Finland: Telecoms - A Global Competition Review - Special Report

Article by Craig Thompson and Anna Salvolainen

This Article First Appeared In: Getting the Deal Through: Telecoms - A Global Competition Review Special Report

Finland is in the midst of changing governments as a result of the recent parliamentary elections held in early 2003. The eightyear old coalition government headed by the former prime minister, Paavo Lipponen has stepped down and a new coalition government headed by the current prime minister, Anneli Jäätteenmäki has just stepped into office. The change in governments will bring about small but perceptible changes in Finland’s communications sector policy.

The successful communications sector policy of the former prime minister’s coalition government promoted the development of the information society as well as network services and communications services by creating a favourable regulatory environment. In implementing the policy, the Ministry of Transport and Communications (liikenne- ja viestintäministeriö – the Ministry), which is responsible for sector policy and law proposal making, and the Finnish Communications Authority (viestintävirasto – FICORA), which is responsible for actual sector regulation, adopted a relatively passive and pragmatic regulatory role and intervened in the sector only when clearly required by EU rules or the conduct of sector participants threatened the development of market competition. Numerous changes to Finland’s communications laws were effected under the stewardship of Lipponen’s government, most notably the 2002 amendments that transformed Finland’s then Telecommunications Market Act of 1997 into the Communications Market Act, converging in the process the laws affecting broadcast and telecommunications infrastructure and the new 2003 Communications Market Act that will as of 25 July 2003 repeal the current Communications Market Act and harmonise Finnish law with the EU Communications Regulatory Framework. In summary, Finland’s communications sector policy of the 1990s was marked by a strong neutrality towards technology and reliance on the functioning of a competitive market.

The communications sector policy of the prime minister, Anneli Jäätteenmäki’s government which was published on 17 April 2003 will continue with the former government’s policy in emphasising the development of the information society and the fostering of a regulatory environment that favors market competition. The policy of Jäätteenmäki’s government, however, should go even further in promoting the information society as a separate Information Society Policy has been created and a crossgovernment body named the Information Society Council will be established and headed by Mr Jäätteenmäki. Key to the new government’s Information Society Policy is the development of non-discriminatory broadband infrastructure, develop content and services production, promote information society development skills, and shoring up confidence in information society services.

As a linchpin to the success of the new Information Society Policy, the new government aims to guarantee broadband access to every resident in Finland by the end of 2005. Even though only 6 per cent of the Finnish population had broadband access at the end of 2002 and the government will not use public funding to build infrastructure, there is a significant chance that the government will be successful. Presently, 95 per cent of the Finnish population lives within 1 kilometre of a fibre optic cable network and close to 47 per cent of all Finnish households have cable TV.

The role of the Ministry is not expected to change much as a result of the new Information Society Policy of Mr Jäätteenmäki’s government. The role of FICORA will, however, continue to undergo change. Since the mid 1990s the role of FICORA (originally the Telecommunications Administration Center or TAC) has broadened from a TV licence, standards, and radio spectrum management body to include also operator interconnection and access dispute resolution, SMP obligations monitoring, and fiTLD domain name administration. Under the new 2003 Communications Market Act, FICORA will also take on the role of defining markets and SMP market power and assign SMP obligations. Since the definition for SMP under the amended Communications Market Act draws close to the definition for dominant market power under Finland’s 1992 Competition Act, the new roles of FICORA will place FICORA figuratively in competition with the Finnish Competition Authority or FCA (kilpailuvirasto), which has traditionally handled operator disputes that impinge on market competition.

The policy of Finland’s government in any particular area of public administration is the responsibility of the presiding government. A government’s policy is usually wrought through negotiation between the political parties that form the government. Since the presiding government must enjoy the confidence of the Finnish Parliament, its policy is subject to the scrutiny of the Parliament.

The Finnish state owned 52.8 per cent of publicly traded Sonera Corporation, the national fixed and mobile network and services operator. As a result of the merger of Telia and Sonera effected through a share exchange on 9 December 2002, Sonera was delisted from the Helsinki Stock Exchange. The Finnish state’s ownership in the merged TeliaSonera entity, which is listed on the Stockholm Stock Exchange, is currently 19.4 per cent. The Swedish state owns 46 per cent in the merged TeliaSonera entity. The Finnish state has authorisation to sell its shares in the merged TeliaSonera entity at market value or to use such shares in followup consolidations.

The local fixed and mobile network and services operator Elisa Communications Corporation, formerly Helsinki Telephone Corporation, is also a publicly traded company, the majority of which is in private hands. Some of the local operators such as Tampere Puhelin and some of the Finnet companies such as Radiolinja and Datatie have been acquired by Elisa and now belong to the Elisa group.

Many of the 32 local operators outside the Elisa group are still owned by municipalities and their users. Many of these operators were set up as cooperatives which thwarted forced consolidations though hostile takeovers. Recently, many of the local operators have restructured themselves as corporations and incorporated their long time Finnet cooperation.

Finland has committed to the WTO Basic Telecommunications Agreement with no exceptions specific to telecoms.

Finland’s Communications Market Act makes a distinction between the construction, operation, and maintenance of a communications network (known as network services) and the provision of subscriber access and routing services as well as TV and radio programming on a communications network (known as communications services).

Network services, save for terrestrial analogue and satellite broadcast network services, are regulated under the current Communications Market Act. Terrestrial analogue and satellite broadcast network services are regulated under Finland’s 1999 Radio and TV Broadcasting Act.

Communications services are regulated under various laws depending on the nature of the service. For instance, the provision of subscriber access and routing services 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.

In Finland, only the provision of public mobile network services and wireless digital TV and radio network services is subject to licensing under the Communications Market Act. The licences are granted by the Ministry after a public notice and application process. 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. Restrictions on network service licences for wireless digital TV and radio networks 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.

Most other network provision and communications services are subject to a notification system administered by the Ministry. 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.

The Communications Market Act exempts from the notification requirement the establishment of VSAT, SNG, and fixed satellite links, taxi radio networks, and public networks with fewer than 500 subscribers. The notification requirement also does not apply to the services and networks exempted from the scope of the Communications Market Act, such as:

• telecoms for one’s own use;
• the use of public broadcasting equipment;
• resale;
• VAN services;
• switched data services and image transmission services; and
• telecoms of minor significance (eg incidental voice transmission in a data network, experimental networks for restricted user groups and incidental programming transmission).

Regardless of these exemptions, all telecoms networks and equipment must comply with the relevant technical standards.

After 25 July 2003, the scope of the Communications Market Act will be expanded to include Internet service providers (ISPs) and TV and radio programming service providers. Satellite broadcasting and government networks (eg police and emergency networks) will also be subject after 25 July 2003 to the scope of the Communications Market Act and mobile government networks will be subject to the licence requirements. The most significant change under the new 2003 Communications Market Act to the licensing regime described above will be the change of the licensing authority to Finland’s Council of State.

Satellite earth stations in Finland are subject to the general rules applicable to radio equipment. Stations that are only downlinks are not subject to Finland’s transmitter permit regime. Priority protection against interference from other radio use may be obtained from FICORA for a fee, subject to frequency allocations and existing radio use. Satellite antenna dishes used for downlinks are not subject to telecoms specific regulation, but local building and environmental ordinances may apply. Satellite ground stations used for uplinks are subject to Finland’s transmitter permit regime. The permit regime is administered by FICORA and priority of enjoyment may be obtained against interference, subject to frequency allocations and existing use. In some cases international coordination of frequency use may be necessary.

Submarine cables are subject to the general rules in Finland regarding network construction and maintenance. Unless a submarine cable is built for one’s own use (i.e., it will not be offered for the provision of public communications services), it is likely that the construction and offering of the cable would be a notifiable telecom activity. The simple resale of capacity on a submarine cable again would not be subject to the notification requirements. The location and installation of a submarine cable in Finnish waters, including beach heads is subject to environmental permits and related public hearing processes. Construction work performed at beach heads is as a rule subject to local building ordinances and construction permits. Maps of cable routes must be maintained by the operator and submitted to the relative maritime authorities. Finland does have specific liability rules for cable damage caused by, for instance, shipping anchors. Notifying and licensed operators are entitled to lay network cables in accordance with their network plans. As pointed out above, environmental permits are required with respect to cables that affect the sea bed and appropriation rules apply with respect to private property.

The Ministry must issue a licence for the provision of a public mobile network or a wireless digital TV and radio network when it is apparent that:

• the applicant has sufficient financial resources to fulfil its statutory operating obligations;
• the applicant complies with the relevant telecoms provisions and regulations; and
• the radio frequencies necessary for network provision are available.

The discretion exercised by the Ministry in granting licences is bound by statute and adverse decisions may be appealed. The Ministry may impose geographic restrictions as well as conditions that serve non-economic public interests such as network safety, operability, and compatibility as well as data protection. In the event of radio frequency scarcity with respect to public mobile and wireless digital TV and radio networks, 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 permits is the responsibility of FICORA.

The provision of public communications networks or services that are not subject to the licensing requirements are as a rule subject to the notification requirements. Operators that duly notify their public communications activities may conduct such activities unless the Ministry notifies them otherwise. The Ministry may require a notifying operator to cease its activities in the event that the operator lacks the financial ability to conduct such activities or the operator has violated the Communications Market Act or any decisions or regulations issued thereunder and failed to remedy the violation as required by the authorities.

All operators, whether subject to the notification/licensing requirements or not, must comply with the technical requirements set forth in the Communications Market Act or in the decisions and regulations of the Ministry and FICORA.

No significant changes to the aforementioned licensing regime are expected when the new 2003 Communications Market Act enters into effect except that the licensing authority will be officially Finland’s Council of State. Under the new Act, Communications notifications will be administered by FICORA instead of the Ministry as is the present case.

There are no communications-specific restrictions on foreign ownership in Finland.

Further, foreign operators entitled to engage in telecoms activities in a country that complies with the WTO Basic Telecommunications Agreement are not subject to the Communications Market Act’s notification requirements when transferring international telephone calls to a Finnish local network and arranging the necessary transfer connections. Such operators are, however, under an obligation to keep FICORA appraised of their routing solutions.

Currently, there are no licensing fees for the public mobile network or the wireless digital TV and radio network licence or for submitting a communications notification. The only fees payable are the annual frequency licence fees and the fees for service provider prefixes, subscriber numbers, and network codes. Network services licences, frequency licences, prefixes, and network codes are not auctioned off in Finland.

After 25 July 2003, the new Communications Market Act will impose an application fee of €1,000 for each licence application.

The granting of a public mobile network or wireless digital TV and radio network licence may take up to three or four months, following the initial public notice calling for applications. There is no statutory processing period with respect to communications notifications.

Under the new 2003 Communications Market Act, a decision to grant a licence must be made within six weeks from the expiration of the application period. Finland’s Council of State may, however, in certain circumstances extend the six-week period to a maximum of eight months.

Public mobile network and wireless digital TV and radio network licences may, provided the statutory requirements are met, be granted for a period of 20 years. Communications notifications are valid for an indefinite period.

As a general rule, no operator in Finland enjoys legal exclusivity in its provision of a network or a communications service.

The use of wireless radio equipment and frequencies in Finland is governed under Finland’s 2001 Radio Act. The construction and operation of a wireless network or link, whether subject to a network licence or not, requires a radio frequency assignment by FICORA. In assigning radio frequencies, FICORA issues either a transmitter-specific permit valid for up to 10 years (usually six years) or a frequency licence in the case of user frequencies for public mobile networks such as NMT, GSM, DCS, and third-generation mobile and WLL networks. The frequency plan for TV and radio activities is prepared by FICORA and confirmed by Finland’s Council of State.

A transmitter permit is required for each wireless link in a network (except for transmitters that have been waived from such requirements, eg conformance certified mobile handsets and WLL transceivers that operate at specified frequencies).

Radio frequencies are not auctioned in Finland. Radio frequencies are granted on a first-come-first-served basis, save for those situations where frequencies are scarce. In such cases, FICORA grants the licence to those applicants whose operations best promote the general purposes of the law (which are enumerated in the Communications Market Act). Frequency licences and transmitter permits are subject to annual fees and may not be transferred or traded without the consent of FICORA.

Finland’s 2001 Radio Act also establishes a system where frequencies can be reserved for one year at time if the design and implementation of a radio system requires such or if the procurement of a radio transmitter presupposes advance information as to spectrum availability.

The roll-out of third generation mobile networks and specific standards (for instance, technology standards and data transmission rates) are not prescribed by general law. The roll-out obligations and specific standards obligations that exist are contained in the operators’ licences. To date, the Ministry has been flexible with respect to enforcing third generation roll-out obligations. It is the Ministry’s professed position that third generation networks should be rolled out in accordance with demand and not as a result of government imposed roll-out schedules.

Relatedly, according to a 2001 amendment to the Communications Market Act, third-generation mobile network operators are granted national roaming rights on the GSM 900 and 1800 networks of SMP operators. The national roaming should be arranged on commercial terms just as interconnection and network access in Finland in general is arranged. The amendment provides that if operators are unable to agree on the commercial terms for national roaming within six months, FICORA may be requested to specify the terms and the cost to be borne by the requesting third-generation operator for certain network investments that may be required of the GSM operator. In such specified terms third-generation operators must be granted roaming rights, generally for eight-year periods, once their own third-generation network covers at least 20 per cent of the population in their operating licence area. An operator requesting national roaming can request such rights from only one GSM operator and only once. The proposed national roaming rights do not apply to virtual mobile operators. GSM operators may shorten the duration of the national roaming rights to two years by rolling out their own third-generation network to cover at least 80 per cent of the country.

Public network licences may in principle be modified only with the consent of the holder of the licence and the Ministry. Operators whose licences are modified by the Ministry without their consent may be entitled to reasonable damages arising from the modification. The Ministry may revoke in full or partially a public network licence in the event that an operator ceases to fulfil the licensing requirements specified in question 6 above. In the event that a licence is revoked or an operator ceases to provide services, the Ministry must take measures to ensure that communications are continued and determine what operators are required to provide service to those subscribers affected. After 25 July 2003, Finland’s Council of State may revoke an operating licence in the event that an operator continuously or seriously violates the communications laws or its operating licence or if the operator ceases to possess adequate finances to attend to its duties and the operator fails to correct the situation within a reasonable period (not less than 1 month) after being encouraged to do so.

Changes to a communications notification must be made by submitting the change in writing to the Ministry (after 25 July 2003 to FICORA).

As a general rule, government licences are not transferable (that includes transfers from one legal entity to another regardless of ownership arrangements save for situations were a licence is transferred as a result of a legal merger) unless expressly stated in the law governing such licence or in the licence itself. With respect to public network operating licences, there is no general provision in the Communications Market Act that would render them to be transferable. The public mobile network services licences, however, do contain provisions prohibiting the transfer of the licence to another party save where the licence is transferred from a parent company to its fully-owned subsidiary and then only provided notification of the transfer is given to the Ministry. Under the current Communications Market Act it is possible, however, to acquire a company that possesses a public network operating licence provided the acquisition does not amount to merely the acquisition of only the licence. The Ministry has interpreted this to require that the company that is the target of the acquisition possesses also the necessary network assets, services, and personnel that permit it to conduct activities under the licence and to do so as an independent entity. As pointed out above, the Ministry may revoke a public network operating licence at any time, even after an acquisition as described above, if it comes to the Ministry’s attention that the operator does not have adequate finances to attend to its duties and such is not remedied within a reasonable period.

The new 2003 Communications Market Act will impose a general restriction on the transfer of any licence and such restriction will apply even to licences granted prior to 25 July 2003. Accordingly, Finland’s Council of State may revoke a licence in the event that a change of actual control occurs in the licence holder. Changes of control in a holder of a public network operating licence must be notified immediately to the Council of State. The Council of State must decide whether to revoke the licence as a result of a notified change of control within two months after the notification. Changes of control that occur within a group of companies are viewed under the new Act to not constitute grounds for revocation. Such changes of control must, however, still be notified to the Council of State.

The first phase of the convergence of the laws governing telecommunications and digital broadcast networks in Finland was effected on 1 July 2002 by broadening the scope of Finland’s Telecommunications Market Act of 1997 to include cable TV and digital wireless terrestrial broadcasting. The new 2003 Communications Market Act will apply to also ISPs and TV and radio network programming service providers. The content of the services provided over a communications network in Finland will, however, continue to fall outside the scope of the Communications Market Act.

TV and radio programming as such is regulated under Finland’s 1998 TV and Radio Activities Act, which is harmonised with the European Television Broadcasting Directives (89/552/EEC and 97/36/EEC). The TV and Radio Activities Act regulates in Finland the public provision over airwaves or by cable of clear as well as encoded TV and radio programming. The TV and Radio Activities Act replaces the previous broadcasting licensing system based on Finland’s now repealed 1927 Radio Equipment Act with a transparent licensing and notification regime.

TV and radio programming distributed via terrestrial airwaves is subject to licensing by Finland’s Council of State. All other forms of TV and radio programming distribution such as cable TV programming distribution and satellite programming distribution are subject only to a notification to FICORA. The TV and radio activities of Finland’s state-owned Yleisradio Oy (YLE) are not subject to a licence provided that YLE operates the frequencies reserved for it. The frequency plan for TV and radio activities is prepared by FICORA and confirmed by Finland’s Council of State.

The Ministry is vested with the general supervision of and policy formation for mass media in Finland. These responsibilities are entrusted to the Ministry’s Media Policy Unit, which handles radio, TV, and cable TV broadcasting activities, postal services, and press support and subsidies.

The freedom of speech is protected under Finland’s constitutional laws. To the extent that speech is regulated, such regulation has been set forth in the 1998 TV and Radio Activities Act and in specific legislation such as, for example, investment services laws, advertisement laws, and copyright laws.

After many attempts to amend Finland’s 1919 Free Press Act, a government bill proposing an Act on the Freedom of Speech, which will in effect repeal the Free Press Act, is currently being considered by the Finnish Parliament and is expected to enter into force in June 2003, at the earliest. The new act is expected to apply also to Internet-based publications.

17 Is there any restriction in your country regarding ownership of cable networks, in particular by telecoms operators?

The Communications Market Act does not restrict telecommunications operators from engaging in cable TV network or broadcast operations nor cable TV operators from engaging in telecommunications operations. The only regulatory requirement imposed is that the appropriate communications notification is submitted to or the appropriate public mobile network or wireless TV and radio network licence is obtained from the Ministry and in the case of cable TV broadcast operations a notification is submitted to FICORA. Finland officially declared on 13 July 1999 that it will not have to take legislative measures to adopt the Cable TV Network Separation Directive (1999/64/EC).

Traditional telecommunications operators own over 90 per cent of Finland’s cable TV networks. Telecommunications operators either operate on their own network as a cable TV operator or lease capacity on their networks on long-term basis to independent cable TV operators.

Unbundling has been implemented in Finland. As a general rule, any operator, whether a network operator or a services operator, is entitled to lease from a network operator the entire subscriber connection and not just the transmission capacity in the connection. Access is to be provided at the network connection point indicated by the requesting operator unless the Ministry, on a case-by-case basis, determines that, when alternative access is reasonably available, the access at the requested connection point would be technically inappropriate, jeopardise data protection, or would be otherwise unreasonable for the network operator. Network operators are required to lease the requested subscriber lines and fixed lines regardless of the intended end use if the request is within the transmission capacity of the public network.

As a general rule, network operators are free to price their subscriber line offerings as they see fit. However, in the case of a network operator with significant market power (SMP) that also operates on its own network as a communications service operator, the lease charges for the fixed lines it offers to operators must be non-discriminatory and reasonable, having regard to the costs incurred in providing the lines. Network operators are required to maintain a list of charges for leasing subscriber lines. Quantity discounts are permitted if such discounts are nondiscriminatory and reasonable bearing in mind the costs of providing the line.

In leasing subscriber lines to operators, network operators may deviate from the general services delivery terms they use with end-users provided such deviation is to the benefit of the lessee operator. The delivery terms a network operator uses in leasing subscriber lines to an operator must be the at least on the same financial terms as the terms it uses when providing subscriber lines to its own communications services operations. Network operators may use general delivery terms with operators that differ from the general terms they use with end-users provided that such terms have been submitted to the Ministry before their effective date.

Subscriber lines and tele-housing were opened up to lineenhancing technology such as xDSL as of 13 April 2001. Accordingly, fixed network operators are required to not only lease their subscriber lines to competing operators but also lease subscriber line capacity to their competitors for xDSL services. Fixed network operators are also required to lease their excess tele-housing space to competing operators for minor equipment necessary for their communications services. Leasing charges collected by network operators will have to be non-discriminatory and reasonable in relation to the costs in providing the service. Leased line charges for capacity may be at most half of the charge that the operator collects for the full lease of a comparable line.

As described above in question 1 the Finnish Parliament passed in February 2003 a bill to repeal the current Communications Market Act and to enact a new Communications Market Act to harmonise Finnish law with the EU Communications Regulatory Framework. This new Communications Market Act will enter into effect on 25 July 2003.

In addition to the implementation of the EU Communications Regulatory Framework Directives, the new 2003 Communications Market Act also aims to strengthen the operations of the communications authorities as well as speed up the processing of disputes before the authorities. The new 2003 Communications Market Act will be considerably longer than its predecessor primarily because the new Act takes into account the requirements of Finland’s new Constitutional Act that many of the numerous decisions of the Ministry on matters such as interconnection and mandated cable duct and antenna platform access are adopted into the law itself.

The regulatory bodies in Finland are the Ministry of Transport and Communications and FICORA. The Ministry is, as stated above, entrusted with the making of national communications policy. Additionally, the Ministry is empowered to issue resolutions under the Communications Market Act, administer notification and licensing procedures, issue communications operator specific decisions, and terminate licensed activities for just cause. Within the Ministry, communications matters are entrusted to the Communications Department, which has been divided into three separate units:

the Network and Competition Unit;

the Media Policy Unit; and

the E-Commerce and Data Security Unit.

The monitoring of compliance with Finland’s communications laws and regulations is entrusted to FICORA, which operates administratively under the Ministry. 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, fiTLD domain name allocation, network security, digital signature certification services and network and equipment standardisation. FICORA is empowered to issue technical regulation on these matters and resolve operator disputes over interconnection and local loop 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.

FICORA works in cooperation with its national and international customers and interest groups. As a rule, many of FICORA’s regulations, decisions, and guidelines are prepared in these groups.

The new 2003 Communications Market Act assigns FICORA with the responsibility for defining the relevant markets in the communications sector in accordance with the EU Commission guidelines. FICORA will also be responsible for conducting market analysis and determining which operators have significant market power (SMP) status. Under the Act, FICORA will also administer the notification process for network services and communications services.

The Ministry and FICORA are assisted by Finland’s competition authorities in matters concerning competition law 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 Ministry and FICORA and their areas of responsibility are established under law. The Ministry is additionally granted the power to delegate many of its duties to FICORA. The Ministry has acted on this power quite extensively during the past years as the Ministry has empowered FICORA to handle essentially all aspects of the day-to-day administration of the Communications Market Act and market monitoring while reserving for itself policy making and legislation proposal work. The Finnish state’s ownership interest in TeliaSonera is overseen by a unit within the Ministry which is administratively separate from the Communications Department.

As a general rule, the decisions of the Ministry must be based on law and may be appealed to Finland’s Supreme Administrative Court. Likewise, the decisions of FICORA must be based upon law and adverse decisions may be appealed. FICORA decisions may be appealed as a rule to the Administrative Court of Uusimaa Province (Uudenmaan lääninoikeus) and further to the Supreme Administrative Court, if leave of appeal is granted.

As the duration of the appeal process has in some cases been as long as five years, the new 2003 Communications Market Act will simplify and shorten the appeal system. Accordingly, FICORA will be required to handle most appeals within four months. Further, most of FICORA’s decisions will be directly appealable to the Supreme Administrative Court.

FICORA is responsible for only those competition issues that are specific to communications and which are addressed in the communications laws. These include, for instance, violations of obligations imposed on operators possessing significant market power (SMP), leased line and local loop rates, and cable duct and antenna platform disputes. The Finnish Competition Authority or FCA (kilpailuvirasto) is responsible for violations of Finland’s general competition laws. These might include, for instance, an operator’s abuse of its dominant market power. Cases which involve violations of both communications specific laws and the general competition laws may be instituted with either FICORA or with the FCA. It is conceivable that an operator could violate its SMP obligations as well as abuse its dominant market power. Under the Communications Market Act, FICORA may refer communications disputes that involve general competition law issues to the FCA.

In the past there was a risk that FICORA would only deal with the specific legal principles referred to in a complaint. In such a case, it was possible that FICORA would not refer a matter to the FCA unless the complainant specifically referred to competition law principles.

Under the stewardship of current General-Director Rauni Hagman, who previously headed up the former market behaviour unit at the Finnish Competition Authority, FICORA has taken a stronger interest in the competition aspects of operator disputes.

Under the new 2003 Communications Market Act, FICORA will be responsible for analyzing and defining (based on 20 Commission recommendations) relevant markets in the communications sector and operators’ market shares and where required imposing obligations on operators with significant market power (SMP). Since the definition for SMP is based on the definition for dominant market power, it is likely that there will be overlap in the activities of FICORA and the FCA. The authorities in recognition of this have set forth between themselves cooperation guidelines for the communications sector and case handling procedures. The guidelines recognise that FICORA is better able to handle cases related to the reasonableness of pricing whereas the FCA is better able to handle cases concerning price discrimination. The outlines also set out how the authorities will exchange information within the restrictions of statutory confidentiality obligations and how each authority should avoid issuing a conflicting decision in a matter by postponing its decision until the other authority has issued its decision in the matter.

Under the Communications Market Act, operators in Finland are required to equip their networks and services so that the relevant authorities can implement communications eavesdropping and surveillance. This obligation does not apply to operators exempted from the scope of application of the Act. Operators are also, in statutorily specified situations, required to provide assistance to law enforcement authorities with respect to the interception of communications, including mobile calls and e-mails. Operators are entitled to reasonable compensation for such assistance. Under Finland’s 1987 Coercive Measures Act, preconditions for communications interception exist when, for instance, there is reason to suspect a person of compromising the sovereignty of Finland, treason, espionage, disclosure of a national secret, unlawful gathering of intelligence, manslaughter, kidnapping, aggravated robbery, aggravated impairment of the environment or an aggravated narcotics offence.

Switched data services and image transmission services and incidental voice transmission on a data network are exempted from the scope of the present Communications Market Act and thus not subject to notification or licensing requirements. As a result, Internet service providers in Finland are not as a rule required to notify their ISP activities to the Ministry or to FICORA, but many do in order to obtain operator benefits such as cost-based pricing for certain infrastructure and services. All other services conceivably provided by ISPs such as fixed data services or building or leasing lines are subject to the communications notification obligations. Despite the above, all Internet service providers must comply with the network and equipment- specific technical requirements to the extent applicable.

As stated above, Internet voice telephony, regardless of its voice quality or real-time nature, is not, as such, subject to notification or licensing under the Communications Market Act, provided that it forms only an incidental part of the transmission on a data network. According to a decision by FICORA, however, all interconnection, access, and technical regulations, with the exception of those that regulate the quality of the transmitted voice, are applicable to Internet voice telephony services once they interconnect with a public network in Finland.

As of 25 July 2003, ISPs will be subject to the new 2003 Communications Market Act.

As a general rule, operators in Finland are free to set interconnection charges amongst themselves. Operators are also entitled to require reasonable payment security from an operator requesting interconnection.

The Communications Market Act provides for an interconnection regime that imposes cost based tariff practices on operators with SMP. For instance, operators with SMP must set a tariff for the use of their network to route traffic to the network services or communications services of the interconnection requesting operator (access traffic). This obligation does not apply to intra-teledistrict traffic routed without an operator prefix or pre-selection arrangement or to traffic routed from a mobile network to a local fixed network or to another mobile network. Additionally, an operator with SMP must set a tariff for the use of its network for terminating traffic. This obligation does not apply to traffic routed from a local network to a mobile network. The tariff charged for access and terminating traffic must be public as well as be the same regardless of the amount of traffic routed. It should be noted that, for instance, wireless TV and radio networks are exempted from the interconnection obligations since these networks do not presently provide subscribers with the possibility to access the network for the purpose of sending traffic.

The Ministry has powers to scrutinise potentially anticompetitive interconnection tariffs. For instance, the Ministry is empowered under the Communications Market Act to issue regulations on the general principles of tariffs and the calculation, publication, and itemisation of such tariffs. The Ministry may act on this power in the event that either EU rules so require or the attainment of the principal purpose of the Communications Market Act is jeopardised as a result of the tariff policy of a SMP operator.

The new 2003 Communications Market Act will not bring significant changes to Finland’s interconnection regime. The provisions regarding interconnection will, however, be transposed from the relevant ministerial decisions into law.

As a rule, tariffs for communications services is, with some notable exceptions, based on retail usage charges. The Finnish system differs from the end-to-end tariffs used in most countries in that increases by local operators and long distance operators of their network segment charges immediately affect the end-user’s tariffs. Finland’s unique retail tariffs were born out of Finland’s duopoly market structure where neither operator camp (ie Sonera as opposed to the Finnet companies) wanted their end user charges to be affected by the other camp.

The retail tariffs for communications services are left to the discretion of the operators in Finland. Those rules at present in place are required as a general rule as a result of Finland’s obligations under EU rules. The Ministry is empowered under the Communications Market Act to issue regulations on the general principles of communications tariffs and the calculation, publication, and itemisation of such tariffs.

The Ministry has imposed transparency and publication requirements on fixed network operators possessing significant market power for ONP offerings. Tariffs for communications services offered by fixed local network operators with significant market power must be reasonable with respect to the costs incurred in providing the services. Additionally, calls to Finland’s emergency call numbers 112 and 10022 must be free of charge.

Under the new 2003 Communications Market Act, a certified public accountant must, when examining the accounts of an operator, also review the cost accounting system used by the operator. FICORA will then publish an annual report regarding the operators’ compliance with the cost accounting systems.

Under the current Communications Market Act, operators are required to draw up standard terms and conditions for consumer agreements and publish their price tariffs. Operator’s standard terms and conditions and tariffs must be submitted to the Consumer Ombudsman and the Ministry (after 25 July 2003 to FICORA) before their implementation.

A description of the formula used by fixed network operators with significant market power for calculating their tariffs must also be submitted to the Ministry for approval. Unless the Ministry notifies the operator within one month after the submission, approval may be assumed.

Presently, under the Communications Market Act, Finland’s telecoms market is subject to the general competition rules promulgated under the 1992 Competition Act and the unfair business practices codified under the 1978 Unfair Business Practices Act. The Ministry and FICORA, when handling a matter that potentially involves competition law or unfair business practice law, may refer the matter to the appropriate authorities. Interestingly, the new 2003 Communications Market Act will vest new powers in FICORA which will require it to take into consideration competition law principles. As a result, it is likely that there will be over- lap between the activities of Finland’s competition authorities and FICORA. As explained above in question 24, the authorities have recognised this and established guidelines for cooperation in matters where overlap in jurisdiction occurs and for avoiding conflicting decisions.

30 What are the criteria and thresholds for regulatory or competition law review of telecoms sector mergers, joint ventures and acquisitions?

There are no competition rules specific to communications sector mergers, joint ventures and acquisitions. Instead these matters are subject to Finland’s general rules on merger control, which broadly resemble that of the EC Merger Regulation (No. 4064/89).

The acquisition of operators that possess a public network operating licence, frequency licence or transmitter permit is subject to the rules described above in question 14.

The authorities in charge of the supervision and enforcement of the Finnish competition rules are the FCA, the Market Court (markkinaoikeus) and the local province governments. The ultimate body of appeal in competition matters is the Supreme Administrative Court.

The FCA is an independent office within the Ministry of Trade and Industry (kauppa-ja teollisuusministeriö), with powers to examine competitive conditions and restrictions on competition. The FCA takes action to remove any restrictions which are considered to have harmful effects and to this end negotiates with the business undertakings concerned. If negotiations fail, the matter is referred to the Market Court which may prohibit the arrangement or practice at issue. In addition, the FCA may upon application issue interim injunctions or orders. It can also grant negative clearances and exemptions.

The duties of the earlier Competition Council have passed to the new Market Court, which began its operations in March 2002. The Market Court handles initiatives made by the FCA to remove competition restraints and prohibit concentrations. It operates as a collegiate panel of judges assisted by economic experts and it is the first appellate instance when appealing the FCA’s decisions. The decisions of the Market Court may be appealed to the Supreme Administrative Court.

Finland has six provincial governments, which are subordinate to the FCA in competition matters and investigate regional restrictions on competition. At the FCA’s request, they may take steps to eliminate the detrimental effects of restrictions on competition.

The 1992 Competition Act and its accompanying legislation and regulations impose time limits both for filing a notification with the FCA to obtain the necessary clearance and for decision-making, as well as a period suspending implementation of the concentration.

During the first stage, the FCA has a period of one month from receipt of a notification to clear the concentration, decide that the transaction is not caught by the Finnish merger control rules, or opt to initiate a further investigation. Time does not start to run until a complete notification has been submitted. If the FCA decides to investigate further, it must, within three months of this decision (or five months with the permission of the Market Court), either clear the concentration or request the Market Court to block it. The FCA should, however, always endeavour to impose conditions rather than request the Market Court to ban the concentration. Such conditions will usually be structural rather than behavioural. Where the involvement of the Market Court is requested, it has three months to clear or block the concentration.

Most concentrations are cleared within the first month after notification. Where a concentration gives rise to serious competition concerns, clearance could take up to nine months, though such extensive investigation is exceptional. A concentration may not be implemented during the investigation, unless the FCA grants an exemption at the request of the notifying party.

In the event that the target of a merger or an acquisition holds a public network operating licence, frequency licence, or transmitter permit, time should be allowed in the transaction for the necessary approvals.

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