Commission lays down law on phone liberalisation

Date: 29/02/1996

By Fiona McHugh

THE European Commission this week adopted legislation which will force EU governments to make good their promises to liberalise phone markets by the beginning of 1998.

From that date, all services including voice telephony which have until now been reserved for monopoly operators must be thrown open to competition, says the directive, which forms a central part of the Commission's liberalisation master plan.

The Commission has also ordered governments to open their mobile phone markets and to allow cable TV operators to run certain phone services.

In addition, the legislation will oblige member states to allow 'alternative infrastructures', such as those run by rail and utilities companies, to carry certain phone services from 1 July 1996.

But Greece, Ireland, Portugal and Spain have been granted an additional five years in which to comply with the directive and Luxembourg an extra two years.

The Commission adopted a more lenient approach to those countries because of fears that domestic phone companies would be wiped out immediately by strong international rivals.

The move comes after an earlier attempt by Competition Commissioner Karel Van Miert to force the pace of liberalisation, by bringing forward the deadline for infrastructure liberalisation by a year-and-a-half, was strongly opposed by a number of member states. Germany and France initially refused to abide by the Commission's order, but backed down after Van Miert refused to clear a crucial Franco-German joint venture until they agreed to open their phone networks to competition.

However, just as the two capitulated, agreeing in principle to free up networks, Belgium, Spain, Greece and Ireland rebelled at a ministerial meeting, accusing the Commission of pushing its luck.

Van Miert rejected the charge and vowed to press ahead with liberalisation of the sector.

Controversially, the directive approved yesterday (28 February) was adopted under Article 90 of the treaty, which allows the Commission to adopt legislation to smash monopolies without the approval of either EU ministers or MEPs - a move not popular with either the European Parliament or the Council of Ministers.

Meanwhile World Trade Organisation officials said this week that a global deal on liberalising the telecoms market could be reached by the 30 April deadline. The prediction came after the US offered to open up its entire telecoms market to foreign competition, provided a “critical mass” of other countries made similar proposals.