29 European Electronic Communications
Markets
(31645)
10245/10
COM(10) 253
+ ADDs 1-2
| Commission Communication: Progress Report on the Single European Electronic Communications Markets 2009
Commission Staff Working Documents
|
Legal base | |
Document originated | 25 May 2010
|
Document deposited | 2 June 2010
|
Department | Business, Innovation and Skills
|
Basis of consideration | EM of 16 June 2010
|
Previous Committee Report | None; but see (30523) 8169/09: HC 5-ii (2009-10), chapter 7 (25 November 2009) and HC 19-xvi (2008-09), chapter 1 (6 May 2009)
|
To be discussed in Council | To be determined
|
Committee's assessment | Politically important
|
Committee's decision | Cleared
|
Background
29.1 The EU regulatory framework agreed in 2002 consists of the:
Framework
Directive setting out
the main principles, objectives and procedures for an EU regulatory
policy regarding the provision of electronic communications services
and networks;
Access
and Interconnection Directive
stipulating procedures and principles for imposing pro-competitive
obligations regarding access to and interconnection of networks
on operators with significant market power;
Authorisation
Directive introducing
a system of general authorisation, instead of individual or class
licences, to facilitate entry in the market and reduce administrative
burdens on operators;
Universal
Service Directive requiring
a minimum level of availability and affordability of basic electronic
communications services and guaranteeing a set of basic rights
for users and consumers of electronic communications services;
Privacy
and Electronic Communications Directive
setting out rules for the protection of privacy and of personal
data processed in relation to communications over public communication
networks.
29.2 In addition, the Radio Spectrum Decision
established principles and procedures for the development and
implementation of an internal and external EU radio spectrum policy.
29.3 The Framework also established a number of committees
and policy groups to manage and implement the new system:
Communications
Committee: which advises
on implementation issues;
European
Regulators Group: to
facilitate consistent application of the regime;
Radio
Spectrum Policy Group:
to enable Member States, the Commission and stakeholders to coordinate
the use of radio spectrum;
Radio
Spectrum Committee:
to deal with technical issues around harmonisation of radio frequency
allocation across Europe.
29.4 In this fast-developing sector, it was decided
in 2007 that the regulatory framework needed to be revised, with
a view to ensuring that it continued to serve the best interests
of consumers and industry in today's marketplace. An agreement
on the EU Telecoms Reform was reached by the European Parliament
and Council of Ministers on 4 November 2009, after two years
of discussion during the legislative process. It consists of:
the
"Better Regulation" Directive;[117]
the
"Citizens' Rights Directive;[118]
and
the
Regulation establishing the BEREC and the Office.[119]
29.5 The Commission says that BEREC (Body of European
Regulators of Electronic Communications) will replace "the
loose cooperation between national regulators that exists today
in the European Regulators Group with a better structured, more
efficient approach". It explains that BEREC decisions "will
be taken, as a rule, by majority of heads of the 27 national telecoms
regulators". A decision on the seat of BEREC still needs
to be taken by the Governments of the 27 Member States.[120]
29.6 The new rules now need to be transposed into
national laws of the 27 Member States by May 2011. The main
elements of the reform package are at Annex 1 of this chapter
of our Report.
The Commission Communication
29.7 This Report sets out the Commission's annual
research on communications markets across the EU and its assessment
of how well each Member State has implemented the regulatory framework
in 2009. Commission officials visit each Member State to interview
Government officials, national regulatory authorities (NRA
Ofcom in the UK), and industry and consumer representatives. It
includes a detailed annex on national markets and the regulatory
performance of each Member State. Substantial Commission Staff
Working Papers accompany the Communication.[121]
29.8 In his Explanatory Memorandum of 16 June 2010,
the Minister for Culture, Communications and Creative Industries
Department for Business, Innovation and Skills/Department for
Culture, Media and Sport (Ed Vaizey) says that the Commission
has undertaken a lower key launch of the report this year because
of the simultaneous publication of the new "Digital Agenda
for Europe.[122]
The Minister observes that the report acknowledges the benefits
the European consumer has derived from the existing EU Framework
(including increasingly affordable electronic communications)
but raises some concerns over the independence of NRAs and the
range of diverse regulatory approaches in national markets, "which
deliver some significant differences in wholesale and retail prices
in the sector". He notes that Member States are currently
implementing the changes to the existing Framework ahead of an
implementation deadline of 25 May 2011, and the report's conclusion
"that consumers and retailers are still faced with 27 different
markets and are not able to take advantage of the economic potential
of a single market"
29.9 The Minister then helpfully summarises the extensive
documentation as follows:
MARKET BREAKDOWN
"The communication reports zero growth in the
EU telecoms market in 2009, in the context of a 4.2% contraction
in the overall EU economy. This is attributed to the economic
climate, cost cutting plans and reduced investment across the
EU (other than on maintaining fixed networks). It also notes that
investment in next generation access (NGA) is still limited. In
2008 (latest figures) revenues from electronic communications
amounted to 351 billion[123]
(£298 bn about half of the ICT sector overall).
"Fixed voice telephony and broadband accounted
for 43% of the market revenues, mobile voice and data communications
for 47%, while the remaining 10% came from pay TV services. Mobile
voice services experienced close to 2% decline, fixed voice telephony
services fell by 6.3%. Fixed and mobile broadband services continued
to show strong growth. Fixed broadband grew by 5.6% and mobile
data by 9.3% in 2009. The growth in fixed broadband, however,
is not yet sufficient to compensate for decline in fixed voice
revenues.
"For the UK the report estimates the value of
the market in 2009 at 'about 50 billion'; down from 56.7
billion (or £42.4 bn down from £50.1bn, last year).
It estimates the total value of tangible assets in the sector
in the UK at about 8.1 bn (£6.7bn) where it had been
put at 8.93 bn (£7.4 bn ) previously noting,
according to operators, the value of their assets were declining
in 2009. Both the uncertainty and the fall can be attributed to
economic circumstances. By contrast, last year the Commission
reported on the resilience of the telecoms sector."
EU COMPARISONS
29.10 The Report focuses on 7 areas of comparison:
broadband
penetration;
mobile
broadband penetration;
mobile
termination rates;
fixed
termination rates;
mobile
price per minute of voice;
time
taken for mobile number portability; and
time
taken for fixed number portability.
29.11 The Minister says:
"The UK rates above average in all of these
except for mobile voice price per minute, where we are mid-table.
"Specifically in the UK the report observes
that;
- prices fell for consumers but
households also reduced spend on communications services,
- the use of mobile services rose, including the
use of mobile Internet,
- fixed broadband penetration also still grew in
2009, although at a slower rate than previously,
- BT remained the largest retail operator, although
its market share continued to decrease as a consequence of the
growth in Local Loop Unbundling (LLU) and Wholesale Line Rental
(WLR) uptake by alternative operators. In particular, the incumbent's
share of retail fixed voice calls by volume of calls fell to under
50% for the first time at the end of 2008."
FIXED BROADBAND
"The report takes a specific look at broadband
developments and notes that the EU fixed broadband market continued
to show positive growth in 2009, although at lower rates than
in previous years. In January 2010 the total number of fixed broadband
lines in the EU reached 123.7 million, growing by 9.3% over one
year. Nevertheless, with 10.2 million new fixed broadband lines,
representing 28,199 net additions per day, the growth rate was
24.5% lower than a year earlier and the lowest in the last five
years.
"The EU average fixed broadband penetration
rate was 24.8%, growing by two percentage points since January
2009. Broadband penetration in the UK is at 29.8% 7th
highest and above the EU average. This figure may seem low compared
to those quoted domestically as Ofcom uses a different methodology
for market penetration connections per household, rather
than per head which show a penetration rate at 65% for January
2009. The rate of growth in take up in the UK is slowing though.
"As of January 2010, the UK had one of the largest
shares in the EU (78.4%) of fixed broadband lines offering speeds
in the 2 to 10 Mbps range, which is currently the most common
bandwidth in the EU representing 60.6% of all fixed broadband
lines. The share of low-speed lines below 2Mbps was just 1.8%,
one of the lowest shares.
"The report concludes that the EU is falling
behind globally when it comes to NGA with lines based in fibre
to premises representing only 1.8% to 5%of all fixed broadband
lines. Two thirds of fixed broadband lines in the EU offered download
speeds between 2 and 10 Mbps and the relative share of high speed
lines has been increasing. As a consequence of speed upgrades
and flat rate bundled offers, retail broadband prices declined,
although less than in the previous year.
"The Commission notes on mobile broadband that
while voice communication still accounts for more than 80% of
overall mobile revenues in Europe, its share in terms of traffic
has been declining in comparison to data traffic, which puts great
pressure on network capacity. In the UK 6.7% of mobile revenue
comes from mobile internet use (above average for the EU and 8th
highest ratio in Europe) At the time all five UK Mobile Network
Operators (MNOs) reported progress in mobile broadband. However,
with higher usage there is also increasing customer dissatisfaction
with the quality of service due to capacity problems.
"In the UK mobile market more generally penetration
rates continued to rise in 2009 to reach 126.2%, higher than the
EU average of 121.9%. Mobile users took advantage of the tariffs
on offer, resulting in an increase in volumes of calls made as
consumers replaced calls from fixed lines with their inclusive
mobile calls. Revenue per subscriber decreased at the same time
retail prices per unit fell annual average revenue per
mobile user went from 317 (£269) in 2007 to 307
(£260.5) in 2008, which is below EU average of 323
(£274.1) in 2008. According to Ofcom, for the first time
in 2009 personal use of mobile phones was more prevalent than
use of fixed lines.
"The Commission also reports a major consolidation
of alternative providers in the broadband sector (Carphone Warehouse's
purchase of Tiscali now sees three fixed broadband providers in
the UK market with a market share above 20%). More significantly
it also reports the start of merger proceedings in September 2009
when the overseas owners Deutsche Telekom and France Telecom announced
their intention to combine T-Mobile UK and Orange UK in a 50:50
joint venture. The new entity's market share will be well ahead
of that of the two current mobile market leaders. This joint venture
has now been cleared for merger by the Commission.
"There were some 30 mobile virtual network operators
(MVNOs) in the UK with a total 10 15% market share.
"More generally the Commission notes the ambitious
UK Government involvement in the telecoms area through provisions
of what has since become the Digital Economy Act (2010) with far-reaching
proposals concerning modernisation of spectrum, a commitment to
ensure universal broadband availability and promotion of next
generation networks (NGN)."[124]
EU REGULATORY ENVIRONMENT
29.12 The Minister notes that, as reported last year,
the Commission remains concerned about the independence of NRAs:
"Several infringement proceedings initiated
last year have been successfully halted, but action has been taken
when the Commission has identified a perceived lack of effective
structural separation of regulatory functions from ownership and
control of telecom operators or the lack of clear and transparent
criteria for dismissals of the National Regulatory Authority (NRA)
chairpersons.
"The Commission again raises concerns over the
limited resources of some NRAs and, in particular, the potential
impact that ineffective appeals procedures can have. The Commission
references the revised Framework which requires that NRAs must
have financial and human resources to carry out the tasks assigned
to them. Implementation of new articles 13a and 13b (FWD) which
cover security and resilience in relation to electronic communications
networks and services are likely to place additional burdens on
NRAs.
"In relation to Ofcom, the Commission comments
on the significant increase in both the number of dispute resolution
procedures and appeals against Ofcom's decisions in the Competition
Appeal Tribunal (CAT). The latter, in particular, put a strain
on resources. The Commission notes that delays in decisions were
reported in the case of market analysis of leased lines, which
created uncertainty for operators using the regulated wholesale
products as a consequence.
"Lengthy and resource consuming appeal proceedings
were reported to present a challenge to legal certainty in Belgium,
Greece, Luxembourg, Poland, Portugal, Sweden and the UK.
"The Commission observes differences between
MS in terms of progress on periodic market analysis and remedies.
[125] Some NRAs
have been particularly advanced in their market reviews and were
able to impose regulatory obligations tailored to next generation
networks (NGN). Almost all NRAs have imposed regulatory measures
following their analyses of broadband markets covering wholesale
(physical) network infrastructure access at a fixed location (market
4/2007);[126] and wholesale
broadband access (market 5/2007). In the UK the Commission acknowledges
that deregulation has occurred within identified geographic areas.
"Separately, the report also notes that the
UK regulator, Ofcom, took a large number of decisions regarding,
in particular, market reviews, spectrum management and consumer
issues but also had to cope with a strong surge in the numbers
of disputes and appeals against its decisions. Market players
continued to look to Ofcom to set out the details of the approach
to regulation of next generation access (NGA) networks, building
on the NGA statement published in March 2009.
"In order to foster a consistent approach by
NRAs to the imposition of regulatory obligations after analyses
of broadband markets, and to provide legal certainty to operators
investing in NGA, the Commission intends to adopt a recommendation
on 'Regulated access to NGA'. The recommendation, expected in
September 2010, will come at a time when many NRAs have set out
their regulatory approach in their most recent market analyses.
"Ofcom's approach to market analysis has been
to conduct the national and Community consultations in parallel.
This means that, in cases where Ofcom re-consults on a modified
proposal, it also launches a new Community consultation. The Commission
therefore continues to urge Ofcom to systematically carry out
the national consultation before the Community consultation in
order to avoid unnecessary double notifications.
"As a result of its thorough consultations Ofcom
may sometimes need to change its final decisions from those set
out in draft measures. While such flexibility was appreciated
by some operators, it was also challenged by others (in particular,
in the CAT in 2009). This occurred in relation to the range of
price controls it consulted on local loop unbundling, and the
appeal was based on the inability to respond a fixed price proposal.
"The report comments positively on a number
of developments in relation to the BT's Undertakings in the context
of its functional separation. These include Ofcom reviewing the
deadlines for completing BT's systems separation and making several
amendments to those Undertakings concerned with the roll-out of
NGA networks. It also noted that the details of regulation in
this area are yet to come with the expected new analysis of the
wholesale broadband and physical access markets. The UK strongly
argued for the introduction of functional separation in the revised
Framework.
"Mobile termination rates (MTRs) on average
fell by 18.4% in 2009 but remain high in comparison to fixed interconnection
rate terminal rates across Europe. UK Mobile termination rates
are the 6th lowest in Europe and remain below the EU average.
On the UK specifically, the report describes the final Ofcom decisions
regarding current MTR which should deliver a target average charge
in 2010/2011 of 4p per minute (down from 5.1ppm) and 4.3ppm for
new entrants (down from 5.9ppm).
"In the UK chapter within the Commission working
documents the reports references Ofcom's consultation in May 2009
which assessed six possible options for the future regulation
of mobile call termination in the UK after 2011. These range from
deregulation to 'bill and keep' and including also the currently
applied cost accounting methodology as well as the methodology
proposed in the Commission Recommendation on termination rates.
Ofcom are currently undertaking a market review, the closing date
for which is 23 June 2010.[127]
"On spectrum management, the Commission notes
the need for coordinated action to open up the digital dividend
spectrum to different services across Europe, creating an opportunity
particularly for wireless broadband network operators to gain
valuable radio spectrum.
"The report notes proposals in the Digital Britain
White Paper proposing that the 900 MHz band will stay with the
two MNOs currently holding rights of use for this frequency band
and set out measures for rebalancing spectrum holdings. Following
consultation and on the basis of recommendations from the independent
spectrum broker, it is proposed to direct Ofcom to conduct a combined
auction of the 800MHz digital dividend spectrum and the 2.6GHz
spectrum to be completed before end 2010.
"During the course of 2009 the UK notified the
implementation of Commission radio spectrum decisions adopted
in 2008: 2008/294/EC, 2008/411/EC, Decision 2008/673/EC amending
decision 2005/928/EC, Decision 2008/432/EC amending Decision 2006/771/EC
and 2008/671/EC. In addition, UK notified the implementation of
two further decisions adopted in 2009: Decision 2009/381/EC and
Decision 2009/343/EC.
"The Commission working documents provide further
detailed analysis of Ofcom's work on persistent "not spots";
the Court of Appeal upholding Ofcom's appeal against the CAT on
GSM gateway licensing (rather than have any specific meaning the
abbreviation "GSM gateway" is now commonly used for
equipment which enables the routing of voice calls to mobile subscribers
by establishing a mobile to mobile call from fixed apparatus);
and Ofcom's remedy imposed on BT in relation to call origination
and call termination services."
CONSUMER INTERESTS
"The report notes most broadband speeds are
above 2 Mbps in Europe and prices have continued to fall, though
not as fast as previously. Users have increasingly been receiving
faster internet services for the same prices.
"The roaming regulation has significantly lowered
roaming charges and improved tariff transparency for mobile phone
users within the EU. The average price per minute of mobile communications
declined from 0.14 (£0.12.) in 2007 to 0.13 (£0.11)
in 2008. The mobile price per minute of voice in the UK is the
12th highest and same as the EU average at 0.13 but falling
faster than average. The Commission feels strongly though that
these Europe-wide differences cannot be explained by market characteristics
alone thereby indicating that there is, as yet, no single market.
"On fixed lines, the Commission notes an increase
in charges against a downward trend over the past decade. The
UK has the lowest fixed termination rates in Europe. The Commission
also reports positively on price transparency in the UK.
"In the UK there was a decline in fixed voice
volumes, partly explained by fixed to mobile substitution. According
to the Office of the Telecoms Adjudicator (OTA), at the end of
2009 there were 6.03 million Wholesale Line Rental (WLR) lines
and 3.73 m Carrier pre-Selection CPS telephone numbers (compared
to 5.32 m WLR lines and 4.16 m telephone numbers using CPS a year
ago).
"BT's market share in the fixed telephony market
continued to decline (54.7% in December 2008 by retail call revenue
compared to 57.5% in December 2007) and 47.1% by volume of calls
(compared to 51.4% a year ago). By both indicators, this is the
lowest market share for an incumbent in the EU.
"On universal service, the Commission notes
two trends. First, several MS carried out new designation procedures
for some or all elements of existing universal service obligations
(USO). Second, MS increasingly considered including broadband
services under universal service obligations. Several MS have
relaxed obligations relating to services delivered by the market
or considered to be of declining significance.
"On universal service matters in the UK the
Commission points to Court of Appeal decision overturning the
CAT on Universal Service Condition (USC) 7. USC7 currently obliges
the fixed incumbent to make available its comprehensive telephone
subscriber database to alternative directory service providers
on fair, reasonable and cost-oriented terms. Although the Court
of Appeal concluded that USC7 was prohibited by the Universal
Service Directive (USD) and other directives, it considered it
necessary to obtain a preliminary ruling from the European Court
of Justice.
"The Commission addresses a new issue raised
through re-drafting of text in Art 8.4(g) (FWD), whereby NRA's
must promote 'the ability of end-users to access and distribute
information or run applications and services of their choice'
and Art 21.3(d) (Universal Service Directive, USD) 'Transparency
of information' obliges communications providers (CPs) to provide
information to end users 'on any procedures put in place by the
provider to measure and shape traffic'. Although not directly
referenced in texts this can relate to net neutrality. The Commission
notes that net neutrality does not seem to be an issue in the
UK but does observe that net neutrality has become an issue in
some MS through mobile operators either preventing access or applying
differentiated pricing strategies to 'Voice over Internet Protocol'
(VoIP) services. In other MS, legislative initiatives to protect
intellectual property (IP) rights sparked a debate on how to strike
a balance between end-users' rights and the need to safeguard
the legitimate interests of IP rights owners. The Commission will,
in line with its Declaration to the European Parliament, keep
developments under close scrutiny.
"Additionally the report mentions provisions
taken forward in the Digital Economy Act (2010) providing for
copyright owners to notify internet operators of suspected copyright
infringements. The Commission advises that sanctions must remain
consistent with new rights for users provided in the revised framework.
"The Commission reports that number porting
is now available in all MS. Timing and the level of charges are
important factors affecting the porting of numbers. Significant
reductions in time limits were introduced in some MS or were planned.
The average porting times for mobile and fixed numbers in October
2009 was 4.1 days and 6.5 days compared with 8.5 and 7.5 days
in October 2008, respectively.
"In the UK the time taken in days for mobile
number portability is 2 days (against a Framework target of 2
days). For fixed porting the time taken, against the same target
was 4 days. The Commission observes that improvement is needed
as the revised framework requires that porting be carried out
within one day. This raises potential issues in the UK where for
historical reasons we operate a donor-led number porting trigger
(for mobile) rather than the recipient-led number porting regime
that most other MS use.
"The report mentions the CAT judgement of 2008
which overturned Ofcom's attempt to implement a recipient-led
and near-instant process for porting mobile numbers as well as
direct call routing supported by a central database to all ported
numbers (fixed or mobile). Within the period of this report Ofcom
issued two new consultation documents on number portability. The
first document proposed four options for changing the mobile porting
process, including donor-led and recipient-led options and either
a one-day or two-hour process. The second consultation sets out
proposals for introducing direct routing for mobile voice calls
to ported mobile numbers.
"The Commission also points to the European-wide
emergency number, 112, noting the inaugural European 112 Day (11th
February 2009) announced in a tri-partite declaration by the Commission,
the European Parliament and the Council, but also noting the decline
in rates of improvement of 112 awareness. Currently, only one
in four EU citizens is aware that they can call 112 across the
EU and in the UK only 8% of the public are aware of the
number.
"The Commission has previously criticised the
UK with regard to the European emergency service number 112, but
on this occasion the Commission reports two noteworthy developments.
In October 2009 it became possible for the UK mobile users to
call the emergency service numbers 112 and 999 from another network
if their own network is unavailable and an alternative provider
has coverage. In September 2009, an emergency SMS trial was started.
Since publication of the Commission's report, the Government's
999/112 Liaison Committee has reported the SMS trial as a resounding
success and we are moving to full implementation.
"The final paragraph on EU market developments
contains the most critical references to the UK. The Commission
states that national rules on e-privacy should be fit for purpose
in the new digital economy. The Commission launched an infringement
proceeding against the UK on transposing EU rules on confidentiality
of communications provided in the e-Privacy Directive 2002/58/EC
and the Data Protection Directive 95/46/EC. That action related
to user consent, lack of sanctions in the case of infringements
and absence of an independent authority to supervise interception
activities.
"The Commission reports that a recent study
on actions to deal with spam, spyware and malicious software confirms
the need for the legislative changes contained in the revised
framework. These changes include clearer and more consistent enforcement
rules and dissuasive sanctions, better cross-border cooperation,
and adequate resources for the NRA in charge of protecting citizens'
online privacy.
"On harmonised numbers for services of social
value (116 numbers) the Commission reports the good progress that
the UK has made in relation to the first three identified numbers."
29.13 The Commission concludes that to move closer
to a true single market, it is vital to step up efforts to address
the issues identified in the Report, and says that, in line with
the Digital Agenda and the measures it outlines on spectrum, universal
service, the regulatory treatment of NGAs and privacy, the Commission
will also take a number of targeted measures, to:
address
the divergences in regulatory approaches and the lack of timely
and effective enforcement of remedies;
lay
solid foundations for a correct and timely implementation of the
revised regulatory framework; and
ensure
an effectively functioning Body of European Regulators for Electronic
Communications (BEREC).[128]
The Government's view
29.14 The Minister goes on to welcome the Report
and the "recognition of UK progress and successes."
He considers it "a useful comparative tool for understanding
the market and regulatory developments across the EU in the field
of electronic communications", noting that both his department
and Ofcom support this annual process by providing data and input.
29.15 The Minister also notes that, while the Report
has no immediate legislative implications, it is generally seen
as significant in determining possible future policy and legislation
in the field of telecoms. He says that the latest round of policy
negotiations were concluded in November 2009, and that the NGA
Recommendation, which sets out the overall policy and regulatory
approach that NRAs should adopt when considering the roll out
of new high speed broadband networks, is to be adopted in September
2010.[129]
29.16 He further notes that "HMG has responded
to the second stage of reasoned opinion on the infringement proceedings
on e-Privacy and the proceedings have not been progressed further."[130]
29.17 The Minister concludes by noting that the Report
was presented at the 31 May 2010 Telecoms Council.
Conclusion
29.18 Two aspects of this extensive analysis are
particularly eye-catching. First, the Commission's previous initiative
i2010[131]
notwithstanding, the degree to which a single internal
market for this product is lacking illustrates the extent of the
challenge at the outset for its successor, "A Digital Agenda
for Europe".
29.19 Secondly, it is notable that, the number
of actual and virtual operators notwithstanding, the mobile price
per minute of voice in the UK is 12th highest and no
better than the EU average.
29.20 There is also much in the Report about Next
Generation Networks and access thereto, and particularly the prospective
NGA Recommendation. When it emerges, we ask that the Minister
deposits it with his views thereon.
29.21 In the meantime, we clear the Communication,
which (like our predecessors) we are reporting to the House because
of the widespread interest in both the domestic and European telecoms
market.
Annex 1: Main elements of telecoms
reform[132]
"The 12 most prominent reforms in the new package
of rules for Europe's telecoms networks and services, as proposed
by the European Commission in November 2007, and agreed between
the negotiators of the European Parliament, the Council of Telecoms
Ministers and the Commission on 5 November 2009 are:
1. A right of European consumers to change,
in 1 working day, fixed or mobile operator while keeping their
old phone number. Currently in the EU it takes on average
8.5 days for a mobile number and 7.5 days for a fixed number to
be changed, with some customers facing a two to three week wait.
In the future, consumers will be able to do this in 1 working
day. In addition, under the new rules, the maximum initial duration
of a contract signed by a consumer with an operator will be no
longer than 24 months. Operators must also offer consumers the
possibility of agreeing to a contract with a maximum duration
of 12 months.
2. Better consumer information: Under
the new telecoms rules, consumers will receive better information
ensuring they understand what services they subscribe to and,
in particular, what they can or cannot do with those communications
services. Consumer contracts must specify, among other things,
information on the minimum service quality levels, as well as
on compensation and refunds if these levels are not met, subscriber's
options to be listed in telephone directories and clear information
on the qualifying criteria for promotional offers.
3. Protecting citizens' rights relating to
internet access by a new internet freedom provision: Following
the strong request of the European Parliament, and after long
negotiations on this point, the new telecoms rules, in a new Internet
freedom provision, now explicitly state that any measures taken
by Member States regarding access to or use of services and applications
through telecoms networks must respect the fundamental rights
and freedoms of citizens, as they are guaranteed by the European
Convention for the Protection of Human Rights and Fundamental
Freedoms and in general principles of EU law. Such measures must
also be appropriate, proportionate and necessary within a democratic
society. In particular, they must respect the presumption of innocence
and the right to privacy. With regard to any measures of Member
States taken on their Internet access (e.g. to fight child pornography
or other illegal activities), citizens in the EU are entitled
to a prior fair and impartial procedure, including the right to
be heard, and they have a right to an effective and timely judicial
review.
4. New guarantees for an open and more "neutral"
net: The new telecoms rules will ensure that European consumers
have an ever greater choice of competing broadband service providers.
Internet service providers have powerful tools at their disposal
that allow them to differentiate between the various data transmissions
on the internet, such as voice or 'peer-to-peer' communication.
Even though traffic management may allow premium high-quality
services (such as IPTV) to develop and can help ensure secure
communications, the same techniques may also be used to degrade
the quality of other services to unacceptably low levels or to
strengthen dominant positions on the market. That is why, under
the new EU rules, national telecoms authorities will have the
powers to set minimum quality levels for network transmission
services so as to promote "net neutrality" and "net
freedoms" for European citizens. In addition, thanks to new
transparency requirements, consumers must be informed
before signing a contract about the nature of the service
to which they are subscribing, including traffic management techniques
and their impact on service quality, as well as any other limitations
(such as bandwidth caps or available connection speed).
The Commission also made a political commitment to
keep the neutrality of the internet under close scrutiny and to
use its existing powers as well as new instruments available under
the reform package to report regularly on the state of play in
net neutrality to the European Parliament and the Council of Ministers.
5. Consumer protection against personal data
breaches and spam: European citizens' privacy is a priority
of the new telecoms rules. Names, email addresses and bank account
information of the customers of telecoms and internet service
providers, and especially the data about every phone call and
internet session, need to be kept safe from accidentally or deliberately
ending up in the wrong hands. Operators must respond to the responsibility
that comes with processing and storing this information. Therefore,
the new rules introduce mandatory notifications for personal data
breaches the first law of its kind in Europe. This means
that communications providers will be obliged to inform the authorities
and their customers about security breaches affecting their personal
data. This will increase the incentives for better protection
of personal data by providers of communications networks and services.
In addition, the rules concerning privacy and data protection
are strengthened, e.g. on the use of "cookies" and similar
devices. Internet users will be better informed about cookies
and about what happens to their personal data, and they will find
it easier to exercise control over their personal information
in practice. Furthermore, internet service providers will also
gain the right to protect their business and their customers through
legal action against spammers.
6. Better access to emergency services, 112:
The new telecoms rules will ensure that European citizens gain
better access to emergency services by extending the access requirements
from traditional telephony to new technologies, strengthening
operators' obligation to pass information about caller location
to emergency authorities, and by improving general awareness of
the European emergency number '112'. In addition, provisions on
access to telecoms services for Europeans with disabilities have
been strengthened so that they can benefit from the same usability
of services as other citizens, but by different means. For the
first time, the EU's telecoms rules will include a provision on
the availability of terminal equipment offering the requisite
services and functions for users with disabilities.
7. National telecoms regulators will gain
greater independence: The new telecoms rules reinforce national
telecoms regulators' independence by eliminating political interference
in their day-to-day duties and by adding protection against arbitrary
dismissal for the heads of national regulators.
8. A new European Telecoms Authority that
will help ensure fair competition and more consistency of regulation
on the telecoms markets. The reform creates a very important
tool for making a single European telecoms market a reality: the
new European Telecoms Authority "BEREC" (Body of European
Regulators for Electronic Communications) that will replace the
loose cooperation behind closed doors that exists today in the
"European Regulators Group" with a more transparent
and more efficient approach. BEREC decisions will be taken, as
a rule, by majority of the heads of the 27 national telecoms regulators:
by a simple majority when BEREC gives opinions in the context
of the Commission's analysis of remedies notified by national
regulators, and by a two thirds majority in other cases. Such
BEREC decisions will be prepared by an independent supranational
Office with expert staff. BEREC will also advise, support and
complement the independent work of national telecoms regulators,
especially when it comes to regulatory decisions with a cross-border
relevance. A decision on the seat of BEREC still needs to be taken
by the Governments of the 27 Member States.
9. A new Commission say on the competition
remedies for the telecoms markets: The new EU telecoms rules
will give the European Commission the power to oversee regulatory
remedies proposed by national regulators (e.g. on the conditions
of access to the network of a dominant operator; or on fixed or
mobile termination rates). The objective is to avoid inconsistent
regulation that could distort competition in the single telecoms
market. When the Commission, in close cooperation with BEREC,
considers that a draft remedy notified by a national regulator
would create a barrier to the single market, the Commission may
issue a recommendation that requires the national regulator to
amend or withdraw its planned remedy.
The new rules also enable the Commission to adopt
further harmonisation measures in the form of recommendations
or (binding) decisions if divergences in the regulatory approaches
of national regulators, including to remedies, persist across
the EU in the longer term, e.g. on broadband access conditions
or on mobile termination rates.
10. Functional separation as a means to overcome
competition problems: National telecoms regulators will gain
the additional tool of being able to oblige telecoms operators
to separate communication networks from their service branches,
as a last-resort remedy. This new remedy has been advocated since
2007 by the European Commission and by the 27 national regulators.
Functional separation can rapidly improve competition in markets
while maintaining incentives for investment in new networks. Functional
separation has been implemented in the UK since January 2006 where
it triggered a surge in broadband connections (from 100.000 unbundled
lines in December 2005 to 5.5 million 3 years later). The new
EU rules on functional separation will add legal certainty for
countries currently moving towards different forms of separation
(Poland, Italy), while ensuring overall consistency for the benefit
of the single market, effective competition and consumer choice.
11. Accelerating broadband access for all
Europeans: Currently, in rural areas of the EU only an average
of 70% of the population can have access to a broadband network
connection. The reform will help in overcoming this "digital
divide" by better managing radio spectrum and by making it
effectively available for wireless broadband services in regions
where building a new fibre infrastructure is too costly; and by
allowing Member States to expand universal service provisions
beyond narrow-band internet access.
The reform in particular puts a much stronger emphasis
on technology and service flexibility in spectrum use, making
it easier for operators to introduce innovative technologies and
services. This increased flexibility will bring important economic
gains and has the potential to generate an estimated additional
0.1% of GDP per annum. In particular, it will allow the "digital
dividend", the radio spectrum freed as a result of the switchover
from analogue to digital TV, to work for the economic recovery
as also stressed in the Commission's recent Communication on transforming
the digital dividend into social benefits and economic growth.
12. Encouraging competition and investment
in next generation access networks: The new rules bring legal
certainty for investment in next generation access (NGA) networks.
These networks, based on new optical fibre and wireless network
technologies, are replacing less efficient traditional copper-wire
networks and will allow high-speed internet connections. The reform
of the telecoms rules reaffirms the importance of competition
in this new sector while at the same time preserving incentives
to invest by taking into account the risks involved in allowing
access to NGA networks and allowing for various cooperative arrangements
between investors and access-seeking operators. In this way, the
new rules will also ensure telecoms operators receive a fair return
on their investments. On the basis of the new rules, the Commission
plans to issue a recommendation for the regulation of access to
NGA networks in the first half of 2010, taking into account the
results of public consultations in 2008 and 2009. The rules governing
the sharing of network elements, such as ducts or in-building
wiring, between operators are also updated by the reform. Besides
improving competition and services for businesses and consumers,
this will also help lower the overall financial costs for operators
of deploying NGA networks."
117 Directive 2009/140/EC of the European Parliament
and of the Council of 25 November 2009 amending Directives 2002/21/EC
on a common regulatory framework for electronic communications
networks and services, 2002/19/EC on access to, and interconnection
of, electronic communications networks and associated facilities,
and 2002/20/EC on the authorisation of electronic communications
networks and services. See OJ 2009 L337. Back
118
Directive 2009/136/EC of the European Parliament and of the Council
of 25 November 2009 amending Directive 2002/22/EC on universal
service and users' rights relating to electronic communications
networks and services, Directive 2002/58/EC concerning the processing
of personal data and the protection of privacy in the electronic
communications sector and Regulation (EC) No 2006/2004 on cooperation
between national authorities responsible for the enforcement of
consumer protection laws. See OJ 2009 L 337. Back
119
Regulation (EC) No 1211/2009 of the European Parliament and of
the Council of 25 November 2009 establishing the Body of European
Regulators for Electronic Communications (BEREC) and the Office.
See OJ 2009 L337. Back
120
See http://berec.europa.eu/ for full information on BEREC. Back
121
For consideration of the 2009 Report, see (30523) 8169/09: HC
19-xvi (2008-09), chapter 1 (6 May 2009). Back
122
"Communication from the Commission to the European Parliament,
the Council, the European Economic and Social Committee and the
Committee of the Regions - A Digital Agenda for Europe" (COM
(2010) 2020) is dealt with in chapter ?? of this Report [CROSS
REF TO CHAPTER ON 31638]. Back
123
( £/ conversation rate used throughout this EM is £1=
1.1784). Back
124
The general idea behind Next Generation Networks (NGN) is that
one network transports all information and services (voice, data,
and media such as video) by encapsulating these into packets,
as on the Internet. The International Telecommunications Union
thus defines NGN) as "a packet-based network able to provide
Telecommunication Services to users and able to make use of multiple
broadband, QoS-enabled transport technologies and in which service-related
functions are independent of the underlying transport-related
technologies. It enables unfettered access for users to networks
and to competing service providers and services of their choice.
It supports generalised mobility which will allow consistent and
ubiquitous provision of services to users." See http://www.itu.int/en/pages/default.aspx
for further information. Back
125
In this footnote, the Minister notes that these findings are further
developed in the latest Commission Report on market analysis and
remedies , which we consider elsewhere in this Report [CROSS REF
TO 31679]. Back
126
Markets defined by 2007/879/EC, Commission Recommendation of 17th
December 2007, on relevant product and service markets within
the electronic communications sector susceptible to ex ante regulation
in accordance with 2002/21/EC of the European Parliament and of
the Council on a common regulatory framework for electronic communications
networks and services - the "Framework Directive" (FWD). Back
127
http://www.ofcom.org.uk/consult/condocs/wmctr/summary.pdf. Back
128
The European Regulators Group for electronic communications networks
and services was set up by the Commission to provide a suitable
mechanism for encouraging cooperation and coordination between
national regulatory authorities and the Commission, in order to
promote the development of the internal market for electronic
communications networks and services. Building on this experience,
the Body of European Regulators for Electronic Communications
(BEREC) and its support Office were created within the recently
approved reform of the EU Telecom rules to improve the consistency
of implementation of the EU regulatory framework. The first meetings
of the Board of Regulators of BEREC and the Management Committee
of the Office were held in Brussels on 28 January 2010. See http://berec.europa.eu/Default.htm
for further information on BEREC. Back
129
A Next-Generation Network (NGN) is the term given to describe
a telecommunications packet-based network that handles multiple
types of traffic (such as voice, data and multimedia). It is the
convergence of service provider networks that includes the
public switched telephone network (PSTN), the data network (the
Internet), and, in some instances, the wireless network also.
Optical fibre backbones are considered the future of telecommunications
infrastructure because they allow a faster and wider transmission
of data in comparison to current largely copper-based networks.
Fibres are at the core of NGNs. Fibre networks have been deployed
slowly across the EU so far, covering a marginal share of national
markets. NGNs today only account for around one million subscribers
in the EU, in comparison to three million in the US and 11
million in the most-developed Asian countries, mainly
Japan and South Korea. Investment in Europe is currently
low. To upgrade EU networks, at least 300 billion of investment
will be necessary, according to estimates by McKinsey, a consulting
company. See http://www.euractiv.com/en/infosociety/commission-shelves-ngn-recommendation/article-182347
for further information. Back
130
For the previous Committee's consideration of this matter, see
(30523) 8169/09: HC 5-ii (2009-10), chapter 7 (25 November 2009). Back
131
"i2010 - A European Information Society for growth and employment"
was the EU policy framework for the information society and media.
It promoted the positive contribution that information and communication
technologies (ICT) can make to the economy, society and personal
quality of life. The strategy is now coming to an end and is to
be followed by a new initiative - the Digital Agenda - in 2010.
See http://ec.europa.eu/information_society/eeurope/i2010/index_en.htm
for full information. Back
132
Extracted from http://ec.europa.eu/information_society/policy/ecomm/tomorrow/reform/index_en.htm. Back
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