Annual report (20-F) - Ono

among certain operators on the basis of gross revenue. Nevertheless the CMT has agreed that no
compensation shall be applied to the costs of providing universal service for years 2001 and 2002. The
CMT has not considered the costs of providing universal service for 2003 and 2004 yet.
In addition to universal service, the Government may impose other public service obligations to
operators to fulfill public safety or national defense. In the same way, it may impose other public service
obligations, prior report from the CMT, due to the following reasons: territorial cohesion, extension of
use of new technologies and services, to ease communications amongst certain groups with special
circumstances, and to ease the availability of those services that imply evidence of the contents of the
message sent or of its sending or reception.
In the event of breach by the relevant operator of its public service obligations, prior
Government decision, the State Administration shall be entitled to directly assume the provision of the
relevant services or the exploitation of the relevant networks. Additionally, the State Administration shall
be also entitled to directly assume, prior Government decision, the provision of certain electronic
communications services or the exploitation of certain electronic communications networks to guarantee
public safety and national defense.
Regulation of Cable Television Services
Overview
Law 42/1995 on Cable Telecommunications (“Cable Telecommunications Law”), formerly
governed the exchange of video, audio broadband, and other telecommunications over the cable
telecommunications network. To these purposes, it divided Spain into 43 franchise areas in which two
operators, Telefonica, and the awardee of the relevant cable telecommunications and television
concession—such as us—were allowed to provide certain cable telecommunications and cable television
services. The Cable Telecommunications Law was repealed by the General Law on Telecommunications
of 1998, except for provisions dealing with cable television, which remained applicable until they were
finally superseded by the current General Law on Telecommunications. However, pursuant to the interim
regime of the General Law on Telecommunications, certain provisions of the Cable Telecommunications
Law remain temporarily applicable.
Pursuant to the General Law on Telecommunications, our former cable television concessions
have been converted by the CMT into administrative authorizations to provide cable television and radio
services, including pay-per-view, in our franchise areas.
Besides certain minor cable television operators existing prior to the calling of the tenders under
the Cable Telecommunications Law that may operate in the franchise areas, until December 31, 2009,
only two operators can provide cable television services in each franchise area (Telefónica and a second
operator, such as us). This limitation may be removed by the Government as of December 31, 2005 if
after consultation with the CMT, the Government deems it appropriate in light of the overall rollout of
cable networks in Spain. This limitation does not affect those franchise areas where no original
concession was awarded pursuant to the Cable Telecommunications Law. In those areas, administrative
authorizations to provide cable television and pay-per-view services may be granted after the approval of
the relevant regulation that will govern the provision of cable television services, as established by the
General Law on Telecommunications.
At present, and until the relevant regulation is approved, the provision of cable television
services is mainly governed by those provisions still applicable of the Cable Telecommunications Law,
pursuant to the relevant interim provisions of the General Law on Telecommunications, the Law of
Television Without Frontiers, the Royal Decree 2296/2004 and the relevant resolution converting the
former concessions to provide cable television services within our franchise areas into administrative
authorizations. After the approval of the regulation that will govern the provision of cable television
services, our administrative authorizations to provide cable television and pay-per-view services will be
subject to that regulation.
For a discussion on the cable television national regulatory authorities, please see “National
Regulatory Authorities in Spain” under “Regulation of Electronic Communications Services” above.
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