TRANS-EUROPEAN NETWORKS — TELECOMMUNICATIONS
(a)
(21266)
8310/00
—
(b)
(21293)
8499/00
COM(00) 267
|
Special Report No. 9/2000 of the Court of Auditors concerning Trans-European Networks (TEN) — Telecommunications.
Commission Communication on the overall evaluation of a set of guidelines for the development of the Euro-ISDN (integrated services digital network) as a Trans-European network (TEN-ISDN).
|
| Legal base: |
— |
| |
| Document originated:
| (a) —
(b) 8 May 2000
|
| Forwarded to the Council:
| (a) 25 April 2000
(b) 11 May 2000
|
| Deposited in Parliament:
| (a) 30 May 2000
(b) 5 June 2000
|
| Department: |
Trade and Industry |
| Basis of consideration:
| (a) EM of 5 July 2000
(b) EM of 7 July 2000
|
| Previous Committee Report:
| None |
| To be discussed in Council:
| No further substantive discussion expected at this stage of the proposal
|
| Committee's assessment:
| Politically important |
| Committee's decision:
| (both) Cleared |
The European Court of Auditors' Report (document (a))
13.1 The Trans-European-Network —
Telecommunications programme, 'TEN-Telecom', promotes near-market
projects for telematic applications and services. The projects
financed mainly concern the development of applications and services
in areas such as education, health, transport, culture, tourism
and electronic commerce.
13.2 The audit reveals a number of weaknesses
in the operation of the programme during the period (1993 —
1998). It highlights three problem areas:
- adapting the programme to suit a fast-moving
sector like telecommunications;
- overlap with other Community actions, in particular
the Community research programme and Structural Funds; and
- poor administrative practice.
— Suitability of the programme
13.3 The basic rules for Trans-European
Networks (TENs) are common to all three TENs sectors — transport,
energy and telecoms. They are directed towards larger scale infrastructure
projects in which Member States are closely involved and were
considered inappropriate for TEN-Telecom. This programme, therefore,
adopted a "bottom up" approach for the identification
of project areas, using a call for proposals process similar to
that used by the research programme.
13.4 Summarising its principal findings,
the European Court of Auditors (ECA) comments that the EU's consultative
and decision-making procedure for setting guidelines took two
years, on two occasions. This was too slow for such an innovative
and highly dynamic sector. "The first guidelines were out
of date almost before they came into force, because they concentrated
on a particular technology. Projects under the new guidelines
started late".
— Overlap with other Community actions
13.5 The ECA says:
"The Commission's co-ordination of TEN-Telecom
with other related EU activities was not sufficiently developed
to facilitate synergy and avoid the possibility of duplication.
In each case where aid is granted for near-market feasibility
studies and pilot projects, it needs to be clearly shown that
the specific objectives of these types of action are well-justified
and that they are unlikely to be achieved without EU subsidy.
The Court notes that the telecommunications sector is currently
very competitive and expanding rapidly without substantial public
subsidies from any source, in response to the liberalisation of
the sector and the development of mobile communications..."
— Poor administrative practice
"The Commission's description of the TEN-Telecom
support measures in its various reports as co-financing feasibility
studies is misleading as it contracted projects which included
multi-annual activities rather than pure studies...
"The Commission made only one check of a contract
on the spot. This revealed substantial irregularities. The Court's
audit of a large contractor found that not all of the contract
obligations were fulfilled...
"The Commission has not developed a clear strategy
in the structural funds vis-à-vis market liberalisation
and privatisation of telecommunications. It made structural fund
payments for telecommunications despite ongoing infringement procedures
against the Member State concerned, for failing to transpose market
liberalisation directives...".
13.6 The Member State referred to is Greece.
The report quotes two other cases, in Italy and Spain, where the
Commission found solutions. It required Telecom-Italia to invest
an additional sum in Objective 1 areas and Telefónica in
Spain to concentrate on projects outside highly profitable zones
and to facilitate access to the market to new operators.
—The ECA's Conclusions
13.7 The ECA again highlights some of these
same points in its conclusions. It says that:
"In each case where aid is granted for near-market
feasibility studies and pilot projects, it needs to be clearly
shown that the specific objectives of these types of action are
well-justified, and that they are unlikely to be achieved without
EU subsidy. At the same time consideration should be given to
a closer linking between the telematic research, development and
demonstration activities (RTD) co-financed through the Research
programme and the near-market projects supported through TEN-Telecom,
including an assessment of the scope for further improvements
in efficiencies if the RTD-telematic projects and the related
market validation activities were managed together. The Court
notes that the telecommunications sector is currently very competitive
and expanding rapidly without substantial public subsidies from
any source, in response to the liberalisation of the sector and
the development of mobile communications. Furthermore, in commercial
terms, telecommunications companies are amongst the largest companies
in Europe, with ready access through the markets to investment
funds of all types. The Commission should ensure that it closely
monitors the technical developments in this fast moving field
to better focus its expenditure in order to maximise its impact.
"The Commission should develop new guidance
for the structural fund interventions in the field of telecommunication,
where liberalisation, privatisation and increased competition
are key developments".
13.8 In addition, the report says that the
Commission should carry out more on-the-spot checks to ensure
that the execution of TEN-Telecom projects and the results achieved
are in accordance with the rules and objectives identified in
the contracts.
— The Commission's response
13.9 The Commission comments in relation
to suitability, overlap and administrative practices.
13.10 On suitability, it says, TEN-Telecom
was "presented to the research audience as a follow-on action".
Its projects start at a point when the marketability of the results
of the research is not clear.
13.11 The Commission notes on the question
of overlap that TEN-Telecom "projects of common interest"
appeared in the guidelines adopted in June 1997[24],
three years after adoption of the Structural Funds programmes.
Also, regional plans were organised around themes which reflected
the priorities of each Member State, such as 'improving the business
environment' and 'modernising the public administration'. Investments
related to telecoms were not identified as such.
13.12 The telecom infrastructure gap in
the majority of regions eligible for Structural Funds is in national
and local networks, but investments in these contribute globally
and enable the inter-operability of services and applications
that are the objectives of TEN-Telecom aid.
13.13 On administrative practices the Commission
quotes the definition of "studies" in the Financial
Regulation[25]
as denoting "a larger acceptance in the meaning of 'studies'".
13.14 The decision-making process is outside
the control of the Commission, it says. After the guidelines have
been adopted, however, it can introduce some flexibility in its
regular updating of the work programme and in how it defines calls.
13.15 On monitoring, the Commission says
that it is able to monitor and review projects to ensure proper
execution of contracts. It does carry out a number of spot checks
and could do more if it had more resources. It has a legal action
pending against one contractor.
13.16 In response to points made about its
evaluations, the Commission says that a mid-term evaluation report
indicates that the objectives of the guidelines for developing
a range of services based on ISDN[26]
were met satisfactorily.
Commission Communication (document (b))
13.17 The Decision establishing guidelines
for TENS in the development of Euro-ISDN[27]
requires the Commission to evaluate the guidelines. The Commission
says that its Communication focusses on two main areas:
- the impact of Community support on achieving
the objectives of the Euro-ISDN guidelines; and
- the manner in which the action has been managed
and implemented.
13.18 The Commission concludes that Euro-ISDN
is a European success story, as a result of the joint efforts
of the telecoms operators, standardisation bodies and Community
support for its evolution and expansion. This has led to a universal
ISDN service across the EU. It has helped to transform the European
telecoms map and has been an important building block on the way
to an information society. As an active niche market, well supported
by European industries, it is now sufficiently mature for market
forces to take over. The Commission concludes that in future it
can be fully integrated within the overall TEN-Telecom guidelines.
The Government's view on both documents
13.19 The Minister for Small Business and
E-Commerce at the Department of Trade and Industry (Ms Patricia
Hewitt) notes that:
"The TEN-Telecom programme has changed in response
to operational experience and an improved understanding of the
rate of technological change in the sector. This has met a number
of the criticisms in the Court of Auditors' report. Since 1997,
the programme has been deliberately technology-neutral and a revised
work programme, introduced for the period 2000-2001, confirms
this approach. The UK has supported these changes.
"The Commission is about to start discussions
with Member States on the orientations for the work programme
for 2002. It is expected that the Court of Auditors' report and
the current programme evaluation will inform this policy review.
In addition, the rôle of continuing action in this sector
will need to be carefully reviewed in the light of other initiatives
for information age Government and eEurope.
"Overlap with other Community activities, in
particular structural funds, will also need to be considered in
developing the future direction of the programme. Like the Court
of Auditors, we would want structural fund expenditure in telecommunications
used on those activities that have a strong inter-Member State
or trans-European character. We would also agree with the Court
of Auditors that, given the overlap between TENs, Objective 1
and the Cohesion Fund, we should be looking for a more integrated
approach from the Commission with regard to telecommunications.
"In addition, issues of lax management controls
by the Commission will need to be addressed at the programme management
committee."
13.20 The Minister says that the UK has
asked the Commission for a discussion on the implications of this
report and the Commission's response to it at the next meeting
of the programme management committee.
Conclusion
13.21 The ECA report highlights a number
of weaknesses in the implementation of these telecommunications
networks, some of which have since been addressed, particularly
with the general reorientation of the programme in 1997. It is
also clear from the audit that there is a need for a Community
policy on the development of the telecoms infrastructure in the
EU and for the systems used for this programme to be reviewed.
We would expect these needs to be considered in the course of
drawing up the new Work Programme.
13.22 The report would have been more
useful if its approach had been less historic and had taken more
fully into account the situation as it is today.
13.23 We now clear these documents, but
we ask the Minister to draw to our attention any failure on the
part of the Commission to take the ECA's criticisms into account
in its plans for the future management of the programme.
24 (17502) 9885/96; see HC 36-i (1996-97), paragraph
25 (30 October 1996). Back
25 Council
Regulation No. 2236/95 of 18 September 1995. Back
26 Integrated
Services Digital Network. Back
27 Decision
No. 2717/95/EC of 9 November 1995. OJ No. L. 282, 24.11.1995,
p. 16. Back
| 
