its monopoly was dismantled.