by Gerry Oberst

A satellite service provider that wants to start a new business in Europe generally knows it will have to obtain facilities and spectrum licenses to operate most kinds of transmit earth stations. A potentially bigger and more annoying consideration is what kind of licenses might be needed for the service itself, in addition to the facilities. Both the European Conference of Post and Telecommunications Administrations (CEPT) and the European Union (EU) have in recent years sought to create rules to minimize this market entry barrier. Recent evidence shows there is still a long way to go.

First, the CEPT, through its working arm the Electronic Communications Committee (ECC) has adopted a large number of satellite-related decisions, including exemptions for licensing certain types of terminals and free circulation rules for portable terminals that allow them to be freely carried and used across national borders. Thus, a first step for a new provider is to determine if its operations are license exempt, which generally applies to certain sizes of small terminals and mobile or radio determination services.

But as this column has often noted, those decisions only become legally binding through national action. A July meeting of the ECC reviewed the most recent statistics on how many countries implemented the decisions. Some unhealthy patterns have, however, emerged.

While there has been some improvement throughout the last year, still by 2004, no single satellite decision had been implemented by more than 31 out of the 46 CEPT countries. A pattern emerges that European countries take a very long time to adopt these decisions–no more than 12 countries had adopted ECC decisions from 2002, and only one or two had adopted the decisions from 2003.

One wonders why some countries bother being part of the CEPT. Ten of the 46 CEPT countries have not adopted any of the more than 40 satellite-related decisions. Another 10 have adopted only a handful.

The 25 EU countries are under a legal requirement to minimize regulatory and licensing barriers, due to new EU directives that became effective in mid-July 2003. Mildly disturbing is the fact that six EU members failed to meet the legal deadline for implementing the entire package of new telecommunication rules and the European Commission must now take them to court.

More disturbing is the tremendous variation in how those countries have implemented the rules for service licenses. Recent efforts by companies to enter the market show the disparities. Filing requirements ranged from short e-mails to the regulator or total exemption from any notice (generally in the Nordic countries), to immense dossiers with detailed answers–a good example being Germany.

Fees for the privilege of providing service are all over the lot. France charges about 15,000 euros (close to $19,000) for a service license; Portugal about 7,000 euros (close to $9,000) and Belgium about 2,000 euros ($2,500). Spain seeks to charge a percentage of revenues, which is inconsistent with EU law; Italy used to charge revenue-based fees until the European Court of Justice ruled against it. Keep in mind that these are fees for service licenses, essentially nothing more than business licenses, with no regulatory oversight or bureaucratic obligations for monitoring spectrum interference or any other issues. And the U.K. is still seeking to implement fees for downlinks that can be consistent with EU law–an uphill struggle but one the regulator will pursue in order to get the revenue stream.

Getting beyond the filing and fee requirements leads to more complexity. Both Spain and Portugal try to insist that a service provider has an office in their country. This is way beyond EU legal requirements and a company can usually rely on having a local representative act as its agent. Countries have different requirements, not always explicit, on legal interception–for example, Monaco notes the rule specifically in its licensing papers.

There is no consistency between licensing obligations or enforcement across Europe. The EU laws are on the books but not always in practice. The various national interpretations ensure that any kind of trans-border business operation must devote substantial attention to regulatory compliance and maintenance, with separate dossiers for each country in which the service provide invoices customers.

Some of the problem is that EU laws are in a state of change. New requirements came into play last year that regulators have not sorted out. Some regulators themselves have been reorganized–we reviewed advice from a U.K. bureaucrat in July that made a total mess of the legal requirements for a satellite broadcasting service, due to confusion between spectrum rules and service licensing. Countries are changing laws and regulations, but are doing it slowly.

There is a good structure for licensing service providers in Europe – but there is a long way to go before that structure is consistent in practice.

Gerry Oberst is a partner in the Brussels office of the Hogan & Hartson law firm.