Recommendation 1998/195 - 98/195/EC: Commission Recommendation of 8 January 1998 on interconnection in a liberalised telecommunications market (Part 1 - Interconnection pricing) - Main contents

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98/195/EC: Commission Recommendation of 8 January 1998 on interconnection in a liberalised telecommunications market (Part 1 - Interconnection pricing) (Text with EEA relevance)

Official Journal L 073 , 12/03/1998 P. 0042 - 0050

COMMISSION RECOMMENDATION of 8 January 1998 on interconnection in a liberalised telecommunications market (Part 1 - Interconnection pricing) (Text with EEA relevance) (98/195/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through the application of the principles of open network provision (ONP) (1), and in particular Article 7(5) thereof,

Whereas Commission Directive 96/19/EC of 13 March 1996 amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets (2), abolishes special and exclusive rights as regards the provision of telecommunications networks and services;

Whereas it is Community policy to create an open and competitive market in the telecommunications sector; whereas for new entrants in the telecommunications market seeking to compete with the incumbent operators, interconnection to the existing public switched telecommunications networks is essential, and interconnection charges represent one of the biggest items of expenditure for new market entrants; whereas the Community has agreed a regulatory framework for interconnection as set out in Directive 97/33/EC;

Whereas Directive 97/33/EC gives national regulatory authorities for telecommunications (NRAs) an important role in securing adequate interconnection of networks, in accordance with Community law, taking into account recommendations defined by the Commission so as to facilitate the development of a genuine European home market (recital 12); whereas, in particular, Article 7(5) of Directive 97/33/EC calls upon the Commission to draw up recommendations on cost accounting systems and accounting separation; whereas, in accordance with the principle of subsidiarity, the setting of tariffs for interconnection is a responsibility of the Member States;

Whereas Article 7(2) of Directive 97/33/EC requires that certain organisations notified by their NRA as having significant market power (hereinafter referred to as 'notified operators`) follow the principles of transparency and cost orientation for interconnection charges, and states that the burden of proof that charges are cost-oriented lies with the organisation providing interconnection to its network;

Whereas the Commission considers that that most appropriate approach to interconnection pricing is one based on forward-looking long-run average incremental costs, since this is most compatible with a competitive market; whereas this approach does not preclude the use of justified 'mark-ups` as a means of recovering the forward-looking joint and common costs of an efficient operator as would arise under competitive conditions;

Whereas until interconnection charges based on forward-looking long-run average incremental costs are put in place, it is appropriate to publish international comparisons of interconnection charges as a means of assisting national regulatory authorities in ensuring the implementation of cost-oriented interconnection to the networks of notified operators;

Whereas Article 7(5) of Directive 97/33/EC calls for NRAs to ensure that the cost accounting systems used by the organisations concerned are suitable to ensure transparency and cost orientation, but does not specify a particular cost accounting system; whereas an approach to interconnection pricing based on forward-looking long-run average incremental costs implies an accounting system based on current costs rather than historic costs;...

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