Recommendation 1998/322 - 98/322/EC: Commission Recommendation of 8 April 1998 on interconnection in a liberalised telecommunications market (Part 2 - Accounting separation and cost accounting) - Main contents

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98/322/EC: Commission Recommendation of 8 April 1998 on interconnection in a liberalised telecommunications market (Part 2 - Accounting separation and cost accounting) (Text with EEA relevance)

Official Journal L 141 , 13/05/1998 P. 0006 - 0035

COMMISSION RECOMMENDATION of 8 April 1998 on interconnection in a liberalised telecommunications market (Part 2 - Accounting separation and cost accounting) (Text with EEA relevance) (98/322/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 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 laid down by the Commission so as to facilitate the development of a genuine European home market; whereas, in particular, Article 7(5) of Directive 97/33/EC requires the Commission to draw up recommendations on cost accounting systems and accounting separation;

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`) should follow the principles of transparency and cost orientation for interconnection charges;

Whereas Article 8(2) of Directive 97/33/EC requires notified operators to keep separate accounts for, on the one hand, their activities related to interconnection - covering both interconnection services provided internally and interconnection services provided to others - and, on the other hand, other activities, so as to identify all elements of cost and revenue, with the basis of their calculation and the detailed attribution methods used, related to their interconnection activity, including an itemised breakdown of fixed asset and structural costs;

Whereas the Commission in its recommendation 98/195/EC of 8 January 1998 (2) on interconnection in a liberalised telecommunications market (Part 1 - Interconnection pricing) considers that the most appropriate approach to interconnection pricing is one based on forward-looking long-run average incremental costs, since this is the most compatible with a competitive market; whereas this approach does not preclude the use of justified 'mark-ups` as a means of recovering such forward-looking joint and common costs of an efficient operator as would arise under competitive conditions;

Whereas an approach to interconnection pricing based on forward-looking long-run average incremental costs entails an accounting system based on current costs rather than historic costs; whereas the Commission has recommended Member States (in the recommendation of 8 January 1998) to set deadlines for the implementation by their notified operators of new accounting systems based on activity based costing; whereas although the bottom-up economic/engineering models are becoming highly sophisticated, they are as yet imperfect, and thus reconciliation of top-down and bottom-up approaches is advised for the foreseeable future;

Whereas Article 7(5) of Directive 97/33/EC requires NRAs to ensure that a description of the cost-accounting system, showing the main categories under which costs are grouped and the rules used for the allocation of costs to interconnection, is made available on request to interested parties; whereas allocation methods need to be displayed at a level of detail that makes clear the relationship between costs and charges of networks components and services (that is to say, usage factors); whereas the...

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