EU Sues Belgium over Telecom Deregulation

The European Commission announced its decision today to pursue Belgium before the Court of Justice for failing to comply with a key provision of European telecommunications deregulation concerning cost accounting.

If the court upholds the Commission complaint, Belgium risks a fine if it still fails to comply.

The infringement stems from a 1996 directive on competition in the European Union telecom market, which imposed on each member state the obligation to base prices on effective costs, and to introduce an accounting system that showed clearly the cost elements incorporated in interconnection charges.

This directive required the member states to take appropriate action by mid-1997. In December 1997, following Belgium's failure to respect this deadline, the Commission opened the initial stage of infringement procedures.

After almost two years of talks, the Commission has now moved to the third and final stage in the European Union's infringement procedures involving the court.

The Commission noted in a written statement that although the Belgian government has begun to examine the terms proposed by Belgacom, the incumbent, for interconnection in 2000, the government still has not determined the cost accounting method that Belgacom must respect.

This procedure is one of 10 formal complaints that the Commission is currently processing against Belgium regarding telecom deregulation. In July the Commission sent to the Court an infringement concerning Belgium's method for financing universal services.

As an indication of the Commission's continuing concern over Belgium's failure to respect EU telecom rules in general, on September 6 former Competition Commissioner Karel Van Miert wrote to Belgian Prime Minister Guy Verhofstadt to voice that concern.

All member states with the exception of Greece and Portugal were required to eliminate on January 1, 1998, all remaining restrictions on the provision of telecom services. This liberalization has led to a tripling of the number of international carriers operating in the 13 deregulated member states, and a 20 percent annual increase in telecom investments over the past two years, Nicholas Argyris, Director Communications Service of the Commission's telecom and innovation division told a conference earlier in the day today.

Despite this success, Argyris acknowledged that prices are still too high.

"This is a serious problem which is slowing the pace of Internet growth," Argyris told attendees at the Telecommunciations and EC Competition Law industry conference being held here.

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