AN INITIAL RESPONSE FROM THE UNITED KINGDOM FROM THE DEPARTMENT OF TRADE AND INDUSTRY, THE DEPARTMENT OF CULTURE, MEDIA AND SPORT, THE OFFICE OF TELECOMMUNICATIONS AND THE RADIOCOMMUNICATIONS AGENCY.

May 2000

INTRODUCTION

The UK authorities are grateful to DG Information Society for the opportunity to comment on its working documents not only at the joint meeting of the ONP and Licensing Committees on May 15-16 but also in writing. We warmly welcome the documents and believe that the Commission has laid a solid foundation for future regulation of EU communications markets that is appropriate, i.e. neither too heavy nor too light. The Commission has attempted to provide for clear legal obligations to be imposed to deliver the necessary degree of legal certainty while allowing for the detail of regulation to evolve so as to permit competition to flourish and provide the correct incentives for innovation and investment. It has also proposed measures for safeguarding the interests of residential and business users.

We hope that the following comments are helpful and would be happy to provide clarification if requested. However, we must stress that they represent only a preliminary assessment by the UK authorities of the working documents and are without prejudice to future negotiations in the Council of Ministers.

We would draw DG Information Society’s attention to the response of the Independent Regulators’ Group, which the UK authorities welcome and broadly support.

If DG Information Society wishes to pursue further any of the comments in this response, it should contact:

Matthew Conway

Head, European Communications Policy

Department of Trade and Industry

Tel: +44 20-7215 5859 · Fax: +44 20-7215 4161

Email

GENERAL

Six broad comments span the breadth of the documents and should be taken in that context.

Harmonisation vs. centralisation

We continue to fully support the objectives and regulatory principles proposed by the Commission. The ultimate goal for the Commission, the Member States, the NRAs and the industry, must be to have a competitive European telecommunications sector that delivers the best to European consumers in price, choice and quality of services. This requires rapid and targeted implementation of the regulatory framework. It is essential to ensure that Europe’s competitive advantage in telecommunications, particularly in the mobile sector, is not eroded by the inability of NRAs to intervene swiftly and fairly, where appropriate, to ensure that regulatory objectives are met.

Our overarching concern is that the Commission’s proposals have the potential to slow down the development of a competitive European telecommunications market. The proposals as they are currently designed are likely to restrict the ability of NRAs to carry out effectively the functions they have been allocated and slow down the decision making process severely by introducing rigid and inappropriate procedures.

We would like to see the reaffirmation of the need for speed of implementation of the telecommunications regulatory framework and to assist the Commission in developing its proposals accordingly. The aim must be to balance the need for speedy and effective regulation in the interests of European consumers against fair and transparent procedures, providing high degrees of regulatory certainty and harmonisation.

The achievement of an open and competitive European internal market for communications requires the right balance of institutional powers and responsibilities. The Commission has received strong support for its proposal not to introduce a Euroregulator, and all parties agree that this such centralisation of regulatory functions would not be effective. On the contrary, the Commission has clearly stated its belief that implementation of the regulatory framework should take place as close as possible to the markets. However taken together, the proposals in ONPLIC00-02 amount to a centralisation of decision making in the Commission´s hands which is comparable to the introduction of a Euroregulator and which has the same disadvantages.

The proposals do not strike the right balance between harmonisation, on the one hand, and the taking of decisions as close as possible to the market, on the other hand. They do not make best use of the expertise and local market knowledge of the national regulators, which have been assigned a key role in the regulation of the national markets. Most importantly, the proposals do not allow decisions to be taken in a timescale which is appropriate to the fast-moving markets to which those decisions relate.

To be explicit, the UK authorities are concerned with the proposed consultation procedure (section 6 of the framework document), which will lead to unnecessary and damaging delays in decision-making. The market-analysis procedure proposed for intervention to prevent abuses of market power will not permit decisions to be taken where the Commission has said they should be taken: as near as possible to the market.

The harmonisation procedures of section 16 of the framework document should be reformulated to make them less open-ended and establish the appropriate degree of partnership between the Commission and NRAs. While the UK authorities very much support the thrust of section 7 of the framework document, improvements should be made to the drafting in order to strengthen harmonisation and increase legal certainty.

The UK authorities welcome the Commission’s proposal concerning cross-border exchange of confidential information between NRAs and between NRAs and national competition authorities. Until now, NRAs have encountered real legal obstacles to maintaining an EU perspective in trying to deal with cross-border issues. However, there are some technical problems with the proposals as drafted. If these are not addressed, the intention of the provisions will be negated.

The new regulatory framework should also put in place appropriate institutional arrangements to guarantee fluid and constant communications between NRAs and the Commission. NRAs should apply their knowledge and experience in partnership with the Commission. As the UK has commented previously, the Commission’s proposals for the High-Level Communications Group do not fully address the regulatory needs here, e.g. in respect of the development of non-binding ‘soft-law’ measures to complement binding EU legislation. We would also welcome further clarity as to the respective roles of the proposed Communications Committee and High Level Communications Group.

Annex A of IRG’s response provides a fuller analysis of these issues.

The UK also considers that careful examination will need to be made of the relationship between regulatory activity, based on the competition objectives and tests in the framework, and the application of Community competition law and national competition law (such as the Competition Act 1998) which is based on broader Community law.

Structure

It is understandable that the Commission wishes to present a number of draft directives to the Council and the European Parliament rather than a single consolidated ‘communications bill’. However, the consequence of this approach is that documents frequently suffer from unwieldy structures that, on occasion, impedes seriously the logical flow of the provisions which they contain. The access document suffers particularly badly in this respect. We would urge the Commission to look again at the documents with a view to reordering them where this enhances readability. We would welcome particularly the definitions of all terms used in the documents being collected together at the start of the framework document and cross-referred from elsewhere rather than, at present, being split across the package.

Definitions

Many of the definitions will need to be tightened. The UK authorities regret not having yet had time to formulate and suggest alternatives. This is a point to which we will return during Council negotiations.

Non-binding measures

Despite the important role ascribed hitherto to non-binding measures—Commission recommendations, co-regulation and industry self-regulation—relatively little reference is made to it in the documents. The UK authorities accept that, by its very nature, these measures will be most valuable when unforeseeable problems arise. However, the Commission does provide on several occasions for harmonisation procedures, and we would welcome similar prominence being given to non-binding measures as well (and, on occasion, instead of these procedures).

Articles, not indents

At the joint meeting of the ONP and Licensing Committees, references were sometimes made to the purpose of sections ultimately being clarified in directive recitals. We would remind the Commission that the non-interpretive nature of the UK’s legal systems does not ascribe the same importance to recitals as some Continental systems. If legislative clarification is necessary, we would argue (notwithstanding our general preference for legislation not to be overburdened with unnecessary detail) that it should be incorporated within the binding text of the Directive itself.

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A COMMON REGULATORY FRAMEWORK FOR ELECTRONIC COMMUNICATIONS NETWORKS AND SERVICES

General

Careful thought needs to be given to the structure of this document. In particular, provisions on "standards" may overlap with provisions in the Radio Equipment and Telecommunications Terminal Equipment Directive. Allocation of radio spectrum and numbering resources may, we suggest, be better dealt with in the authorisation document. We would prefer to see definitions from across the Working Directives listed here for clarity.

Although we understand that the term ‘NRA’ is to be interpreted in a broad sense across the documents and may refer both to bodies associated with and bodies acting independently of the central Administration, we note that there has been some confusion over this broad definition and on how the regulatory duties specified in the Working Documents should be allocated.

Section 1: scope and aim

It is unclear whether the directives are exhaustive in relation to NRAs’ powers and duties. We would welcome clarification of section 1(2) in this context.

We understand the rationale behind excluding the R&TTE Directive from the scope of these documents. However, we need to ensure that the exclusion is appropriately applied and that there are no provisions that contradict R&TTE. Section 15 needs especially careful examination in this context. It is also important to ensure that no areas are left unaccounted for because they fall outside both the R&TTE and these documents. In this context we would be grateful for clarification of how equipment outside the scope of the R&TTE (eg equipment used solely for the reception of sound and TV broadcasting services) is to be treated.

Section 2: definitions

The split between content (which is not covered by these directives) and services/networks needs to be made clearer and more explicit. For instance, it is far from clear as to what is encompassed within the definition of "electronic communications service." Does it, for example, cover the provision of television programmes, video on demand and e-commerce services, and if so, to what extent? In addition, we would welcome clarification of the meaning of "services provided for remuneration." Consideration also needs to be given as to whether there should be a definition of "publicly available communication service." This is a new term and has the capacity to be interpreted in a number of different ways.

We would welcome clarification of the definition of "electronic communications networks" and in particular what is meant by "defined" termination points. This may be an issue for networks (such as broadcasting and mobile) where it is transceivers’ characteristics, not their location, that determines the point of termination.

As part of the 1999 Review, we understood that the Licensing Directive 97/13 was to be revised to clarify the scope of the services which it covered, in particular those which use radio spectrum. This clarification is not apparent in the new terms ‘electronic communications networks and services’.

Section 3: national regulatory authorities

We are unclear as to how the Commission envisages that NRAs’ duties are to be apportioned. Section 3(1) suggests that more than one body can take on the role of NRA, in line with subsidiarity considerations. However, section 3(2) suggests that "day-to-day supervision" of the market should be undertaken by a single body. We would be grateful for clarification of what this ‘day-to-day supervision’ entails, and why the Commission believes it should be assigned to a single body.

Section 5: exchange and provision of information to national regulatory authorities and the Commission

This needs further careful consideration. It is important to strike an appropriate balance between the need to meet justifiable wishes of users and the need to protect confidentiality and privacy. However, in the broad way in which this is currently phrased, we are concerned that it could fall foul of human-rights provisions on right to privacy and national freedom-of-information regimes allowing certain information to be withheld.

5(4): we are concerned particularly that this seems to oblige NRAs to ensure public access to all information submitted to the NRA, regardless of the need to respect commercial confidentiality. The likely effect would be to prevent NRAs from obtaining any confidential information from operators and others. The requirement later in the paragraph to "balance the concerns of parties submitting information and the interests of the public" does not, in our view, address this sufficiently.

Section 6: consultation and transparency mechanism

We fully support the need for transparency in regulatory processes. However we are concerned that as currently drafted these provisions are inappropriate and could act to delay decision-making at a time when flexibility and speed are becoming increasingly essential.

Firstly, we have practical concerns about the proposed procedure.

The requirements in 6(4) in particular are based on mechanisms established in the Transparency Directive designed to preserve the integrity of the Single Market in areas of the economy where there is little harmonisation of legislation. This is not the case for communications, which as the Commission says, is to be subject to a strong regulatory framework ensuring sufficient harmonisation. 6(5) and 6(6) also could result in lengthy delays and uncertainty to the detriment of consumers and the telecommunications sector as a whole.

Second, we are concerned at the apparent scope of this provision. As currently drafted, it would appear to apply to all decisions made by NRAs, including individual determinations. This would be onerous, excessive and a recipe for lengthy delay—the opposite of what industry believes is essential - dynamic, flexible regulation at a time of rapid and unpredictable change.

The scope, processes and timescales will all need to be examined and refined if this is to be fit for purpose and not impose undue administrative burdens that hamper the development of the communications industry.

Section 7: policy objectives and regulatory principles

It is not clear whether the objectives are exhaustive. If they are, we would be concerned that they do not appear to allow for other initiatives such as promoting international competitiveness of EU operators. This might be remedied by including a specific reference to this objective.

The provisions refer to benefiting the European citizen. This should be the overall result of these provisions, but we question whether it is appropriate to impose on individual Member States the duty to pursue EU-wide objectives.

The third bullet makes no reference to consumer radio provision - we would suggest the inclusion of the duty to ensure access to spectrum for social, cultural, scientific and leisure purposes (e.g. citizen’s band). This is also an issue for section 8.

7(3) We support the sentiments behind the requirement for Member States to ‘ensure that regulation neither imposes nor discriminates in favour of the use of a particular type of technology’. However, we are concerned that this anticipates a higher level of convergence than currently exists. In particular self and co-regulatory regimes are likely to differ across sectors and platforms eg fixed telephony, mobile and Internet – as the regimes will be designed to meet the requirements of that particular sector/issue.

Section 8: management of radio spectrum

In general we would welcome a more flexible approach to the provisions contained in this Section. We also believe that this could potentially fit better in the authorisation document, while separating them could potentially lead to anomalies and inconsistencies.

8(3): This expressly provides for auctions and administrative pricing of spectrum, which we welcome. However, there should be corresponding provision for number charges (and, where appropriate, auctions) in section 9. (See also comments on section 13 of the authorisation document.)

8(4) & 8(5). We would be grateful for clarification from the Commission’s intentions on these points, in particular whether the Commission is suggesting that the actual licence may be traded or whether the reference is only to ‘sub-letting’ or trading use of certain parts of the spectrum. It is also unclear to us whether there are restrictions on the circumstances in which spectrum may be traded.

We have faced difficulties under the Licensing Directive in excluding potential bidders for radio spectrum because of competition concerns. More clarity could be brought to bear here. An amendment to allow bidders with SMP in the market to be excluded at the pre-qualification phase, even when there are more licences than incumbents (i.e. a new entrant is guaranteed a licence), would be useful.

Section 9: numbering, naming and addressing

We would be grateful for confirmation that this section leaves open the possibility of non-public bodies to run national Internet domain-name registries.

9(1): this should give Member States the flexibility to assign number allocation to an independent body, and shouldn’t preclude the possibility of a self or co-regulatory regime being adopted for certain numbering functions where workable and appropriate.

9(3): section 16, to which this section refers, suggests that the Commission may issue "guidelines to NRAs for the implementation of specific measures." Section 9(3) therefore implies that the Commission can issue guidelines on harmonising national numbering schemes across the EU and failure to comply with such guidelines must be justified. We would be grateful for clarification of the circumstances in which the Commission envisages that it might apply this provision.

9(5) We would be grateful for clarification that this applies only to being able to reach numbers and is not a requirement that service providers in every Member State match all the number pricing points (including freephone) across Europe. In any case, the practical implications of this need to be considered.

Section 10: rights of way

For rights of way, please see the comments on section 4 of the authorisation document.

Section 11: collocation and facility sharing

This is not dissimilar to what is in the existing directives but seems to go further insofar as it requires Member States to give the NRAs the power to impose on operators a requirement to share property. We will need to examine the implications more closely.

Section 12: accounting separation and financial reports

Section 12(1): this is the first of many references to "publicly available electronic communications services." We would welcome clarification as to what this is intended to encompass.

Section 12(2): the Commission’s view that operators should provide financial information "on request and to the level of detailed required" may be unrealistic. Operators need to have a clear and unequivocal understanding of their accounting obligations to be able to implement procedures and systems capable of delivering anything useful.

Section 13: undertakings with significant market power

The UK authorities agree that sector-specific intervention to prevent abuses of market power should be limited to what is necessary for the achievement of the regulatory objectives, in line with Section 7(2) of Paper ONPLIC00-02. Accordingly, since general competition law applies to the communications sector, interventions under sector-specific rules should not be made in circumstances where the problems can be solved satisfactorily by use of competition law.

However, the Commission’s proposals seek to rely on competition law to a degree that is not yet appropriate. The effect of the Commission’s proposed new definition of Significant Market Power will be that some competition problems in the sector will not be solved. There are significant gaps between the problems which are amenable to solution by competition law and those were sector-specific intervention is permitted. The losers will be European consumers as the development of competition in the European telecommunication markets will be hindered.

There are four generic issues here:

(i) we consider that one of the reasons for applying ex ante rules is to prevent dominant players from using delaying tactics to obstruct market entry. In fast-moving markets, legal certainty and first mover advantage can be of crucial importance. Potential new entrants who are not clear that entry will be possible on reasonable terms in a reasonable timescale will not seek to enter. The Commission’s proposed SMP test does not fully address this problem as it amounts to a test of "super-dominance". A dominant operator which does not pass the Commission’s proposed SMP test is also capable of such obstruction.

(ii) While the Commission has in effect provided for application of the concept of joint dominance, to complement that of individual dominance, we consider that it would be unwise to rely on the former. The jurisprudence is simply not sufficiently established to make this a sensible regulatory approach.

(iii) Competition law is designed to deal with abuses of a dominant position. But, in particular markets, it is quite possible for there to be a failure of effective competition in the absence of a clear dominant position. Competition law cannot address this; well-targeted sector-specific intervention, fully and transparently justified may be necessary in the interests of European consumers.

(iv) There are some technical deficiencies with the drafting which give rise to perverse effects which IRG does not believe were intended by the Commission.

This is a difficult area and we would wish to carry out more detailed analysis of the full effect of the Commission’s definition. But we note that according to IRG’s initial analysis, NRAs might have difficulty, in the absence of amendment to the currently proposed definition, in enforcing regulatory obligations against SMP operators in a number of cases where the Commission has previously said such action can be justified, notably local loop unbundling, mobile carrier selection, supply of conditional access services on fair and reasonable terms and retail tariff regulation.

Annex B of IRG’s response provides examples of the problems which could arise and suggests a redefinition of SMP to address these concerns.

Section 14: market-analysis procedure

While accepting the principle of an appropriate market analysis procedure, we are concerned that the approach in section 14 may be over-prescriptive. The restriction of ex ante regulation to specific markets identified by the Commission represents excessive centralisation, contrary to the principle of regulating close to the market. A notice of ‘indicative markets’ from the commission could provide helpful guidance, but we would suggest that the Commission is not in a position to reach conclusions as to whether a particular market in a particular member state is one where a competition problem arises. Rather NRAs have the appropriate expertise and local knowledge to take on this task. We would suggest that a better procedure, which would ensure a coherent approach across the EU without imposing a rigid and unworkable structure, would be to enable NRAs:

• to apply ex ante regulation on markets not listed in the notice where they had done so in accordance with Competition Law market definition principles as clarified by the Commission in any guidance; and where

• they had observed agreed transparency procedures

NRAs should also be to segment markets listed in the Commission Notice where one segment might be competitive but another not.

On the detail of the current proposals: we believe that two months is insufficient time for NRAs to prepare a market analysis after identification of the market segments. We also query the approach to the frequency of market reviews. Section 7(2) of the Interconnection WD allows for ‘periodic’ reviews, while section 27 of the WD on Universal Service specifies 2 yearly reviews of the leased lines market. This inconsistency is confusing. The UK regulator is planning to conduct 2 yearly reviews of market segments, but we recognise this may not be appropriate in all cases.

Section 15: standardisation

We are not clear of the relevance of this section given the apparent intention to exclude the R&TTE Directive in section 1. More importantly, we are concerned that some of the provisions appear to be at odds with R&TTE. For instance, provisions on the proposed publication of network interfaces in the OJEC conflict with RTTE, which specifically does not require such publication. It also goes beyond RTTE in implying that article 3(3) requirements under the directive will be applied following consultation with the Committee, i.e. standards will be mandated in some cases. Moreover, taken with section 22, this seems to enable the Commission to impose standards in circumstances where there is no qualified majority in the Council in either support of or opposition to the standard.

Section 16: harmonisation procedures

Soft law will have an important role to play in ensuring that sufficient harmonisation is achieved while being able to respond quickly to unforeseen circumstances. If, as is suggested, the application of ‘soft law’ is to be given further weight, the Commission should ensure that NRAs are fully involved in the preparation of any guidance.

We recall that the Commission intends to bring forward guidelines for self-regulation for electronic commerce. It is important that these guidelines, when they issue, should be consistent with what the Commission brings forward for the future regulatory framework for electronic communications.

Section 17: dispute resolution between undertakings

The breadth of this provision appears to give NRAs almost complete discretion in the resolution of disputes – surely not what the Commission intended. It also appears to require NRAs to resolve any dispute between undertakings, irrespective of whether they have SMP. This could be an undue burden—NRAs could be brought to a halt under the weight of complaints. NRAs should be able to forbear from resolving disputes. It also appears at the request of a party to take jurisdiction away from national courts in respect of such disputes.

Given that this is set out as the ‘framework’ for dispute resolution and has a very broad reach (perhaps too broad) we would welcome clarification as to why separate dispute resolution procedures have been set out in Section 4 of the Access WD and how the two relate.

We would be grateful for clarification as to whether there is any significance in the words "dispute between undertakings providing electronic communications services"? Is it intended that disputes relating to networks be excluded?

Section 17(2): we would suggest that NRAs also take into account the "security of electronic communications services." This is all the more important because the article on essential requirements in the Voice Telephony and ONP Framework Directives has been removed. Indeed we would be grateful for general clarification from the Commission as to how essential-requirements provisions are to be handled under the new regime.

Section 18: dispute resolution involving parties in different Member States

We are concerned at the inferred role of NRAs in dealing with all individual disputes, i.e. disputes between individuals or companies and communications-service providers regardless of the nature of the dispute. We would suggest that disputes falling outside NRAs’ remit to promote competition and promote general consumer interests are better dealt with by other means. See also comments on section 31 of the universal-service document.

18(3): where dealing with disputes, we would consider two months insufficient for the full facts of the case to be considered. This also appears to contradict section 6(3), which requires a minimum consultation period of three months for draft decisions. Even if these types of dispute are not caught by section 6(3), there still needs to be sufficient time to establish the facts and the viewpoints of interested parties and obtain any further information, liaise and coordinate views between NRAs and publish and consult on a draft decision.

Section 20: exchange of information

20(1): "where necessary" in the first line may be overly restrictive. In the interest of transparency, it should be deleted.

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ACCESS TO, AND INTERCONNECTION OF, ELECTRONIC COMMUNICATIONS NETWORKS AND ASSOCIATED FACILITIES

General

We would welcome a more coherent structure for this working document, with the circumstances in which ‘access’ can be mandated and the conditions accompanying an obligation to supply access more clearly laid out. In the interests of maintaining a consistent approach, specific access requirements on LLU and Conditional Access should be cited as instances of access subject to the same conditions rather than being set out as standalone obligations.

We welcome the expansion of the scope of access to include LLU, but consider that further consideration needs to be given to the definition and to how ‘access’ obligations might be applied in practice to ensure that the framework is appropriate in all circumstances.

We are not clear as to how the concept of SMP relates to this working document, and how an NRAs duties relating to access and interconnection might differ depending on the level of market power a market player wields.

The roll-over procedure (for retaining existing obligations until new market analyses are conducted) seems confusing and unclear. Rather than referring back to previous definitions of SMP, we would suggest that this WD leave existing obligations that would fall under the scope of the new ‘access’ Directive untouched until such time as a market review is conducted.

As mentioned in the context of the Framework document, we are concerned at the level of centralisation proposed in this paper and in particular are not at present satisfied that the relevant markets can be determined on a Europe-wide basis or that those identified are appropriate.

Section 2: definitions

2(a): We welcome the move towards a more expansive definition of ‘access’ which will include LLU and other forms of ‘access to networks’. However, given its new all-encompassing role, it is now extremely important that ‘access’ and its relationship to other concepts is clearly defined. In particular we would welcome further clarification of the relationship of ‘access’ to ‘interconnection’ and to other wholesale elements not apparently covered in these working documents – in particular wholesale leased lines used to complete operators’ networks.

2(c): The only example given of an ‘associated facility’ is ‘conditional access’. We would welcome further clarification on the scope of this term and whether, for instance, it would also encompass access to content platforms eg a home portal on a mobile network if that took on some of the characteristics of "conditional access".

Section 3: general framework for access and interconnection

We would welcome clarification of how 3(4) relates to the concept of ‘ICD annex II’. If ‘Annex II’ as a concept is to be removed, as this seems to suggest, a more precise definition will be needed of what constitutes an interconnect service.

Section 4: rights and obligations for network operators

4(1): It is not clear how an NRA’s duty to intervene (and freedom to decline to intervene) relates to whether either party has SMP – is the intention that the SMP circumstance and the additional conditions which might apply be covered by the general provisions on ‘access’? Also we would assume that the intention is that this provision cover interconnection only, but it refers to the objectives in section 3(3), which relate to the provision of access and interconnection. Third, the only guidance to NRAs as to how to resolve a dispute seems to be the objective in section 3(3). How does this relate to the more extensive provisions for dispute resolution set out in Section 17 on the Framework WD?

4(2): We would welcome clarification on whether the obligation to carry widescreen services now extends to all networks. Condition 2 in the TV Standards Directive only applies to cable, satellite or terrestrial means.

Section 5: unbundled access to the local loop

We consider LLU and line sharing should be listed as an instance of ‘access’ and subject to the same tests and conditions, rather than being set out as stand-alone obligations.

We are unclear as to why the old definition of SMP (as in the Voice Telephony Directive) has been used in this context. Firstly it is inappropriate because it suggests that LLU is already an obligation under existing directives, when the Commission has suggested that it is not mandated under current European telecommunications legislation. Secondly we consider it confusing as a mechanism for ‘carrying-over’ existing obligations. We would prefer instead a provision requiring market analyses to be conducted in relation to all those existing obligations which fall under the scope of this new Directive, leaving any old obligations to remain in place until the market analysis is complete.

We consider the reference to the requirement to provide ‘long distance transmission’ presumably at cost-oriented prices to be inappropriate here. This is essentially a wholesale leased line that could in certain circumstances be competitively provided. We suggest this be covered under the general provisions on (and subject to the same conditions as) ‘access’.

Section 6: conditional-access systems

Like LLU, above, we would prefer that this were set out as an instance of ‘access’ subject to the same tests and conditions.

As set out this provision does not appear to fit with the general principle that access should be imposed only where the provider of the facility has SMP. We do not consider that there is any particular justification as to why CA should be different from other developments that might have similar effect, e.g. mobile portals.

This refers to conditional access in respect of digital television only. That was the concept in the TV Standards Directive. The Conditional Access Services Directive, however, covers conditional access also to radio and information-society services. Should not the new directive have the latter, broader coverage?

The obligation to provide conditional access services applies only to those who ‘produce and market’ such services (Annex I). An organisation which supplies only to itself is excluded because it does no ‘marketing’. This is and has been contrary to the intention of the provisions which is to prevent CA services from becoming a bottleneck, so should be rectified here.

Section 7: procedure for review of obligations for access and interconnection

In theory, the approach for these transitional provisions seems reasonable, but we have some serious practical concerns. Section 14(3) of the framework WD seems to require the NRA to conduct analyses within two months of the Notice. If at the start of the process the Commission expects NRAs to do all these reviews it would not be possible to complete the assessments on time or to conduct them thoroughly.

As explained above in our comments on Section 14 of the framework WD, we are concerned about the prescriptive nature of the Commission proposals for market analysis. We also have some doubts over the appropriateness of the candidate markets identified in Annex II. Consideration will also need to be made of the relevant retail markets, and NRAs should be given the ability to segment markets.

Section 8: modification of obligations

8(2), 8(3) & 8(4) These appear to represent the tests for or conditions in which ‘access’ obligations should be applied and as such would sit better at the start of Section 12.

8(4): We would welcome some rationale as to why and in what circumstances it would be appropriate impose all the obligations set out in sections 9-13 on all operators in a specified market. The reference to small and medium size enterprises seems rather detailed yet open to interpretation. Is this not addressed by the requirement for ‘proportionality’ in 8(2)?

Sections 9, 10, 11 & 13 – Conditions applicable to ‘access’

As these all relate to conditions which can be applied to obligations to provide ‘access’, they might sit better after Section 12.

In general we welcome the flexibility these provisions give Member States. Given the broad definition for ‘access’, it is important that Member States have the ability to apply slightly differing requirements depending on the circumstances. However, while retaining this flexibility, more structure might be given to these sections. For instance, 10, 11 and 13 all call for a market analysis to be conducted – might this not be linked with concept, fleshed out in the framework WD – of SMP in the relevant market.

An additional ‘condition’ that NRAs should be able to apply when imposing obligations for ‘access’ is the requirement for terms to be ‘fair and reasonable’. This is to ensure that the operator does not offer onerous terms for services which it does not itself supply at present to prevent another player from acquiring first mover advantage.

Section 10: obligations for non-discrimination

This needs to be coupled with an obligation to avoid unfair cross-subsidy. Otherwise it can be avoided by integrated players.

It is not clear whether there is an ability for the NRA to allow end-use pricing.

10(2) It is unclear what is meant by ‘partners’ – the term could be very broad indeed.

Section 11: obligations for accounting separation

11(1): It would be helpful to understand the Commission’s objectives when an NRA imposes accounting separation. It is unclear what "in relation to specified activities related to interconnection" means in this context. Accounting separation restricted to identifying a limited set of interconnection markets would probably not assist an NRA in identifying unfair cross-subsidies or undue discrimination.

11(2): Accounting separation can make revenues transparent—not prices, as suggested here. We are unclear as to how market analysis will inform the accounting-separation obligations in identifying "essential" input facilities. What is "essential" in this context?

11(3): The term "accounting records and revenues" is not one normally associated with the types of financial statements normally prepared for publication. Again, it is unclear what the Commission is expecting to be published. The subsection also omits any reference to independent audit verification. This is a serious omission, unless the reference in section 13 is meant to cover accounting separation as well.

Section 12: obligations for access to, and use of, specific network facilities

12(1): The tests at 8(2),(3) and (4) could perhaps be inserted here – SMP (with certain exceptions?), proportionality, obligation linked to (and resolving) nature of problem. The wording in this section seems also to limit the application of ‘access’ to preventing distortions of competition. We would consider ‘promotion of competition’ a necessary addition.

The rights of service providers for access to services (and dispute resolution if denied access) and not just network elements or facilities from fixed operators that are covered in the Interconnection Directive now seem to be less clear.

Local Loop Unbundling, line sharing and conditional access should be set out as instances of ‘access’, subject to the same tests above.

Section 13: obligations for price control and cost accounting

13(1): We are not clear on what "obligations concerning cost-accounting systems" mean in this context. The emphasis should be on the operator applying accounting policies and procedures acceptable to the NRA. What "systems" the operator uses to meet these obligations should not be an NRA concern.

13(2): We are unsure why the caveat at the end of this sentence—"taking into account the practicality of"—has been included. Acquiring the information is likely to be the easy part; it is designing, implementing and managing the systems and outputs that will consume resources (and cost!).

13(2): We are not clear what is meant by the reference to "enable competition and maximise consumer and user welfare." Does the Commission mean, by the reference to welfare benefits, simply lower prices increasing consumers’ surplus? Clarification on this would be helpful.

13(3): We would prefer, instead of "actual" costs, "relevant and efficiently incurred" costs.

13(4): We would welcome clarification as to the purpose of this requirement and how publication will assist the process.

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THE AUTHORISATION OF ELECTRONIC COMMUNICATIONS NETWORKS AND SERVICES

General

We note that the majority of the draft text is concerned with the issuing of authorisations and the conditions to be attached to them. There does not however appear to be any provision to take account of action to be taken during the lifetime of a licence - ie the renewal or maintenance of the authorisation.

Section 3: general authorisation of electronic communications services and networks

Comments on the Framework WD relating to general definitions and to radiocommunications are also relevant here.

The incorporation of rights to radio frequencies within the authorisation framework for electronic communications services needs to be assessed carefully to ensure that concepts appropriate for telecoms are equally applicable to radiocoms. With convergence, it will also be important to ensure that the framework is also appropriate for, say, the provision of video over 3G mobile.

Section 3(1): the reference to "public security concerns" should be sited in section 1 so that it applies to the whole document.

Section 3(3): it is important that every authorised operator has a presence in the Member States where it is active, even if this is only by way of an agent, so that it can be contacted where necessary. This is particularly necessary in the context of spectrum safety, where, in emergencies, someone must be in a position to switch things off.

Section 4: minimum list of rights derived from the general authorisation

This section appears to give rights of interconnection to any service provider, yet, elsewhere, interconnection is defined as a specific form of access between network operators. This needs clarification.

The document’s provisions on rights of way are fundamentally inconsistent with the UK’s system of (private) land ownership. The references to grants of rights (here and elsewhere) and provisions about fees (section 13) do not sit well with the practical reality in the UK that compensation for access to land is privately negotiated rather than within the gift of the Government.

Section 5: rights to use radio frequencies and numbers

Section 5(1): it needs to be made more explicit that access to the finite spectrum resource cannot always be provided "on request" to those who wish to provide spectrum-based networks.

Section 5(2): the two-week turnaround requirement for allocating numbers is unreasonably short.

Section 5(3): this is internally inconsistent. Member States are allowed to restrict access for spectrum-efficiency reasons but required to assign rights where spectrum is available. This militates against long-term strategic planning and prudent management. There is also insufficient emphasis on "equitable" use. The boundaries of what type of radio licences are affected are uncertain and would not obviously cater for safety-of-life and rescue services, hospital and other social use and some hobby use, not all of which are efficient but nonetheless ought to be protected in some way.

Section 6: conditions attached to the general authorisation and to the rights of use for radio frequencies and numbers

Section 6(3): this is a large let-out from the restrictions imposed by the section and, in a way reminiscent of article 7 of the Licensing Directive, is likely to frustrate totally its aims and purpose.

Section 6(4): there is a slight ambiguity and confusion. It is intended to prevent the texts from the general authorisation being grafted onto specific conditions for radio frequencies or numbers. The reverse should also be the case: it should be unnecessary to include the conditions attaching to frequencies and numbers in the general authorisation.

Section 7: procedure for restricted granting of rights to use radio frequencies

Competition concerns must rank alongside spectrum efficiency when assigning radio spectrum, in particular where spectrum efficiency is quoted as the only reason to restrict spectrum rights. This section should also provide for the exclusion of bidders from spectrum auctions where success would enable them to entrench a position of significant market power.

Section 8: harmonised assignment of radio frequencies

This is unclear and appears to suggest that, when spectrum has been harmonised, conditions cannot be imposed on users. This is not compatible with the earlier text in sections 3, 5, 6 and 7. It is also likely to cause problems for users because harmonisation of spectrum does not remove the need for conditions to be imposed on uses to ensure that use is undertaken in appropriate circumstances.

Section 9: declarations to facilitate the exercise of rights of way and rights of interconnection

The one-week deadline is likely to prove unrealistically short.

Section 10: compliance with the conditions of the general authorisation or for rights of use

This does not explicitly provide for financial penalties. Furthermore, it is not clear on the scope for employing such penalties if an operator remedies the breach upon receipt of an initial notice and thus on employing them as a means of deterring future breaches. In other words, NRAs could possibly do little about the serial infringer who remedies and then repeats the breach.

Section 11: information required under the general authorisation and for rights of use

Section 11(2): it would be more helpful if the section referred to an obligation on the NRA to state the purpose for which the information was required.

11(1) Member States are empowered to require information from operators for publication of quality and price comparisons, but this is qualified by the final sentence which states that the information shall not ‘be required prior to or as a condition for market access’. Section 18 of the WD on Universal Service requires Member States to make tariff information available to the public. Taken together, it is not clear when Member States can require this information – the WD’s appear inconsistent.

Section 12: administrative charges

The scope of costs that can be recovered from operators needs to be expanded to cover all those associated with fulfilling the objectives placed on NRAs by the new regulatory framework, not just the management, control and enforcement of the general-authorisation scheme. Without this, NRAs will continue to face financial shortfalls for such activities as international representation and consumer-protection measures and so remain financially dependent on state budgets. The corollary of this would be greater scrutiny of the scale of costs incurred. Commission guidance would be welcome to prevent unjustified divergences between Member States.

Section 13: fees for rights of use and rights of way

This appears to be more flexible on number charging than at present and, as such, is helpful. However, it does not seem to allow number auctioning. This harks back to the fact that auctions and administrative pricing of spectrum are specifically provided for in section 8 of the framework document but there is no equivalent for numbering in section 9 thereof.

Section 15: publication of information

This needs to be looked at in parallel with section 5 of the framework document. It appears that section 15 is intended to relate to information on authorisation procedures rather than actual assignments, but this is not entirely clear.

Section 16: functioning of the internal market

The circumstances in which Commission intervention is possible need to be clarified so that both it and NRAs are able to form a view on the scope of such an intervention. Subsidiarity concerns also need to be borne fully in mind.

Section 17: authorisations existing at the date of entry into force of the new system

The entry-into-force date of January 1, 2002 will need to reflect the actual speed at which the new regulatory framework is negotiated and transposition possible.

Annex

Part I: some of the categories are drafted in fairly wide terms. There is also no need to duplicate obligations in other non-sectoral legislation.

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UNIVERSAL SERVICE AND USERS’ RIGHTS RELATING TO ELECTRONIC COMMUNICATIONS NETWORKS AND SERVICES

General

The essential requirements (article 13 of the Voice Telephony Directive) relating to security of network operations and maintenance of network integrity have been omitted, as they have from the access document (currently article 10 of the Interconnection Directive). We would be grateful for an explanation as to why this has happened.

It is noted in the explanatory text (second sentence of the fourth paragraph under "universal-service obligations") that, "Recovery [of access costs] via supplements to interconnection fees would no longer be desirable." However, there appears to be no matching reference in the rest of the document. We would welcome clarification of how such recovery would be prohibited or how "undesirable" it will be.

Section 4: provision of access at fixed locations

Section 4(2): we welcome the removal of the inadequate minimum data speed of 2.4kbps. However, we are concerned that this leaves open the possibility for Member States to require funding schemes to meet the costs of upgrading the networks of universal-service providers to unreasonably high levels. To avoid this, while ensuring that data flows are adequate for Internet access and are reasonable in the circumstances taking account of technical constraints, we would suggest a provision giving Member States the flexibility to set minimum data speeds up to 33kbps.

Section 6: public pay telephones

We wonder whether qualifying the term "free of charge" by reference to "without coins" adds anything here.

Section 8: designation of operators

When the Voice Telephony Directive was implemented, there was provision for existing universal-service obligations to be simply carried over. We would welcome seeing this replicated at the time that the new regulatory framework enters into force.

Section 9: level and structure of tariffs

Section 9(3): this is a new provision in need of careful examination. We have no difficulties with it if it is simply an endorsement of Member States’ rights to subsidise provision in, for example, rural areas from general taxation. However, it would be helpful if it was made clearer, i.e. that any entitlement through an imposition on an operator has to be paid for by the government in a transparent manner out of general taxation.

Section 11: quality of service of designated operators

We do not believe that mandating quality-of-service parameters in this fashion best meets the needs of users. We would instead welcome the ability to use the ETSI parameters if so desired but also to resort instead to comparable performance indicators agreed in consultation with operators and consumer representatives at the Member State level and published at the expense of operators.

Section 15: principles and criteria for review

Section 15(4): it is not clear whether it is the Commission or Member States that would determine how an extension would be funded. It would seem appropriate for this to be determined by Member States in the light of national circumstances.

Section 18: transparency and publication of information

We would welcome clarification that all types of users—business and residential—can obtain information on standard tariffs, including those for business consumers. This is important to ensure that tariffs published in this way can be used by third parties in comparisons produced for commercial purposes.

We are concerned that taken in conjunction with Annex II, this could be interpreted as requiring the publication of all pricing information including bespoke tariffs. This would substantially increase the burden on operators. We would therefore like to see clarified in Annex II that the requirement should cover standard tariffs only.

Section 19: quality of service

There should be explicit provision for NRAs to oblige operators to pay for the publication of QOS information. We would also welcome sufficient flexibility to allow the needs of consumers in different markets to be reflected.

Section 20: interoperability of consumer digital-television equipment

We would welcome clarification as to whether the Commission’s proposals amount to more or less than a simple requirement to fit a common interface on integrated digital TVs.

Section 21: operator-assistance and directory-enquiry services

Section 21(4): since access to operator-assistance services is not linked to the needs of disabled users, we would welcome clarification of why it is being mandated.

Section 21(5): we are uncertain about the purpose of this. It is also unclear whether the use of "access" in section 21(4) and "contact" in section 21(5) is deliberate. If so, we would welcome clarification of the distinction

Section 22: European emergency number ("112")

Section 22(2): does the reference to calls being "appropriately answered and handled" give textphone users the right to be able to access emergency services simply by dialling 112 rather than an alternative number? We would prefer that this obligation be considered discharged wherever a Member State has taken specific measures to ensure equal access to telephone services (including access to the emergency services) for disabled users.

Section 22(3): we would welcome further clarification of the "granularity" (i.e. level of detail) of caller-location information that would be required. If this is greater than is likely to be provided by market mechanisms, a cost/benefit analysis should be undertaken to ascertain whether the benefits to users outweigh the costs. We would also welcome further clarification of what is meant by "where technically feasible" in this context—does this address the same point?

Section 23: European telephone access codes ("00") ("3883")

Section 23(2): this should not apply to network operators who do not wish to serve the "3883" market, e.g. those serving just the United States.

Section 25: number portability, carrier selection and carrier preselection

Section 25(2): We would welcome an indication of what "further harmonisation of number portability" the Commission envisages might be necessary.

Section 26: must-carry obligations

Section 26(1): this suggests that "electronic communications services" do encompass the provision of television programmes. As such, it serves as an example of the current unhappy divide between economic and content regulation. Member States should retain the flexibility to impose must-carry obligations which are appropriate or necessary.

Section 26 also imposes an obligation on Member States to ensure that operators receive adequate compensation for ‘must carry’ channels. In the UK, operators are reasonably content to carry some services without compensation. This obligation seems therefore unduly restrictive.

Section 29: schools

If this is to be included, consideration should be given to the definition of schools and to whether other educational establishments might be included. However, we are not clear why the provision of Internet access to schools cannot be met through market mechanisms or where this is not possible through general universal service mechanisms, as is the case in the UK. If reference is to be made to schools, it also needs to be made more explicit that competition cannot be distorted by measures introduced by Member States or NRAs.

Section 30: consultation with interested parties

Section 30(2): it would be helpful if this section could also mention price comparisons and other forms of consumer information.

Section 31: dispute resolution

It is vital that an NRA is able to decline intervention in a dispute where other forms of dispute resolution, most notably civil law relating to contracts, are available. If not, the potential burden of having to resolve all disputes referred to it involving "publicly available communication services" would be immense.

Annex II: information to be published in accordance with section 18

Paragraph 2.2: the wording here would seem to include individually tailored discounts offered by suppliers without SMP. This level of disclosure, going beyond the supplier’s standard tariffs, is too detailed and could work against users’ interest by encouraging operators to collude over price setting. We would therefore welcome a price-disclosure requirement relating only to standard tariffs and discounts, standard being defined as those that are offered to more than one customer and not specifically designed for a particular consumer.

Annex IV: calculating the net cost, if any, of universal-service obligations and establishing any recovery or sharing mechanism

It is stated in the third paragraph that, "Due attention shall be given to correctly assess the costs that any USO operator would have been able to avoid." We would prefer to see the wording ". . . would have chosen to avoid" because a calculation should reflect the fact that a commercial operator could choose to supply anyway to obtain the benefit of being seen to be acting for the wider public good.

Annex VI: interoperability of digital consumer equipment

Part II: we would welcome more information on the Commission’s thinking here. The existing open interface requirement in the TV Standards Directive ensures that digital-TV decoders can be easily connected to TV sets. With regard to sets with an integrated digital decoder, the requirement is that such sets must allow for the option of fitting a "standardised socked" permitting connection of conditional access and other elements of a digital-TV system of the digital decoder. Is the existing "standardised socket" now being declared an "open interface"? Is the Commission intending to ensure that integrated Digital TVs are capable of incorporating the IEEE-1394 (FireWire) standard? It is also interesting that the text requires that this open-interface socket must enable "all elements of a digital television signal" to pass through it. Conditional-access information and "the full API command set of connected devices" are explicitly stated. Is this condition included to address the interoperability issues that exist in this area of the integrated digital-TV market? There is currently a lack of compatibility between different conditional-access systems. There are also issues regarding accessing another platform’s interactive services due to the fact that different APIs are utilised. Are these interoperability concerns the focus of this provision? If so, we are not clear as to how this provision will ensure that these concerns are addressed in practice.

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THE PROCESSING OF PERSONAL DATA AND THE PROTECTION OF PRIVACY IN THE ELECTRONIC COMMUNICATIONS SECTOR

General

We welcome the aim of providing a technologically neutral solution for data protection in communications. However, care will be needed to ensure that provisions that now apply to the Internet (and indeed all the provisions of the directive now that it applies unequivocally to ‘communications’ in a broad sense) are fit for purpose and practicable.

Section 2: definitions

This may already be covered by the General Data Protection Directive, but we will need to check that ‘processing’ referred to in sections 6, 9 and elsewhere excludes any activities that are involved in the conveyance of data.

We are not clear of the need for the reference to ‘finite group’ in the definition of "communication".

Section 4: security

It is not clear that an obligation to provide information about remedies to given risks and the costs of these remedies is always ‘practicable’, particularly where risks may be foreseeable but difficult to quantify. While this wording belongs to the previous Directive, it may still be advisable to refine the wording further to avoid uncertainty.

Section 5: confidentiality of the communications

As emails and other forms of data communication are now unambiguously caught, it is arguable that the list of proscribed activities—"listening, tapping, storage or other kinds of interception"—should be redrafted. Applied literally, the storage of emails on a central server could become illegal.

There is some difficulty with the exclusion of "users" (i.e. "natural" persons) from these provisions, and the opportunity should be taken to address this.

Section 6: traffic and billing data

It would be preferable to remove this section and protect the data subject by general data-protection legislation.

There is no attempt to define the difference between traffic data and location data (section 9). As location data has been separated out from traffic data for this WD, one would have expected this separation to be reflected in a revised wording of section 6.

Section 8: presentation and restriction of calling- and connected-line identification

While this is identical to the existing article 8 of the Telecoms Data Protection Directive, we would like to see this opportunity taken to improve the wording and remove ambiguities. "Eliminate the presentation" is unwieldy and misleading where the standard term is "withhold CLI." It also fails to make clear that CLI is always present and visible to network operators and so cannot be eliminated, simply its display to an end-user. Because CLI is not defined (although it is in the Voice Telephony Directive), there is an ambiguity about whether this section captures call-return (1471) services. We would consider that, following fundamental data-protection principles, they ought to be.

8(3): A more serious ambiguity lies here. One can infer that the rejection of incoming calls should be a network-provided service (because it is limited to the subscriber, need not be provided free of charge and, if solely user-controlled, what is the purpose of this section?), but this is not made explicit. As providers are still arguing that rejection can be effected by not answering the phone, this loophole should be closed by the new text.

Section 9: location data

We welcome the Commission’s recognition that value-added services based on location data are imminent and raise data-protection issues. The consent approach seems sensible.

9(2): This should allow for the withdrawal of consent altogether rather than on a temporary basis.

Section 11: automatic call forwarding

Now that call forwarding has ceased to be a service required in the rights WD (as it was in the Voice Telephony Directive), it should cease to be regulated in this way. Identical to article 10 of the Telecoms Data Protection Directive, this provision provides a remedy for a non-existent mischief and can only be implemented by operators in an ad hoc, one-off basis.

Section 13: unsolicited communications

We welcome the explicit inclusion of electronic mail. It would be preferable in the interests of ensuring a continuing technologically neutral approach if 13(1) – ie communications for which an opt-in approach is required - could be generalised with fax, email etc as specific instances. This needs more thought. A common denominator might be the absence of human intervention in the processing and delivery of individual communications.