It is apparent from the Consultation Paper that the new Act will aim to introduce (and maintain) full competition in the telecommunications markets. In view of this, the new Act will regulate the access to and usage of telecommunications networks and the services which are provided via such networks to the customer. "Telecommunications networks" should be interpreted broadly to include cable networks, mobile networks and transmitter conglomerates. The telecommunications services covered by the new Act include information services, broadcasting activities and inter-active services. However, the new Act will not regulate the contents of such services. This aspect will remain subject to
separate legislation.
Full competition will increase the need for measures to safeguard certain (general) interest objectives. Therefore, the Minister will include in the draft for the new Act safeguard measures related to, inter alia, public order and security, access to the market, interconnection and universal services (i.e. a minimum set of services to be made available to all users at an affordable price). The new Act will, moreover, regulate the supervision of the new rules and their further implementation.
ACCESS TO THE TELECOMMUNICATIONS MARKETS
Under the new Act, access to the telecommunications markets should, according to the Minister, in principle be free. The number of market participants will therefore not be limited a priori unless there are objectively valid reasons for such limitation. The new Act will provide for individual licences and for general authorisations.
Pursuant to the Consultation Paper, the issuing of individual licences may be required when the party concerned:
- wishes to dispose of certain (scarce) assets or resources which for planning reasons are publicly managed and/or granted, such as rights of way, frequencies and numbers;
- intends to exploit a telecommunications network to or from third countries;
- intends to exploit a public telecommunications network;
- intends to operate a public voice telephony service.
Individual licences may include specific rights and obligations. However, such rights and obligations will be objective, transparent, non-discriminatory and proportional.
For other activities, such as the provision of telecommunications services (not including voice telephony) and the operation of a non-public telecommunications network, the new Act will introduce a regime of general authorisations. General legislation will set out the conditions for the provision of such (network-) services. Parties may freely enter the market provided that they comply with these conditions.
As concerns the distribution of scarce resources, objective and non-discriminatory criteria must be applied. With respect to the allocation of rights of way, the Consultation Paper states that the regime as presently applicable to KPN (i.e. an almost unlimited allocation of rights of way over public and private land), cannot be extended to other providers of telecommunication services/networks. It is, therefore, suggested that the existing regime be replaced by a more general right of way restricted to the laying of cables on public land, which will be available for all telecommunication operators. However, the owners of such public land shall, at the same time, be granted the right to coordinate, in a non-discriminatory fashion, the use made of this general right of way.
With regard to the distribution of frequencies, preference is granted to the State in so far as frequencies are required for public security purposes. Further preference is granted to public broadcasting. For the distribution of the remaining frequencies, the Consultation Paper adheres to the mechanism of a free market. Public sales of frequencies will be arranged when demand exceeds the availability of frequencies.
Since numbers represent a commercial value, they will under the new Act be allocated by a public authority pursuant to a transparent, non-discriminatory procedure.
RULES TO BE OBEYED BY THE MARKET PARTICIPANTS
The introduction of full competition will not immediately result in a balanced market. The traditional providers of telecommunication networks and services will probably, at least initially, be able to maintain their predominant position. In order to reduce the risk that these operators abuse their dominant position and, thus, effectively preclude competition on the market, the new Act will (temporarily) include specific rules on undertakings. These specific rules will apply in addition to the general rules on competition. They will concern the obligation to provide a certain minimum package of services on transparent and non-discriminatory conditions and include rules on access and interconnection to the network.
The obligation to provide a minimum service package will only be imposed on dominant market participants. According to the Consultation Paper, the question whether a certain operator holds a dominant position requires a de facto assessment. A certain market share (as an example, a market share of 25% is mentioned in the Consultation Paper) or control over certain access facilities may give rise to dominance.
As regards interconnection, commercial agreements may be concluded. The new Act will, however, contain certain conditions which must be met by undertakings with a dominant position. They will, for example, be obliged to publish their interconnection tariffs (which should be established on a cost-plusbasis), respect the principle of non-discrimination and provide the national authorities with certain information.
UNIVERSAL SERVICE OBLIGATION
The introduction of full competition should not lead to deterioration of the quality and availability of certain services. Therefore, the new Act will introduce the so-called universal service obligation pursuant to which a minimum set of services (including voice telephony, public telephones, free emergency numbers, information services and telephone directories) shall be made available throughout the country at an affordable price. Provisionally, the universal service obligation shall be imposed on KPN only. The tariff regulation of the services involved will be limited to the provision of maximum prices. Since the services involved may be exposed to competition of a different degree throughout the country, the new Act will allow KPN to lower its prices should the market conditions so require.
In the Consultation Paper, it is recognised that the provision of the universal service for prescribed (maximum) tariffs may appear to be a loss-making activity. In such a case, the other market participants who operate a public telephone service but are not covered by the universal service obligation will be obliged to make a contribution to cover the (objectively determined) deficit.
SUPERVISION
The Minister intends to provide for the establishment of an independent body which will be responsible for the supervision of the rules established by the new Act. This body will operate alongside and independently from the investigation and supervisory bodies operating on the basis of the Act on Competition, which will remain fully applicable to the telecommunications sector also after adoption of the new Act.
For further information, please contact: Dirk van Oostveen, De Brauw Blackstone Westbroek, Tel: +31 70 328 5 328 or enter text search 'De Brauw Blackstone Westbroek' and 'Business Monitor'.
March 22, 1996
