PART V: LEARNING TO DEAL WITH DEMANDS FOR PARTICIPATION
IV. DIFFERENT MECHANISMS OF CONVERGENCE IN THE THREE COUNTRIES
‘‘download’’from the EU to the member states. Other factors independent of the European evolution, such as technological innovations, economic liber- alization, learning among national elites, or domestic political impulses, also account for national telecom policy reforms. Telecom policy reform should then be primarily conceived as a‘‘multilevel process’’(Evans and Davies, 1999), which implies global, European, and national sources of policy changes. In the next part, we will show how the reform processes differed across countries and we shall focus on factors specific to each country under scrutiny to explain these different paths.
IV. DIFFERENT MECHANISMS OF CONVERGENCE
Table2PolicyTransferinTelecomReformsinTheNetherlands,Austria,andSwitzerland Reformactsunder scrutiny
Whoisengagedintransfer? Howistransfer achieved?Whydoactors engageintransfer?Domesticactors callingforreformPolicyentrepreneurs NL1996:InterimActEarlyimpulsesfrom businessinterests fortelecomliberal- ization(beginning ofthe1980s) CAPTandlegal expertsDomesticimpulseswere decisive;largepolitical supportforreform; severalexpertreports Domesticlearning duringthe1990s andcompliance withtheEUregu- latoryframework
1997:OPTAAct (Initialreforms:1989; fourlaws) A1997:Telecommuni- cationsAct(TKG)Largelyabsent(very latelyformulated claimsbyindustry representativesand legalexperts) Lateinterventionof theEUCommission andtheMinistryof EconomicAffairs Formalandinformal interventionofthe EUCommission, alternativedraftbill presentedbyindustry representatives Coerciveadaptation toEUregulation (fortheregulatory framework:partial imitationofthe Germanreform model)
[Initialreform:1993, TelephonyAct (FMG)] CH1997:Telecomlaw reformandnew lawonthetelecom company Earlyimpulsesfrom businessinterests fortelecomliberal- ization(beginning ofthe1980s) Federalofficefor communication (OFCOM)
Strongdomestic supportfor liberalization, alignmenttoEU framework,and deadline;expert reports Domesticlearning, linkedtocondition- ality(participation ofSwisscomin Unisource)[Initialreform:1991, TelecomAct (LTC)]
liberal policy oriented toward privatization and downsizing of the public sector. The 1989 reform consisted in the adoption of four new laws concerning the corporatization of KPN as a holding company for PTT Telecom and PTT Post and its further privatization, as well as the liberalization of value-added services and telecom equipment. While industry representatives favored the complete separation of public utility and commercial services and the creation of an independent regulator, political parties were split on these issues. At the end, the reform was rather consensually adopted and a compromise was found between these positions (Hulsink, 1999, 190 ff.).
After this initial step toward liberalization and privatization, it was not until 1997 that the final measures of liberalization and the creation of an independent regulatory authority became effective with the adoption of the Interim Act and the OPTA Act. The Interim Act voted by the parliament in spring 1996 introduced a liberalization of infrastructures* and voice teleph- ony (as of July 1, 1997). The OPTA Act adopted in spring 1997 set up a new independent regulatory authority for the telecom and postal sectors (the OPTA), according to which the latter and the newly created competition authority would have to cooperate on competition issues on the telecom market.
Finally, the Interim Act was replaced in autumn 1998 by a completely new Telecommunication Act, the drafting of which had started before the formal adoption of the Interim Act and OPTA Act. This new act largely consolidated the reforms of the Interim Act, ensuring full competition in all telecommunication activities and complete implementation of the European Open NetworkProvision principles (for more details, see OECD, 1999).
1. Early Moves in a Context of European Acceleration
As early as the beginning of the 1980s, the Dutch government, business representatives organized in the Federation of Dutch industries (VNO- NCW), and independent experts started to question the monopolistic position of the PTT and expressed their dissatisfaction with PTT services and equipment. In a context of rapid technological innovation, telecommunica- tions services became an increasingly important element for the competitive- ness of the national economy, especially for international companies. This early diagnosis of the central importance of telecommunications, simulta- neously made by business representatives and independent experts who were
* In 1996, two new national licenses for infrastructure were granted to Enertel (a joint venture of different electricity companies) and Telfort (a subsidiary of the Dutch railway company and British Telecom).
particularly sensitive to the evolution in the Anglo-Saxon countries, favored the formation of a broad consensus on the necessity to stimulate public monopolistic operators. This broad political support led to the 1989 reforms, which, nevertheless, remained less pronounced than the original proposals made by expert committees (see Hulsink, 1999, 181 ff.).
The first half of the 1990s was marked by the privatization of KPN*
and the gradual liberalization of some telecommunications services, such as data communication (1993) and mobile telephony (1994y). On the other hand, the first half of the 1990s was a time of uncertainty concerning the cen- tral elements of liberalization (voice telephony and infrastructure networks).
The government initially planned in 1993 to promote a‘‘managed duopoly’’
between PTT Telecom and a second Dutch operator, which would include the alternative networkproviders (energy, railways, and cable companies).
This governmental strategy failed in 1995 because of internal divergences between operators. In parallel, the EU Commission adopted new direc- tives, and the European Council of Ministers decided in 1993 to open all telecommunication services for full competition before January 1, 1998.
Finally, the early international strategy of KPN is of relevance, too, for it largely explains its positive attitude toward further steps of liberalization. In 1992, the KPN, in alliance with the Swedish PTT, set up an international joint venture (Unisource) designed to provide services for international customers. The Swiss PTT joined Unisource a year later. Apart from Unisource, the KPN also increased its participation in several other telecom companies at the beginning of the 1990s. All these political and economic factors (early diagnosis of the role of telecommunications, the constraining dimension of EU regulations, and the international strategy of KPN) contributed to the smooth adjustment of Dutch telecom legislation to the new international environment. We will now survey in more detail the learning mechanisms that led to the final measures of liberalization in 1996 and 1997.
2. The Learning Process During the 1990s
As mentioned before, the initial steps of liberalization and privatization in The Netherlands were followed only much later by full liberalization.
Nevertheless, this must be seen as the result of a continuous learning process.
The issue of telecom policy remained consensual and did not lead to serious
* In 1994, the government sold a first tranche of 30% of KPN shares on the stockmarket, and a second tranche of 25% a year later.
y Earlier than the EU, which adopted a new‘‘mobile directive’’in 1996.
political controversies. Various actors, especially independent experts from advisory bodies, published several reports during the first half of the 1990s to push for further liberalization and made recommendations for telecom reforms. The learning process on telecom liberalization and re-regulation largely stemmed from these independent experts. The role of expert com- mittees, standing advisory boards, and expert reports was very important for the smooth and continuous learning process experienced by the administra- tive and political authorities.
With the 1989 reform, several bodies for consultation, advice, and rule making were created. Let us mention first the HDTP (directorate general for telecommunications and post), a new department of the Ministry of Trans- port and Public Works, composed of three units in charge of regulation, policy formulation, and operational tasks. We should also mention the Commission for Advice on Postal and Telecommunication Policy (CAPT), which is composed of independent experts in order to make recommendations to the government on the broad lines of telecom policy and technological developments. In 1992, the CAPT was integrated into the advisory council of Transport and Public Works.*
As to expert reports, of note is the McKinsey report of 1993, drafted upon request of the HDTP, which advised promoting competition in the fixed telecom infrastructure and ‘‘pointed to a number of shortcomings in PTT Telecom’s service provision, especially services for large corporate users’’
(Davies, 1996, p. 9). Shortly thereafter, in September 1993, the CAPT published two reports in favor of further liberalization (CAPT, 1993a,b).
These publications were a reaction to the presentation of the governmental strategy on telecom policy in June 1993. The CAPT report advocated further liberalization, a simplification of the former law, and the creation of an independent regulatory authority. The reports openly criticized the position of the government favoring the creation of a ‘‘managed duopoly’’ in the telecom sector, and pleaded for a legal frameworkmore open to competition and for the introduction of an‘‘asymmetric regulation’’that would facilitate the entry of new competitors into the Dutch telecom market (CAPT, 1993a).
Moreover, while the Interim Act was under debate in parliament, a group of four legal experts (Dommering et al., 1995), including H. J. de Ru, vice president of the CAPT, published in June 1995 an alternative proposal to the governmental bill. Even though no consideration was given in the parliamentary debates to this draft, which proposed an important simplifi-
* Finally, again in 1992, a new consultative body, the OPT (consultative body on postal and telecom policy) was created. It was composed of equipment suppliers, services providers, customers, employees, and the PTT.
cation of the law, it contributed to paving the way for a complete reform of the telecom act. At the end of the same year, the CAPT published two further reports on request of the ministry: one on future legislation on telecommu- nications and one on the creation of an independent regulatory authority (CAPT 1995a, b).* These reports were the result of an in-depth study made by the CAPT, including a stay of all its members in the UK to learn about the experiences of this country in telecom liberalization and re-regulation (Inter- view IV). This is illustrative of a form of cross-national learning from a country, which had started earlier to liberalize and privatize its telecom sector.
Thus, before the Interim Act and OPTA Act were adopted by the parliament, the necessity for a complete reform of the telecom act was largely recognized, and the preparatory workfor a new law had already started with the CAPT reports.
Despite clear unanimity in favor of further steps toward liberalization, especially in the parliament, which had complained several times about the slow pace of the governmental reform, the final measures concerning liber- alization and regulation came relatively late. Originally designed to act as countervailing powers to the PTT’s monopoly, the HDPT and CAPT lacked the necessary competencies and were too poorly equipped in terms of expertise and staff to supervise and guide the liberalization process (Hulsink, 1999, p. 219).‘‘Since corporatization in 1989, there has been a brain drain of expertise from the government to PTT Telecom. Consequently, not only has the regulator been seriously understaffed, it also lacks the relevant expertise to establish a new regulatory regime’’(Davies, 1996, p. 28; see also Hulsink1999, p. 219 and Interviews I and IV). This helps to explain why the impulses for further liberalization did not come earlier directly from the ministry and why KPN was not particularly challenged by the political authorities.yInstead, it was mainly the CAPT, composed of independent experts, which played the major role in the learning process and policy recommendations.
In addition, despite the early decision of the EU to fully liberalize the telecom market before 1998, some EU directives came only very late, in 1996 (full competition directive) or even 1997 (interconnection directive). This hindered the ministry from presenting a coherent and thorough reform of the
* The first report of the CAPT contained a complete draft proposal for a new telecom act, much more liberal and in line with the EU regulatory framework. The formulation of a detailed draft proposal is very uncommon for this kind of report (Interview IV).
y In addition, the government had to react to a complaint of the association of Dutch telecommunication users to the EU Commission, according to which it would have violated ONP directives by approving leased line tariffs that were not cost-oriented. This led the Dutch Ministry of Transport and Public Works to reduce prices for leased lines without waiting for the commission’s decision (Davies and Hulsink, 1997, p. 32).
old law sooner (Interview I). It also explains why the government did not follow the initial proposals of the CAPT. An additional explanation for the delay of the telecom liberalization is the early move of 1989, which made Dutch political and administrative elites feel under less pressure from the EU.
Thus, the monitoring role of the EU Commission (through its annual publication on the implementation of the telecommunication regulatory package) did not play a direct role in the elaboration of the telecom reforms in The Netherlands (Interviews I and IV).
In sum, the early impulses for Dutch telecom policy reform originated mainly from endogenous initiatives. From 1989 on, a smooth learning process tookplace among experts and, subsequently, the administration, where the EU did not play a central role. As we shall see below, the coercive dimension of the EU remained much weaker in The Netherlands than in Austria.
B. Austria: Late Adaptation Under EU Pressure
Unlike the Dutch reform process, the liberalization of the Austrian Telecom market started late: it was triggered only by the country’s accession to the EEA in 1993, which implied the adaptation of national laws to all existing directives in the field. Therefore, the old Telephony Act from 1949 had to be entirely revised. The main changes concerned the complete liberalization of value-added services and terminal equipment. Moreover, a new regulatory body for telecommunication affairs was created as a section of the Ministry of Transport.
As an EEA member, and from 1995 as a member of the EU, Austria had to implement the EU decision on full market liberalization for 1998. Even though the Commission put this deadline on the agenda in 1993, it was only in summer 1996 that the preparatory workfor a new Telecommunications Act began. This new law was adopted a year later in July 1997, and included three main elements: the complete liberalization of the national telecommunica- tions services and rules favoring the entrance of new operators on the national market; a new regulatory arrangement with an independent market regulator, the Telekom Control Commission; and the definition of the scope of universal service. The national operator’s status had been reformed previously in 1996, when the new ‘‘Post und Telekom Austria AG PTA’’was founded, whose shares remained entirely under governmental control.
Unlike The Netherlands and Switzerland, the reform process began late in Austria. The whole liberalization process remained always closely related to the given EU agenda. This rather reactive adaptation can be mainly explained by the quasi-absence of domestic impulses for reform until 1997.
1. The Weakness of Initial Domestic Impulses for Liberalization
Austria is a highly corporatist country with an important culture of con- sensus and very strong links between the government, major trade unions, and business associations.* The national operator was traditionally inte- grated into the Ministry of Transport, directed by a social democratic minister. Interviewees maintained that an informal agreement between the trade unions and the business chamber on the maintenance of the status quo explains, to a large extent, that no claims for a reform of the telecom sector were expressed until the first step of liberalization in 1993 (Interviews V and VI). A second explanatory factor for the lackof early demands in favor of an opening of the telecom market is the quasi-absence of a relevant industry in the field, and an overall rather weakliberal tradition of the country’s business associations (Interviews VI and VII). Thus, while The Netherlands and—as we shall see later—Switzerland, too, started their liberalization processes in the late 1980s, Austria followed only with its accession to the EEA.
Even after this first adaptation, domestic claims for further liberaliza- tion remained virtually nonexistent. Moreover, unlike its Dutch and Swiss counterparts, Telekom Austria did not develop an international business strategy until spring 1997 (Braunsperger, 1998). Thus, no broad domestic debate on the need for liberalization tookplace until winter 1996, when representatives of the Austrian People’s Party (O¨VP) pointed to the fact that Austria had fallen behind the other EU member states in the preparation of the complete market liberalization (Wolfsberger, 1998, p. 422).
It was only in July 1996 that the Ministry of Transport presented a first informal draft bill that would introduce complete market liberalization. This proposal was, however, clearly rejected by the business chamber and the industry, which criticized its lackof conformity with EU directives because the dominant position of Telekom Austria on the market would be protected and because the regulator would not be sufficiently independent. In Novem- ber 1997, the Ministry presented a second draft for an entirely new Tele- communications Act. In the following consultation procedure, this second draft was, however, also rejected. The business chamber and the right-wing parties claimed that not much was changed from the first draft, and that the new project would not meet EU requirements concerning market access regulation for new operators and the independence of the regulator (Slomin- ski, 2002).
* Mostly the chamber of labor and the business chamber, which benefit from mandatory membership of all Austrian workers and firms.
It was only at that moment (beginning of 1997) that national industry representatives and independent law experts started to intervene significantly in the policy process. Estimating that the business chamber did not represent the demands for liberalization in a sufficiently offensive manner (Interview VII), they founded an‘‘ad hoc committee’’(IWT), which issued in April 1997 an alternative, very liberal proposal for a new Telecommunications Act, suggesting a regulatory structure largely inspired by the German legislation.
Doubts about the conformity of the two ministerial drafts to EU regulations thus allowed these actors to make their own proposal (Slominski, 2002, p. 133).
Given increasing domestic opposition and the growing pressure exerted by the EU Commission for a more rapid pace of reform, the Ministry of Transport started negotiations with the authors of the alternative draft bill.
Interestingly, the traditional social partners, notably the Austrian business chamber, were excluded from these talks on the grounds that the reform had to be adopted rapidly. It is of note that the EU Commissioner had requested, at the moment of the presentation of the alternative draft bill in April 1997 that the Austrian government should not wait for an overall consensus to be found, but instead seize the opportunity to opt for a liberal, competition- friendly Telecommunications Act (Wolfsberger, 1998, p. 432).
In addition, the Ministry of Economic Affairs, formally not in charge of telecommunication policy, began to intervene in the reform and finally also participated in the negotiations.* This Ministry largely supported the alter- native draft bill presented by the industry representatives. It was under pressure from these actors that the Ministry of Transport finally had to accept, to a large extent, the alternative project. To sum up, all interviewees confirmed that the industry representatives succeeded on the most important points in imposing their proposal on the Ministry. The final draft was adopted in less than a weekby the parliament without any significant amendments.
2. Coercive Adaptation Under Pressure from the EU Commission
Several observations indicate that the reform and its reorientation into a more liberal direction were, to a large extent, influenced by external coercion rather than being expressions of voluntary policy transfer in terms of learning. Even the industry’s important intervention at the end of the process must be seen in relation to the role of the EU Commission.
* The intervention of this Ministry can also be explained by party–political reasons because it was headed by a minister from the O¨VP, whereas the Ministry of Transport was directed by a social–democratic minister.