This project is funded by the European Union

1. This project is funded by the European Union EU regulatory framework for electronic communications - Competition rules, the LiberalisationDirective and privatisation Richard Harris Independent EU telecommunications consultant ICTtrain workshop London 3-14 November 2008

2. Agenda • The Competition rules • Articles 81 to 89 of the EU treaty (1992) • Articles 85 to 94 of the EEC treaty (1957) • Commission Directive 2002/77/EC • the 17 recitals • The 12 articles • The 2 annexes • Is privatisation relevant? • Can “telecommunications” be found in the EU Treaty?

3. The competition rules What is an undertaking? . • FR – entreprise • DE – Unternehmen • IT – impresa • ES – empresa • BG - • HR - • RO - • TR -

4. The competition rules Articles 81-89 of the EU Treaty . 81 Anti-competitive agreements 82 Abuse of a dominant position • Making of laws for enforcement of 81-82 • Until which time MSs are responsible • Commission to police principles of 81-82 • Rules apply also even where there are special or exclusive rights 87-89 No state aid which distorts the market

5. A short, simple law 1 An article 86 Commission Directive is a clarification of the Treaty. • In this case, the text in article 86(2) was said by the Commission in 1982 to mean that the business of providing telecommunications services was subject to the competition rules of the treaty. • It was found also that certain behaviour by BT was in breach of Article 82 and BT was ordered to desist. • Italy appealed to the ECJ and in 1985, the ECJ decided in favour of the Commission . This decided a key point for the first time and led the EU to develop and adopt a policy for the sector

6. A short, simple law 2 In 1990 an article 86 Commission Directive was adopted that required member states to abolish exclusive and special rights for providing telecommunications services. At first, certain activities were exempted from this but the Directive was later amended five times so that all exemptions were progressively removed. Directive 2002/77/EC explains all this in the recitals and then consolidates the remaining articles.

7. A short, simple law 3 Article Subject 2 Prohibition on special & exclusive rights 3 Non-discrimination by vertically integrated firms 4 Right to use spectrum 5 Directory services must be competitive 6 Universal service obligation 7 Use of satellites 8 Cable TV networks

8. Is privatisation relevant? • Privatisation is not required by the acquis. • The competition rules apply in exactly way whether or not the state owns or controls an undertaking. However: • Where the state has a commercial interest it is much harder for the regulator to be independent. • Even where it is independent, it is harder to convince other investors. • It is not sufficient to put independence in the law.

9. Article 154 of EU Treaty • To help achieve the objectives referred to in Articles 14 and 158 and to enable citizens of the Union, economic operators and regional and local communities to derive full benefit from the setting-up of an area without internal frontiers, the Community shall contribute to the establishment and development of trans-European networks in the areas of transport, telecommunications and energy infrastructures. 2. Within the framework of a system of open and competitive markets, action by the Community shall aim at promoting the interconnection and interoperability of national networks as well as access to such networks. It shall take account in particular of the need to link island, landlocked and peripheral regions with the central regions of the Community.

10. Why is it so important? • EU telecom revenue is 3% of GDP • The sector is vital to most economic sectors and social groups • Mobile penetration very high (112%) but prices vary too much (6:1) • Broadband penetration now growing (EU average 20%) but highest is 5 x lowest • The Internet is bringing new risks

11. Thank you for your attention dickharris@btinternet.com For more information: See - Europa web-site