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The New Austrian Telecommunications Act of 1997 in the Light of Full Telecommunications Liberalisation

Datum: 
1. Januar 1997
Introduction

The liberalization of telecommunications law in Austria took - according to some, a slow - start in 1993 with the enactment of the Telecommunications Act of 1993. Telecommunications services were liberalized to a considerable extent, with licences only being required for voice telephony. The regulatory and operative functions of the Austrian national operator PTV were disentangled by transferring regulatory competences to a new regulatory authority. The relationship between PTV (which has meanwhile been transformed into a stock corporation under corporate law, "PTAG") and its customers was changed from an administrative law basis to a contractual one under private law. Yet, this Act did not constitute a satisfactory basis for the implementation of full telecom liberalization in Austria as of January 1, 1998: The Act updated the statutory monopoly of PTAG in providing fixed voice telephony and in operating the fixed network and failed to institute the regulatory authority (which was construed as division within the Ministry of Transport) as an independent regulator.

After more than one year of discussion, the Telecommunications Act of 1997 ("TA") passed Parliament in early July, 1997 entered into force on August 1, 1997; some of its provisions (in particular, the ones on voice telephony and infrastructure liberalization) will, however, only become effective as of January 1, 1998. Like its model, the German Telecommunications Act, the TA is a compendium of rules concerning most aspects of telecommunications law. They include provisions on infrastructure and telecommunication services, universal service provision, frequency allocation, numbering, consumer and data protection as well as terminal equipment. The TA aims at securing the provision of reliable, cost efficient and innovative telecommunication services to the public by means of the development of a modern telecom infrastructure, the establishment of a level playing field for competitors and the prevention of abuse by dominant players as well as the efficient use of the frequency spectrum.

1. Licenses

a Infrastructure

The TA provides that no license shall be required for the erection and operation of infrastructure facilities and networks for the purpose of telecommunication (sec 5 para 1 TA). Certain basic requirements must, however, be fulfilled as concerns infrastructure facilities and networks designed for interconnection with public telecommunications networks or for the rendering of public telecommunication services (safety of network operation, maintenance of network integrity, interoperability of services and interconnection terms for terminal equipment; sec 5 para 2 TA).

In providing for the full liberalization of telecommunication infrastructure, the TA is in line with the Full Competition Directive (96/19EC) and is in fact more liberal that its German counterpart which subjects the operation of "means of transmission" used for public telecommunication services to a license requirement (sec 6 para 1 German TA). Sec 5 TA does not specifically mention cable-TV networks; however, the Explanatory Remarks to the TA make clear that cable-TV networks can equally be erected and operated without any telecommunication license. As a matter of fact, with a view to the Cable-TV Directive (95/51/EC), cable-TV networks were exempt from the requirements of a telecommunications license already as of January 1, 1996, as a result of a special ministerial decree (for lack of a statutory basis); only interconnection between cable TV-networks required administrative approval. As for alternative networks, a specifically construed exemption from the Telecommunications Act of 1993 ensured license-free erection and operation already since July 1, 1996. The TA also contains provisions on rights of way and co-location in order to facilitate infrastructure liberalization.

b Telecommunication Services

As concerns telecommunications services, the TA generally provides for a mere notification requirement to the regulatory authority (sec 13 TA). A license is, however, required for




  • the provision of mobile telecommunications services on the basis of a mobile network erected by the operator; no license is, howexer, required if a public mobile teelcommunication service is rendered by means of satilite or else if there is sufficient frequency spectrum for all interested parties at present or in the visible future. (sec 14 para 1 and sec 20 TA; see infra item c);


  • for voice telephony and other public telecommunication services (including the leasing of lines) rendered by means of the operator´s own fixed telecommunications network (sec 14 para 2 TA; the operator´s "own" network can also be composed of leased lines since "ownership" in this sense is understood as the exercise of control over such network). Since service providers do not operate "their own" networks, its services are not subject to a license (explanatory remarks ad sec 14). It should be noted that the license requirement for other public telecommunication services as referred to above is only in line with the Licenses Directive (97/13/MC) is it is understood narrowly, referring to the leasing of lines only, as it is suggested in the explanatory remarks. As concerns the license procedure, the regulatory authority has 6 weeks in order to decide on a (written) application for a license. Contrary to the Licensing Directive which limits the duration of license award proceedings the ultimate duration of such proceeding is left open in the TA (sec 15 para 1) in case "necessary additional inquiries" require an extension of time beyond 6 weeks. The applicant is entitled to be awarded the license if it fulfills such a criteria (e.g., technical, financial and quality criteria; sec 15 para 2 TA) Individual terms of a license can be modified by the regulatory authority at a latest stage if such modification is required because of "important public interest"; this clause seems to exceed the scope of act 8 para 4 Lincensing Directives. The number of licenses for the above-mentioned telecommunication services is not limited.



c Mobile Telecommunications Services

With a view art 2 para 1 of the EC-Directive of mobile communication and personal communications (96/2/EC), a license has been recently granted to the operator of DCS 1800 mobile system (in addition, there are two GMS-operators, one is Mobilcom, a subsidiary of the Austrian PTT and STET International, on the one hand and MAX.Mobil, a private consortium, on the other), license award pre-conditions and proceedings, first enacted in 1993 have been subject to the various modifications; the once currently in force under the TA reflect the experience ..... on the occasion of previous license award. The license must be awarded in an open, fair and non-discriminal tory proceeding in the cause of a public tender. A frequency allocation fee has to be paid in order to insure economically oriented frequency allocation (sec 21 TA). The license is to be awarded to the applicant who bestwarrants efficient use of the frequency spectrum to be allocated.

2. Universal Service

The provision of universal service shall be based on periodic public tenders; the financing will be effected by means of a Universal Service Funds.

3. Regulation of Competition

Like the German Telecommunications Act, the TA contains a set of specific competition rules aiming at the control of the market behavior of dominant telecom enterprises. An enterprise offering or consuming (!) telecommunications services is considered dominant if it is subject to no or only insignificant competition on the product and territorial market in question or if it has an overriding market position compared to its competitors due to its capability to influence market conditions, its access to customers and its experience, turnover and financial strength (section 33 para 1). A market share in excess of 25% gives rise to the rebuttable assumption that the enterprise in question is dominant. It is the competence of the regulatory authority to decide whether an enterprise is dominant and to annually publish a list of dominant enteprises.

Dominant enterprises in terms of the TA are subject to certain obligations which do not apply to others, only to specify the most important:




  • Open Network Provision: A dominant offeror of telecommunication services is required to grant its competitors access to its services, regardless of whether such services are offered on the market or only internally, provided such services are "essential". Such access must be granted without discrimination and subject to the same conditions as the ones used by the offeror itself; restrictions are only admitted if they correspond to the ones admissible under EU law (cf art 3 para 2 Council Directive 90/387/EEC "Open Network Provision").


  • Leased Lines: Dominant offerors of leased lines are required to offer a minimum of leased lines in accordance with the standards provided in Council Directive 92/44/EEC (ONP/leased lines; obligation to contract). General terms and conditions as well as fees have to be published and are subject to the approval by the regulatory authority.


  • Interconnection: A dominant operator of a network has to grant other operators access to and interconnection with such network. The TA specifies minimum requirements for services which the dominant enterprise must offer in the context of interconnection and mandates that interconnection agreements be transparent, non-discriminatory and based on objective standards. Apart from that, interconnection agreements can be negotiated freely by the parties under the principles of civil law. Any operator (not only a dominant one) of a public network is obligated to negotiate (not to conclude) an interconnection agreement with another public operator; if no agreement can be reached within 6 weeks, the regulatory authority may be resorted to with the effect that its decision on the issue will govern in lieu of an interconnection agreement.


  • Cross-subsidies: The TA contains a prohibition for dominant enterprises to cross-subsidize tariffs with proceeds from areas of operation in which they dispose of special or exclusive rights. Unlike its German counterpart, the TA does not provide for a specific prohibition of concentrations for dominant enterprises in the telecommunications area.



The mentioned special competition provisions of the TA basically proceed from the principle of free competition and provide for regulation only to the extent necessary to ensure workable competition. Thus, the competition rules are designed to prevent the abuse of a dominant position in the specific context of the telecommunications environment. As a general rule, in case of a violation of the above-mentioned competition rules by a dominant enterprise, the regulatory authority is competent to take measures in order to effectively terminate the abuse. In particular, the authority is authorized to impose on or interdict to a dominant enterprise a certain way of acting, it may even declare contracts void to the extent the enterprise abuses its dominant posititon by means of such contract (sec 34 para 3 TA). Under certain circumstances, an abuse is even presumed with the effect that the dominant enterprise has to provide evidence to rebut such assumption (sec 34 para 4 TA).

The TA specifically states that its competition law provisions are without prejudice to the competences of the Austrian Cartel Court (under the Austrian Cartel Act). Thus, beyond the competition rules under the TA - which in this respect constitutes a lex specialis to the Cartel Act - the Cartel Court is in theory free to apply the provisions of the Cartel Act on the abuse of a dominant provision. In Germany, the German Bundeskartellamt criticised the two-thronged approach to the control of dominant positions reflected in the German Telecommunications Act, on the one hand and the German Cartel Act (GWB), on the other, because it feared an inhomogeneous legal development. Since, unlike the German Telecommunications Act, the TA does not define the notion of a dominant enterprise with reference to the term "dominant position" in the Austrian Cartel Act, this concern holds even more true in Austria.

The institution of the regulatory authority under the Telecommunications Act of 1993 as a division within the Ministry of Transport was criticized for its lack of independence. In reaction to the general demand for an independent regulatory authority, the TA has taken a radically different approach to this sensitive issue:

Section 108 of the TA provides for the constitution of a special limited liability company with the firm name "Telekom-Control Österreichische Gesellschaft für Telekommunikationsregulierung mbH" (Telekom-Control GmbH) whose purpose is to fulfill all tasks conferred by the TA upon the regulatory authority (with certain exceptions; see below). The company has a stated capital of ATS 50 million, is 100% state-owned and is in principle governed by the Austrian Act on Limited Liability Companies. Thus, the regulatory "authority" is situated outside the traditional Federal administration (a concept also used for the purpose of air traffic control) and is a legal entity of the same legal form as the majority of the Austrian incorporated private business entities ("GmbH"). According to the Explanatory Remarks to the TA, the legislator´s decision to convey regulatory functions upon a company is based on the idea that the tasks of surveillance and control of competition cannot be adequately handled with the instruments of a "classic" administrative authority; in addition, the legal form of a GmbH allows for more flexibility and the employment of sufficient personnel (private employees instead of civil servants).

Sec 111 TA specifies a number of regulatory decisions capable of affecting "civil rights" which are reserved to a special "Telecom-Control-Commission" established at Telekom-Control GmbH (e.g., the award and withdrawal of licenses, the approval of General Terms and Conditions and tariffs, the determination of contributions to the Universal Service Funds, the classification of an offeror of telecommunications services as dominant in terms of sec 33, the determination of the conditions of interconnection in case of dispute). This Commission is composed of three members, is chaired by a judge and is independent; its decisions are not subject to review by any administrative authority; it is thus considered as a tribunal in terms of article 6 of the European Human Rights Convention.

It should be noted that the taxative list of decisions reserved to the Commission in section 111 TA does not make reference to the sanctions the regulatory authority may impose in case a dominant enterprise abuses its dominant position; consequently, e.g. the competence to declare contracts void (sec 34 para 3 TA; see above) lies with Telekom-Control GmbH. While the TA generally submits the company to the supervison of the Minister of Transport, the TA is silent with regard to rights of appeal against (potentially far-reaching) decisions of Telekom-Control GmbH as the regulatory authority. Furthermore, as an instrument of this supervision, sec 117 para 2 TA grants to the Minister of Transport the right to render to Telekom-Control GmbH written instructions. The TA does not specify the nature and contents of instructions which the Minister may render when exercising his right of supervision. Yet, it is a basic principle under the Austrian law of limited liability companies that the managing directors of a GmbH are bound by lawful instructions of the shareholders. Consequently, the independence of the regulatory authority is only assured in the - rather limited - area of decisions to be rendered by the Telecom-Control-Commission.

4. Outlook

It is an open question whether the TA will serve as a satisfactory instrument to implement the transgression from a market still characterized by monopolistic features in many aspects to a more competitive environment. Not all share the view that especially with respect to its competition rules and the treatment of the regulatory authority, the TA can live up to the general expectations. At any rate, the legislator´s desire to implement the current EU telecommunications law standards in the TA as well as progress achieved in the past (e.g. the introduction of competition in the market for mobile telecommunication) show that Austria is on the right way towards full telecom liberalization.

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