Agreement finally reached on EU telecoms reform package
On 5 November 2009 the European Commission announced that the European Parliament and Council of Ministers had finally reached an agreement on the issues outstanding in the reform of the EU Common Regulatory Framework for Communications (CRF). Disagreement between the European Parliament and the member states (via their position in the Council) earlier this year had threatened to significantly delay the vital reform of the CRF.
The Commission presented its first package of reform of the 2002 CRF back in November 2007. Intense legislative wrangling between the various EU legislative bodies and the member states led to a compromise package being presented a year later, in November 2008. The majority of contentious issues were settled in May 2009, including the revised scope of the Commission’s powers and the creation of the Body of European Regulators for Electronic Communications (BEREC), to replace the existing European Regulators Group (ERG).
Internet freedom
A serious sticking point, however, arose in relation to the ability of internet service providers (ISPs) to cut off or restrict an individual’s internet access if they are engaged in infringements of intellectual property (IP), such as illegal file sharing. The European Parliament had insisted that, to protect the fundamental rights of internet users, a prior condition to taking such action must include obtaining a court order. Certain member states, including France, viewed this as impinging on proposed provisions of national law intended to permit internet blocking or ‘throttling’ of download speeds. As a result of this opposition, the legislative process has been put through a process of conciliation under which the European Parliament and Council, aided by the Commission, had six weeks to reach a compromise position.
Following the conciliation process, the European Parliament has resiled from its original position and a compromise position, known as the ‘internet freedom provision’, has been accepted unanimously by all parties. The internet freedom provision falls short of obliging ISPs to obtain court orders before restricting internet access. It does, however, require that any measures taken by member states to restrict a user’s access to the internet ‘shall respect the fundamental rights and freedoms’ guaranteed by the European Convention on Human Rights. Moreover, restrictive measures can only be taken ‘with due respect for the principle of presumption of innocence and the right to privacy’, and a ‘prior fair and impartial procedure’ must be guaranteed to that end-user.
Prominent reforms in the telecoms package
With the legislative package on the brink of approval, the Commission has published an overview of what it considers to be the most prominent reforms in the telecoms package. They include the following.
Improved consumer information
The new rules will oblige consumer contracts to specify, among other things, information on minimum service levels, as well as refunds and compensation payments if these standards are not met. These rules are designed to improve consumers’ awareness of what can be complex rules surrounding, the provision of new technology.
Internet freedom provision
Commenting on the agreement reached between the European Parliament and the Council of Ministers, Viviane Reding, Commissioner for Information Society and Media, described the internet freedom provision as ‘unprecedented across the globe’ and ‘a strong signal that the EU takes fundamental rights very seriously’.
Guarantees for internet neutrality
The reform package includes provisions to allow national regulatory authorities to set minimum quality levels for network transmission services (such as broadband services). These provisions are designed to ensure that ISPs are unable to use data management techniques to unacceptably degrade the quality of a given usergroup’s services.
Protection for consumers against personal data breaches
To reflect the responsibility that arises as a result of the sheer volume of consumer data held by telecoms companies, the reform provisions seek to bolster operators’ responsibilities. The reform package will, for the first time in the EU, create a mandatory notification obligation for personal data breaches.
Greater independence for national telecoms regulators
The new rules are designed to reinforce national regulatory authorities’ independence from political interference in their day-to-day activities and to protect the heads of those authorities from arbitrary dismissal.
The creation of a new European regulator, BEREC, to ensure greater cross-border consistency in regulation
BEREC, which will consist of representatives of the 27 member states and the Commission, is designed to facilitate co-operation between national regulatory authorities and the Commission, and provide regulatory oversight of the telecoms sector. The regulation establishing BEREC was approved by the European Council on 26 October 2009.
Enhanced Commission powers to oversee national remedies in telecoms markets
The Commission will have the power to make recommendations to national regulatory authorities to amend or withdraw remedies imposed if it considers they would distort competition or create regulatory uncertainties in the market. These powers fall short of the Commission’s original proposal for a power to veto and replace national regulatory decisions in certain circumstances.
Functional separation as a means to overcome competition problems
National regulatory authorities across the EU will have an additional power to impose functional separation as a remedy of last resort against operators with significant market power. In the UK, functional separation of the retail and wholesale aspects of BT has already been imposed under competition legislation. The reform package will enable functional separation to be imposed as a remedy to problems with national communications legislation.
Accelerating broadband access in rural areas
The proposed regulation includes provisions to address the ‘digital divide’ arising between urban and rural areas by promoting the management of radio spectrum to encourage its use for wireless broadband, and other innovative services.
Encouraging competition and investment in next-generation access networks
The reform package includes measures requiring national regulatory authorities to promote efficient investment, and innovation in new and enhanced infrastructures, such as optical fibres and wireless technologies. The rules are designed to strike a balance between competition law and ensuring that national regulation takes into account the need for telecoms companies to receive a fair return on their investments.
Next steps
With the agreed text now in place, the draft legislative package went under a formal vote of the European Parliament and the Council at the end of November. The Commission reports that the entire revised telecoms package should then enter into force in early 2010. Implementation into the domestic law of the member states will then be required by May 2011.
By Niamh Grogan, partner, and Neil Davies, associate, SJ Berwin LLP.
E-mail: niamh.grogan@sjberwin.com; neil.davies@sjberwin.com.