Monday, 12 January 2009

EU Procurement Directive: Telecommunications sector excluded

Contracts concerning public telecommunications networks and services are excluded from the scope of the European Community (European Union) Procurement Directive 2004/18/EC:

Article 13
Specific exclusions in the field of telecommunications

This Directive shall not apply to public contracts for the principal purpose of permitting the contracting authorities to provide or exploit public telecommunications networks or to provide to the public one or more telecommunications services.


Telecommunications sector

Liberalisation of the telecommunications sector gradually led to more effective competition. Recital 21 of the Procurement Directive tries to explain some of the reasons:

(21) In view of the situation of effective market competition in the telecommunications sector following the implementation of the Community rules aimed at liberalising that sector, public contracts in that area should be excluded from the scope of this Directive insofar as they are intended primarily to allow the contracting authorities to exercise certain activities in the telecommunications sector. Those activities are defined in accordance with the definitions used in Articles 1, 2 and 8 of Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sector, such that this Directive does not apply to contracts which have been excluded from the scope of Directive 93/38/EEC pursuant to Article 8 thereof.



The definitions relating to telecommunications are found in Article 1(15) of the Procurement Directive:

15. For the purposes of Article 13, Article 57(a) and Article 68(b), the following phrases shall have the following meanings:

(a) ‘public telecommunications network’ means the public telecommunications infrastructure which enables signals to be conveyed between defined network termination points by wire, by microwave, by optical means or by other electromagnetic means;

(b) a ‘network termination point’ means all physical connections and their technical access specifications which form part of the public telecommunications network and are necessary for access to, and efficient communication through, that public network;

(c) ‘public telecommunications services’ means telecommunications services the provision of which the Member States have specifically assigned, in particular, to one or more telecommunications entities;

(d) ‘telecommunications services’ means services the provision of which consists wholly or partly in the transmission and routing of signals on the public telecommunications network by means of telecommunications processes, with the exception of broadcasting and television.


Utilities Directive: Telecommunications competition

Article 13 of the Procurement Directive excluding public telecommunications sector from the scope prevented these contracts from falling within the scope of the general procurement rules, when they were excluded from the new Utilities Directive 2004/17/EC.

The old Utilities Directive 98/38/EC included contracting entities operating in the telecommunications sector, but market liberalisation had already started to erode their privileged position. The new Utilities Directive was built on the premise that effective competition existed in the telecommunications sector, both de jure and de facto, dropping telecommunications from the name and from the scope of the new Utilities Directive 2004/17/EC, as explained in Recital 5 of this Directive:

(5) The scope of Directive 98/38/EEC covers, at present, certain contracts awarded by contracting entities operating in the telecommunications sector. A legislative framework, as mentioned in the Fourth report on the implementation of the telecommunications regulations of 25 November 1998, has been adopted to open this sector. One of its consequences has been the introduction of effective competition, both de jure and de facto, in this sector. For information purposes, and in the light of this situation, the Commission has published a list of telecommunications services which may already be excluded from the scope of that Directive by virtue of Article 8 thereof. Further progress has been confirmed in the Seventh report on the implementation of telecommunications regulations of 26 November 2001. It is therefore no longer necessary to regulate purchases by entities operating in this sector.


Continued monitoring of telecommunications

Recital 7 of the Utilities Directive 2004/17/EC added the proviso that the Commission will continue monitoring internal market developments in the telecommunications sector:

(7) Nevertheless, it is appropriate to continue to monitor developments in the telecommunications sector and to reconsider the situation if it is established that there is no longer effective competition in that sector.


Purchase of telecommunications services

Following the introduction of more effective competition in the telecommunications sector, governments and other public bodies can profit from competitive buying of telecommunications services, as explained by Recital 8 of the new Utilities Directive:

(8) Directive 93/38/EEC excludes from its scope purchases of voice telephony, telex, mobile telephone, paging and satellite services. Those exclusions were introduced to take account of the fact that the services in question could frequently be provided only by one service provider in a given geographical area because of the absence of effective competition and the existence of special or exclusive rights. The introduction of effective competition in the telecommunications sector removes the justification for these exclusions. It is therefore necessary to include the procurement of such telecommunications services in the scope of this Directive.


Scope of telecommunications services

Cf. Article 31 of the Utilities Directive and Category 5 Telecommunications services in Annex XVII A (replaced by Annex VI in OJEU 15.3.2008 L 74/373) with CPV references from 64200000-8 to 64228200-2, 72318000-7, and from 72700000-7 to 72720000-3.

Ralf Grahn