These proceedings are between Telefónica de España SA ('Telefonica'), an entity authorised to provide telecommunications services, and Administración General del Estado concerning the conformity with the Community directive relating to interconnection in the telecommunications sector of the royal decree transposing the directive into Spanish law.

Community legislation in the field of telecommunications essentially consists of liberalising directives and harmonising directives. The latter concern the harmonisation of the conditions under which public telecommunications networks and public telecommunications services may be openly and effectively accessed and used. Those directives form part of the provision of a universal service in an environment of open and competitive markets. The directive which forms the subject matter of this dispute is the key feature of this legislative framework.

Telefónica considered certain provisions of the Spanish royal decree transposing the directive to be unlawful on the ground that the Spanish Government had acted ultra vires its regulatory competence; so it brought an action before the Tribunal Supremo, in which it sought the setting aside of certain provisions of that decree.

In its preliminary question the Spanish Tribunal Supremo essentially asked the Court of Justice whether the directive permitted a Member State to adopt provisions requiring an operator dominant on the public telecommunications network to:

- provide access to the subscriber loop, and

- offer interconnection to local and higher-level switching centres.

Telefónica maintained that the directive did not permit the national regulatory authorities to impose (ex ante) on an operator having significant market power obligations concerning access and interconnection points on the network. The directive merely allowed national regulatory authorities to advocate inclusion of that question in the agreements negotiatedbetween the different operators. The conditions governing interconnection were thus a matter to be determined by the parties.

On the other hand, the Spanish Government considered that the Community provisions enabled the national authorities to require operators with significant market power to offer interconnection at local and higher-level switching centres. In fact, if a Member State considered that the market would not be totally competitive and that users' interests would not be guaranteed because an operator having significant market power refused to offer interconnection to certain levels of the network, that Member State could require that operator to offer such interconnection.

In its judgment the Court first analysed the purpose of the directive, which is in fact to seek to ensure interconnection of telecommunications networks, interoperability of services, and provision of a universal service in an environment of open and competitive markets.

In order to attain those objectives, the directive is relying primarily on commercial negotiations between operators providing telecommunications services. None the less, the directive also permits Member States to limit the freedom of those operators to decide whether to enter into interconnection agreements in order to ensure that those agreements are in conformity with the objective pursued by it.

On the basis of those findings the Court went on to analyse the contested provisions of the directive, in particular the provision under which dominant operators are required 'to satisfy only reasonable requests for access to the network.' However, the fact that those operators are required to satisfy only 'reasonable' requests for interconnection did not mean, the Court ruled, that Member States were precluded under that provision from imposing on those operators prior conditions or obligations with regard to access.

It was true that, under the directive, the national authorities had to encourage coverage in interconnection agreements of certain issues, such as the location of the points of interconnection.

However, it would not, the Court held, be compatible with the subject-matter of the directive to preclude the Member States from laying down prior conditions or obligations relating to such matters, even when to do so appears necessary in order to facilitate the introduction of competition and to further the interests of users.

Unofficial document for media use only; not binding on the Court of Justice. Available in all the official languages. For the full text of the judgment, please consult our Internet page www.curia.eu.int  at approximately 3 pm today. For further information, please contact Fionnuala Connolly: Tel. (00352) 4303 - 3355; Fax (00352) 4303 - 2731