OPINION OF ADVOCATE GENERAL
delivered on 14 May 2009 1(1)
TeliaSonera Finland Oyj
(Reference for a preliminary ruling from the Korkein hallinto-oikeus, Finland)
(Electronic communications – Networks and services – Obligation to negotiate interconnection in good faith – Definition of operator of public communications networks – Undertaking without significant market power – Interpretation of Articles 4(1), 5 and 8 of Directive 2002/19/EC of the European Parliament and of the Council – Powers of the national regulatory authorities)
I – Introduction
1. The Korkein hallinto-oikeus (Supreme Administrative Court), Finland asks the Court of Justice to rule on the interpretation of Articles 4(1), 5 and 8 of Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (‘the Access Directive’ or ‘Directive 2002/19’). (2)
2. It is specifically interested in the scope of the obligation on interconnection laid down in Article 4(1) of Directive 2002/19, in order to determine whether it covers the generous provisions of the Finnish legislation, which imposes that duty on all telecommunications undertakings, without distinguishing those which manage public networks from those which provide services, not even according to their significant market power.
3. Following the liberalisation of the sector, the Court of Justice allowed the national regulatory authorities to impose ex ante certain obligations on the dominant operators, (3) authorising them, pursuant to the transitional provisions of the Access Directive and of Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (‘the Framework Directive’ or ‘Directive 2002/21’) (4) to connect networks without first carrying out a market analysis. (5) It also rejected automatic interventions which, deriving from the legislative power, stifle the flexibility which those authorities need. (6)
4. However, the result of the dialogue initiated here is that the competition between old and new operators gives way to the debate concerning the limits of the administration, where a high level of liberalisation has been attained, so that public interventions in the market have to be filtered in order not to upset the equilibrium of supply and demand.
5. In fact, neither of the main parties in the national proceedings has acquired the status of ‘operator with significant market power’, which illustrates, to a certain extent, the success of the Community crusade against monopolies, which enables a communications undertaking, in order to obtain technical assistance, to try and expand its business through another operator whose dominance over a sector of the market has not been recognised. (7)
6. If it were to accept that operators, whatever their market position, have to enter into agreements, the Court of Justice, following the thinking of the referring court, would have to define the power conferred by Community law on the independent national authority to establish whether that interconnection obligation has been complied with and, if necessary, to adopt appropriate measures.
7. Underlying this case is the capacity of the Member States to extend the requirements of the telecommunications directives, which must be considered with the caution demanded by the proper use of the definitions (8) of certain technology (9) and the strict delimitation of the obligation to negotiate interconnection.
II – Relevant legislation
A – Community law
1. The principle of cooperation in good faith
8. Article 10 EC provides that ‘Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community’, and ‘shall facilitate the achievement of the Community’s tasks’. Furthermore, ‘[t]hey shall abstain from any measure which could jeopardise the attainment of the objectives’ of the Union.
2. Directive 2002/19
9. The creation of a competitive, harmonised European market, founded on the free choice of operators, commenced in 1987 with the drafting of the Green Paper on telecommunications. (10)
10. The administrative deregulation of the sector significantly transformed its legal status; this, which had been based on the notion of keeping the operation of telecommunications networks in the hands of public bodies, moved, in accordance with the guidelines laid down in Directive 90/388, (11) towards the withdrawal of special or exclusive rights, in view of the inability of the traditional system of State monopolies to satisfy the demands of users, not only because of the revolution which had taken place in the industry but also because of the high degree of political influence revealed in its decisions. (12)
11. Directive 90/387 (13) contributed to the convergence, encouraged the entry of new participants into the sphere of telecommunications and oversaw the introduction of a balance difficult to achieve, since its fragile foundations trembled owing to the existing superiority of the former public operator, deriving from the rights which it had enjoyed for a long time and from its profound knowledge of the market.
12. Therefore, harmonisation also needed to extend to access to and location of the infrastructures, thereby guaranteeing interconnection between public networks and their suppliers. (14) That objective led to the adoption of Directive 97/33, (15) which granted authorised suppliers of public networks and/or telecommunications services (16) the right, and the corresponding obligation, to negotiate interconnection with each other, in order to ensure provision of these networks and services throughout the Community (Article 4(1)), adding that those which had significant market power were required to accept all reasonable requests for connection (Article 4(2)).
b) Its content
13. The Access Directive is part of the so-called ‘new regulatory framework’, (17) adopted on 7 March 2002 and published on 24 April 2002. (18)
14. With the Framework Directive setting the rhythm, and with the experience provided by Directive 97/33, the Access Directive seeks to harmonise interconnection with the dual intention of making it compatible with the principles of the internal market and benefiting consumers, while safeguarding sustainable competition and the interoperability of services.
15. In accordance with Article 4(1) of Directive 2002/19:
‘Operators of public communications networks shall have a right and, when requested by other undertakings so authorised, an obligation to negotiate interconnection with each other for the purpose of providing publicly available electronic communications services, in order to ensure provision and interoperability of services throughout the Community. Operators shall offer access and interconnection to other undertakings on terms and conditions consistent with obligations imposed by the national regulatory authority pursuant to Articles 5, 6, 7 and 8.’
16. The first subparagraph of Article 5(1) provides that national regulatory authorities, acting in pursuit of the objectives set out in Article 8 of Directive 2002/21, are to encourage and ensure adequate access and interconnection, and interoperability of services, exercising their responsibility in a way that promotes efficiency, sustainable competition, and gives the maximum benefit to end-users.
In particular, without prejudice to measures that may be taken regarding undertakings with significant market power in accordance with Article 8, national regulatory authorities are to be able to impose certain objective, transparent, proportionate and non-discriminatory obligations (Article 5(3)):
(a) on undertakings that control access to end-users, including in justified cases the obligation to interconnect their networks where this is not already the case, in order to ensure end-to-end connectivity;
(b) on operators to provide access to the other facilities referred to in Annex I, Part II on fair and reasonable terms and to ensure accessibility for end-users to digital radio and television broadcasting services specified by the Member State in question.
17. Article 8 contains the precise initiatives (19) which the regulatory authorities may adopt, but only in respect of companies having significant market power, a status conferred as a result of a market analysis carried out in accordance with Article 16 of the Framework Directive.
18. In order to dispel any doubts, this limit on those subject to the obligations is reinforced in Article 8(3), (20) which states that the authorities shall not impose the obligations set out in Articles 9 to 13 on operators that have not been designated in accordance with paragraph 2; in other words, on those which do not have significant market power.
19. Important among the measures which the Access Directive provides for dominant undertakings are those in Article 12(1), since a national regulatory authority may, in accordance with the provisions of Article 8, require operators to meet reasonable requests for access to, and use of, specific network elements and associated facilities, inter alia in situations where the national regulatory authority considers that denial of access or unreasonable terms and conditions having a similar effect hinder the emergence of a sustainable competitive market at the retail level, or are not in the end-user’s interest.
Operators may be required:
‘(a) to give third parties access to specified network elements and/or facilities, including unbundled access to the local loop;
(b) to negotiate in good faith with undertakings requesting access;
(e) to grant open access to technical interfaces, protocols or other key technologies that are indispensable for the interoperability of services or virtual network services;
(g) to provide specified services needed to ensure interoperability of end-to-end services to users, including facilities for intelligent network services or roaming on mobile networks;
(h) to provide access to operational support systems or similar software systems necessary to ensure fair competition in the provision of services;
(i) to interconnect networks or network facilities.
B – National law
20. In Finland, the Access Directive and the Framework Directive have been transposed by the Vienstintämarkkinalaki (Communications Market Law). (21)
21. Paragraph 2(13) of the Vienstintämarkkinalaki defines interconnection as the physical and functional connecting between different networks and services, to ensure user access, even if they belong to other telecommunications undertakings which, according to Paragraph 2(21) include both network operators and service providers.
22. Paragraph 39 of that Law governs the obligations of those undertakings in relation to interconnection; Paragraph 39(1) concerns negotiation on interconnection. Under Paragraph 39(2), the Vienstintävirasto (Finnish Regulatory Authority) may require (22) an undertaking with significant market power to connect its network or services to the network or services of another undertaking; Paragraph 39(3) also authorises it, (23) to impose the same obligation on undertakings which do not have significant market power, if they control user connections to the communications network and if it is necessary to ensure the connection.
III – Facts
23. iMEZ Ab deals in text (SMS) messages and multimedia (MMS) messages by means of a software package in order that its customers may communicate with a mobile phone user (the end user), so that the information passes both from the software to the phone and from the phone to the software, since the system enables the end-user to receive the message sent and to process his replies.
24. The company does not have its own radio network, but it does have message centres, the ‘Short Message Service Centre (SMSC)’ and the ‘Multimedia Messaging Service Centre (MMSC)’. In order to provide its services, it concluded an agreement in Finland with Elisa Oyj, which operates mobile phone services, and in Sweden with all the mobile telephony operators, obtaining a Mobile Network Code from the Swedish Regulatory Authority (Kommunikations-myndigheten PTS).
25. The mobile telephone network of the company TeliaSonera Finland Oyj, which amalgamated with Sonera Mobile Networks Oy, allows the transmission of text messages and images, and also data processing.
26. TeliaSonera Finland Oyj is not expressly regarded, for the purposes of the dispute which has arisen, as an operator with significant market power, but its mobile telephone network covers the whole of Finland, which has prompted iMEZ Ab to seek interconnection.
27. On 7 August 2006, after the breakdown of negotiations, iMEZ Ab asked that the Finnish Regulatory Authority to compel TeliaSonera Finland Oyj to negotiate the interconnection in good faith, by proposing a reasonable agreement and, if this were not achieved, to impose a solution for the transmission of SMS and MMS messages. Alternatively, it asked the Vienstintävirasto to declare that TeliaSonera Finland Oyj was an undertaking with significant market power, in order to obtain the interconnection in that way.
28. By decision of 11 December 2006, the Finnish Authority declared that TeliaSonera Finland Oyj had not fulfilled its obligation to negotiate pursuant to Paragraph 39 of the Communications Market Law, by offering iMEZ Ab the connection under non-reciprocal conditions, since messages transmitted to TeliaSonera Finland Oyj network would have incurred charges but messages transmitted to iMEZ Ab would have been free of charge.
29. The Vienstintävirasto held that TeliaSonera Finland Oyj had to rectify its actions and negotiate in good faith (24) on the interconnection for text and multimedia messages, and ensure the operability of these services for the benefit of consumers.
IV – The main proceedings, the forms of order sought by the parties and the questions referred for a preliminary ruling
30. TeliaSonera Finland Oy appealed against the ruling of 11 December 2006 before the national court, claiming that it was invalid insofar as concerned the conducting of negotiations, since the Viestintävirasto was not empowered to require it to initiate contact with iMEZ, following failed attempts to enter into a commercial relationship.
31. iMEZ Ab claimed that the appeal should be dismissed and insisted that TeliaSonera Finland Oyj should be required to continue negotiations, because what had been achieved to date did not guarantee the functioning of its services.
32. The Korkein hallinto-oikeus has stayed the proceedings and has referred questions to the Court of Justice for a preliminary ruling, expressing its doubts in the following way:
1. Is Article 4(1) of Directive 2002/19/EC of the European Parliament and of the Council on access to, and interconnection of, electronic communications networks and associated facilities (Access Directive), when read in conjunction with recitals 5, 6 and 8 in the preamble to that directive and with Article 8 and Article 5 thereof, to be interpreted as meaning that:
1 (a) national legislation may provide, as in Paragraph 39(1) of the Finnish Communications Market Law, that any telecommunications operator has an obligation to negotiate on interconnection with another telecommunications operator and, if so,
1 (b) a national regulatory authority can take the view that the obligation to negotiate has not been complied with where a telecommunications operator which does not have significant market power has offered another operator interconnection under conditions which the authority regards as wholly unilateral and likely to hinder the emergence of a competitive market at the retail level, where they have hindered in practice the second operator from offering its customers the opportunity to transmit multimedia messages to end-users subscribed to the telecommunications operator’s network and, if so,
1 (c) the national regulatory authority can in its decision require the aforementioned telecommunications operator, which therefore does not have significant market power, to negotiate in good faith on the interconnection of text and multi-media communications services between operators’ systems in such a way that, in commercial negotiations, regard must be had to the objectives which interconnection seeks to achieve and negotiations must be based on the premise that the operation of SMS and MMS services between operators’ systems can be made subject to reasonable conditions so that users have the possibility of using telecommunications operators’ communications services?
2. Do the nature of iMEZ Ab’s network or whether iMEZ Ab should be regarded as a public electronic communications networks operator have any bearing on the assessment of the questions set out above?
V – The procedure before the Court of Justice
33. This reference for a preliminary ruling was lodged at the Registry of the Court of Justice on 8 May 2008.
34. Observations have been lodged, within the time-limit prescribed by Article 23 of the EC Statute of the Court of Justice, by iMEZ Ab, the Governments of Finland, Italy, Lithuania, Netherlands, Poland and Romania, and by the Commission.
35. At the hearing, held on 2 April 2009, the representatives of TeliaSonera, iMEZ Ab, the Republic of Finland and the Commission presented oral argument, and the case was expedited for the preparation of this opinion.
VI – Analysis of the questions referred for a preliminary ruling
36. The order of the Korkein hallinto-oikeus brings up two points which, although connected, need to be dealt with separately from a legal point of view.
37. Questions 1(a) and 2 seek to ascertain the kind of undertakings intended by Article 4(1) of the Access Directive to negotiate interconnection, while Questions 1(b) and 1(c) tend towards an examination of the powers of the national authorities.
38. In the interests of organisation, it is necessary to re-arrange and group the many questions raised, and to undertake, first, an analysis of Questions 1(a) and 2, since the answer to these affects the scope of the powers of the regulatory body in the case under consideration.
A – Preliminary observations on free competition and the legislation governing the sector
39. Telecommunications, traditionally under governmental protection, have experienced and economic upturn owing to their liberalisation, for the attainment of which the rules of the Treaty of Rome, in themselves, have been shown to be inadequate.
40. In my view, in a State monopoly, there is no leadership, there are only administrators, there are no customers, only people subject to administration, in short, there is no market, there is only public management, so that, in those circumstances, Articles 81 EC and 82 EC are unable to provide potential operators with formulae for arbitrating their entry into a market previously subject to the fickleness of the former system.
41. For this reason, the catharsis of the sector required certain external impulses and, to that end, the Community legislature, which is given to specific intervention, helped to introduce some minimum requirements making it possible, first, to overcome the bottleneck regarding access and, secondly, to promote the consumer’s freedom of choice.
42. Thus, partial regulation is introduced, in which competition emerges as the most effective tool, which is justified in order to correct defects in the market, such as the fact that to replicate the infrastructures is not profitable or the fact that the benefits which they afford society as a whole cannot be recouped by the person who constructs or maintains them, without the law of supply and demand, on this occasion, compensating an accurate apportionment of resources. (25)
43. The fight against those structural defects has been organised on two complementary flanks: on the one hand, the protection of competition, which minimises interference, seeks to establish a neutral environment, in which nobody meddles in business tactics, and protects the competitive process of the markets; and, on the other hand, the ad hoc regulation of communications, which occasions the presence of the authorities, encourages the incorporation of more industries, protecting the weak, and pursues, in short, the immediate attainment of the objectives of the directives.
44. The two sets of rules differ in the way in which they fulfil their aims.
45. The ‘new regulation’ relates ex ante to predetermined markets, but asymmetrically, since the intensity of the catalogue of obligations it creates depends on the power of the undertaking and, precisely because it affects freedom to trade, is devised on a provisional basis.
46. These premises are reversed in competition law, since it generally acts a posteriori on markets which have yet to be established, (26) does not distinguish between the operators who infringe its rules and is designed to be permanent.
47. Clearly, when the initial difficulties are overcome and competition becomes the backbone of electronic communications, that ‘shock treatment’ of the sector loses effect, which explains the obvious reduction in the desire to regulate, (27) as predicted by current amendments, since, subject to any draft legislation in this field, (28) it is possible to discern a tendency to temper the legislative tradition of intervention. (29)
B – Public networks operators as the persons on whom the duty to negotiate interconnection is imposed
48. The Court of Justice cannot determine whether iMEZ Ab is an operator of public communications networks, an aspect which falls within the exclusive jurisdiction of the national court. However, it must render that court’s task easier, by providing it with guidelines for making that assessment.
49. With this mind, it is necessary to examine the personal scope of Article 4(1) of the Access Directive in order to determine whether the task of negotiating interconnection concerns any undertaking authorised in the field of communications or only operators; as the Korkein hallinto-oikeus rightly points out, this involves explaining the nature of networks. Once that unknown quantity has been clarified, what is important is the problem of discrimination according to significant market power.
1. Positive definition
50. The wording of Article 4(1) of Directive 2002/19 provides for the negotiation of interconnection with each other by ‘operators of public communications networks’ and points to a synalagmatic link which involves advantages for one and, often, disadvantages for the other. (30)
51. Article 2(c) of Directive 2002/19 gives a clear description of the category of operator, by limiting it to an undertaking ‘providing or authorised to provide a public communications network or an associated facility’; thus acknowledging that undertakings providing other services co-exist with it.
52. Although, as the Court of Justice has explained, the meaning of words is not always an adequate interpretive axiom, on this occasion the different language versions give a unanimous solution, since they only make subject to that obligation those operators who manage the aforementioned public communications networks.
53. It is therefore necessary to clarify whether operators of associated facilities (31) are exempt from the duty to negotiate under Article 4 of that directive. (32)
54. Even if it is possible to discern a duality between the operators of ‘public communications networks’ and those of ‘associated facilities’, negotiation concerns them all, because the directive contains a single definition of ‘operator’ for them both. Moreover it must not be forgotten that those ‘associated’ operators, owing to their organisation, qualities or, in short the technology which they provide, make an invaluable contribution to the functioning of the network.
2. Negative definition
55. The other bodies in the industry remain on the sideline; they escape by means of a systematic interpretation of the Access Directive, Article 2(b) of which defines interconnection as ‘the physical and logical linking of public communications networks used by the same or a different undertaking …’. If that interconnection, as the definition states, only affects those networks, then, logically, it is the exclusive responsibility of the operators who own them or who provide them with associated facilities.
56. Therefore, as the providers of communications services do not belong to the family of ‘communications networks operators’, they are exempt from the requirement to attempt to reach interconnection agreements.
57. This idea is reinforced by the historical interpretation, which reveals the contrast between Article 4(1) of Directive 97/33, which extended the duty to negotiate interconnection to ‘[o]rganisations authorised to provide public telecommunications networks and/or publicly available telecommunications services’ (33) and its counterpart in Directive 2002/19, which limits it to ‘[o]perators of public communications networks’.
58. The observations of the Netherlands in these preliminary ruling proceedings, when comparing the 1997 Directive with the 2002 Directive, support the contrary argument, inasmuch as the Access Directive expressly refers to its predecessor. (34)
59. However, as the Netherlands Government acknowledges, the Access Directive repealed Directive 97/33 and, furthermore, although recital 8 in the preamble to the former states that ‘[t]he existing rights and obligations to negotiate interconnection should … be maintained’, that assertion must be linked to its stated objective, that ‘[o]ther network operators … deliver traffic to those customers, and so need to be able to interconnect directly or indirectly to each other’, emphasising that interconnection concerns network operators.
60. The withdrawal of the mention of ‘[o]rganisations authorised to provide public telecommunications networks’ in Directive 2002/19 confirms a more favourable prognosis for competition than that which prevailed when Directive 97/33 was adopted, since, unlike the previous situation, the new scheme expresses greater confidence in the ability of the market to overcome any irregularities detected, which is also a logical consequence of the reduction in administrative intervention.
61. Nor do I agree that Article 7 of Directive 2002/19 establishes the inviolability of all the interconnection obligations contained in Directive 97/33, since that article is entitled ‘Review of former obligations for access and interconnection’, which counteracts any attempt to perpetuate the obligations, particularly as those already in force continue only ‘until such time as these obligations have been reviewed ‘and a determination made in accordance with paragraph 3’.
3. Rejection of a broad interpretation
62. The Netherlands states that, although the Access Directive refers, in Article 4, only to ‘operators of public communications networks’, there is nothing to preclude extending the interconnection obligation to ‘providers of electronic communications services’, in accordance with Article 6 of Directive 2002/20/EC (‘the Authorisation Directive’) and Part A, paragraph 3 of the Annex thereto, provisions which give the Member States considerable discretion in telecommunications planning.
63. It is necessary to consider whether the Access Directive authorises the Member States to add to the obligations it imposes, but caution dictates that that opportunity must not alter the strict terms of the assistance for which the Korkein hallinto-oikeus (35) seeks from the Court of Justice, which are limited to the requirement to negotiate interconnection under Directive 2002/19, legislation which, in my view, it is difficult to extend without twisting its technical legal meaning or distorting competition.
64. First, the conditions attached to the general authorisation for electronic communications networks or services, laid down in Directive 2002/20, in particular the obligations which, under Article 5(1) and (2) and Articles 6 and 8 of Directive 2002/19, they may require their suppliers to fulfil ‘shall be legally separate from the rights and obligations under the general authorisation’ (Article 6(2) of Directive 2002/20).
65. Secondly, among the requirements which Part A, paragraph 3 of the Annex to Directive 2002/20 combines with that general authorisation are the interoperability of the services and the interconnection of the networks, expressions which show that the Community legislature uses language precisely, since services interoperate whereas networks interconnect, (36) and this, furthermore, must occur ‘in conformity with Directive 2002/19/EC’, (37) to which Article 4(2)(a) of the Authorisation Directive also refers.
66. Thirdly, to suggest that the national legislature is not bound by Articles 5 to 8 of Directive 2002/19, (38) on the grounds that they apply only to regulatory authorities, reflects a biased view of that directive, since, as well as disregarding the fact that the granting of specific powers to the national regulators presupposes State intervention, it ignores the essential fact that negotiations for the conclusion of possible interconnection agreements are envisaged as a generic measure in Article 4 of the Directive, not in those other provisions. (39)
67. And, fourthly, for these purposes, the Access Directive does not act as a set of minimum rules, but, as stated in recital 14 in the preamble, ‘[t]his range of possible obligations … should be established as a set of maximum obligations that can be applied to undertakings, in order to avoid over-regulation. …’.
68. Although Directive 2002/19 aspires to harmonisation and rejects, in an open, competitive market, obstacles to negotiation, in particular on cross-border agreements, (40) the Member States cannot at whim expand the group of bodies called upon to agree interconnection, since, to do so would increase the risk of undermining freedom of competition.
69. Paragraph 39 of the Vienstintämarkkinalaki exceeds the threshold inferred from Directive 2001/19 as regards the obligations of undertakings, by extending the obligation to negotiate interconnection to service providers, a differentiating factor expressly acknowledged by the representative of the Government of Finland at the hearing. (41)
70. It is not appropriate to restrict a market economy without cause, since its limitation is justified only in the interests of the aims pursued by Community law and in accordance with the principles of appropriateness and proportionality. (42)
71. Furthermore, recital 19 in the preamble to Directive 2002/19 recognises that, ‘[m]andating access to network infrastructure can be justified as a means of increasing competition, but national regulatory authorities need to balance the rights of an infrastructure owner to exploit its infrastructure for its own benefit, and the rights of other service providers to access facilities that are essential for the provision of competing services’.
72. In that regard, the principle of minimum intervention, which reflects the principle of proportionality, a concept which has been clearly defined in the case-law of the Court of Justice (43) and is founded on appropriateness, necessity and the cost-benefit relationship advises against squandering the obligation to negotiate, deemed to be a measure ex lege, (44) with bodies other than public networks operators.
73. The Access Directive does not seek the generalised negotiation of interconnection between all undertakings, (45) but only between public networks undertakings, which, furthermore, is a logical premise when it comes to creating the conditions for unfettered competition, for which it is necessary to understand the basic idea, contained in Article 4 of Directive 2002/19, that those networks are accessory to the telecommunications services. (46)
74. By ensuring interconnection of the networks or of their associated facilities, the Community system is preparing the ground for ensuring, later, the freedom to provide services, (47) the regulation of which is better suited to the discipline of competition than to that of the legislation governing the sector.
C – Significant market power and negotiation on interconnection
75. The Access Directive deals with the obligation to negotiate interconnection in two dimensions: the first, as a general obligation and the second as a specific measure. It also takes into account, when it is imposed by an act of the regulatory authority, whether the undertaking under the obligation has a particularly strong market position.
1. A general legislative provision
76. Article 4 outlines the ‘Rights and obligations for undertakings’ and involves in negotiation on interconnection all public networks operators, irrespective of their commercial weight.
77. There is therefore a potential power conferred by the direct application of Community law, which does not require any administrative intervention.
2. Particular administrative measures
78. Article 5 defines the ‘[p]owers and responsibilities of the national regulatory authorities with regard to access and interconnection’, establishing, for certain cases, the obligation to interconnect networks.
79. The scope of those rules differs, since, while Article 4, which is directly applicable, allocates attempts to reach agreements to ‘operators of public networks’, Article 5 urges the national regulators to ensure the proper functioning of the market, by means of specific, not abstract, decisions.
3. Significant market power
80. Article 5 of the directive, as may be inferred a sensu contrario from Article 5(1), is not limited to the strongest companies. As I have already pointed out, that restriction arises in Article 8 of the directive, which, together with Article 12(1)(b), grants the national authorities a series of initiatives for facilitating access to specific network resources.
81. The influence of the undertaking therefore defines the scope of Article 5, without distinguishing between those to whom it is addressed according to their relative size, and of Articles 8 and 12, which are designed for undertakings of that kind.
82. Market power (48) therefore provides for a system of asymmetric rules for interconnection, the proper understanding of which depends on its definition and its recognition by the competent authority, (49) together with the dynamic nature of the concept and its compartmentalisation according to market, which may give rise to a situation in which an operator can enjoy a dominant position depending on the sectors of its business.
83. Under Directive 97/33 an undertaking having a market share of more than 25% was presumed to have significant market power although, depending on its ability to influence market conditions, its turnover, its control of the means of access to end-users, its financial resources and its experience, the undertaking might merit the application of this description without that percentage’s being reached, or might not merit the description in spite of exceeding that percentage (Article 4(3)).
84. The Access Directive leaves it to the Framework Directive to attach that description to companies which, either individually or jointly with others, enjoy a position equivalent to dominance, that is to say a position of economic strength affording it the power to behave independently of competitors, customers and ultimately consumers (the first subparagraph of Article 14(2) of the Framework Directive).
D – The systematic interpretation of the Access Directive and its relationship to the national law
a) Article 4 of Directive 2002/19
85. For providers of public networks which, like TeliaSonera, have been accorded that market power by administrative act, the interconnection obligation is fulfilled by merely negotiating interconnection, without the need to reach an agreement.
86. However, Directive 97/33 required those who had that power to meet all reasonable requests for connection (Article 4(2)), an obligation repeated in the Access Directive (Articles 4(1) and 5(1) and (4)), which also introduces, as I have pointed out, specific duties for dominant organisations (Article 8 in conjunction with Article 12).
87. I am aware that the first recital in the preamble to Directive 2002/19 supports a broad interpretation of those duties, endorsing them in respect of the networks and of ‘access and interconnection arrangements between service suppliers’. In that regard, recitals 5 and 6 mention that ‘undertakings which receive requests for access or interconnection should in principle conclude such agreements …’ and refer to the ‘negotiating power between undertakings’, without, therefore, confining themselves to ‘public networks operators’.
88. However, calm reflection reveals the inadequacy of that first impression, which sits badly with the legal axioms of the directive, which are based on free trade.
89. Moreover, it is clear from the case-law that the preamble to a Community act has no binding legal force and cannot be relied on as a ground for derogating from the actual provisions of the act in question or for interpreting them in a manner clearly contrary to their wording. (50)
90. Although in practice many communications undertakings ‘manage networks’ and at the same time ‘provide services’, that dual nature of their business is clear in the first recital in the preamble to the Access Directive, when it allows agreements, but between equals, that is to say, separating ‘network operators’ and ‘service suppliers’.
91. Even if Telia Sonera transmit were to messages, enjoying the same status as iMEZ Ab (as service undertakings), it would only be possible to impose on it the obligation under Article 4 of Directive 2002/19 if iMEZ Ab had a public communications network, since, otherwise, it would merely be a user (51) of Telia Sonera’s network, and have no right to request interconnection.
92. Therefore, if TeliaSonera acts as an operator of public telecommunications networks, to require it to negotiate in good faith interconnection with iMEZ Ab requires the latter undertaking to have the same status.
93. Paragraph 39 of the Vienstintämarkkinalaki does not follow this path, but makes negotiation compulsory for all telecommunications entities. The draft of that law, drawn up by the Government for the Parliament, explains in the detailed statement of reasons relating to Paragraph 39(1), that the obligation to negotiate lies with all undertakings and that it corresponds to the obligation laid down in Article 12(1)(b) of the Access Directive.
94. This reveals the confusion in the case under consideration, to which iMEZ Ab refers in its written observations, when it mentions the incorrect reference in Paragraph 39(1) of the national law to Article 12 of the Access Directive, which, as I have pointed out, is limited to dominant companies, instead of referring to Article 4 thereof, which applies to public networks operators irrespective of their power.
95. It is for the Korkein hallinto-oikeus to clarify whether iMEZ Ab’s ‘networks’ (52) of fall within the definition set out in the Framework Directive for ‘public communications network’ , for which purpose it is necessary to evaluate their functionality and, especially their aptitude for supplying communications services to the public (53) or, as associated facilities, for enabling or supporting their development.
96. Another reliable criterion is provided by the definition of network provider (Article 2(m) of the Framework Directive), which includes, as well as the person who establishes the network or makes it available to another, those who operate and control it.
97. The Finnish court must also determine the nature of the networks of iMEZ Ab, arriving, by a process of exclusion, at the definition of ‘electronic communications service’, (54) in order to ascertain whether its infrastructure supports only the operation of those applications or whether it has a capacity similar to that of the networks.
98. Finally, it must consider whether the Short Message Service Centre (SMSC) and the Multimedia Messaging Service Centre (MMSC) are regarded as public telecommunications networks (55) or elements which may be integrated into their framework, by means of an interconnection interface (56) in order to accord it the status of operator. (57)
99. iMEZ maintains that the Swedish Regulatory Authority (Kommunikations-myndigheten PTS) has recognised it as a network undertaking, giving it its own Mobile Network Code. (58)
100. However, this event, which took place in Sweden, should not have transnational repercussions, and have a decisive effect on the Finnish telecommunications market, (59) because the granting of the Mobile Network Code is consistent with technical parameters which are not governed by Community law, (60) and which much be assessed by each national authority in accordance with, among other criteria, (61) the recommendations of the International Telecommunications Union. (62)
101. Therefore, in order to answer questions 2 and 1(a), an interpretation in accordance with Article 4 of the Access Directive must make the obligation to negotiate interconnection conditional on the nature of iMEZ Ab’s network, since that article only imposes the obligation on undertakings classified as ‘operators of public electronic communications network’, irrespective of whether they have significant market power.
b) Article 5 of Directive 2002/19
102. It remains to be decided whether a national regulatory authority can take the view that the obligation to negotiate has been infringed, where an undertaking without significant market power has offered another interconnection on terms which are unilateral and may hinder the emergence of the retail market, by preventing its customers from benefiting from its services (No 1(b) of the questions referred for a preliminary ruling).
103. An affirmative reply would preserve the effectiveness of Article 4 of Directive 2002/19, following the analysis of whether the operator acted in good faith, (63) in order to ascertain whether he really intended to reach an agreement, deducing this from clues such as the reasonableness and seriousness of his proposals.
104. However, if the national regulator finds that that obligation has not been fulfilled, it cannot, relying exclusively on Article 4, add supplementary terms to remedy the situation. (