With the trialogue negotiations between the Commission, Council and Parliament now underway, an approved final text should in theory be imminent. However, the Council and the Parliament still have significant differences of opinion given their respective positions, and must still take on board the concerns of the industry, which is generally skeptical about the likely success of the code in creating a sensible framework for investment. The EC’s original proposal aims to create a future-proof regulatory framework that better takes into account how the market has evolved over recent years.
The EC’s initial proposal
The initial proposal for a new European Electronic Communications Code was unveiled by the Commission back in September 2016 and designed to overhaul the existing legislative framework for telecommunications. Its main provisions included:
Measures to stimulate investment in very high capacity networks: The proposal was for a general reduction in wholesale access obligations Market reviews would become less frequent (from the current three-year timeframe to a five-year one). SMP operators which invested in high-capacity networks would face lighter price regulation; operators open to co-investment, or which operate under a wholesale-only model, could also be exempted from SMP obligations all together (particularly in rural areas).
Spectrum & 5G: Spectrum licences would be longer (25 years), and linked to investment requirements. Timing of spectrum assignments, as well as licence conditions would be coordinated to ensure spectrum is available sooner, and to reduce costs for operators present in multiple countries. Spectrum sharing would also be made easier for 5G networks.
Universal service: Legacy services would be removed. The focus would be on universal basic broadband.
Services and end-user protection: “Electronic communications services” (ECS) would be redefined to take account of the popularity of OTT services. Equivalent services would be subject to equivalent rules.
Governance: The EC proposed to strengthen the role of NRAs by establishing a list of their minimum competences and introducing enhanced independence requirements. BEREC would get a stronger role in coordinating regulation. A new “double-lock” system would allow the EC to demand amendment or withdrawal of draft market reviews, with the consent of BEREC.
The EU Parliament, however wants to strengthen consumer protection, and is pushing for greater harmonisation around spectrum. On October 2, the ITRE committee of the Parliament voted on its report and proposed amendments. In summary:
Co-investment: it is proposed that investment plans meet stricter criteria before regulation can be significantly reduced.
Spectrum: The ITRE report supports 25-year licence durations, with a transparent review process at least every 10 years, and mandatory peer exchange of views between national spectrum agencies to foster greater harmonisation and transparency.
Consumer protection: Operators would not be allowed to charge additional fees for fixed or mobile calls to another EU state, unless this is justified by differences in termination rates. BEREC would set out guidelines for providers on how to recoup related costs. This measure has been criticised as a way to reintroduce retail price regulation through the back door.
Privacy: End-to-end encryption would become mandatory, to protect users from having their information hacked.
The EU Council wants measures to foster broadband investment in remote areas, and rather than greater harmonisation, promotes more flexibility at a national level when it comes to spectrum. On October 11, 2017 the European Council pencilled its amendments and granted the mandate to the Estonian presidency to begin the negotiations based on these. In summary:
ECS definition: The Council differentiates the rules applying to ECSs, based on whether the service is a paid one. It also proposes a review mechanism which would keep end-users’ rights up-to-date in a fast-moving digital environment.
Co-investment and access regulation: Measures to promote investment in remote areas are included, which allow a reduced level of regulation when competition is sufficient. These are accompanied by safeguards aiming to ensure effectiveness of regulation. The main SMP principle is supported and complemented with symmetric regulation of all network providers (in certain situations), in an effort to reflect the increasing complexity of market players.
Spectrum: While the Council welcomes increased cooperation among member states, it underlines that spectrum usage varies across the EU and that flexibility for national governments must be ensured. Peer review of national spectrum assignments would be led by the RSPG, not BEREC.
The clock is now ticking, but next June could be an unrealistic deadline
The EU Parliament and the Council now have to reach a common position through the trialogue negotiations with the EC. Those negotiations started on October 25, 2018 with the aim to complete the process and reach a final agreement by June 2018. However, such deadline could be unrealistic given the significant differences between the Council and the Parliament’s respective texts, and the criticism coming from large parts of the industry.
Telcos have voiced their concern that the rules as they stand, rather than reduce the overall regulatory burden, could in fact end up increasing it. OTT players have generally recognised that the playing field is likely to be levelled by upcoming regulation; however stress a preference for this being achieved by deregulation of everyone, rather than imposing new rules – particularly on OTT communications.
ECTA noted that critical issues to make co-investment solutions sustainable are left unaddressed. It also sees the risk to reduce NRAs’ independence, by allowing governments to specify a minimum period during which NRAs cannot issue new remedies related to new networks deployed through co-investment.
ETNO, representing incumbent operators, also voiced its discontent, arguing that “even the status quo with the existing EU Directives would deliver more predictability and certainty than the proposed new Code”.
