Netherlands

Changes over the last three months (Oct. Dec. 98)

On-going developments

1. Tele -and data- communications

1.1 Telecommunications Act

The frameworks and starting points for a full revision of the Telecommunications Act have been established by the Cabinet and were sent to the Parliament in February 1996. Together with this, the structural relation between the Telecommunications Act and the Media Act has been settled.

In the meantime, an interim regulation (Telecommunication Facilities Act) has been enacted on July 1996, which was an amendment to the current Telecommunications Act. On that date the Licensing Act also came into effect. The Telecommunication Facilities Act created new opportunities providers of telecommunication services but especially for providers of networks. It allowed operators to start offering public voice services from July 1997. The interim regulation involved:

• the liberalisation of the existing "alternative" infrastructure ;
• preferential treatment of existing CATV-network operators to expand into areas which have not yet been accessed ;
• the liberalisation of the right to install and operate cables without digging rights.

On the basis of the interim regulation, the Minister of Transport, Public Works and Water Management has enacted a number of further implementation regulations.

In September 1997, a proposal concerning the new Telecommunications Act was submitted at the Parliament. This proposal was mainly a digest of the rules as they have been submitted within the European directives. It dealt with, among others, the abolition of the concession of KPN. However, KPN will keep obligations with respect to interconnection, special access and universal services.

In many cases, the licenses will be replaced by registrations. The two national infrastructure license holders will keep the obligations that are connected to the licenses for a period of five years. The new act does not contain special provisions concerning the supervision of access to the cable. According to former agreements within the Cabinet, after January 1^st 1998, the supervision of the cable has become part of the Competition Act; the Commission for the Media will lose its present competencies.

In the last quarter of 1997, the OPTA indicated in a comment that this legislation should be less detailed and technology dependent and that the competencies of the regulator should be strengthened. It also considers that there should be a better demarcation between the Telecommunications Act and the general Competition Act.

In the second quarter of 1998, the Lower House has approved the new Telecommunications Act. It contains twenty chapters:

1.2 Infrastructure licenses

After the application term for two national infrastructure licenses was closed on September 9 1996, the Dutch Ministry of Transport, Public Works and Water Management in October awarded two national infrastructure licenses to Telfort (NS Telecom and British Telecom and Enertel (consortium of utilities).

With an infrastructure license, licensees do not need to get KPN Telecom’s approval to add an extra line to their networks and third parties may be connected to networks previously limited to private business use.

*Open Network Provision includes:

• open network and obligation to provide
• objective and transparent conditions (e.g. cost-oriented tariffs)

1.3 Interconnection

The proprietary infrastructure (e.g. Cable TV or business networks) of potentially new telecommunications services competitors is often insufficient for providing competitive services. A specific right to interconnect is therefore, along with digging rights, one of the most important aspects of an infrastructure licence. In practice, new providers will want to interconnect their networks to KPN Telecom network, which must be negotiated with KPN Telecom.

The interconnection guideline that has been set by the European Union (March/April 1997) has been worked out in national guidelines. The major elements are:

• In case of interconnection of fixed telecommunications networks, a distinction is made between "special access" and "interconnection" ;
• KPN Telecom has to base the interconnection tariffs on costs and has to break it down into elements of the service bought and transmission.
• The Minister wants different tariffs for the completion of telephone traffic to subscribers of KPN Telecom and for telephone traffic that originates on the network of KPN Telecom.
• There will be an interconnection tariff for special leased lines that start in the network of a competitor of KPN Telecom and end in the KPN Telecom network ;
• KPN Telecom has to provide access at all points of its network

1.4 Frequency policy

A bill concerning the (radio) frequency policy has been presented to the Parliament early 1996. As of January 1st, 1997, anyone can apply for a transmission frequency directly with the Radio communications Agency (RDR). Therefore, KPN Telecom no longer has a priority right.

1.5 DCS 1800 licences (mobile telephony licence)

During 1997 there has been a lot of uncertainty around the DCS 1800/E-GSM licenses.

Till the end of May 1997 only two companies (Telfort and Enertel) seemed to be interested in a DCS 1800 licence. In June 1997, after several discussion, the Parliament accepted the bill concerning the auctioning of two licenses for the use of the DCS 1800 E-GSM frequencies together with a number of motions that included:

• KPN and Libertel were not allowed to put DCS 1800 licences within two years after the grant of the licenses, unless the development of the market will be distorted by this measure.
• The two new licensees have to build a DCS 1800/E-GSM network with national coverage within three years.
• The 50 MHz DCS 1800 frequencies that have been freed by KPN had to be auctioned in spring 1998.
• Number portability for mobile connections had to be introduced as of January 1^st 1998, unless the OPTA (Independent Post and Telecom Authority) has grounds for delay (maximum: one year).

The government had to start a consultation with KPN with regard to the destruction of ATF 3 (analogue mobile network) because it does not use the frequency spectrum efficiently.

In October 1997, the Cabinet decided to delay the intended auction of DCS-1800/E-GSM frequencies and to revise the bill involved and in November 1997 the Parliament agreed on the revision of the bill by the Minister of Transport, Public Works and Water Management. In December 1997 the auction was started with a registration round. The interested parties had to present themselves at the latest on January 7^th 1998.

On February 12^th 1998, the auction of the frequencies for the two national combined E-GSM/DCS-1800 licenses and the sixteen smaller DCS-1800 licenses was started. Eleven days later, the auction was finished. The auction comprised a total of 137 rounds. The total proceeds of the auction were about ECU 853 million:

• Federa (Deutsche Telekom, France Télécom, ABN-Amro bank and Rabobank) and Telfort (British Telecom/Dutch Railways company) were the highest bidders for the two national licenses. They will each have the use of 15Mhz DCS-1800 frequencies and 5 MHz GSM frequencies. By now, Deutsche Telekom has left the Federa consortium.
• KPN (KPN Telecom) acquired seven of the smaller DCS-1800 packages; Libertel acquired two, Tele Denmark four, Orange/Veba two and Telfort one. These smaller packages can be used for a wide range of purposes, such as Wireless Local Loop and regional telephony, but can also be combined to constitute a nation-wide mobile telecommunications network.
• Air Touch also participated in the auction.
• Tele Danmark together with the Belgian operator Belgacom started a joint-venture called Ben (first called Brucop and Proximus). This company acquired the two licenses of Orange/Veba. Together with the four licenses of Tele Danmark, the joint-venture will be able to offer mobile communications services throughout the entire country.
• Telfort started offering its mobile communications services on September 30 1998.
• Dutchtone will start offering its services at the end of January 1999. Ben will follow in February 1999.

The minister of Transport, Public Works and Water Management wants to finalise the auctioning of frequencies for UMTS mobile telephony already in 1999. The introduction of UMTS is expected in 2002.

1.6 Number portability

An independent investigation has shown that KPN Telecom will not be able to offer number portability before 1999. In June 1997, the Parliament has accepted a motion that insists on the portability of phone numbers as of 1999. In the fourth quarter of 1997, members of the Parliament announced that the realisation of number portability of the fixed and mobile numbers has to be considered impracticable.

2. Electronic content

2.1 Liberalisation Media Act

The revision of the Media Act developed in three steps. The first step was completed on April 1996: commercial broadcasting companies are not obliged to offer their programs on a national basis anymore. The second step (July 1997) concerned the bill which extends the possibilities for offering new types of services via cable, ether or satellite. It also dealt with the expiration of the strict separation between content (programs) and infrastructure. The last step concerns the possible adaptations of the Media Act as a result of the complete revision of the Telecommunications Act.

2.2 Criminal responsibility for punishable information of anonymous origin on the electronic highway

The Criminal Law Code is considered as applicable to the electronic highway and the development of legislation will be left to jurisprudence.

2.3 Consumer protection

The rise of electronic shopping will require adaptation of existing laws. When a European directive is set, this may require adaptation of the Civil Code. However, there are no concrete plans for legislation.

2.4 Intellectual copyright

The developments in this field are strongly internationally determined. Separate notes to the Parliament concerning new media and copyright issues are being prepared.

2.5 Privacy

The Personal Data Registration Act will be replaced by the Personal Data Protection Act, which should come into effect at the latest in October 1998. It no longer regulates the building and the administration of databases with personal data but comprises the processing of personal data in general.

2.6 Cryptography

It is not subject to restrictions. Regulations concerning the telecommunications facilities tap-ability have been integrated in the new Telecommunications Act. But it is expected that the market parties will independently take care of the realisation of "certification authorities" that administer the issue of cryptography keys and the unique relation between keys and individuals.

2.7 Public domain of the information provisioning

The Cabinet decided, in 1996, to concentrate on four aspects:

• the future of the public TV and radio network ;
• the access of government information ;
• the role of public libraries in offering access to the electronic highway ;
• extra investments in education.

2.8 Bill concerning computer crimes II

According to the adaptation of the Article 53 of the Criminal Code, that now offers protection to printers and publishers, the Criminal Code responsibility of the Internet Service Providers through which punishable material (like child pornography) is distributed, will be limited by law. Furthermore, by means of the adaptation, e-mail will get legal protection. Encryption (encoding of messages) will stay legal.

2.9 "Electronic signature and law"

In October 1997, the minister of Economic Affairs and the minister of Justice announced they want to remove the impediments for doing juridical transaction electronically. In a letter to the Lower House, they announce the project "Electronic signature and law".

3. Supervision telecommunications market

Till August the 1^st ,1997, the Main Directorate Telecommunications and Post (HDTP) supervised the telecommunications market. It consisted of three parts:

• the Directorate Policy Issues (BZ)
• the Governmental Department for Radio-communication(RDR)
• the Directorate Supervision Networks and Services (TND).

As of August 1^st, the OPTA (Independent Post and Telecom Authority) acts as an independent supervisor of the telecommunications market. It is allowed to impose sanctions without the approval of the Ministry of Transport, Public Works and Water Management. It is expected that the OPTA can withdraw when the liberalisation and competition is "complete".

4. Stimulation of and legislation for the Electronic Highway

4.1 Note "Legislation for the Electronic Highway"

Resulting from National Action Program Electronic Highways, the minister of justice has presented on February 12 1998 the note "Legislation for the Electronic Highway" to the Lower House. On behalf of the note, a systematic investigation of whether the existing legislation, which mostly has been written for the "physical world", is applicable to the electronic highway has been done. According to the note, international co-operation and harmonisation of legal norms is essential to be able to offer unambiguous rules and legal security to the citizens. The existing Dutch legal rules and concepts are, possibly after adaptation, applicable to the electronic highway. The legislative role of the government will stay limited to the classic regulatory tasks. Furthermore, the government facilitates electronic traffic by promoting a market which is transparent and accessible, by promoting the reliability of electronic traffic and by removing existing (juridical) impediments.

The note, which can be found on the web site of the minister of justice ((http://www.minjust.nl) deals with five themes:

1. Internationalisation and jurisdiction
2. Privacy
3. Reliability
4. Markets
5. Guarding of the law

4.2 National Action Program Electronic Highways

In 1994 the Dutch government (Ministry of Economic Affairs) started up the National Action Program Electronic Highways. This program consists of six lines of action:

1. Liberalising the telecommunications-infrastructure
2. Liberalising the Media Act
3. Demarcation of the Public Domain
4. Juridical border conditions
5. Example projects in the public sector
6. Initiatives in the market sector

In this framework, the government has committed itself to create opportunities for new electronic highway initiatives (e.g. by means of the role of legislator) and has announced to start large-scale example projects as a user of the electronic highway. The government also addressed the business sector to unfold initiatives, inviting in 1995 a group of leading companies to formulate needs for a quick start of the electronic highways in the Netherlands. Subsequently, those companies have formulated a plan of action, titled "Vision on Acceleration" (November 1995) and gathered in two groups: the "Initiative Group Infrastructure" and the "Core Group Services". In November 1996, both groups have presented their plans in the report "Services and Infrastructures for Electronic Highways in the Netherlands".

For 1998, the government dedicates ECU 27.5 million to the National Action Program Electronic Highways.

4.3 Stimulation IS application areas

• Education: The Ministry of Education, Culture and Science has formulated an action plan with respect to ICT in education. The action plan presents a program with the purpose of completely integrating the use of ICT in education. In the first phase the program aims at primary education, secondary education and adult education, secondary teacher training and agricultural education. In 1997 and 1998 the first step of the project (with a duration of several years) is made.
  In February 1998, the Platform Information and Communication Technology in Education in the Netherlands (PICTION) officially started. PICTION is an initiative of several parties from the educational and business sector to professionalise the introduction of information and communication technology in the educational sector. The PICTION package of products and services consists of education, educational software, policy advice, (project) management and IT related services.

• Government: The objectives of the Cabinet sector are included in the note "Terug naar de toekomst" (Back to the Future), also called "BIOS-3" and presented in June 1995. The note "To accessibility of government information" of June 1997, summarises the initiatives and further plans. Several projects have been initiated: "Collective Information Counter" ; Staatsalmanak (State Almanac) ; the Algemene Databank Wet- en regelgeving. By the beginning of 1998, an evaluation of 8 experiments with electronic discussion platforms has been finished. The ministry of the Interior also works on the improvement of the electronic exchange of information within the public sector. Several research programs and consultations have been initiated to streamline the government activities. By means of the project "Overheidsnetwerk voor de 21ste eeuw" (ON21, Government network for the 21^st century), the ministry of the Interior, the VNG (Association of Dutch Municipalities) and the Internal Revenue Service are searching for possibilities to collectively put out to tender ICT services, like telephone services and payment traffic. The project "Digitale Duurzaamheid" (Digital Durability) has been started to take measures to preserve digital filed information. The BIOS-3 plans have been recently reformed by the new Minister of Public Information Dissemination, Roger van Boxtel, into a plan of action known as "Electronic Government". This involves a series of activities to ensure easy electronic access to government and therefore improved delivery of public services. It follows five principles:

• The provision of government services by electronic means must be equal in quality and certainly in price to the existing traditional services.
• This must be voluntary.
• Confidentiality.
• Collaboration with the private sector
• Electronic service provision by the government must not be limited to the ‘one stop shop’ but must also result in integration of ‘back office’ activities,

• Health service: In May 1996, the project Zorg 2000 (Care 2000) - Electronic highway in the health care sector - started. The core of Zorg 2000 is the realisation of building stones for a (virtual) Electronic Patients Dossier (EPD).

• Teleworking: by means of a number of actions, the Dutch government stimulates teleworking. Most of the ministries participate or have participated in teleworking projects. The Dutch government also participates in the Dutch Teleworking Forum. To stimulate teleworking in the Netherlands, the Dutch government in 1998 allows employers to pay for the furnishings for a teleworking place tax-free.

II - Changes and adjustments over the last three months (October-December 1998)

1. Legal and policy changes

1.1 Far-going advice on Intellectual Property Rights (IPRs) and the new media

The Commission Intellectual Property Rights has advised the Minister of Justice that the current rules on IPRs with respect to new media can largely remain unchanged. However, due to the new interactive exploitation techniques, there must be a legal basis for availability law. (http://www.minjust.nl).

1.2 Government announces the improvement of the network infrastructure

As part of the general investment in the infrastructure of 6.5 Billion guilders, the government intends to spend 142 Million guilders on GigaPort, a network of fast connections (up to 80 Gigabit in 2002) to the United States, Asia and the other countries in Europe. (http://www.gigaport.nl).

1.3 Transparency in Immaterial Production Factors

The cabinet has decided that a pilot project, "Transparency in Immaterial Production Factors", must be set up in order to gain experience in the identification and valuation of immaterial fixed assets.

1.4 New media as a key to cultural innovation

The Secretary of State for Cultural Affairs, van der Ploeg, is planning to spend 2.85 Million guilders for projects that incorporate culture in new media techniques. For next year, another 25 million will become available. (Http://www.minocw.nl).

1.5 Educational software for public education must be stimulated

The Netherlands spends relatively little on hard- and software in education in comparison to the United States, and to other European countries. This was the outcome of a study by order of the Ministry of Education. To reduce the gap, a structural rise in spending is needed, of 75 MECU yearly.

1.6 The Higher House postpones the treatment, but finally accepts the Telecommunication law

The vote on this new law was planned for the end of September, after several earlier delays. Amendments had to be made, especially with respect to privacy and tapping. The final decision came mid October. Implementation has been started mid November. (http://www.parlement.nl).

1.7 The new Telecommunication Law contains tele-selling

The Minister of Justice has contained the troublesome selling by telephone. Telemarketeers immediately have to mention themselves by name, and have to inform the other side about the objective of the conversation.

1.8 Service Providers need to co-operate with the Justice Department

ISPs can be obliged to hand over the details about a subscriber, if there is speech of suspicion of punishable facts and a legal investigation. That is the core of a bill from the Minister of Justice, Mr. Korthals, Computer Criminality II. Another proposal incorporated in this bill is privacy of correspondence for e-mail. (Http://www.minjust.nl) and (Kamerstuk 25443, nr 40).

1.9 Internet Services and Taxation

The new tax laws reverse the fact that online services suppliers had to remit all their value-added taxes to the Dutch exchequer. Discussion is still going on in the Lower House, based on the report from the Secretary of State for Finance, Mr. Vermeend, on Taxes in a borderless World, which demonstrates the large growth potential of electronic commerce, and possible implications for, and revisions of, current tax laws (http://www.minfin.nl). According to the new tax laws, taxes have to be paid in the country in which the transaction has taken place.

1.10 Basic law in the digital era

The Cabinet has appointed a commission that will investigate the "Basic law in the digital era". The commission must formulate proposals for the review of the basic law. (Http://www.parlement.nl).

1.11 Main Directorate for Telecommunication and Post (HDTP) has been changed

The Cabinet has decided to transform the Main Directorate for Telecommunication and Post (HDTP) into the Directorate General for Telecommunication and Post (DGTP). The DGs have more political power than the main directorates. (Http://www.minvenw.nl/hdtp).

2. OPTA rulings

2.1 OPTA allows for slower reduction in tariffs of KPN Telecom

OPTA has decided that KPN can adjust its tariffs in two phases instead of one. Several tariffs will go down in January, leading to an average lower cost per household of around 10 percent. Loss of turnover will be approximately 330 Million guilders for KPN. (Http://www.opta.nl).

2.2 OPTA investigates GSM and ERMES (HDTP/98/2370/SV)

As a consequence of the new Telecommunication Law, the operators of GSM and ERMES networks have to report to the OPTA about capacity, quality and features of their networks. (Http://www.opta.nl).

2.3 Objection Dutchtone against license Proximus (Belgacom and Tele Danmark)

Dutchtone, one of the new mobile operators, did have objections to the recent granting of a license to Proximus because it has obtained the licenses first granted to Tele Danmark and Orange. Dutchtone did have the opinion that the licence could not be granted to Proximus, because this company is in the same party as Tele Denmark. The law does not allow that a license is granted to a party that has been granted a license before. Proximus however posed that the transfer of the frequencies has been taking place according to the Act on the Telecommunications facilities. (http://www.opta.nl). In the meantime the name "Proximus" has been changed to "Ben".

2.4 Telephone directory KPN much too expensive

The OPTA demonstrated that KPN is charging an exorbitantly high price for the supply of its directory of telephone subscription to other parties:(http://www.opta.nl).

3. Market changes

3.1 Telfort starts vigorously on the Dutch market for mobile telecommunication

On September 30^th 1998,Telfort started supplying mobile telecommunication, 7 months after it bought its licence via an auction. The company focuses on high quality, low costs and high flexibility. "Old" GSM telephones can not be used: Telfort makes use of the DCS 1800-network. (Http://www.telfort.nl).

3.2 Third Twinning Centre announced

The first Twinning Centre was opened in Amsterdam on the 22^nd of October. Investment by the government in the Twinning project will be raised from 70 to 90 Million guilders. Total investments will amount almost 200 Million guilders. (Http://www.twinning.com).

3.3 PTT-Post introduces digital passport

PTT-Post has introduced KeyMail, a digital passport that can be used as an identification for e-mail. It is expected that it significantly enhances electronic business. KeyMail costs 141 guilders a year. (Http://www.keymail.nl).

3.4 KPN and Qwest start a new company

The American telecom operator, and KPN Telecom invest $700 Million in a joint-venture that will have its headquarters in the Netherlands. This new company KPN Qwest, which will employ 700 people, is mainly going to focus on network capacity. Expected turnover in Europe in 2001 is $220 Million. Qwest was not active in Europe until now. (Http://jv.eu.net).

III - On-going developments

1. Standpoint convergence of the sectors telecommunications, media an IT

In the second quarter of 1998, the Dutch government has formulated a reaction to the Green Paper (COM(97)623) of the European Commission concerning the convergence of the sectors telecommunications, media and information technology and the consequences for the legislation. On March 26^th 1998, the government organised a consultation meeting with representatives of the telecommunications, broadcasting and information technology sectors and other interested parties, among which consumer associations.

The government has also defined a possible approach for regulation. Three approaches are mentioned (with a preference for option 1):

• Adaptation of the existing regulation has to be based on existing frameworks and has to build on these frameworks where possible.
• Adaptation of the existing regulation by means of a new framework for many on-line and interactive services, in addition to the frameworks that already exist for the traditional telecommunications and broadcasting activities.
• Adaptation of the existing regulation has to focus on the development of one coherent framework with a regulation approach that is equal for all three sectors.

2. Note "Above NAP", - re-calibration of the "National Action program Electronic Highways" (NAP)

In April 1998, the ministries of Economic Affairs, Transport, of Public Works and Water Management, of Education, Culture and Science, of the Interior, of Justice and of Social Affairs and Employment presented the note "Above NAP - re-calibration of the National Action program Electronic Highways. From four benchmark studies that have been executed in 1997, it appears that the Netherlands has made progress, but that in a number of fields, further action is desirable. More information about these benchmark studies can be found in the ESIS pages on "promotional actions".

Starting point of the Cabinet is that the development of the "information society" has to be left to the market, but that the government has to take action in a number of fields to form the "information society". The Cabinet has determined five program clusters for future policy:

• The government as legislator and instructor ;
• ICT and the public sector ;
• Knowledge and accessibility;.
• Innovation and ICT developments in the market sector.
• (Tele)Communications-infrastructure.

The structural budget for the Electronic Highways amounts to ECU 42 million.

3. The Netherlands "Brainport"

The second Cabinet Kok wants to transform the Netherlands into a "Brainport" by means of a large amount of investments in the electronic infrastructure and in education. The next four years, the Cabinet has reserved 3 billion ECU in total for the electronic infrastructure. Until 2003, 40 Million ECU will be spent on Internet exchange services, and 20 Million on Techno-centres.

The government will, during the four-year period, invest about 500 MECU in ICT in education.

One of the most important projects is the Giga Port project which consists of two sub-projects:

• GigaNet: the upgrade of both the national telecommunication R&D network and the connected international connections. Access can be fixed or mobile. International connections will in the first place be connected to the United States.
• GigaWorks: the creation of an environment in which companies and research institutions can develop and test completely new ICT- and Internet applications. GigaPort is a co-operation between the government, the SURF Foundation, SURFnet and the Institute for Telematics.