10.7.1999 Official Journal of the European Communities L 175/39 COMMISSION DIRECTIVE 1999/64/EC of 23 June 1999 amending Directive 90/388/EEC in order to ensure that telecommunications networks and cable TV networks owned by a single operator are separate legal entities (Text with EEA relevance) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular Article 86(3) thereof, Whereas: Pursuant to Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecom- munications services ('), as last amended by Directive 96/19/EC (%), Member States were required to lift special and exclusive rights for telecommunications services and infrastructures by 1 January 1998, subject to additional transition periods for some Member States. In particular, Article 4, as amended by Commission Directive 95/51/ EC (?), required Member States to ‘abolish all restrictions on the supply of transmission capacity by cable TV networks and allow the use of cable networks for the provision of telecommunications services, other than voice telephony’, and to ‘ensure that interconnection of cable TV networks with the public telecommunications network is authorised for such purpose, in particular interconnection with leased lines, and that the restric- tions on the direct interconnection of cable TV networks by cable TV operators are abolished. Directive 95/51/EC addressed two problems concerning undertakings to which Member States have granted the right to establish both cable TV and telecommunications networks. First, it stated that these undertakings are in a situation whereby they have no incentive to attract users to the network best suited to the provision of the rele- vant service. It was pointed out that the introduction of fair competition will often require specific measures that take into account the specific circumstances of the rele- vant markets. At the time of the adoption of Directive 95/51/EC, the Commission concluded that, given the disparties between Member States, the national authori- ties were best able to assess which measures were most appropriate, and in particular to judge whether a separa- tion of these activities was indispensable. Secondly, the Commission concluded that detailed control of cross- subsidies and accounting transparency are essential in the early stages of liberalisation of the telecommunica- tions sector. Article 2 of Directive 95/51/EC therefore required Member States to ensure in particular that tele- communications organisations providing cable TV infra- 192, 24.7.1990, p. 10. oj L O] L 74, 22.3.1996, p. 13. oj L 256, 26.10.1995, p. 49. structures kept separate financial accounts as regards the provision of public telecommunications networks and cable TV networks as well as their activities as telecom- munications service providers. It was also stated that while Member States should at least impose a clear separation of financial records between those activities, full structural separation was preferable. At the same time the Commission stated that in the absence of the emergence of competing home-delivery systems it would have to reconsider whether a separa- tion of accounts was sufficient to avoid improper prac- tices, and that it would assess whether such joint provi- sion did not result in a limitation of the potential supply of transmission capacity at the expense of the service providers in the relevant area, or whether further meas- ures were warranted. In this context the third paragraph of Article 2 of Directive 95/51EC required the Commis- sion to carry out, before 1 January 1998, an overall assessment of the impact, in relation to the aims of that Directive, of the joint provision of cable TV networks and public telecommunications networks through a single operator. This Directive is based on the assessment carried out by the Commission pursuant to Article 2 to Directive 95/ 51/EC. In preparing that assessment, two studies were commissioned on the competition implications in tele- communications and multimedia markets of, on the one hand, joint provision of cable and telecommunications networks by a single dominant operator and, on the other, restrictions on the use of telecommunciations networks for the provision of cable TV services. The studies concluded in particular that the joint ownership of telecommunications networks and cable TV networks by a single enterprise, without a high degree of competition in the local access markets, slows down the development towards a full multimedia infrastructure to the detriment of consumers, service providers and the European economy as a whole. The Commission has adopted a communication on the assessment carried out as required by Directive 95/ 51/EC and 96/19/EC (¥. In its review the Commission found that the optimal development of telecommunica- tions and multimedia markets depends on four factors: ) O] C 71, 7.3.1998, p. 4.