Select Committee on European Scrutiny Seventh Report


SEVENTH REPORT


The European Scrutiny Committee has made further progress in the matter referred to it and has agreed to the following Report:—

GREEN PAPER ON RADIO SPECTRUM POLICY

(a)
(19738)
14320/98
COM(98) 596


Commission Green Paper on radio spectrum policy in the context of European Community policies such as telecommunications, broadcasting, transport and research and development.


(b)
(20668)
12840/99
COM(99) 538



The Next Steps in Radio Spectrum Policy — Results of the Public Consultation on the Green Paper.
Department: Trade and Industry
Basis of consideration: Minister's letter of 24 January 2000
Previous Committee Report: (a) HC 34-ix (1998-99), paragraph 6 (10 February 1999)
(b) HC 23-ii (1999-2000), paragraph 4 (1 December 1999)
Discussed in Council: (a) Not relevant
(b) 30 November 1999
Committee's assessment: Politically important
Committee's decision: Recommended for debate in European Standing Committee C, together with documents considered at paragraph 2 of this Report

Introduction

  1.1  The Parliamentary Under-Secretary of State for Small Firms, Trade and Industry at the Department of Trade and Industry (Mr Wills) commented on the importance of the issues raised by the Green Paper on Radio Spectrum Policy in his EM of 2 February 1999[1], in which he referred to "... 'the vital cultural, social and economic importance of the radio spectrum', a crucial and finite resource which in the UK contributes to more than 400,000 jobs and 2% of GDP".

  1.2  In April 1999 we informed the Minister that we would consider the Government's response to the Commission, a draft of which he had forwarded[2], when we came to consider whether to recommend the document for debate. In an exchange of correspondence with Lord Tordoff, Chairman of the House of Lords Select Committee on the European Communities[3], the Minister summarised the key points of the Government's response as follows:

    "(i)  the importance of effective, strategic spectrum management that optimises the use of the spectrum, taking account of national circumstances;

    (ii)  the need for effective international spectrum harmonisation, particularly for those services which are likely to operate on a Europe-wide or global basis;

    (iii)  the importance of building, so far as possible, on the existing arrangements for international harmonisation, through the ITU[4] and CEPT[5], and avoiding unnecessary duplication;

    (iv)  the advantages of selective EU intervention to provide an impetus to harmonisation in areas where rapid international agreement is desirable, as has been done, for example, for third generation mobile telephony through the UMTS Decision;

    (v)  the need for an effective means of identifying those strategic issues where a concerted EU-wide approach would be desirable, (we have suggested this might be done though a high-level advisory group, chaired by DGXIII); and

    (vi)  the advantages of a flexible approach to assignment and licensing, in which tools such as spectrum pricing, auctions and spectrum trading could play a part, taking account of the needs and particular circumstances of each Member State".

Document (b)

  1.3  In November 1999, the Commission issued its report on the outcome of its consultation, document (b), which we considered on 1 December. We confirmed our assessment that the issues raised were of political importance and concluded that we should await the Minister's report on the outcome of the 30 November Telecoms Council before deciding whether to recommend it for debate.

The Minister's letter

  1.4  In her letter of 24 January, the Minister for Small Business and E-Commerce (Ms Patricia Hewitt) says that at the Council the Commission presented the Communication on the results of its public consultation, summarising the outcome and the areas in which it envisaged making legislative proposals. There was no discussion of the Communication. The Presidency concluded that the Council noted the Commission's intentions which would require further study when specific legislative proposals emerged in 2000.

Conclusion

  1.5  Rather than wait for the Commission to put forward legislative proposals in this important area, we now recommend that these documents should be debated in European Standing Committee C, together with the two documents considered at paragraph 2 of this Report on the 1999 Review of Telecoms Legislation and on Implementation of the Regulatory Package.

  1.6  The issues which arise include:

  • the rôle of the Community in spectrum management at the global level. The Minister said in her EM of 30 November on the "Next Steps" paper that the Commission's proposals could "give rise to practical problems in terms of negotiating flexibility". She might be asked to elaborate on this comment;

  • the lack of consensus on a pricing mechanism if charging for radio spectrum is agreed and the differing views on whether to introduce a secondary market for spectrum. What arrangements does she now expect will be put in place if use of the spectrum is to be optimised, as urged by the Government in its response to the Commission?

  • whether there is sufficient co-operation between radio spectrum management organisations and standardisation bodies at European and global level on radio equipment and standards;

  • how proper account will be taken of defence interests which, as the Minister points out[6] are largely overlooked in these documents;

  • the areas where the Government is "unconvinced of the need for action of the kind proposed"[7]. The Minister discusses one of these, saying that it is unclear exactly how the proposed Decision would function. She might be asked whether the Government has yet been able to form a clearer picture and whether this proposal is likely to command the support of other Member States;

  • other areas for concern, such as the suggestion that, where the use of radio spectrum is harmonised at Community level, general authorisations should be issued rather than individual licences.

  1.7  The Minister might be asked to comment in general terms on the effect that such suggestions could have on UK operators and consumers, if pursued.

1999 REVIEW OF TELECOMMUNICATIONS LEGISLATION

(a)
(20657)
12838/99
COM(99) 537

(b)
(20666)
12839/99
COM(99) 539



Commission Communication: Fifth Report on the Implementation of the Telecommunications Regulatory Package.


Commission Communication: Towards a new framework for Electronic Communications infrastructure and associated services. The 1999 Communications Review.

Legal base:
Department: Trade and Industry
Basis of consideration: Minister's letter of 24 January 2000
Previous Committee Reports: (a) HC 23-i (1999-2000), paragraph 7 (24 November 1999)

(b) HC 23-i (1999-2000), paragraph 8 (24 November 1999)

Discussed in Council: 30 November 1999
Committee's assessment: Politically important
Committee's decision: Recommended for debate in European Standing Committee C, together with the documents on Radio Spectrum Policy considered at paragraph 1 above

Introduction

  2.1  When, late last year, we considered these two proposals, we asked the Minister for a report on discussions of them in the 30 November Telecoms Council. We also indicated that we would decide on whether to recommend them for debate in the light of her report.

  2.2  For ease of reference, we reproduce below the Commission's consolidated list of the positions it set out in its Communication on the 1999 Review, document (b).

The Minister's letter

  2.3  In her letter of 24 January, the Minister for Small Business and E-Commerce (Ms Patricia Hewitt) provides us with this report. Her main points are as follows:

Document (a): Implementation of the existing package

  • the Commission concluded that the successes of the existing regulatory framework had led to market growth with increased competition and lower tariffs

  •  it drew attention to the remaining barriers to a single European market in telecoms, including:

    —   a comparatively low level of harmonisation of Community licensing and interconnection régimes;

    —   incomplete implementation by some Member States of Community cost accounting provisions; and

    —   the lack of competition in local access markets in all Member States.

Member States approved this general analysis.

Document (b): 1999 Review of the regulatory framework

  • all the Member States recognised the need for swift action in the face of the pace of technological change, and simplification of the regulatory framework;

  • a number, including the UK, stressed the need for a flexible framework with a minimum of regulation.

  2.4  The Minister says that she emphasised in the Council debate that strengthening competition in the market for communications services is vital to produce an environment in which e-commerce can flourish in Europe, and welcomed the Commission's recognition that regulation should be on a co-regulatory basis with business where possible.

  2.5  The Conclusions adopted by the Council are attached to her letter. They endorse the principles set out by the Commission in its Communication.

Conclusion

  2.6  These documents raise a number of issues of undoubted importance to the British telecoms industry. International competition in this sector is intense and the regulatory framework set in place within the EU will affect not only the conditions applying within the UK, but also the ability of British telecoms businesses to compete successfully within the internal market — and, indeed with major competitors from outside the EU. We consider that these documents should be debated in European Standing Committee C, together with the documents on radio spectrum policy which form part of the same group and which we also consider in this Report.[8]

  2.7  Members may wish to pursue with the Minister the following issues:

  • The Commission proposes three courses of action: new or revised regulatory measures, non-binding measures such as guidelines and self-regulation, and greater reliance on competition law. Is the Government content with the selection of the issues which need to be addressed and that the approach advocated in each case will be effective?

  • Examining the current state of the EU sector, the Member States acknowledged in the Council that barriers remained. The Minister might be asked whether the Government is satisfied that all is being done that might be done to remove these barriers. It has opposed the creation of a European Regulatory Authority and welcomed the Commission's decision that such an authority was "not necessary at this stage", commenting that what was needed was strong independent national regulatory authorities which enforce harmonised guidelines[9]. Are the current pressures on the individual Member States to remove barriers sufficient?

  • In broad terms, what updating and clarification to the Telecoms Data Protection Directive[10] does the Government expect the Commission to propose?

  • How aggressive does the Government expect the Commission to be in using the competition law concept of dominant position in relation to cost-orientation and non-discrimination?[11]

  • Is the Government confident that the guidelines proposed will be enforced? What other recourse will be available if, for instance, a National Regulatory Authority (NRA) is weak in exercising its obligation to require dominant infrastructure owners to meet reasonable requests for access?


Annex

CONSOLIDATED LIST OF COMMISSION POSITIONS

Licensing and Authorisation

—  Use general authorisations as the basis for licensing communications networks and services, with specific authorisations reserved for assignment of radio spectrum and numbers;

—  apply a comprehensive and coherent policy framework to communications infrastructures, including broadcast networks, with appropriate transitional measures where necessary;

—  restrict range of possible conditions which can be attached to authorisations; establish procedures to agree on categories of authorisations at EU level;

—  ensure fees for authorisations cover only justified and relevant administrative costs, and draw up EU level guidelines to promote best practice and transparency;

—  continue to authorise communications services using the Internet in an equivalent manner to other communications services.

Access and Interconnection

—  Maintain specific Community measures which govern both access and interconnection, building on the principles set out in the Interconnection Directive and the TV standards Directive;

—  in the case of access to network infrastructures, place responsibility on NRAs in Member States to deal with specific access issues, including resale of services, according to a set of conditions and criteria laid down in Community legislation; require infrastructure owners with significant market power to negotiate, on commercial terms, in respect of requests for access; require dominant infrastructure owners to meet reasonable requests for access; maintain the possibility of NRA intervention to resolve disputes;

—  in the case of interconnection, maintain the requirement for cost orientated interconnection in directives (hard law) but interpret this concept through Commission recommendations; maintain the Recommendation to use LRAIC for pricing call termination services of dominant operators; recognise that call origination services, transit services and call termination services are likely to develop as different markets to which different rules apply;

—  draw up where appropriate, Recommendations on access; in particular to consider in the short term a Recommendation to Member States on technical and economic aspects of local loop unbundling;

—  extend the current standardisation framework for telecommunications to cover all communications infrastructure and associated services, i.e. to rely as far as possible on a voluntary approach to standardisation, but provide procedures to ensure open access and interoperability if voluntary processes do not succeed;

—  make carrier selection — but not carrier pre-selection — available to mobile users, by placing obligations on mobile operators with SMP.

Management of radio spectrum

—  administrative pricing and auctioning of radio spectrum can be a means to ensure efficient use of the radio spectrum; however, clarification is needed as to the conditions of implementation, and the sectors in which such system should or should not apply, so as to preserve other general interest principles while ensuring broadly comparable access to frequencies;

—  Member States should be encouraged as far as possible to use revenue raised as a result of fees, auctions, and radio spectrum pricing to increase radio spectrum efficiency; consideration should be given to making revenues available for radio spectrum re-farming purposes;

—  the current Licensing Directive should be amended in order to allow — although not mandate — Member States to make provision for radio spectrum secondary trading as part of a process to encourage the efficient use of radio spectrum. The Commission will consider what safeguards might be necessary in the Community interest;

—  continue dialogue with Member States on allocation and assignment issues, in particular for pan-European communications services, in the framework of any new institutional arrangements designed to address cross-sectoral radio spectrum issues.

Universal service

—  Maintain at this stage the current definition and scope of universal service;

—  given that it is a dynamic and evolving concept, put existing criteria for possible extension of its scope, as well as mechanisms for periodic review, in Community legislation;

—  keep under review funding schemes and, in the context of funding schemes, encourage the development of mechanisms where "pay or play" is implemented;

—  develop pricing principles at EU level in order to ensure the affordability of universal service.

The interests of users and consumers

—  Update and clarify the Telecoms Data Protection Directive to take account of technological developments and to ensure it is appropriate for a converging market;

—  mandate enhancement of the European emergency call number 112 by requiring caller location to be provided to the emergency services, while taking account of the privacy issues linked to the disclosure of caller location to the emergency services;

—  mandate and consolidate existing obligations with regard to complaint handing and dispute settlement procedures and quality of service; consider whether further measures are required;

—  increase transparency of information, including of tariffs, for consumers (e.g. by introducing requirement for per-call tariff information for all users);

—  require suppliers to publish information for their customers on quality of service, and maintain reserve powers for regulators to intervene on quality of service issues where problems arise in respect of services within the definition of universal service;

—  withdraw the Leased Lines Directive 92/44/EC once there is adequate choice of leased lines for all users and leased line prices are competitive.

Numbering, naming and addressing

—  Not to pursue specific regulatory measures, at this stage, with respect to Internet naming and addressing, but to keep the situation under review;

—  encourage greater dialogue between the bodies involved in numbering, naming and addressing at European and Member State level and ensure co-ordination of European positions in international bodies;

—  extend the availability of operator number portability to mobile users, but not at this stage to require operator number portability between fixed and mobile networks;

—  consider mandating interoperability of national IN databases in order to facilitate pan European service provision;

—  strengthen the current framework with regard to numbering by (i) confirming the rights of an NRA to withdraw the use of a number allocation where such changes clearly contribute to the efficient use of the numbering resource, (ii) to encourage co-ordination of NRAs on issues of European interests and (iii) to require NRA supervision of allocation of point codes in signalling system No. 7 and access codes for corporate networks.

Specific competition issues

—  Use of the competition law concept of dominant position as the more appropriate trigger for certain sector-specific obligations, in particular cost-orientation and non-discrimination, while maintaining the lower threshold of significant market power for other obligations, e.g. obligations to negotiate access, transparency.

Institutional issues

—  replace the existing two telecommunications committees with a new Communications Committee, which would draw on the expertise of a new High Level Communications Group involving the Commission and NRAs to help improve the consistent application of Community legislation;

—  review existing legal provisions with a view to (i) strengthening the independence of NRAs, (ii) ensuring that the allocation of responsibilities between institutions at national level does not lead to delays and duplications of decision making (iii) improving co-operation between sector specific and general competition authorities and (iv) requiring transparency of decision making procedures at a national level.

COMMON STRATEGY ON UKRAINE

(20904)

Presidency's work plan on the implementation of the Common Strategy of the European Union on Ukraine.
Legal base:
Department: Foreign and Commonwealth Office
Basis of consideration: EM of 31 January 2000
Previous Committee Report: None; but see: (20727): HC 23-iv (1999-2000), paragraph 1 (15 December 1999)
Discussed in Council: Approved as an 'A' point at General Affairs Council on 24 January 2000
Committee's assessment: Politically important
Committee's decision: For debate in European Standing Committee B

Introduction

  3.1  The Common Strategy on Ukraine sets out the objectives for the European Union's relations with Ukraine for the next four years, and identifies the means to be used to pursue those objectives.

  3.2  We referred the Common Strategy for debate in European Standing Committee B, when we considered it on 15 December 1999.

The Work Plan

  3.3  Article 46 of the Common Strategy requires each incoming Presidency to present to Council a Work Plan setting out how it intends to take forward implementation of the Strategy. The Portuguese Presidency's Work Plan sets out a programme covering the range of the Common Strategy's broad principal objectives:

  • encouraging the democratic and economic reform process in Ukraine;

  • meeting common challenges on the European continent (stability and security, environment, energy and nuclear safety); and
  • strengthening co-operation between the EU and Ukraine (support for WTO accession, investment protection, co-operation in justice and home affairs, encouragement for development of cross-border infrastructure networks).

The Government's view

  3.4  The Minister of State at the Foreign and Commonwealth Office (Mr Vaz) says that the Government fully supported the adoption of the Common Strategy at the 24 January General Affairs Council, as a valuable development of the European Union's Common Foreign and Security Policy. It welcomes the wide-ranging Work Plan which has been put forward by the Presidency. He adds that if it is achieved, the Work Plan will make a significant initial contribution to achieving the objectives of the Strategy.

Conclusion

  3.5  The Work Plan provides a useful guide to the activities which the Council now expects to be initiated, to give practical effect to the Common Strategy. It is ambitious in scope, particularly in its plans for work to be carried out to promote the progressive approximation of Ukrainian legislation to that of the EU, and its implementation.

  3.6  We have already expressed concerns about whether the Common Strategy properly addresses Ukraine's real problems with establishing a fully democratic society. In this context, the Work Plan may well be found to be over-ambitious. We recommend that it should be debated in European Standing Committee B, together with the Common Strategy document, already recommended.


1  (19738) 14320/98; see HC 34-ix (1998-99), paragraph 6 (10 February 1999). Back

2  Deposited in the Library. Back

3  Correspondence with Ministers: Seventeenth Report from the European Communities Committee, House of Lords, HL Paper 94 (1998-99), pages 53-54. The Committee is now called the European Union Committee. Back

4  International Telecommunications Union. Back

5  European Conference of Postal and Telecommunications Administration. Back

6  See HC23-ii (1999-2000), paragraph 4.6 (1 December 1999). Back

7  The Minister's EM of 19 November 1999, cited in ibid., paragraph 4.7. Back

8  See paragraph 1. Back

9  (20666) - ; see HC 23-i (1999-2000), paragraph 8.8 (24 November 1999). Back

10  Directive 97/66/EC. Back

11  (20666) -; see HC 23-i (1999-2000), paragraph 8.6 (24 November 1999). Back


 
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