Telecom companies call for exclusion rights

Date: 13/02/1997

By Chris Johnstone

EUROPEAN telecom firms are campaigning for the right to be excluded from EU rules setting out the procedures for awarding large public contracts.

They argue that complying with the regulations would impose too great a burden on the sector while it is moving away from state monopolies and into a competitive market.

The companies, grouped in the European Public Telecommunications Network Operators' Association (ETNO), have written to officials in the European Commission's Directorates-General for telecoms (DGXIII) and the internal market (DGXV) asking for their exclusion call to be considered this year.

Internal market officials are said to be strongly opposed to any changes, but their telecoms counterparts may be more sympathetic to industry's demands.

The 1993 directive coordinating procurement procedures in the water, energy, transport and telecommunications fields is due to be reviewed this year, four years after it came into force.

The ETNO argues that the EU procurement rules were a good idea when first conceived in the 1980s, when governments could put pressure on telecom companies to buy equipment from national champions.

Now, however, the telecom sector has moved on, with firms striving to get the best value for money so that they can compete in open or opening markets.

“All markets are open with the exception of voice-telephony and on 1 January 1998 that should be as well. Even countries with derogations must prepare their markets for competition,” said ETNO spokesman Neil Gibbs.

The Union procurement procedures require telecom companies to employ whole departments to check compliance and, says the industry, could send clear signals to rivals about a firm's investment intentions.

The current rules also force companies to tread cautiously in all contacts with equipment suppliers. “If a manufacturer has an idea for a new product and informally approaches a telecom company, then years later that contact might be brought up by rivals,” said Gibbs.

He suspects that the Commission might reject any changes, using the argument that there is still no effective competition in most European telecoms markets, with former monopolies still holding dominant positions.

A confused situation already exists where some new entrants to the market, such as cable companies in the UK, are not covered by the directive while former holders of exclusive rights, such as telecoms giant BT, are.

“Furthermore, EU companies could be handicapped in their efforts to compete at a global level since operators outside the Union are not subject to similar obligations,” added Gibbs.

BT, a member of ETNO, has already launched and won a European Court of Justice challenge against the UK government's interpretation of the Union procurement rules.