Telecommunications - The Influence In Norway Of EU's Proposal For New Regulation

1. INTRODUCTION

Based on the rapid development in the information technology area, the Commission in 1997 launched "Green paper on the Convergence of the telecommunications, media and information technology sectors, and the implications for regulation towards an information society approach" (COM (97) 623). The Green Paper was the basis for the subsequent report made by the Norwegian Ministry of Transport and Communications: "Convergence - The fusion of telecommunication, data, and the media sectors".

The Green Paper was followed by "The 1999 Communications Review"1, which included more detailed suggestions for regulatory change in the telecom area, inter alia with the object of including the rapid technological developments in a consolidation of the existing regulations.

After a round of consultation with national authorities and private participants on the telecommunication market, the Commission put forward a suggestion for a new set of rules, the Telecom Reform Package, in July 2000. The proposal from the Commission signifies a simplification and clarification of the existing regulations in the telecommunication area since the number of legal documents will be reduced from 28 to 8.The Telecom Reform Package consists of a regulation on access to the local loop ("the LLUB regulation")2, a framework directive3, four harmonisation directives4 5 6 7, a liberalisation directive8, and a proposal for a decision on EU's radial spectrum policy9. The legislative package is meant to be flexible so that it easily can be adjusted to the on-going developments in this market. Further, the legislative package must ensure legal certainty and finally harmonise the member states' regulation in this area. The new set of rules is also intended to be technology neutral resulting in the equal treatment of different technologies.

The Counsel and the Parliament currently discuss the Telecom Reform Package as a part of the co-decision procedure. At the Gothenburg Summit it was again stated that the aim is to approve the proposal before the end of 2001. To ensure the prompt adoption of the new legislative package, Norway is at the moment revising the existing legislation in the Telecom area. The revision is expected to result in a report on the changes necessary, to be presented to the Parliament late 2001.

In this article we will give a short overview of the proposal from EU and the effects this proposal will have on the telecommunication regulation and market in Norway. As it is still not clear what the final content of the proposed legislative package will be, we will not perform a detailed review of the changes necessary.

2. The Norwegian Telecom market

2.1 Market conditions

In Norway, a licence to provide telecommunication services is only necessary if you have significant market power, i.e. a market share of at least 25 %, or in other cases if decided by the Ministry of Transport and Communication ("MTC"), normally in case of wireless networks such as GSM and UMTS. Other operators or providers of public telecommunications networks, public telephony services and provision of transmission capacity will have to register with the Post and Telecommunication Authority ("NPT") before entering the market. In addition, authorisation from MTC is necessary, with certain specific exceptions, for the use of radio frequencies.

Although there are currently 83 market participants registered in the Norwegian telecommunication market10, only eleven licenses regarding public telecommunication have until now been issued by the Norwegian authorities. Licences for wireless services have been assigned after beauty contests, except in cases where the frequencies are plentiful. In those cases licences have issued on first-come first served basis. In Norway licences have not yet been subject to auctions, but it is likely to believe that a new GSM licence will be offered by an auction.

Telenor holds six of these licences; including a license for Fixed line, NMT 450, NMT 900 (expired 1. March 2001), GSM 900, GSM 1800 and UMTS. NetCom holds three licences; including a license for GSM 900, GSM 1800 and UMTS. Tele 2 Norge and Broadband Mobile11 have each got a license for UMTS.

The dominant player is the incumbent operator Telenor, which provides services at all levels within telecommunication and information technology. Not surprisingly, the NPT has concluded that Telenor has a significant market power. Telenor had an annual turnover of NOK 37.6 billion in 2000. In 1999 it was estimated that Telenor had approx 85 % of the turnover to the end users.

Telenor was publicly listed at Oslo Stock Exchange and NYSE in December 2000. The ownership interest of the Norwegian State is approximately 70 % of the stocks. It is likely that this share will be reduced.

NetCom is the second Norwegian mobile telephony operator, with a strong foothold (approx. 25 % market share) in the mobile telephony market. NetCom is a subsidiary of Telia, the Swedish incumbent. Apart from Telenor, NetCom is the only...