Introduction
Market Composition
Legal Framework
Regulatory Authorities
Enforcement
The Telecommunications Market Act
The Radio Act
Operator Obligations
Interconnection Framework
Consumer Protection
General Service Obligation
Finland has one of the most liberalized telecommunications markets in the world. Only the provision of a public mobile network is subject to an operator licence. Finland also has one of the world's most competitive markets. This is partly due to the liberalization programme that was initiated by the government in 1987, as well as to the composition of the Finnish market -characterized by a large number of independent operators. At the highest point in the 1930s, there were as many as 800 telephone operators in Finland.
Finns' appetite for mobile telecommunications and the Internet has also contributed to the competitiveness of the telecommunications market. Finland has a mobile telephone subscriber penetration of over 65 % and there are 11 internet host machines for every 100 people. 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 100 licensed or notified operators in the country. With its rapidly growing mobile communications and internet markets, it seems only natural that Finland would be the first to announce its readiness to embrace the technology that is hoped to cause these markets to converge. To this effect, Finland issued on March 18 1999 the world's first third generation mobile network licences.
From Czarist times (1809-1917), user-owned local telephone operators were granted exclusive concessions to build and operate their own networks. Until the latter half of the 1980s these operators provided local telephone services in their concession areas without competition. In the late 1980s, 46 local operators formed the Finnet Alliance to lobby the government and to compete in long distance, international, mobile, and data services. During the 1990s the Finnet Alliance grew into a major competitor in these service markets through subsidiaries. The alliance is currently undergoing change as the largest telephone company in the alliance, Elisa Oyj (formerly Helsingin Puhelin Oyj), has acquired majority control in Radiolinja and Datatie.
Finland's State Postal and Telecommunications Office was created in 1917 to build long distance lines throughout the country to connect the networks of the local telephone operators. In addition to providing long distance telecommunications services, the office provided local services to individuals and businesses propitiously located outside the concession areas of the local operators, as well as international telecommunications services. The office also served as the national telecommunications regulatory authority until 1987 and retained the exclusive rights to provide long distance and international telecommunications services until the end of 1993.
During the 1990s a number of operators have made inroads on Sonera's and the Finnet Alliance's market positions. Notable examples include:
- Telia Finland Oy, which offers mobile, long distance, international and internet access services;
- RSL COM Finland Oy, which offers international, mobile, corporate network and internet access services;
- Global One Finland Oy, which offers international, corporate network and internet access services; and
- AUCS Finland Oy (formerly AT&T-Unisource Communications Services), which offers corporate network services.
While Sonera Oyj and Elisa Communications Oyj control the market for internet access, a number of independent internet access providers have grown considerably in market share during the late 1990s, including Saunalahden Serveri Oy, Interaktiivinen Satama Oy and EUnet Finland Oy.
Finland's telecommunications legislation comprises three principal acts:
- the Telecommunications Market Act (396/1997);
- the 1988 Radio Act (517/1988); and
- the Telecommunications Security and Privacy Act (565/1999).
The provisions of these acts are broadly drafted, technology neutral, and focus on promoting a competitive market. The details of applying these acts to the actual workings of Finland's telecommunications market are set forth in a significant number of government decrees, resolutions and regulations.
The general supervision and promotion of, and policy formulation for, telecommunications is entrusted to the Ministry of Transport and Communications. In carrying out these general duties the ministry:
- issues resolutions;
- administers the notification and licensing procedures;
- issues operator specific decisions; and
- terminates licensed activities for just cause.
The discretion exercised by the ministry is provided by the Telecommunications Market Act and adverse decisions can be appealed. Within the ministry, telecommunications matters are entrusted to the Telecommunications Unit, which has been divided into two separate groups: the Competition and Network Section and the Internet and New Services Section. To achieve independence between the regulator and the state-owned operator Sonera, the state's ownership interest in Sonera is overseen by a department within the Ministry of Transport and Communications separate from the ministry's Telecommunications Unit.
The monitoring of compliance with the Telecommunications Market Act is entrusted to the Telecommunications Administration Centre (TAC). TAC is responsible for the following:
- administering frequency licensing;
- numbering;
- internet domain name allocation;
- network and equipment standardization; and
- other technical specifications and type approvals.
TAC is also empowered to issue technical regulations on these matters.
TAC is divided into the following six sections:
- radio administration;
- radio equipment;
- telecommunications administration and standardization;
- postal administration;
- television licence services; and
- administrative services.
TAC charges administrative fees for many of the services it provides. These fees cover TAC's administrative costs and are set by the ministry and periodically amended to take into account changes in TAC's cost structure.
In 1998, the ministry delegated a major portion of its market administration and supervision duties to TAC. As a result, TAC's areas of responsibility and powers also include:
- the issuance of regulations related to infrastructure leasing, network and service obligations and non-discriminatory network provision;
- resolving interconnection, leased subscriber line and infrastructure leasing disputes; and
- deciding on public network subscription entitlements and fixed network subscriber line minimum selection requirements.
TAC works in cooperation with its national and international customers and interests groups. National interests groups such as telecommunications operators, manufacturers, user groups and government organizations are represented in the 18 administrative working groups and 19 standardization groups established by TAC. Although the recommendations and proposals of these working groups are not binding on TAC, their influence cannot be discounted.
The ministry and TAC are also assisted by Finland's competition authorities in matters concerning competition law issues and by the Data Protection Ombudsman with respect to data protection and privacy matters.
The enforcement powers of the ministry and TAC are quite extensive. They may impose conditional fines on recalcitrant operators or order that corrective work be carried out at the operator's expense. The ministry may also prohibit an operator from engaging in a telecommunications activity or revoke a mobile wireless network licence if the violating operator fails, after being put on notice, to change its non-compliant activities. An operating licence can also be revoked if, taking into consideration the extent of the operator's activities, it is apparent that the operator will not fulfil the terms and conditions of the licence.
Operators that engage in telecommunications without an operating licence or notification may be fined or imprisoned. Other violations are subject to a fine unless a more severe penalty applies. Economic benefit gained from a violation or from unauthorized telecommunications may, in certain circumstances, be forfeited to the government. This applies also to unauthorized telecommunications and decoding equipment.
The ministry and TAC may rely on assistance from police authorities, customs officials and border guards. They are also empowered to compel operators to provide them with relevant information concerning their telecommunications activities and any changes in their ownership structure.
The Telecommunications Market Act
The Telecommunications Market Act came into effect on June 1997. It was motivated partly by EU Commission proposals for the ONP Interconnection Directive (97/33/EC) and partly by industry and government aims to consolidate into a cohesive package the many fundamental amendments made to the 1987 Telecommunications Act. The Telecommunications Market Act also seeks to promote industry competition by further lowering market entry barriers and by encouraging competition in recalcitrant markets. Its principal purpose is to promote market efficiency so that the available means for telecommunications fulfil the reasonable needs of all users, are competitive, technically advanced, of good quality, functionally reliable and secure and reasonably priced.
The Telecommunications Market Act governs the construction and operation of telecommunications networks in Finland and the provision of telecommunications services on such networks as well as terminal equipment, decoding systems and subscriber television services and signal standards. The Telecommunications Market Act does not apply to the following:
- telecommunications for personal use;
- the use of radio equipment for public broadcasting;
- the resale of telecommunications networks and services, value added network (VAN) services, switched data services and image transmission services; and
- telecommunications of minor significance such as incidental voice transmission in a data network, experimental networks for restricted user groups and incidental programming transmission.
Regardless of these exemptions, all telecommunications networks and equipment must comply with the relevant technical standards.
Central to understanding the Telecommunications Market Act is the legal distinction between network provision and telecommunications services. 'Network provision' is defined as the provision of a telecommunications network for telecommunications services. 'Telecommunications services' is defined as the provision of exchange and routing services. This distinction is used, for instance, in defining network operators' excess capacity and infrastructure assignment and leasing obligations towards services operators. It serves as the demarcation line between an operator's various business activities when complying with the accounting separation requirements. Telecommunications 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 market.
Public mobile network licences
Only the provision of a public mobile wireless network is subject to operator licensing in Finland. The ministry grants operator licences, which are network specific and, provided the statutory requirements are met, are granted for maximum of 20 years. There are no licensing or application fees for a public mobile network licence except for the frequency licence fees and fees for operator prefixes and network codes (discussed below). Neither operator licences nor frequency licences are auctioned.
A public mobile network licence must be issued when the following requirements are met:
- the applicant has sufficient financial resources to fulfil its statutory operating obligations;
- the applicant complies with the applicable provisions and regulations; and
- the radio frequencies necessary for the network are available.
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 Telecommunications Market Act. The actual assignment of radio frequencies is the responsibility of TAC.
The ministry may, if frequency availability requires, impose on an operator geographic restrictions and other such conditions as serve non-economic public interests like network safety, operability, compatibility and data protection.
Foreign operators are not required to establish a Finnish corporation or branch office to obtain a public mobile network licence.
Telecommunications notifications
All other telecommunications services and network provision services covered by the Telecommunications Market Act must be notified to the ministry before the commencement of operations. There are no fees for submitting a notification form.
The operator notification requirement does not apply to the following:
- the services exempted from the scope of the Telecommunications Market Act;
- fixed satellite links such as very small aperture terminal and satellite news gathering links;
- taxi and other mass transit radio networks; and
- public networks with less than 500 subscribers.
Enterprises offering these exempted services may at their discretion file an operating notification with the ministry to obtain operator status and some of the associated benefits (and obligations). A few internet service providers have taken this opportunity and filed notifications to obtain access to networks as telecommunications service operators.
Since January 1 1998 foreign operators entitled to engage in telecommunications activities in an EU member state or in a country that complies with the World Trade Organization's Basic Telecommunications Agreement have not been subject to the Telecommunications Market Act's notification requirements when arranging transmission connections for terminating international telephone calls into a Finnish local network. These operators are, however, required to provide TAC with information on their connection arrangements into Finland.
A notification must contain the following information:
- notifying party's contact information;
- extract from the Trade Register or similar register;
- ownership in the notifying party;
- itemization and description of the services to be provided;
- operational area;
- description of or plan for network;
- description of or plan for interconnection;
- estimate of the investments and funding required; and
- five-year estimate of the development of the business.
Once the notification has been effected, the operator is entitled to apply for the subscriber numbers, operator prefixes and network codes required for its operations. These codes and numbers are granted by TAC 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 Radio Act establishes the legal regime for licensing radio transmitters and for frequency spectrum management.
Radio receivers
The use and possession of a radio receiver is not subject to any operating or frequency licensing requirements. Radio receivers must, however, comply with the applicable type-approval standards and electromagnetic compatibility (EMC) requirements. Radio receivers imported into Finland for sale or otherwise sold must also be properly marked.
Radio transmitters
The possession and use of a radio transmitter in Finland is subject to a frequency-specific transmitter licence obtained from TAC. Transmitter licences are granted for maximum 10-year periods (however, six-year periods are the rule) and apply only to transmitters that are type-approved, fulfil the applicable EMC requirements and are properly marked. Radio transmitters also may not be imported into Finland for sale or otherwise sold unless these requirements have been met.
Each licensed transmitter is subject to an annual licence fee to cover the publicized administrative costs of TAC. The amount of the fee depends on whether the transmitter operates on an internationally coordinated frequency. The annual fee for radio frequencies requiring international coordination is Fmk960. International coordination work may require at least six months to complete. The annual fee for frequencies that do not require international coordination is Fmk390. Licences for such frequencies may, if available, be issued within a few days. TAC may impose transmission and geographic restrictions in addition to the general licensing terms.
A general exemption from the transmitter licensing requirements is provided for radio transmitters that operate on a collective frequency identified by TAC and which are type-approved, EMC compliant and properly marked. Mobile telephones and radio local area network terminals are just two examples of transmitters that have been exempted from the transmitter licensing requirements.
Type approval
Radio equipment must be type-approved in accordance with Finland's national type-approval system or, where applicable, in accordance with the ERC type-approval system based on Decision ERC/DEC(97)10. These type approval rules will change as of April 8 2000 when Finland implements the new directive on radio equipment and telecommunications terminal equipment and the mutual recognition of their compliance (1999/5/EU). The description of Finland's type approval system below reflects the position as of February 1 2000.
National type-approvals granted by TAC are given on the basis of a test report indicating that the radio equipment in question fulfils the established technical requirements. The required tests may be conducted at an accredited laboratory in Finland or in another country. Finland's technical standards for type-approval are set forth in published decisions and, where possible, comply with the corresponding EU recommendations and decisions.
TAC charges a fee of Fmk1,700 for a type-approval decision and Fmk 3,400 for a type-approval decision on a family of products. TAC also charges an hourly fee for type-approval work that goes beyond what is normally required. Type-approvals granted by TAC are valid for five years and may in certain cases be revoked. TAC also charges importers and Finnish manufacturers a one-off monitoring fee for radio transmitters exempted from the transmitter licence, except for mobile telephones.
Radio equipment in Finland must fulfil Finland's applicable EMC requirements, which have been harmonized with Council Directive 89/336/EEC. Radio and terminal equipment sold in Finland must be properly marked to indicate whether connection of the equipment to the public network is permitted or prohibited.
Frequency licensing
The user frequencies of certain wireless networks such as third generation and wireless local loop (WLL) networks are subject under the Radio Act to radio frequency licences issued by TAC. The licences are subject to an annual fee based on the amount of bandwidth, geographic coverage and frequencies required and for certain network technologies on the number of years in operation. These annual fees are calculated on the basis of TAC's actual operational costs.
Operators in Finland are required to shoulder general obligations with respect to their activities. These obligations are shared by all operators, regardless of their market power. Accordingly, operators (to the extent applicable), are required to arrange their operations so that end users may within reason use competitive, technically advanced, quality secured, and reasonably priced telecommunications services. Additionally, operators are required to:
- attend to the interconnection of their operations with other operators;
- ensure uninterrupted service whenever possible;
- lease to other operators excess cable ducts and radio mast platforms;
- attend to the invoicing of services as deemed appropriate; and
- separate their network provision service accounting from that of their telecommunications services.
Operators that have been notified as possessing significant market power are saddled with additional obligations in relation to their operations. These include further interconnection-specific obligations (eg, cost-based pricing, non-discrimination and transparency), accounting separation obligations and end user-specific obligations. Significant market power is presumed to exist when an operator's market power in its relevant operating market exceeds 25% or when a lower threshold determined by the ministry is exceeded. The ministry has identified 50 operators as possessing significant market power.
'Interconnection' is broadly defined in the Telecommunications Market Act as the physical and logical connection of operators' operations to ensure users' ability to communicate and to gain access to the telecommunications services of another operator.
Operators without significant market power are subject only to a general obligation to negotiate in good faith. Operators possessing such power, however, must accept all reasonable demands for interconnection.
Public networks must be interconnected as soon as technically possible after a request for interconnection has been made, unless the ministry or TAC specify otherwise. The point of interconnection is determined by the network operator requesting interconnection. Telecommunications services operators are entitled to connect their exchanges and other necessary equipment to any public network, whether mobile or fixed, provided the technical requirements set forth by TAC are complied with.
As a general rule, operators are free to set interconnection charges among themselves. They are also entitled to require reasonable payment security from an operator requesting interconnection. Only operators with significant market power in their respective markets and mobile operators with such power in the national market for interconnection are required to publicize their interconnection charges and sufficiently itemize them. These charges must be reasonable with regard to the costs incurred, taking into account a reasonable profit on invested capital.
As a general rule, the operator that has concluded the contract with the subscriber is required to collect from that subscriber the telecommunications charges due to other operators. Alternatively, he may provide the other operators with enough information to bill the subscriber themselves. Operators are also at liberty to agree among themselves on other means of invoicing.
Network access
The Telecommunications Market Act lowers market entry barriers by enabling nascent telecommunications service operators to choose the public network for offering their services. The capacity and subscriber line leasing, and interconnection obligations of network operators are, as a rule, very stringent under the Act.
As a general remedy, violations of access obligations, such as refusal to lease excess network capacity, may be brought to the attention of TAC which will strive to bring the disputing parties together to achieve a solution in line with the purposes of the Telecommunications Market Act. If no such solution is possible and it is evident that a violation has occurred, TAC may compel the network owner or operator to fulfil its duties under penalty of a fine.
Infrastructure access
Network owners that allow the provision of telecommunications services on their networks are required to lease to requesting operators any excess capacity on these networks available for telecommunications services. This requirement applies as a general rule to all networks, including cable TV networks. The lease terms are to be reasonable and non-discriminatory and must otherwise accord with the decisions of the ministry.
Operators are required to lease to requesting operators excess space in their cable ducts and on their radio mast antenna platforms forming part of a public telecommunications network, if the construction of parallel infrastructure is not expedient for environmental or zoning reasons. Operators are not, however, required to lease cable duct or antenna platforms if they can demonstrate that the facilities will be required within two years for fulfilling the needs of their own telecommunications customers. Operators must offer their cable housing and antenna platform facilities at reasonable leasing rates. If an agreement over the leasing of such facilities cannot be reached between operators with two months, the matter may be submitted to TAC for resolution. Operators that undertake to construct cable ducts or radio masts must take into account in their construction plans the reasonable written requests of other operators.
Subscriber and fixed lines
Operators are entitled to lease subscriber lines and fixed lines from network operators at the network connection points they indicate, unless the ministry determines that access at the requested connection point would be technically inappropriate, jeopardise data protection or would 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.
Network operators with significant market power that offer fixed lines to public network users are required either alone or together with other network operators to offer at least the fixed lines required under the ONP Leased Lines Directive. A 'fixed line' is defined as any non-switch accessed telecommunications service comprising a backbone between connection points on a transmission network that is offered in connection with the establishment, development and operation of a public network. In the case of an network operator with significant market power that also operates on its own network as a telecommunications 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.
Fixed network operators are required to offer at least the subscriber lines stipulated by TAC. A 'subscriber line' is defined as a telecommunications connection between the distribution frame of an exchange, concentrator or other similar equipment and a termination point of a public network.
Fixed network operators must respond in writing within two weeks to any requests for subscriber lines and, in the event that a network operator considers that it is not required to fulfil the request, it must state the grounds for such a view. In certain cases, the network operator is entitled to charge a fee corresponding to its actual costs of responding.
As 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 that also operates on its own network as a telecommunications service operator, the lease charges it offers must be non-discriminatory and reasonable.
In leasing subscriber lines to operators, network operators may deviate from the delivery terms they use with end users, provided such deviation is to the benefit of the leasing operator and the terms have been submitted to the ministry. The delivery terms a network operator uses in leasing subscriber lines to operators must be as economical as the terms it follows when providing subscriber lines to its own telecommunications services operations.
In relation to charges directed at end users, the ministry is empowered under the Telecommunications Market Act to issue regulations on the general principles of telecommunications charges and on the calculation, publication and itemization of such charges. The Ministry enjoys a similar power with relation to interconnection charges between operators.
Network construction and rights of way
Operators are entitled to lay cables and erect antennae by agreement with the land owner or, if such construction is for the needs of the community or specific property, by application of the general laws in Finland concerning takings. Additionally, operators may obtain the right under the Telecommunications Market Act to place cables and other necessary network infrastructure on the basis of an approved routing plan.
Consumer rights concerning basic telecommunications services flow from Finland's general Consumer Protection Act (38/1978), which applies to the offering, sale and marketing of telecommunications services. In addition, the Telecommunications Market Act sets forth provisions governing customer relationships between subscribers and operators.
Under the Telecommunications Market Act, end users are entitled to subscribe to a public telecommunications network and to lease lines, as well as to use such lines and connections for telecommunication purposes either for their own needs or by offering them to others. To protect this right, the ministry has defined the general principles governing the terms of delivery for telecommunications services. Accordingly, operators must have written general terms of delivery and those terms are to be available to the public free of charge. Operators are not permitted to deviate from their publicized terms of delivery to the detriment of household consumers. Subscription contracts must also be in writing.
As indicated above, the Telecommunications Market Act also contains provisions governing the sale of equipment in Finland. In addition to the requirement that only type-approved, EMC compliant and properly marked telecommunications equipment is sold in Finland, the act prohibits the tying of mobile handset sales to the purchase of a network subscription.
Fixed network operators possessing significant market power are required to provide universal service and the advanced service functions as defined in the relevant EU directives. Finland recognizes this obligation as part of operators' general service and development obligations. No common funding of these obligations has been established, nor is any funding mechanism contemplated. As part of their general service and development obligations, operators in Finland are required to develop their public networks to meet appropriately and economically the telecommunications needs of all end users in Finland. It is claimed that these obligations, together with the dynamic market competition already in existence, ensure the availability of affordable basic telecommunications services.
For further information on this topic please contact Craig Thompson at Roschier Holmberg, Attorneys Ltd by telephone (+358 8 551 33 02) or by fax (+358 8 551 46 01) or by e-mail ([email protected]).
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