Finland: Finland’s Broadcast And Telecommunications Law Convergence

This article first appeared in the International Telecoms Review 2003

The convergence legislation represents the first phase of Finland’s efforts to harmonise its laws with the EU 2002 Communications Regulatory Framework as well as maintain Finland’s widely recognised leadership in deregulation, communications market competition, and information society services and network innovation. The second phase of Finland’s harmonisation efforts achieved a significant milestone when Finland’s Ministry of Transport and Communications submitted to the Parliament, after long and extensive public consultations, a bill for a new communications market act mirroring very much the EU Communications Regulatory Framework. It is anticipated that the new act will enter into force during the summer of 2003, on or before July 25, 2003 deadline imposed in the EU Communications Regulatory Framework.

The convergence of Finland’s broadcast and telecommunications laws serves also other goals of the Finnish government: the furtherance of a lightly regulated and dynamically competitive communications market as well as the furtherance of the Finnish government’s program to place broadband access within the reach of all Finns.

Commencing with the adoption of the 1987 Telecommunications Act, Finland has made significant gains in liberalising its telecommunications markets. The high number of registered operators in Finland and the low cost of many Finnish telecommunications services attest to the success of Finland’s liberalisation efforts. The convergence of laws addressing digital broadcast, cable TV, and telecommunications networks should put these networks on equal footing with respect to each other and increase competition across these networks. The means of accessing subscribers should be opened up and placed on commercial terms as present local loop bottlenecks should find themselves under the new provisions of the law forced to compete with other networks and means of subscriber access. Communications service providers in Finland such as Internet service providers, TV and radio programming providers, and communications routing services providers should also be able to benefit from the anticipated increase in competition at the local loop level.

Broadband access in Finland has only recently started to grow, reaching at the end of 2002 approximately only 6% of the population. When one considers that over 95% of the Finnish population lives within 1km of a broadband fibre optic network, the low amount of actual broadband access is astonishing. For this reason, Finland’s government is in the process of championing nondiscriminatory broadband access for all Finns. The government’s professed goal is to guarantee for all communications users in Finland the possibility to obtain by 2005 broadband access. Increased competition and broadband services offerings from, for instance, cable TV operators should put the government’s goal within reach.

Finland’s telecommunications and broadcasting industries were previously subject to separate laws depending, in part on whether the offered services were for point-to-point telecommunications or for point-to-multipoint broadcast. As recently as 1999, Finland had separate laws each for telecommunications, cable TV broadcasting, and TV and radio broadcasting. The application of those laws to various communications markets was arguably not always consistent. Satellite broadcasting, for instance, was included in the scope of the laws governing cable TV for what appears to be a lack of a better place.

Network digitisation was arguably the prime motivator for the convergence of Finland’s laws. Analogue terrestrial broadcast networks, for instance, remain for the most part (significant market power pricing obligations may, however, apply) outside the scope of the Communications Market Act due to the technical bundling between broadcaster and programmer in such networks and to the criticised phase-out of such networks scheduled for the end of 2006.The use in Finland of satellite networks for broadcasting television and radio programming also falls outside the scope of Finland’s Communications Market Act due in part to the reportedly small interest of Finnish broadcasters in broadcasting via satellite.

Finns’ appetite for mobile telecommunications and the Internet has contributed to the competitiveness of the telecommunications market. Finland has a mobile telephone subscriber penetration of over 80% and there are over 18 Internet host machines in Finland for every 100 persons. To satiate the Finns’ appetite for cutting edge communications technology a large number of operators have entered Finland’s market, offering alternatives to traditional communications services and bringing down prices. There are presently over 175 licensed or notified operators in Finland.

Finland has presently three national GSM 900- 1800 operators (with GPRS functionality) and a significant number of local GSM 1800 operators. Finland issued in 1999 the world’s first 3rd generation mobile network licences. The four 3rd generation network licence holders already began the roll out of their networks in late 2001 and commercial services are expected to be offered over their networks during 2003. Finland also commenced with digital TV services in 2001 after programming rights for digital broadcast were granted to a number of entities. The network services licence for Finland’s digital TV broadcast networks was granted to Digita Oy. Cable TV networks in Finland are common place as over 45% of all Finnish households have cable TV. Over 90% of these networks are owned by Finnish telecommunications operators and it was not until recently that some of these networks were opened up for the provision of traditional telecommunications services. The overwhelming majority of the networks are single direction coaxial networks but some operators have commenced with converting their networks to be bidirectional. WiLAN networks are also being offered in Finland. The primary providers of WiLAN services have been municipalities and power companies but several telecommunications operators have also launched WiLAN services.

The Communications Market Act makes a distinction between the construction, maintenance, and offering of a communications network (known as network services) and the provision of routing and TV and radio programming on a communications network (known as a communications service). Network services save, as mentioned above, for terrestrial analogue broadcast and satellite broadcast are regulated under the Communications Market Act. Communications services are regulated under various laws depending on the nature of the service. For instance, the provision of subscriber access services to a communications network is covered by the Communications Market Act, regardless of whether the services accessed are cable TV, fixed line telephony, mobile telephony, data, or digital broadcast. The provision of commercial TV and radio programming and commercial cable TV programming is licensed under Finland’s TV and Radio Activities Act (744/1998) and subject to Finland’s Radio Liability Act (219/1971).The provision of non-commercial TV and radio programming is covered by Finland’s Public Broadcaster Act (1380/1993) and financed through Finland’s TV and Radio State Fund Act (745/1998).

The use of wireless radio equipment and frequencies in Finland is governed under Finland’s Radio Act (1015/2001).A wireless network, for instance, may require radio link licences or frequency licences if the frequencies used in such network are not common frequencies for which licences have been waived. Satellite uplink licences are required under the Radio Act for satellite broadcast operations even though such activity is outside the scope of the Communications Market Act. Downlinks for satellite networks remain outside the scope of the Radio Act and thus are not regulated save for municipal ordinances regarding the construction and placement of, for instance, satellite dish antennas.

The provisions of Finland’s Communications Market Act and TV and Radio Activities Act are for the most part broadly drafted, technology neutral, and focus on the functioning of a competitive and diverse market with respect to network services and communications services. The Public Broadcaster Act differs from these acts in that it seeks to secure the non-commercial position of Finland’s state-owned national broadcaster "Yleisradio Oy" or "YLE" and its provision as a public service of TV and radio programming to the public on equal terms. The public service duties of YLE aim to support democracy by offering diverse information, opinions, and discussions on societal issues as well as to support Finland’s national cultures. The financing of the non-commercial activities of YLE is secured through the TV and Radio Fund Act, which imposes fees on the public for the use of TVs and radios as well as an annual turnover-based charge on commercial TV programming licence holders. The details of applying these acts to the actual workings of Finland’s communications market are set forth in a significant number of government decrees, resolutions and regulations.

In Finland’s autonomous Åland province, which comprises the Swedish speaking archipelago lying off the southwest shores of Finland’s mainland, the power to regulate TV and radio programming and cable TV programming, including network provision for such, is exclusively reserved to the Åland government. These matters are regulated in Åland under the Åland TV and Radio Broadcasting Act (117/1993) and the Åland Public Cable TV Act (53/1993), both of which have been harmonised with the relevant EU directives. Telecommunications matters are reserved to Finland’s central government. However, under the Åland Province Autonomy Act (1144/1991), which enjoys constitutional law status in Finland, the Ministry of Transport and Communications may grant an operating licence to engage in telecommunications in Åland only with the consent of the Åland government.

The general supervision and promotion of, and policy formulation for, all communications activities, including network construction, communications routing, and TV and radio programming, in Finland is entrusted to the Ministry of Transport and Communications.

The Ministry is the licensing authority for the provision of public mobile network services and wireless digital TV and radio network services under the Communications Market Act. Further, the Ministry administers the notification process for notifiable network services and communications services under the Communications Market Act. The discretion exercised by the Ministry in passing decisions is bound to the criteria set forth in the Communications Market Act and adverse decisions can be appealed.

The licensing authority for TV and radio programming under the TV and Radio Activities Act is Finland’s Council of State. This authority extends also to the provision of terrestrial analogue TV and radio network services.

The monitoring of compliance with Finland’s communications laws is entrusted to the Finnish Communications Regulator (FICORA), which operates administratively under the Ministry of Transport and Communications. FICORA is responsible for monitoring, for instance, network activities, programming, subscriber access services, network access terms, and even postal services. FICORA is also responsible for administering, for instance, cable TV programming notifications, frequency licensing, numbering, Internet domain name allocation, network security, digital signature certification services and network and equipment standardisation. FICORA is empowered to issue technical regulations on these matters and resolve operator disputes over interconnection and local loop leasing terms. Fees are charged by FICORA for many of the services it provides. Some of these fees cover FICORA’s administrative costs and some, such as frequency licence fees, are fixed.

It is expected that FICORA will also administer the notification process for network services and communications services under the recently proposed amendments to Finland’s Communications Market Act. These amendments follow from Finland’s obligations to harmonise its laws with the EU Communications Regulatory Framework. It is also contemplated by the proposed amendments that FICORA will be given the mandate to issue and review market definitions and confer significant market power obligations on qualifying service providers.

The Ministry and FICORA are assisted by Finland’s competition authorities in matters concerning competition law issues and by Finland’s Data Protection Ombudsman with respect to data protection and privacy matters. These authorities must heed the principles and purpose of the Communications Market Act when handling communications matters within their area of competence. The implementation of programming requirements and advertising restrictions under the TV and Radio Activities Act is entrusted in part to Finland’s Consumer Protection Ombudsman.

The Communications Market Act presently governs the construction and operation of communications networks in Finland and the provision of communications services on such networks as well as telephone directory services, decoding systems, and subscriber TV services and signal standards. The Communications Market Act does not as a rule apply to communications for one’s own use, the use of radio equipment for other than public communications, the simple resale of communications networks and services, value added network (VAN) services, switched data services and communications of minor significance. All public communications networks and equipment must comply with the relevant technical standards.

Central to understanding the Communications Market Act is the legal distinction, as discussed above, between network services and communications services. This distinction is used, for instance, in defining network services providers’ excess capacity and infrastructure assignment and leasing obligations towards communications service providers. It also serves as the demarcation between a service provider’s various business activities when complying with the accounting separation requirements.

Under the Communications Market Act only the construction and operation of a public mobile network or of a wireless digital TV or radio network is subject to licensing. All other public network services (e.g. the provision of a wireline public network or a wireline public digital TV and radio network) subject to the scope of the act are subject to only a notification, which is currently effected by submitting a standard form to the Ministry of Transport and Communications. In 2002, no administrative fees were assessed for licence applications or notification submissions. There are no nationality restrictions under the Communications Market Act for notifying service providers or for holders of public mobile network licences or wireless digital TV or radio network licences.

Network service licences are granted by the Ministry through a public process. The licences are network specific and, provided the statutory requirements are met, are granted for maximum twenty-year periods. There are no licensing or application fees for a network services licence save for the annual frequency licence fees and fees for service provider prefixes and network codes.

Network service licences, frequency licences, prefixes, and network codes are not auctioned off in Finland.

In the event of radio frequency scarcity, the available frequencies are to be awarded to those applicants whose operations best promote the purposes of the Communications Market Act and the Radio Act. The actual assignment of radio frequencies and transmitter licences is the responsibility of FICORA.

The Ministry may, if frequency availability requires, impose on an applicant geographic restrictions and other such conditions that serve non-economic public interests like network security, operability, compatibility and data protection. Foreign service providers are not required to establish a Finnish corporation or branch office to obtain a network services licence.

The Ministry may also impose restrictions on network service licences for wireless digital TV and radio networks. These restrictions may concern transmission techniques, the offering of capacity to programming licence holders and other communications service providers, and technical aspects relating to the use and possession of the network.

The provision of public mobile network services actually requires two separate licences: a network services licence granted by Finland’s Ministry of Transport and Communications and a corresponding frequency licence granted by FICORA. The network services licence and the frequency licence are granted in practice in connection with each other and are dependent on each other, i.e. a frequency licence cannot be granted unless a network services licence has been granted. The provision of wireless digital TV and radio network services also requires two separate licences: a network services licence and individual transmitter licences granted by FICORA. Transmitter licences may not be granted unless the corresponding network services licence has been granted. Only the individual transmitter licences are subject to a fee, which is based on the power of the transmitter and accessed annually.

As discussed above, communications activities are separated into two categories of services: network services and communications services. Communications services are broadly defined under the Communications Market Act as the routing and transmission of communications traffic on a communications network as well as the transmission and offering of TV and radio programming on a communications network used primarily for such. Communications services are distinguishable from resale and VAN services in that resellers and VAN service providers do not possess the legal right nor the actual ability to connect and disconnect subscribers from the services they provide.

All public communications services covered by the Communications Market Act must, as a general rule, be notified to the Ministry before the commencement of operations save as provided below. The service provider notification is effected by a form provided by the Ministry. There are no fees for submitting a notification and the notification is valid for an indefinite period.

The service provider notification requirement does not apply to the services exempted from the scope of the Communications Market Act. Service providers offering these exempted services may at their discretion file a notification with the Ministry to obtain service provider status and some of the associated benefits (and obligations). A few Internet service providers in Finland have taken this opportunity and filed notifications to obtain access to networks as communications service providers.

Foreign service providers entitled to engage in telecommunications activities in an EU member state or in a country that complies with the WTO Basic Telecommunications Agreement are not subject to the Communications Market Act’s notification requirements when arranging transmission connections for terminating international telephone calls into a Finnish local network. These service providers are, however, required to provide FICORA with information on their connection arrangements into Finland.

Once the notification has been effected, the service provider is entitled to apply for the subscriber numbers, service prefixes and network codes required for its operations. These codes and numbers are granted by FICORA against payment of the prescribed fees determined on the basis of how many digits are in the number: the shorter the number, the higher the annual fee.

The convergence of Finland’s broadcast and telecommunications laws promises to remove many of the legal barriers for competition in the market for network services. A competitive network service market should in turn foster growth in the markets for communications services by lowering the barriers for market entry for many communications services. Indeed, it is hoped that the lowered market barriers will create a spawning ground for innovation and new services concepts. There are grounds for this hope as many of Finland’s internationally successful telecommunications equipment and services companies grew out of Finland’s telecommunications market liberalisation in the 1990s.