Firms attack telecoms package

Date: 08/06/2000

By Peter Chapman

INFORMATION society chief Erkki Liikanen is coming under pressure to beef up his draft proposals for policing the EU's telecoms markets.

The clamour for action comes as the Enterprise Commissioner puts the finishing touches to a year-long review of the ground-breaking 1998 liberalisation package which opened huge swathes of the Union's telecoms markets to competition.

Industry has criticised Liikanen's plan to scrap the current rules which single out firms enjoying significant market power, typically defined as 25%, for sector-specific regulations. In their place, the Commissioner plans to put the heaviest regulatory burden only on firms with 'dominant positions' in their markets, borrowing directly from Union competition law.

But critics, including Union telecoms users group INTUG, claim this would allow some operators who did not meet the new dominance test to escape punishment for squeezing rivals out of certain sectors of the market. INTUG also warns that individual member states and national courts could define dominance in different ways, undermining the single market. "At best harmonisation is reduced, at worst the internal market could become seriously fragmented," it said in a statement.

New entrants into the telecoms sector have also criticised Liikanen's draft proposals, arguing that national regulators should be "given more rope" to create a truly flexible EU regime for policing the market. Senior sources add that national regulators, including the UK's OFTEL, are uneasy about the lack of teeth in the draft text.

But Commission sources predict that Liikanen will win broad support for many other aspects of his proposals, which are designed to replace some of the regulations put in place as part of the original liberalisation package to ensure the former monopolies could not abuse their position before effective competition had developed.

In their place will come scaled-back rules intended to ensure a level playing field for the communications sector as a whole, from traditional fixed networks run by the old monopolies to cable television networks and from mobile phone services to the Internet.

Liikanen will propose a new 'framework' directive setting out the new regime's general approach, the sectors covered and, crucially, the duties and tasks of national regulators. Other more specific directives will cover licensing, universal service and data protection as well as the controversial access and interconnection rules.

On licensing, Liikanen wants to ensure member states offer 'general licences' to all firms wishing to offer services. But the proposed directive would still allow governments to boost their coffers by, for example, auctioning off scarce radio spectrum for third-generation mobile phone services.

The Commissioner also wants to retain, for the time being, the existing definition of the bare minimum service that all customers should be able to expect. The 'universal service' requirement currently covers basic, voice, fax and Internet capability, but Liikanen will argue it should be reviewed "periodically" as customers' expectations increase.

Competition Commissioner Mario Monti will also unveil proposals later this month for a new directive which will set out how EU competition law will apply to the sector in future.

Information Society chief Erkki Liikanen is coming under pressure to beef up his draft proposals for policing the EU's telecoms markets. The clamour for action comes as the Enterprise Commissioner puts the finishing touches to a year-long review of the ground-breaking 1998 liberalisation package which opened huge swathes of the Union's telecoms markets to competition.