Telecom Italia SpA is quarreling with the European Commission over its directive that telecommunications infrastructure should be liberalized, and has taken its complaint to the Court of First Instance, demanding that provisions of the directive be annulled. The state-controlled company argues that the Commission overstepped its powers by adopting Directive 96/19/EC, which says that operators of alternative networks such as the internal networks set up by railway operators and utilities must be allowed to compete with state monopolies to carry some telecommunications services from July 1 this year. It is also asking the court to annul provisions in the directive on financing of universal service obligations. Its argument is that the directive violates the timetable for telecommunications liberalization agreed by the Council of Ministers, and according to Reuter, it points out that the Council agreed that all telecommunications markets should be liberalised by January 1 1998, but specifically rejected proposals that it set an earlier deadline for alternative infrastructure. On universal service costs, it says the directive encroaches on the powers of the Council and of the European Parliament by decreeing that the financial burden of guaranteeing affordable basic phone service to all consumers should be borne by companies providing public telecommunications networks. In Italy, that burden would fall solely on Telecom Italia, it complains. It argues that the Commission should not use Article 90 of the Treaty of Rome, which applies to government actions, to regulate the conduct of companies, and that it should instead use Article 86 of the treaty on abuse of a dominant position or Regulation 17/62 on restrictive business agreements. The point is moot because Telecom Italia and France Telecom have traditionally effectively been run as if they were an arm of government.
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