Clarifying how recent EU Policies &
Decisions will foster effective competition : Who should be Europe's
Dr Herbert UNGERER
European Cable & Satellite 96 Conference
The information sector today represents 450 bn ECUs (600bn US$)
European Union alone. Some predict that we will be facing a 3
worldwide market by the end of the 90s. The catch words are :
digitalization, broadband switched services.
The Mega-Trends are determined by liberalisation, change of technology,
II. THE MEGA TRENDS
The information sector is being fundamentally re-shaped by the
of the telecoms sector with information technology and the "content
industries" of television broadcasting and publishing. This
poses decisive and
unprecedented challenges for public policy at both national and
we run up to full telecommunications liberalisation by 1998.
The date has been formally written in EU-law by the Full Competition
Directive adopted by the Commission on 13 March, last week.
There is massive potential for growth in Europe especially in
the market for
broadband services to the home. Compared with the US where 35%
households are equipped with PCs, we are still below 20% - though
growing rapidly. Over 60% of US homes are linked to cable networks
whereas in Europe six of the Member States have less than 25%
households passed, and three have no cable network to speak of
The impulse of market players to pick up the slack between potential
market penetration is remarkably rapid. As we speak a wave of
mergers and joint ventures are being formed in Europe. Much of
spurred on by developments in multimedia services and applications.
characterised by the vertical integration of content producers
distributers and carriers, and also a horizontal convergence between
telecoms, cable and computer networks.
All these radical developments imply a complete transformation
of the core of
the economy comparable only to the Industrial Revolution of the
century. Similar shifts of global economic and market conditions
but much more rapidly and dramatically, within a time frame of
as little as
Key to this development is digitalization. We saw the effect of
this on the
telecoms sector in the 80s.
As regards the television sector, the initial structure of public
providing service to the public under strict national regulation
directly by the audience via licence fees is being rapidly eroded
in a process
which began in the late 1980s with the progress of private broadcasters
number of Member States and emergence of advertising revenue as
major - and for private broadcasters, in many cases, only - revenue
Commercial television is now starting to look for pay-Tv subscription
view revenues as a third main revenue source.
The diversification of supply, a resulting squeeze on fee-income
for the public
broadcasters, increasing competition for advertising revenues
under a growing
number of market participants and the search for new revenue sources
introducing intense competition in the European television sector.
Competition will be amplified by the entering of digitisation
in the television
sector which may have similar effects in the television sector
in the nineties
as the introduction of digitisation had in the telecommunications
sector in the
eighties. Its first consequence is further multiplication of channels
A second is convergence with telecommunications and software services,
the context of the Information Society concept.
The resulting new opportunities of packaging of offerings across
particularly in fields like video-on-demand, special interest
offerings and on-
line services is leading to repositioning and alliances across
markets in the move towards multi-media.The media sector is undergoing
substantial restructuring in Europe as in the United States.
These developments have led to a dramatically increased role of
competition law for the sector. We are in favour of commercial
partnerships when they are in the interests of the Information
alliances must have a competitive not an anti-competitive logic
With this in mind we have two general conditions:
The first is that such a powerful and radical revolution in telecoms
as we are
experiencing must be overseen by competition safeguards: basic
which need to be as flexible and global as the moves and the players
The second is that the markets must be liberalised before we can
dominant players to join forces. We cannot risk that markets such
interactive TV, or global mobile satellite systems, are sewn up
commercial moves before they are even opened to competition. New
gateways must be opened to avoid gatekeepers strengthening their
III. EU Competition Policy
This talk will therefore cover the major strands of EU competition
the area of telecoms and multimedia :
I Lifting Government restrictions on market entry
II Setting down general rules of fair play
III Controlling the behaviour of dominant players
A key issue concerning both regulation and competition in the
communications and information sector is the creation of the right
for investment. Competition policy is not only responsible for
restrictions on market entry, but also for setting down the rules
of fair play
regarding the commercial relations between old and new players,
such undertakings and the government.
Our goal is, of course, a market structure and regulatory framework
stimulates optimal progress in the interests of both consumers
growth. This is no less true in the telecoms and media sector
else. The problem is that this sector has been characterised by
high levels of
government involvement and public monopoly over the last decades.
We know that we now want to allow, to the greatest extent possible,
commercial decision making and commercial negotiations to develop
shape of the information society. And we know that we want to
maximum flexibility concerning developing technological applications
sectoral convergence. However, we also know that all this must
within a framework of rules. Policy makers must recognise that
the nature of
these rules, however minimal, will (and does) inevitably play
role in determining where investment will flow to and where the
important competition will emerge.
The major deadlines for lifting restrictions are :
* Aug 1995: satellite services and equipment
* Jul 1996: transmission capacity on cable networks
* Jul 1996: transmission capacity on alternative networks
* Jan 1998: public voice telephony and public network provision,
additional possible transition periods for Greece, Ireland, Portugal,
The first two deadlines are fixed by the Satellite and Cable Liberalisation
Directives, the two latter by the Full Competition Directive.
Let me now look
in more detail at the first two areas, most relevant to the topics
IV. EU POLICY ON SATELLITE COMMUNICATIONS
Our first entry point for developing an EU-wide multi-media policy
framework came with a measure adopted by the Commission in 1994
applies competition principles to open the market for satellite
and access to the space segment. This should now have been implemented
all Member States. For the most part progress has been very encouraging,
six Member States are behind on this time table : Greece, Ireland,
Luxembourg, Portugal, Spain. In all of these cases we have, in
initiated the necessary legal procedures, in order to correct
The aim is to stimulate without delay greater use of satellite
in the EU.
Member State broadcasting policy is unaffected by the satellite
has, however, to distinguish between the provision of programming
broadcasting and the provision of the technical means to carry
such services. The provision of the satellite network services
conveyance of radio and television programmes is, by its very
telecommunications service and there is therefore no justification
it differently from any other telecommunications service. The
makes a clear distinction between:
i the services provided by the carrier (transmission, switching
activities) necessary for the conveyance of the signals, which
telecommunications services liberalised under the Directive, and
ii the activities of those bodies which produce and control the
contents of the
messages to be broadcasted, which are broadcasting activities
the scope of this Directive.
Services liberalised under this Directive therefore include services
over telecommunications operator's feeder links from studios/events
sites, as well as uplink services for point to point, point to
to-home (DTH) satellite broadcast services and services to cable-head
direct access to space segment
Member States are required by the Directive to abolish all restrictions
offer of space-segment capacity on their territory.
This means, in particular, that governments must ensure that:
- any regulatory prohibition or restrictions on the offer of space
capacity to any authorised satellite earth station network operator
abolished, and that
- any space segment supplier is authorized, within its territory,
to verify that
the satellite earth station network for use in connection with
capacity conforms to the published standards
Reform of the International Satellite Organisations
Member States are obliged, however, to ensure that there are no
provisions in their national regulations which would have the
preventing the offer of space segment capacity in their territory
another signatory or by independent systems. Member States must
abolish restrictions which prevent space segment capacity, already
the International Satellite Organizations by a licensed operator
in one Member
State, from being freely accessed by users from their own national
This means, for example, that companies and service providers
in Italy would
have the freedom to choose to use capacity provided by BT, France
or STET. The main aim is to achieve maximum commercial flexibility
all concerned parties within the context of the current regulations.
Restrictions preventing parties other than the national signatory
the technical and operational specifications of satellite earth
stations must also
The directive also emphasises that measures relating to international
organisations must comply with the competition rules of the Treaty.
Ultimately, if it appears that signatories continue to maintain
which dissuade multiple access and thus favour market sharing
provision of space segment, the Commission will consider taking
against the relevant signatories.
* COMMON POSITIONS AND POLICY WITH REGARD TO NEW LEO
Alongside mobile terrestrial communications, satellite networks
to the development of personal communications whereby a user can
identified regardless of geographical position. We are convinced
goal is central to the future information society in Europe.
The Commission has put forward a Council decision on the future
of LEOs system in the EU which will be on the agenda of the telecoms
Council in Brussels tomorrow.
The benefits of liberalisation we can expect in the EU market
* Reduction of costs of deploying and operating satellite capacity
which will be translated into lower prices for service providers
consumers: Competition and liberalisation will mean more space
segment and easier space segment access.
* The rapid deployment multimedia applications and access to the
developing data superhighways of the information society.
* Removal of prohibitions on service provision and interconnection
* Simplification of operations such as licensing, equipment
registration and installation
* Increased confidence of users, operators and investors in satellite
solutions for Europe
* More generally, a confirmation of Europe's satellite infrastructure
its role of carrying the future digital telecoms and entertainment
services across Europe.
Let me then turn to the other major carrier of the future broadband
services, the cable networks.
V. EU POLICY ON CABLE COMMUNICATIONS
The EU Cable Directive has entered into force by 1st January.
have a further nine months for implementations.
The Directive allows use of cable networks for telecom services
Union. It will unleash a substantial amount of growth potential,
for multi-media services, in the run up to full services liberalisation
Article 1 of the Directive thus abolishes restrictions on the
use of transmission
capacity on CATV networks for all telecoms services, apart from
telephony. Where applicable changes to national legislation must
to the Commission no later than July 1996. This provision covers,
particular data communications, corporate networks and multi-media
(which however will include, according to the Full Competition
public voice telephony from 1st January 1998 onwards). The article
ensures that cable TV networks are allowed to (a) interconnect
national public telecoms network, and (b) directly interconnect
In many of the Member States national regulation still restricts
use of cable
TV networks to simple, one-way television broadcasting services.
regulatory restrictions thus effectively prevent cable TV operators
offering carriage or provision of any of the new switched broadband
The main goal of the Commission is thus to lift those restrictions
in order to
allow an enlarged economic base by joint use for entertainment
telecommunications services of the cable networks.
Lifting restrictions on cable network usage will introduce new
means for telecoms service providers throughout the EU to gain
access to end customers. What this means is that we open up a
between service providers and customers and at the same time seriously
reduce the power of the old gatekeepers.
Joint provision of telecoms and broadcasting services
I want to make four main points here :
i a particular aim of the cable TV directive is to provide a viable
for local access for both telecoms and media services
ii where one operator controls both links to the consumer (cable
telecommunications) and no one else is allowed in, then there
must be rules
to ensure non-discriminatory behaviour, particularly separation
accounts as concerns the provision of each network and the provision
telecom services. This is to prevent unfair cross subsidies between
monopoly areas and areas where new players are attempting to gain
foothold. By 1st January 1998, the Commission will carry out in
assessment whether accounting separation is enough to ensure the
the cable TV Directive
iii On the other hand we have also taken account of the concerns
European Parliament regarding lifting restrictions on telecoms
from providing broadcasting services: Although, in principle the
of broadcasting signals is a telecoms service, and we all know
convergence the distinction between telecoms and broadcasting
increasingly blurred, EU telecoms liberalisation has not, so far
encroached upon the specific rules in certain member states regarding
distribution of audiovisual programmes for the public. However,
according to the Full Competition Directive, the Commission will
out, in parallel with the review of joint ownership, an overall
of the situation regarding restrictions on use of public telecom
for provision of cable TV capacity.
Let me here add some facts and figures : It is interesting to
* The most recent OECD figures show that PTOs enjoy an increasing
of the cable subscriber market and, thus, the platform for alternative
provision of local telecoms access is shrinking. PTOs are in fact
likely to be able to offer cable TV services than cable operators
provide switched public telecom services. Restrictions on PTOs
providing cable TV services are the exception not the rule. The
of the cable communication market is increasing in those countries
After having virtually identical market share of the EU cable
TV market in
1990, by 1995 this had shifted to 60:40 in favour of the PTOs
52.7% of subscribers in the EU were customers of PTO owned cable
networks. By the end of 1994 the PTO share had increased to 58.5%)
* In Member States where there are still monopolies in telecoms
infrastructure and voice telephony, this increasing cable TV market
PTOs in the run up to 1998 is worrying. It means that the platform
local loop competition may be shrinking and that incumbent monopolists
may well be entrenching bottleneck control of access to customers
* This is especially problematic in the global context: Many parts
of the EU
area are already at a tremendous disadvantage compared to, for
Canada and the US, in terms of the independent infrastructure
the provision such competition. This is a clear result of cable
being owned or controlled by incumbent telecom monopolists.
* The application of EU competition rules generally prevent the
dominant position from one market, for example telecoms, into
example cable TV.
We are therefore keeping a very close watch on the moves of incumbent
telecom operators. This concerns (a) relations or agreements with
broadcasters and content suppliers; and (b) their plans to roll
out their own
cable infrastructure, especially in those countries where the
are not yet developed (such as in Spain and Italy). We are in
conducting investigations in this area.
Of course the interests of the consumer are paramount:
some might argue that competition policy should not stand in the
the kind of investment that only the incumbent telecom operator
prepared to make in broadband networks given the synergy of building
upon the existing telecoms network (including ducts and wayleaves)
develop an integrated telecoms - audiovisual service
The short term gains however must be weighed against the significant
disadvantages of effectively locking in a monopoly in local loop
access (for both telecoms and cable).
This means one very powerful gatekeeper between the individual
and the information superhighway.
Here again we are faced with the challenge of finding the right
deregulation and restrictions, of opening gates onto the playing
field and then
controlling the most powerful players, to best serve the individual
The review by 1st January 1998 will give opportunity to draw the
VI. DIGITAL TV AND CONDITIONAL ACCESS SYSTEMS
Let me then turn to the issue of access to digital services.
First, a short comment on a hotly debated topic : where to class
multi-media services ; Content or carriage ; Point - to - point
; or point to
The key questions in this onrunning debate at EU level include:
Are the new interactive services of the information society to
as telecoms or broadcasting for regulatory purposes, or are they
in fact to
be considered separately from both? What are the implications?
How does the introduction of competition impact on concerns about
cultural protection, political pluralism and education?
What about pornography, censorship and protection of minors in
information society? Are the on-line or on-demand programmes to
treated like books and magazine sin this context, or more like
In March 1995 the Commission adopted a proposal for a revision
of the TV
without frontiers directive which would establish a clearer legal
for broadcasting policy and promote the development of the European
audiovisual services market.
The main scope of application remained the same under the original
proposal: ie to continue to apply to all "point-to-multipoint"
services (including pay-per-view and near-video-on-demand). However,
proposed revision clarified that the provisions of the directive
would not apply
to the new "point-to-point" audiovisual interactive
services like video-on-
demand. The Commission decided not to extend the scope of the
the latter since the services are qualitatively very different
broadcasting services for which the directive was specifically
particular because they allow the viewer, not the service provider,
and control the content.
The new audiovisual services excluded from the broadcasting directive
subject of a special Green Paper on New Audio-visual services
on the basis
that they need particular internal market measures "tailor
made" for such new
applications. The main issues to be addressed are:
Public interest criterion to be further studied and clarified
cultural and linguistic diversity to be protected and promoted
Development of new services to be supported;
The future legal framework should facilitate (not alienate) significant
investments in the industry and should be sensitive to the significant
risks involved. It should also aim for coherence at national,
The Green paper will be published this year.
A main issue of debate on the broadcasting directive review has
limited scope vis a vis the new audiovisual services such as on-line
demand services. Initially this was discussed from the point of
view of the
quotas issue, i.e. should "cultural" quotas apply to
the new audio-visual
Now the discussion is centring more on the pornography and censorship
i.e. how can minors be protected from pornography on-line? The
Parliament has proposed in its recent Resolution extending the
scope of the
Broadcasting directive to cover new audio-visual services in order
broadcasting rules to these services. The Commission and the Member
have continued to support the separation of the new audiovisual
formal position on the Parliament's proposed amendment is due
in the coming
Sector specific regulation must remain flexible and not technology-based.
Treaty competition rules always apply.
Let me then touch on a second topic of major importance for digital
Set Top Boxes and conditional access systems
We recognise that such systems are particularly important for
the new digital
TV market. What we are saying is that although conditional access
necessary gateway, it should preferably be neutral and transparent,
and, in any
case it should be non-exclusive. The Commission is hoping to prevent
mass customer access may be jealously guarded by one gatekeeper.
It is however an extremely complex regulatory issue and one which
and continues to be, negotiated intensely with the industry. Given
levels of risk and investment involved it was untenable for the
seek to rigidly impose a common interface at the set top box level.
extensive consultation through the digital video broadcasting
proposed a directive which ensured:
i a common European Scrambling System, and
ii an open interface socket on all TVs with screens larger than
What this means is that, even where different decoder bases and
access systems are adopted by competing consortia there should
technical reason why the customers of one system should not be
able to gain
access to the services of another. The commercial negotiations
need to be involved between the competing players is, of course,
Naturally, the pay-TV broadcasters who will actually be launching
for digital TV support Proprietary Conditional Access systems
dedicated decoders. In the short term its looks like a better
bet for a large
investment. However it is clear that a transparent common interface
much better solution for customers for the long term development
market because it unbundles consumer hardware from the necessarily
proprietary and secret aspects of conditional access systems.
We hope that
market forces (through increased consumer awareness) may favour
of the propriety access system.
What EU policy now stipulates, as expressed in the Directive of
October of last year on the use of standards for the transmission
signals, is that manufacturers must incorporate an open interface
all TVs with screens larger than 42cms.
This supports the current
towards making new technology products more consumer friendly:
and all services should be available simply by changing the plug.
often referred to as the "plug and play" model.
Firstly, the Television Standards Directive requires that digital
TV service use
standardized transmission systems but does not dictate the actual
details of the
That is left to the industry and users working
the Digital Video Broadcasting (DVB) project and in ETSI.
Secondly it addresses this problem of the risk of gatekeepers
conditional access gateway
Following intensive industry consultation, particularly with the
Directive also sets down some requirements on conditional access
digital television which follow the principles I have mentioned.
The requirement that the agreed Common European Scrambling Algorithm
be included in all consumers equipment. This will result in the
a common infrastructure in Europe for scrambling and will enable,
principle, any Pay-TV service providers to access any consumer
in the Union.
The requirement that it is technically and economically feasible
of Conditional Access can be transferred between broadcasters
TV network operators. This will ensure that Cable TV operators
enabled to address their customers in a straightforward manner
requirement of several boxes in the home
Principles for licensing of proprietary Conditional Access technology
manufacturers.This will allow manufacturers to build in full functionality
into consumer equipment for the benefit of consumers.
Principles relating to fairness in commercial relations between
Access providers and Broadcasters, together with dispute resolution
procedures if there are problems.
Given the rapid change and unpredictability characterising the
the Directive also contains a review mechanism which will ensure
market development will be closely monitored and the Commission
propose modifications to the directive when necessary.
I believe I do not have to stress that wherever individual cases
of abuse of a
dominant position or restrictive agreements are found in the area
conditional access we can always apply directly the Treaty competition
Before going on I should mention the link between the ex-ante
framework and the investigation and impact of various multi-media
which I will come onto later.
As all of here today are aware there are two very significant
consortia in the
making concerning digital pay TV services in Europe: one involving
Bertelsmann and Seca and the other led by Kirsch. It looks like
they will be
adopting different technical standards for the decoder base of
access systems. The EU measure should mean that such a scenario
take the pressure off the consumer regarding their choice and
one or the other system.
Encryption and legal protection
A Green Paper on the legal protection of encrypted signals has
published on 19th December. It is centrally concerned with the
theft by pirates of the revenues which should properly flow to
providers. Piracy may well be facilitated by digital technology
while at the
same time the financial significance of the practice will be dramatically
The main thrust of the Encryption Green Paper is therefore to
antipiracy legislation throughout the Union.
New Audiovisual Services
This leads me back to the specific treatment of new interactive
services in the EU policy framework. We certainly need to establish
legal framework at EU level for the new "point-to-point"
In particular we want to encourage and promote this fledging European
market, so we must ensure that regulation is not burdensome.
As I noted before, the Commission's position will be defined in
paper on Audiovisual Services which should be published during
VII. THE GROUND BREAKING CASES
Competition Safeguards on commercial agreements
At this point we come to the final section of my talk: how the
applies the competition rules to individual agreements in the
digital multi-media arena where we have seen some breathtaking
arrangements of alliances during the last weeks in Europe which
The deregulation of the core telecommunications market, and the
diversification of television and broadcasting, with the expansion
broadcasters and the transformation of the original public broadcasting
which is now beginning, combined with the entry of new actors
publishing and software industries into the market (a consequence
convergence) is contributing to a substantial accelerating in
development. In many instances, the new possibilities for horizontal
vertical integration, the small number of powerful actors holding
positions allowing them to control market development, and the
market actors to occupy the major growth positions, all generate
potential for anti-competitive behaviour which has become a major
for EU competition policy during the last two years. The Commission
try to ensure that the current restructuring process will lead
to competitive and
growth oriented market structures.
As regards general principles, the whole point of case by case
analysis is, of
course, that there are no a prioiri judgements or assumptions.
especially important in a market sector experiencing such rapid
and change. Competition rules are being applied in a firm but
manner to adapt to the changing situations as they arise. The
and context is critical to the outcome of the case. The most important
elements in assessing this context concern :
exclusive rights or market dominance
barriers to entry for other players
state of liberalisation of the relevant market
I will not go into detail on the cases. However, let me say a
few words on
two of them which have been trendsetting for the audio-visual
sector : the
MSG case (1994) and the Nordic Satellite case (1995).
Leading cases : the MSG case
The MSG case concerned the German companies Bertelsmann AG, Deutsche
Telekom and Taurus Beteiligungs GmbH (Taurus), a company of the
Group (Kirch). They proposed to create a joint venture called
Service GmbH (MSG). The object of MSG was the technical, business
administrative handling of payment-financed television and other
communication services. The relevant market affected was that
and administrative services for pay-TV and other TV services financed
through subscription or payment by viewers in Germany.
The most interesting element of the case was that a public telecommunications
operator holding a monopoly for telephone network services and
nearly the totality of TV-cable networks in a Member State would
future activities in the joint venture's market with those of
the leading pay TV
The conclusion of the Commission investigation at that time was
proposed operation would create or aggravate a dominant position
market for administrative and technical services for pay TV, where
would obtain a lasting dominant position.
Kirch would have a dominant position on the German market. Furthermore,
the dominant position of Deutsche Telekom on cable infrastructure
have been protected and strengthened by MSG. The Commission considered
in particular that in view of the position of Telekom, the facts
liberalisation of cable infrastructure would be limited by the
creation of MSG.
The Commission therefore declared the joint venture incompatible
common market under competition rules.
Leading cases : the NSD case
Nordic Satellite Distribution (NSD) intended to transmit satellite
programmes to cable TV operators and households receiving satellite
their own dish ("direct-to-home" market).
concluded that the establishment of NSD in its proposed form would
in effect to a concentration of the activities of its parents,
creating a highly
vertically integrated operation extending from production of TV
(through operation of satellites and cable TV networks) to retail
services for pay-TV and other encrypted channels.
NSD's parents were important companies in TV transmission and
the Nordic area.
Norwegian Telecoms (NT) is the main cable TV
Norway with about 30% of household connections and controls the
capacity on one of the two allocated Nordic satellite positions,
and it is an
important pay-TV distributor in Norway through its company Telenor
TeleDanmark (TD) is the largest cable TV operator in Denmark with
50% of household connections, and will retain a privileged position
cable TV operations possibly until 1 January 1998, the deadline
liberalization of the telecommunications markets.
with Kinnevik, controls most of the satellite capacity on the
satellite position. Kinnevik, the Swedish conglomerate with interests
programming, magazines and newspapers as well as in steel, paper,
and telecommunications, is the most important provider of Nordic
programmes including the most popular channels.
The company is
pay-TV distributor in the Nordic countries through its Viasat
also has an important stake in Kabelvision, the second largest
company in Sweden, as well as in TV4, the largest advertising-financed
The Commission concluded that the creation of the NSD joint venture
have resulted in the creation or strengthening of a dominant position
- the market for provision of satellite TV transponder capacity
to the Nordic
region (Denmark, Norway, Sweden, and Finland) - this would have
the creation of a dominant position for NSD itself.
- the Danish market for operation of cable TV networks - this
strengthened the dominant position already held by TD.
- the market for distribution of satellite pay-TV and other encrypted
channels to direct-to-home households - this would have created
position for NSD.
The operation was vertically integrated, and thus the downstream
positions (cable TV operations and pay-TV) and those upstream
transponders, provision of programmes) would have been mutually
reinforcing. The parties would have achieved such strong positions
would have been able to foreclose the Nordic satellite TV market
Essentially NSD would have obtained a "gatekeeper"
the Nordic market for satellite TV broadcasting. The Commission
prohibited the joint venture in the form submitted.
Conclusions to be drawn
The affected markets are currently in a transitional phase, since
telecommunications markets are about to be liberalized and the
technologies and services are currently under development and
are about to be
In this situation the decision of the Commission took
particular importance, since this is the period during which future
structures are being defined.
However, let me stress that the Commission also re-stated, in
the context of
the NSD Decision, that joint ventures, particularly transnational
ventures, could be instrumental in developing the media and
telecommunications sectors to their full potential. The policy
Commission was to take new developments into account and the Commission
therefore remained open to examine new proposals from the parties.
Both the MSG and the Nordic Satellite decision clearly indicate
that the sole
entry in a newly emerging market does not constitute as such a
position as a result of which competition would be significantly
nature, the first entrant in a new market is always initially
in a monopoly-like
However the situation is different when such dominant
likely to be long lasting and a long-term monopoly is going to
Overall, the record shows that the Commission - and Competition
Commissioner van Miert has confirmed this on a number of occasions
taking a positive position on restructuring and alliances, once
conditions for keeping markets open are fulfilled. Let me just
examples, the decisions on IPSP ; Cable&Wireless VEBA ; and
But, as I have said, we have to be careful to avoid market foreclosure.
me here mention areas which call for special attention.
Leading cases : Global Mobile Satellite Systems - the new LEO
Earth Orbit) satellite systems.
The Commission has launched an in-depth and comprehensive examination
the newly emerging strategic alliances which are formed to offer
satellite telecommunications services on a worldwide basis.
In this sector with only a few global market players, it is essential
competition is safeguarded in the downstream markets involved,
service provision, distribution and equipment supply.
One of the examined systems, namely Inmarsat-P, has already received
positive sign from the Commission.
Leading cases : Investigation of On-line Joint Ventures
The Commission's main objective in dealing with online cases is
to prevent at
an early stage the establishment of anti-competitive situations
stifle the development of online services and the 'Information
ruling out viable competition before an effective market has had
a chance to
In both the Europe Online case and the AOL/Bert/DT case,
Commission is looking into whether
(i) access to the publications
by the partners would be available at fair conditions to other
both concerning advertising for the new services and online provision
(ii) publications not belonging to the founding groups
access to subscribers at conditions similar to those enjoyed by
(iii) anti-competitive agreements with other
would be avoided.
With the current rush in the US - after the adoption of the new
Act last month - of both telecoms and cable operators to line
up with major
Internet providers, the importance of these cases will increase.
The Commission has also indicated that it would follow closely
developments related to Microsoft Network when Microsoft launched
Windows'95 (on August 24), it became clear that included with
would be the small piece of software necessary to connect to Microsoft's
online service, the Microsoft Network (MSN). This caused concerns
other online service providers, including Compuserve and America
and caused the US Department of Justice (DoJ) to launch a high
The reason for this concern was that when an "icon"
for the MSN appears
prominently on the screen of the computer, this may make it much
a user to choose to use MSN than another online service.
Here the Commission is limiting itself currently to gather information,
order to understand better the issue in the context of the industry.
Leading cases : global telecom alliances
In the field of global telecom alliances, we have investigated
BT / MCI,
the DT / FT / Sprint alliance - now called GlobalOne - and we
have stated a
number of conditions, as is well known.
We are doing currently
the same with
the Unisource / Uniworld / AT&T alliance.
Current re-alignments in the digital TV market
We are of course following with full attention the recent major
arrangements in the pay-TV field in the European Union in preparation
EU-wide digital television. The Commission has continued to follow
will examine - the efforts to find more open solutions for the
access to pay-
TV systems, subsequent to the prohibition of MSG - such as the
developments related to MMBG. Commissioner van Miert has also
announced that the Commission will look closely at the recent
arrangements of alliances in the market, such as the recently
Bertelsmann, Canal+, Havas and Murdoch alliance.
In conclusion let me turn back to the general principles. As new
serving the customer replace the traditional mass media broadcasting
on the one hand, and "plain old telephone service" on
the other, new policy
issues outgrow the traditional regulatory concepts.
Multi-media, by its very nature, crosses regulatory frontiers
- again this has an
impact at both national and EU level. It is not always as easy
policy and its institutions as it is to converge market sectors.
One effect of
this is increasing responsibility and challenges for competition
law to establish
the ground rules. Another aspect is the need for closer cooperation
the various agencies and bodies responsible for measure effecting
In order to avoid regulatory straight jackets, pre-empting such
and commercial developments, we need to remain as dynamic and
At the same time we recognise that as investors in a
intensive, high risk sector regulatory certainty is a priority.
Perhaps the best guidance I can leave you with is a very general
we want to establish and open new gateways to the information
we must be very cautious when it comes to gatekeepers
This is exactly the aim of our new EU-Cable Directive. In nearly
member states switched access to public end users was jealously
one gatekeeper, the national incumbent telecommunications operator.
Liberalisation should provide a brand new gateway benefitting
service providers alike.
However, in the shorter term where certain gateways remain closed
fact or law) we cannot let the gatekeepers entrench their position
anyone else has a chance to gain a foothold.
The General principles to be drawn out
Encourage gateways and abolish exclusive gatekeepers
Encourage competitive alliances and prevent defensive foreclosure
establish competitive safeguards to focus on situations of asymmetrical
power in liberalised markets