European Electronic Communication Code - a blueprint for a connected society

The recently announced EU consultation on a proposal for establishing a new European Electronic Communications Code (EECC) is part of the EU’s Telecoms Package proposals.  The consultation emphasises how connectivity is the underlying driving force for the digital society and economy, and identifies good connectivity as a necessary condition to achieve the Digital Single Market. The key aim of the EU’s telecoms reforms is to consolidate the current objectives of competition, the internal market and end-user protection, with a new objective of widespread access and take-up of very high capacity connectivity across Europe.

Background to the EECC

The EECC is intended to achieve and ensure the functioning and regulatory fitness of the internal European market for electronic communications. This legislation consolidates four existing EU telecoms directives, namely the:

• Framework Directive (2002/21/EC);
• Authorisation Directive (2202/20/EC);
• Access Directive (2202/19/EC); and
• Universal Service Directive (2202/22/EC),

while working in parallel with the Broadband Cost Reduction
Directive (2014/61/EC) and the ePrivacy Directive (2002/58/EC).

The EECC is intended to promote:

• the harmonisation of European legislation, inline with the DSM initiative;
•  the reduction of ex ante legislation, as the market is already competitive;
• equal access to telecoms operators; and
• investment in connectivity.

The EECC is designed to update and consolidate the current framework, rather than propose any wholesale changes, although we highlight some of the most eye-catching proposals below.

What are the key changes?

The double-lock system

The Body of European Regulators for Electronic Communications (BEREC) is currently tasked with ensuring the consistent
application of the EU regulatory framework and promoting an effective internal market in the telecoms sector.  The proposed EECC will give BEREC additional powers, including the ability to adopt binding and quasi-binding decisions on some specific aspects of telecommunications regulation, to request information directly from operators, to set up a register of providers and to issue guidelines in a number of areas including quality of service parameters.

A notable quasi-binding power to be introduced is the so-called “double-lock” system. BEREC’s current remit is to oversee – and in some cases override – decisions by national regulatory authorities (NRAs).  However, its powers have lost most of their strength over the years due to political influence of Members States’ governments.  The introduction of a double-lock
system is intended to reinforce the role of BEREC.

The new system will mean that, when NRAs are in the process of drafting new national measures on telecoms market regulation and BEREC and the Commission agree on their position regarding the draft remedies proposed, BEREC will be able to require the NRA to amend or withdraw the draft measure and, if necessary, to re-notify the market analysis undertaken by the NRA which informed the proposed new national measures.

Access to civil infrastructure

The key principles of the current telecoms legislative framework will remain, but significant adjustments are proposed to provide necessary incentives to telecom operators to make economically viable investments or co-investments in future network infrastructure. Particular focus is put on providing greater access to civil infrastructure (e.g. ducts and poles).

The proposal aims at reinforcing and improving the Significant Market Power (SMP) access regime which the UK has implemented through the Communications Act 2003.  The SMP regime is similar to the concept of dominance in competition law.  In the UK, Ofcom has the power to apply special conditions to operators who are considered to hold SMP in relation to defined markets, e.g. in relation to wholesale broadband access. Where operators have SMP control over civil infrastructure, the EECC will seek to ensure that there is greater competition which will support greater access.  One way in which it seeks to do this is to ensure that wholesale-only networks with SMP apply a fair, reasonable and non-discriminatory approach to access, with a dispute resolution process where necessary.

Voice termination rules

The proposal changes the current system of voice termination fees payable by the person making the call. This is consistent
with the approach adopted towards roaming charges, demonstrates the intention to eliminate all rates applied when terminating a call on another network.

In particular, the EECC introduces:

• a binding methodology for setting voice termination rates, to be set through a Commission decision; and
• fixed maximum termination rates at an EU level,which will be established via delegated acts adopted by the Commission.

Digital Exclusion Areas

The EECC refers to ‘Digital Exclusion Areas’; these Digital Exclusion Areas exist where no operator or public authority has deployed, or plans to deploy, a very high capacity network, or has upgraded or extended, or plans to upgrade or extend, their legacy network to a performance of at least 100 Mbps download speeds.

This is in line with the Commission’s Communication on Connectivity for a Competitive Digital Single Market, moving towards a European Gigabit Society, where the Commission points out the need to improve connectivity in rural areas. The Communication explains how internet connectivity can play an essential role in preventing digital divide, isolation and depopulation by reducing the costs of delivery of both goods and services and partially compensating for remoteness, and sets the elimination of these areas as objective for 2025. The EECC proposes that NRAs undertake geographical surveys to identify existing Digital Exclusion Areas and to organise a call for interest in these areas to promote the deployment of high capacity networks in such areas.

Classification of services

The EECC proposes to update the current framework to reflect the evolving market by introducing three types of service category:

• internet access;
• interpersonal communications (split into numberbased and number-independent based); and
• services consisting wholly or mainly of theconveyance of signals, e.g. M2M communications and broadcasting.

This re-classification will remove the current broad ‘electronic communications service’ definition and in the case of interpersonal communications services will reflect that there are now over-the-top voice services which are number-independent.  The Commission sets out that these OTT VoIP services will only be subject to regulation where it is necessary in the interests of public policy to apply regulation to all types of interpersonal communications service.  One express example of this is in relation to security and the EECC also proposes that standardisation processes may be required to ensure effective access to the emergency services by all interpersonal communication services.

The EECC also gives more prominence to the ability for NRAs to develop a general authorisation model (as opposed to the current regime for individual licences for mobile operators) and to develop the most appropriate model for the adoption of 5G. The Commission will also have the power to adopt binding measures to achieve proportionality and consistency within different types of authorisation regimes. An example is the soft approach taken towards number-independent operators, which reflects the Commission’s technology neutral approach to the legislation.

Universal service

The EECC sets out the Commission’s intention to move away from legacy services (public pay phones, paper phone directories and directory enquiry services) and towards broadband.  Accordingly, the Commission has set out proposals in respect of both about the availability and the affordability of broadband. Furthermore, broadband is seen not only as the fact of being online, reference is also made to a functional internet access connection on the basis of a minimum list of online services that enable end-users’ participation in civil society – a recognition for the first time in EU law that basic broadband access should be considered as a universal service. This is something that the UK government is already planning with its universal service obligation on the provision of broadband with download speeds of at least 10 Mbps in the Digital Economy Bill.

These two objectives are reinforced by the proposed Regulation on the Promotion of Internet Connectivity in Local Communities and Public Spaces, the so-called “WiFi4EU”, which allocate a share of EU funding to local public authorities for the development of Wi-Fi in public areas and buildings.

Spectrum

The Commission also deals with the regulation of spectrum. There is a clear focus put on the need for greater cross-border coordination on the management of spectrum, with the Commission advocating that the NRAs adopt a more holistic view on spectrum management.

The EECC also proposes that key aspects of spectrum authorisation, such as minimum licence duration (25 years), spectrum trading and leasing processes, and principles to promote competition such as spectrum caps will be enhanced to ensure a more consistent approach.  Furthermore the Commission proposes a ‘use it or lose it’ approach for the withdrawal of spectrum allocation.

An example given is the management of white space (the unused broadcasting frequencies in the wireless spectrum), where NRAs could make better use of available spectrum, as well as that of the spectrum shared use, where tracking becomes necessary to avoid interference. In the UK, Ofcom has already adopted some innovative approaches to these kinds of issue and it will be interesting to see if the EU takes into account the English approach following the consultation.

Prominence is also given to general authorisations instead of individual licences, as is already the case in the UK for fixed line and broadband access. This change of authorisation procedure will not be something that will happen overnight, yet we have seen it happening in other sectors, e.g. Uber in the transport sector, and we do not see why for the telecommunications sector the story should be different.

What’s next?

The proposals will now pass through the scrutiny of the European Parliament and the Council of the EU, alongside the WiFi4EU Regulation and the proposed Regulations regarding the promotion of internet connectivity in local communities and public spaces and the regulation of BEREC, respectively.

This process will include consultation with relevant stakeholders and NRAs and we are therefore likely to see some amendments to the current proposals before they are adopted. We are unlikely to see a new telecoms framework in the short term – not only are the proposals framed as a Directive (which will means that Member States will, in any event, have to adopt domestic implementing legislation) but they also pave the way for a number of delegated and implementing acts which will take some time to develop.