What will the new European Electronic Communications Code mean for the EU?

23 Mar 2020

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With a new European Electronic Communications Code coming into effect at the end of the year, the team at William Fry examines what it means for member states such as Ireland.

A new European Electronic Communications Code (EECC) is due to take effect in all EU member states by 21 December 2020. It sets out revisions to the existing telecoms regulatory framework, which was last updated more than 10 years ago.

The new measures include an expanded definition of electronic communication service, measures to encourage investment in high-speed, high-capacity networks, consumer protection and updates to the universal service rules, new EU-wide fixed and mobile termination rates, and revisions to spectrum management rules. But what will these new measures mean for EU member states?

An expanded definition

The EU telecoms regulatory regime applies to providers of electronic communications services and electronic communications networks. To ensure that the scope of the regulatory framework keeps pace with technological and market developments, the definition of electronic communication service under the EECC will cover internet access services, interpersonal communications services (ICS) and services consisting wholly or mainly in the conveyance of signals.

The inclusion of ICS is a key change. These are services enabling interactive and interpersonal exchanges of information through electronic communications networks between a finite number of persons where the sender determines the recipients. This could include voice calls, emails and messaging services.

This change will explicitly bring many services provided over the internet within the scope of the regulatory regime. There is a limited exception from the scope of ICS where the communication element of a service is a minor and ancillary feature.

In June 2019, the European Court of Justice confirmed that VoIP with the ability to call a number from the national numbering plan through the public switched telephone network could come within the definition of electronic communication service. The EECC confirms this and brings welcome additional clarity on the scope of electronic communication service in relation to these types of services.

Under the EECC, number-based ICS, meaning services that connect with numbers in national or international numbering plans, will be regulated in the same way as traditional ECS services and will be subject to the full regulatory regime.

Number-independent ICS, meaning ICS that do not connect with numbers in numbering plans, will be subject to fewer obligations. Such services will not, for example, be subject to the general authorisation regime, although many of the other core regulatory requirements will apply.

The requirement that the electronic communication service be normally provided for remuneration in order to fall within the scope of regulation will remain. The EECC expressly provides for broad interpretation of this requirement. For example, the provision of personal data by the recipient of the service can suffice as remuneration.

Encouraging investment in networks

Demand for high-speed, high-quality connectivity has increased significantly in Europe in recent years. The EECC proposes various measures to encourage operators to invest in networks facilitating this, such as fibre and 5G. The EECC introduces a new general regulatory objective for national regulatory authorities to promote connectivity and access to and take-up of very high-capacity networks.

The EECC aims to encourage co-investment in high-capacity broadband networks, for example through co-ownership or co-financing, that will allow co-investors to compete effectively in downstream markets in the long term.

To this end, in certain circumstances the EECC will allow exceptions to the usual significant market power (SMP) regulatory regime for SMP operators that build these networks.

An SMP operator that enters into a co-investment agreement on fair, reasonable and non-discriminatory terms for very high-capacity networks, with fibre to (or very close to) the end-user premises, may avoid SMP regulation of that network.

The EECC also provides for lighter-touch SMP regulation for wholesale-only networks. This approach reflects the lower risk of competition concerns arising when an undertaking providing wholesale access is not vertically integrated.

The circumstances in which national regulatory authorities can impose symmetric access obligations, for example, outside the scope of the SMP regime, will also be expanded by the EECC.

Telecoms regulators will also have more time to carry out their market reviews, with the review cycle being extended from three to five years.

Consumer protection and updates

The EU telecoms regulatory framework provides for the provision of a minimum set of services to end users through a universal service obligation. The EECC updates the universal service regime to reflect developments in technology and user demand, focusing on access to adequate broadband and voice communications services at a fixed location.

It also introduces a requirement for providers of publicly available electronic communications services to provide a concise and easy-to-read contract summary to consumers, with the European Commission publishing a summary template for this purpose.

A contract will not be effective until this summary has been provided to the consumer and the consumer has confirmed their agreement.

The EECC also provides for an independent and free-of-charge comparison tool to be made available to end users to allow them compare and evaluate internet access services and ICS.

Interestingly, the contract summary information requirements in the EECC, as well as requirements on maximum contract duration and bundles, will apply to contracts with microenterprises, small enterprises and not-for-profit organisations, in addition to consumers, unless expressly waived.

The EECC will also expand the regulatory obligations on providers of bundles. Where a bundle includes an internet access service or a publicly available numbers-based ICS, certain consumer protection provisions in the EECC will apply to the whole bundle.

Fixed and mobile termination rates 

Termination rates are the wholesale charges levied by fixed and mobile telephone operators on other service providers for connecting incoming calls to their subscribers.

At present, maximum mobile termination rates and fixed termination rates are set by each national regulatory authority and thus vary between EU member states.

The EECC permits the European Commission to set a single maximum mobile termination rate and a single maximum fixed termination rate by 31 December 2020. These rates will come into effect across the EU in 2021.

Revisions to spectrum management rules 

The EECC includes measures to harmonise spectrum management in the EU.

It provides for changes to the current regime intended to promote regulatory predictability and investments including a 15-year minimum duration for spectrum licences, measures to facilitate shared use of spectrum by mobile operators, and the possibility of withdrawal of spectrum rights, based on the ‘use it or lose it’ principle.

The EECC aims to reflect market developments, particularly the rapid growth of communications over the internet, by using a functional rather than technical approach to the scope of the regulatory regime. The broad inclusion of ICS within the scope of electronic communication services will mean that telecoms players outside the scope of the regulatory regime at present will have to consider their obligations under EECC and adapt as needed.

By Claire Waterson and Sarah Lynam

Claire Waterson is a partner and Sarah Lynam is a senior associate, both in William Fry’s competition and regulation department.

A version of this article originally appeared on the William Fry blog.