The new Telecommunications Market Act (1997/396), hereinafter the "Act", entered into force on June 1, 1997 and it continues the effort to increase competition and effectiveness in the telecommunications market. In this article the main points of the new Act are highlighted.

Purpose of Act

The Act imposes a challenging target for the telecommunications market. The purpose of the Act is that the availability of telecommunications will be:

1) sufficient to meet the reasonable needs of telecommunication users;

2) competitive;

3) technically advanced;

4) of good quality;

5) functionally reliable and secure; and

6) reasonably priced.

The purpose of the Act is attained by promoting competition between telecommunications networks and telecommunications services. The Act aims also at ensuring the public availability of telecommunications networks and services.

The Act repealed its predecessor, the Telecommunications Act of 20 February 1987 (1987/183). The main principles of the earlier legislation remain unchanged in the new Act. The concepts of the new Act, however, have been revised to correspond to technical development, as well as to legislation of the European Communities.

Scope of Application

The scope of the current Act is generally equivalent to the scope of the Telecommunications Act of 1987. The Act applies mainly to all networks of electrical communications. As a general rule, however, the Act does not apply to:

1) internal telecommunications;

2) the use of radio equipment for broadcasting or private telecommunications;

3) the resale of telecommunications networks and telecommunications services;

4) telecommunications primarily for purposes other than the provision of voice telephony to an extent separately decided by the Ministry of Transport and Communications (hereafter "Ministry"); nor to

5) telecommunications of minor importance in accordance with separate decisions of the Ministry.

Licenses and Notifications

The Act reduces the need for telecommunication licences. Only provision of mobile networks remains subject to license requirements.

Even if no particular license is required, a telecommunications operator has to submit a notification of telecommunications prior to commencing public telecommunications. An operator has the right to initiate telecommunications only after the notification has been submitted. The notification must be submitted to the Ministry and it must contain the information prescribed by the Ministry. When the Ministry receives the notification, it issues a receipt of notification.

A notification is not required for telecommunications used solely for the purpose of broadcasting or for distribution of programmes to the public. Such activity is either broadcasting, governed by the Act on Radio Equipment (1927/8), or cable transmission, governed by the Act on Cable Transmission (1987/307).

If the notification procedure for a particular type of telecommunication business becomes unnecessary, the Ministry shall eliminate the notification submission requirement.

Regarding a telecommunication business which is subject to license, an application for license has to be submitted to the Ministry. The application has to contain the information which is separately prescribed by the Ministry.

Before granting any license, the Ministry has to issue a notice to the public of the opportunity to apply for licenses. The license shall be granted if the applicant fulfils the requirements set by the law.

If the scarcity of radio frequencies limits the number of licenses available, licenses have to be granted to those applicants whose operations best promote the attainment of the purposes of the Act.

A license can be granted for a maximum period of 20 years.

Assignment Of Telecommunications Network

The Act enlarges the obligation of assignment of telecommunications networks for owners and holders of the telecommunications networks. This far, as mandated by both the new Act and the earlier legislation, a telecommunications operator must lease to other telecommunications operators upon demand unused cable channel segments which were constructed for operation of public telecommunications. The obligation to lease also applies to available antenna places on radio masts belonging to a public telecommunications network, in the event that construction of parallel cable channels or radio masts is not expedient. No obligation to lease cable channel and antenna space exists, however, if the space is needed for present, and reasonable future, use by the customers of the telecommunications operator.

Under the new Act, an owner or holder of a telecommunications network who allows the use of its telecommunications network for the provision of telecommunications services is obliged to assign any unoccupied segment of the telecommunications network for use by another telecommunications service operator. The obligation of assignment applies to use of telecommunications network for any kind of telecommunications operations, despite the original and main use of the telecommunications network. If a network is constructed for a specific purpose and used only for that purpose, an owner or holder of a telecommunications network is not required to lease available space for any other purpose. If the owner or holder of a cable transmission network, for example, does not provide any other telecommunications services on the network, and has not allowed any other operator to use the network for provision of such services, no other party is entitled to lease the cable transmission network for its use.

For an owner of real estate where a network is a part of that real estate, there is no obligation of assignment.

An available segment of a telecommunications network is considered part of the network which the owner or holder of the telecommunications network does not use itself and which is not in use by another telecommunications operator. Moreover, a part of the network necessary for the reasonable future needs of the owner or the holder of the telecommunications network is not considered as an available segment.

In the assignment of a telecommunications network, non-discriminatory terms are to be applied to all telecommunications service operators. When necessary, the Ministry issues orders relating to the factors to be taken into consideration in evaluating, what is and what is not, non-discriminatory.

Interconnection Of Telecommunications Networks And Services

According to the Act, telecommunication networks have to be generally interconnected. The interconnection has to be effected at the point indicated by the telecommunications operator requesting interconnection, unless otherwise provided by the Ministry. The Ministry can allow an exception if, for example, the interconnection at the point required would be technically or economically impossible, or if the data security of the telecommunications network would be jeopardized as a consequence of the interconnection.

Obligation Of Telecommunication Operator

The Act imposes on the telecommunications operator a general service obligation, the specific content of which is determined by the license and notification of the telecommunications operator.

In addition to the general service obligation, the telecommunications operator has to ensure that possibilities for telecommunications are available for users. It must also ensure it operates even in exceptional circumstances. The telecommunications operator is under an obligation of interconnection and assignment of telecommunications networks. It is also responsible for the differentiation of operations and the adequate collection of fees.

Telecommunications operator having significant market power

In accordance with the legislation of the European Communities, the Act adopts the concept of significant market power. Significant market power signifies that a telecommunications operator can affect de facto the provision conditions of telecommunications networks or telecommunications services in the market in a significant manner. Significant market power of a telecommunications operator is evaluated by the extent of its business, its market share in the geographical area in question, its opportunity to control the access of users to telecommunications networks, available financial resources, and its experience in the provision of such services. The concept of significant market power is not, however, the same as the concept of the dominant market position in the Act on Restrictions on Competition (1992/480). Therefore, the market power of the operator may be significant though it is not in a dominant market position.

The Ministry decides which operators have significant market power as defined in the Act. As a general rule, a telecommunications operator has a significant market power if its market share exceeds 25 per cent in a specific market segment in its area of operations. The Ministry, however, can decide, that a telecommunications operator with market share smaller than 25 per cent has significant market power, or that it does not have significant market power even if its market share exceeds 25 per cent.

A telecommunications operator that is determined to have significant market power can be subject to larger obligations than other operators if the Ministry so decides.

Right And Duties Of Users

The Act grants a user the right to obtain a subscription to a public telecommunications network at a chosen point on the network, with some exceptions, as well as the right to lease from telecommunications operators subscriber lines and permanent lines between the points of a telecommunications network which the user has indicated and which are within the transmission capacity of the public telecommunications network. Anyone also has the right to use public telecommunications services offered through public telecommunications networks and to connect to network termination points telecommunications terminal equipment which are approved by the Act and in working order. The Act also grants to anyone a right to receive an itemized invoice for its telecommunications fees, as well as a right to offer the services it has acquired from a telecommunications operator to other users.

Obligations of a user contain, naturally, an obligation to pay the fees collected by a telecommunications operator for the subscription, the use of the telecommunications network and telecommunications services. A user has to ensure that only telecommunications terminal equipment, which is in accordance with the Act and in working order, is connected to a subscription in its possession. A user has to comply with the contract concluded with a telecommunications operator upon delivery of a telecommunications network or a telecommunications service. Should a user not comply with its duties and not rectify its actions within a reasonable time following an exhortation, a telecommunications operator has the right to terminate the subscription or to interrupt the provision of telecommunications services.

Differentiation of Operations

The Act contains provisions regarding differentiation of business operations consisting of the provision of telecommunications network services and telecommunications services. Differentiation signifies that an income statement has to be drawn up for each financial period of the operations to be differentiated and, in case of telecommunications network operations, also a balance sheet. The purpose of differentiation in accounting is to increase the transparency of the public telecommunications operations, so as to impede the cross-subvention between various business operations. Differentiation is particularly important when the telecommunications operator has significant market power.

Where a telecommunications network operator with significant market power operates in its telecommunications network as a telecommunications service operator, the rent from subscriber lines earned by its own use has to be entered in the income statement in accordance with the same principles as it uses to collect payments from other telecommunications service operators to whom is has assigned its telecommunications network.

Telecommunications Fees

Each telecommunications operator may determine the telecommunications fees which it charges from users. Only in exceptional circumstances may the Ministry issue orders on the general principles of telecommunications fees, the calculation of costs and the publication and itemization of fees. This is the case when the attainment of the objectives of the Act is endangered due to the fee policy of a telecommunications operator which has a significant market power, or due to the regular market increase, or when the legislation of European Communities requires the regulation of certain telecommunications fees.

By Laura Lehto at Heikki Haapaniemi, Attorneys-at-law Ltd

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.