EU „Connectivity Package“ to reshape telecoms regulation

Last week, on 14 September 2016, after extensive stakeholder and expert consultations, the Commission presented a – well above 1,000 pages – “Connectivity Package” that will shape the regulatory environment for network deployment and operation and telecommunication services for the coming years. Key elements of the package are:

• Legislative proposals for a substantial overhaul of the EU telecoms regulatory framework. 
• A set of new targets for mobile and fixed broadband connectivity in Europe.

 

A. What’s in the package?

 

The Connectivity Package comprises one draft directive and two draft regulations, accompanied by various communications, such as impact studies, explanatory memoranda, an action plan and other communications.

The legislative centrepiece of the bulky delivery is the proposal for a directive establishing the European Electronic Communications Code (COM(2016)590) (“Draft EECC Directive”). This new codification shall incorporate all four directives that build up the European telecoms framework – Framework Directive (2002/21/EC), Authorisation Directive (2002/20/EC), Access Directive (2002/19/EC), Universal Service Directive (2002/22/EC) – and update this framework in key areas such as access regulation, spectrum, service regulation, governance et. al.

Further, the Commission proposes a regulation strengthening the institutional framework of BEREC (COM(2016)591) (“Draft BEREC Regulation”). The third legislative proposal is a regulation regarding the promotion of internet connectivity in local communities and public spaces (COM(2016)589) (“Draft Wi-Fi Regulation”).

Beyond these legislative proposals, additional policy papers have been issued: The communication aiming to build a European Gigabit Society (COM(2016)587) and the 5G Action Plan (COM(2016)588) pronounce the strategic objectives of the Commission which are inter alia:

• Gigabit connectivity for all key social institutions like schools, transport hubs, universities, hospitals as well as “digitally intensive enterprises” by 2025 and
• 5G connectivity in all urban centres by 2025.

 

B. Key propositions

 

In the following, some key propositions that seem of particular relevance for the telecoms sector at large shall be highlighted:

I. Access regulation

Until now, the European broadband policy was focuses on the ensuring EU-wide high-speed broadband roll-out – high speed being defined as internet speeds of above 30 Mbps (see for example the cost reduction directive 2014/61/EU). The connectivity package aims at a new target: the rapid deployment of very high capacity networks (“VHC”). Networks consisting of fibre at least up to the distribution point or other networks of similar performance shall qualify as VHC networks (Art. 2 para. 2 Draft EECC Directive).

In future, SMP access regulation, shall pay regard to the investments made into such VHC networks, in particular in the realm of a somewhat relaxed price regulation (Art. 72 Draft EECC Directive). Also, new network elements that contribute significantly to the VHC deployment may be exempted from SMP remedies if the deployment of the new network is open to co-investment for access seekers (Art. 74 and Annex IV Draft EECC Directive).

A further novelty of the SMP regulation is proposed in Art. 77 Draft EECC Directive: under this proposition, access regulation for wholesale-only networks will be simplified (excluding in particular price regulation). A strict standard is used to determine the whole-sale only character of networks: neither the undertakings nor any affiliate may have retail activities and there must not be an exclusive relationship with a retailer in place.

II. Spectrum

The commission believes that there is currently too much inconsistency of the spectrum management across the EU. While the commission affirms its respect for the fact that spectrum belongs to the member states and that national specificities need to be considered, it proposes a move towards further convergence of spectrum management. For this purpose, the commission proposes a variety of harmonization measures regarding both the substance of spectrum assignment (e.g. minimum license durations, more prominence to general authorisations rather than individual licences, common conditions for the assigned rights) as well as the procedure, in particular a coordinated timing of the assignments (Art. 45 seq. Draft EECC Directive).

The consistency of the spectrum assignment shall in future be fostered by a newly created peer review process in which the NRAs present its planned measures regarding radio spectrum to BEREC, the European Commission and other NRA (Art. 35 Draft EECC Directive). BEREC is assigned with the task of delivering a reasoned opinion on the draft measures within one month. This BEREC opinion will remain unbinding for the NRAs, but they are called upon to “take utmost account of the opinion”.

III. Services / OTTs

As expected by all observers, the Draft EECC Directive also takes on the task of realigning the regulation of telecommunication services. The current regulation mainly covers traditional communication services provided by telecoms (voice telephony, SMS, internet access). This regulatory framework will now be adapted to cover – to a certain extent – also those services that are offered “over-the-top” using internet access services.

Central to this adaptation is a redefinition of the term “electronic communication service”. Whereas the term currently requires the service to consist wholly or mainly in the conveyance of signals (which arguably requires network control) the term now encompasses in addition (and without regard to network control) all internet access services and all “interpersonal communication services” (Art. 2 para. 4 Draft EECC Directive). Interpersonal communication services within the meaning of the directive come in two varieties: number-bases services and number-independent services (Art. 2 para. 5 and 6 Draft EECC Directive). Number-bases services are considered those that are connected to the public switched telephone network – either by the use of its own numbers or by allowing to connect with assigned numbers.

The regulatory concept of the Draft EECC Directive is to apply end-user related provisions predominantly to internet access services and number-based interpersonal communication services. This is the case e.g. for the regulation of end-user contracts (Art. 95 seq. Draft EECC Directive) and emergency calls (Art. 102 Draft EECC Directive). Number-independent services are only subject to security requirements (Art. 70 Draft EECC Directive) and may only be subjected to interconnection obligations under special circumstances (Art. 59 Draft EECC Directive).

IV. Governance

The Connectivity Package also proposes significant changes to the institutional framework regarding telecommunications regulation, in particular:

• Under the newly introduced „double-lock system“, the Commission may in consent with BEREC demand NRAs to withdraw draft market regulation measures (Art. 33 Draft EECC Directive). 
• In addition to its new powers in the peer review process regarding spectrum management (see above), BEREC will be assigned with identification of transnational markets (Art. 63 Draft EECC Directive) and the determination of a single maximum termination rate for the EU (Art. 73 Draft EECC Directive). 
• The Draft BEREC Regulation seeks to transform BEREC into a “fully fledged agency” equipping it with legal personality, a new administrative structure, annual programming etc.

V. 5G deployment

In addition to the legislative measures of the Draft EECC Directive, the 5G Action Plan sets out actions to be taken in order to achieve the ambitious goal of rapid 5G deployment. This action plan includes in particular:

• The voluntary establishment of a common timetable for the launch of 5G; 
• Determination of spectrum bands for 5G services; 
• The development of the national roadmaps, regarding inter alia quality objectives; 
• Encouragement of technological experiments and the use of 5G infrastructure; 
• Identification of possibilities for a venture financing facility.

 

C. What comes next?

 

Before the propositions of the Connectivity Package become law, the draft directive and regulations have to pass the ordinary legislative procedure of the EU and be jointly adopted by the European Parliament and the European Council (Art. 289 TFEU). This political process – prone to involve substantial changes to the proposal – will certainly be closely followed by all stakeholders across the EU.

 

Further reading:

Proposal for a European Electronic Communications Code
https://ec.europa.eu/digital-single-market/en/news/proposed-directive-establishing-european-electronic-communications-code
Proposal for an updated BEREC regulation
https://ec.europa.eu/digital-single-market/en/news/proposed-regulation-establishing-body-european-regulators-electronic-communications-berec
Proposal for a EU Wi-Fi
https://ec.europa.eu/digital-single-market/en/news/proposed-regulation-promotion-internet-connectivity-local-communities-and-public-spaces-wifi4eu
Communication Connectivity for a Competitive Digital Single Market
https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-single-market-towards-european-gigabit-society
5G action plan
https://ec.europa.eu/digital-single-market/en/news/communication-5g-europe-action-plan-and-accompanying-staff-working-document