Telecommunications (Miscellaneous Provisions) Bill, 1996: Second Stage.

I move: "That the Bill be now read a Second Time."

The purposes of this Bill are to provide for the establishment of an independent regulator for the telecommunications sector and to enable the sale of equity in Telecom Éireann, thus allowing the formation of the equity based strategic alliance with the KPN/Telia consortium to be completed. These provisions represent significant changes in the legislative base underpinning the telecommunications sector in Ireland and will have a major impact on its future development. The Bill lays the foundation for the transition to open competitive markets in the provision of telecommunications services and enables Telecom Éireann to meet the challenges facing it in that new competitive environment.

Before outlining the provisions of the Bill, I would like to explain the background to the legislative proposals contained in it in order that the significance of these proposals will be better appreciated.

The telecommunications industry is a rapidly evolving sector throughout the world and it will have an increasingly important role to play in all aspects of modern society. There are a number of forces driving this rapid change. First, developments in technology are increasing capacity, reducing costs and extending the range of services on offer. Second, the growth of the services sector throughout the world requires more and more information transfers. Third, communications are becoming a necessity in the modern world, not only for economic reasons but also for social, personal and leisure time purposes. These forces of change are calling into question the current structure of the telecommunications industry and are creating new opportunities and threats for all players in the industry.

In the past, the most widespread organisational structure for telecommunications was an integrated State owned monopoly operating solely in the home market. Arguably, this was the most efficient system available given the state of the technology, investment risk, resources available and the state of economic and market development at the time. Now, new service providers have the technical and economic means to compete against the public telecommunications operator. Alternative telecommunications networks can be developed and operated separately but be integrated with the public network: the globalisation of business requires advanced international services and growing demand for telecommunications services requires speedy responses to customer needs.

Governments throughout the world are responding to and facilitating these developments by liberalising the industry, involving the restructuring of the ownership and control of telecommunications operators and opening up the markets to competition. All these developments are facilitating and are being facilitated by the development of the information society which will fundamentally transform major aspects of the modern world-work, lifestyles and Government services. The information society is generating a wealth of debate and study worldwide.

In Ireland the Information Society Steering Group appointed by the Minister for Enterprise and Employment is currently developing a proposed strategy for Ireland. There are many uncer-currently developing a proposed strategy for Ireland. There are many uncertainties about the nature of the evolution of the information society at present but it is clear that it will generate opportunities and threats for economies as well as telecommunications operators and it is important that Ireland seeks to maximise the opportunities presented by the information society and to minimise the threats. Another certainty about the information society is the requirement for a top class telecommunications sector if Ireland is to maximise the opportunities presented by it.

The development of the telecommunications sector in Ireland takes place in the context of developments at EU level. The European Commission has been the driving force behind the liberalisation of telecommunications in the European Union generally. The process commenced in the second half of the 1980s when the Commission proposed, and the Council adopted, the first tentative step with the removal of monopoly rights in relation to the supply of terminal equipment. However, political agreement on full liberalisation of services was not achieved until June 1993 when the Council of Ministers agreed that the key voice telephony market would be opened to the full rigours of competition from 1 January 1998 in the EU generally but with scope for deferment for certain member states, including Ireland. A further political agreement was reached in November 1994 on a similar timeframe for liberalisation of telecommunications infrastructure.

The Commission has now adopted a series of directives which provide for the removal of monopoly and special rights in the sector on a phased basis. Data and value added services were liberalised in 1990 while satellite and mobile telecommunications services were liberalised in 1994 and 1995, respectively. Provision has also been made to enable cable television network operators to provide services other than voice telephony over their networks. Finally, a directive is now in place which obliges member states to implement full liberalisation by 1 January 1998 subject to the deferment provisions which apply to Ireland and others.

The process of achieving the transition of the sector from the traditional monopoly structure to a competitive regime requires the development and implementation of a comprehensive regulatory package. The task of developing the regulatory package to ensure that competition is effective and that regulatory measures are uniform throughout the Union falls to the Council and Parliament. This package includes, in particular, measures to ensure new service providers have access to the networks of dominant market players, that is, generally speaking, the former monopoly operators. It also includes a directive dealing with interconnection and universal service which seeks on the one hand to establish a framework for commercial agreements between competing operators to ensure interoperability of networks and services and, on the other, to ensure the provision of universal service on a clearly costed and transparent basis. Finally, a directive is proposed to ensure a harmonised approach to the licensing of telecommunications services in order to ensure that there are no bureaucratic barriers to market access. During the course of the Irish Presidency I am actively pursuing progress on these initiatives so that they can be adopted and transposed into national legislation before liberalisation.

Debate adjourned.