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Background
 

Telecoms package: more competition and improved consumer rights

Information society - 28-08-2008 - 16:47
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At the end of September, MEPs will vote on the reform of the regulatory framework for electronic communications - including mobile and fixed telephones, broadcasting and the internet - following a debate on Tuesday 2 September. The Industry and Internal Market Committees have already backed the amended "telecoms package" seeking to strengthen consumer rights and privacy protection, to ensure a consistent application of regulatory measures and to modernise radio spectrum use.

The telecoms package will reform the current set of electronic communications rules dating from 2002 by amending five existing directives and one regulation, and by establishing a new European body of national telecommunications regulators. The new rules, approved by the EP's Industry and Internal Market Committee in July, are tabled for a first reading plenary vote at the plenary session of 22-25 September in Brussels, following a debate at the 1-4 September session.
 
In July, Industry Committee MEPs adopted amendments to the framework directive for electronic communications networks and services so as to ensure that radio spectrum management is better coordinated and harmonised across the EU, especially in view of the switchover from analogue to digital TV by 2012 which will release a large range of frequencies currently reserved for broadcasting. The report drafted by Catherine Trautmann (PES, FR) also expands the tools available to national regulators to include, as "an exceptional measure", functional separation – a regulatory instrument which requires an incumbent operator to separate its network infrastructure from the business units offering services using this infrastructure.
 
To ensure a consistent application of the regulatory framework, the Industry Committee also backed Pilar del Castillo's (EPP-ED, ES) proposal for a Body of European Regulators in Telecommunications (BERT), rather than the European Electronic Communications Market Authority (EECMA) advocated by the Commission.
 
By adopting a report drafted by Malcolm Harbour (EPP-ED, UK), also in July, Parliament's Internal Market Committee voted for improved consumer rights such as the obligation on operators to provide more transparent information on tariffs and contractual terms and easier access to e-services for users with disabilities. The report equally aims to strengthen personal data and privacy protection, for example, by requiring access providers to warn internet users of the risk of malicious use of their personal data or other illegal practices.  A range of measures enhancing data protection were also included, based on an opinion drawn up by Alexander Alvaro (ALDE, DE) for the Civil Liberties Committee under the enhanced cooperation procedure.
 
This background note gives more detail on each section of the telecoms package.
 
REF.: 20080827BKG35492

Reform spectrum management to boost new wireless services

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Radio spectrum is the backbone of modern wireless technologies and services such as broadband internet, mobile telephony and broadcasting, Bluetooth, satellite navigation systems, air traffic control, weather forecasting, etc. With more and more new applications emerging, frequencies have become a scarce resource that many stakeholders are bidding for.
 
Make wireless services EU-wide interoperable
 
Today spectrum is often inefficiently used. Spectrum allocation and management need to be reformed, to accommodate emerging new applications. Moreover, coordination at EU level has become necessary to enable spectrum users to operate EU-wide services without harmful interference - that is to ensure, for example, that you are able to connect to mobile TV services while travelling abroad.
 
The electronic communications framework directive, as revised by the Industry Committee, therefore requires Member States to co-operate with each other and the Commission in the strategic planning, co-ordination and harmonisation of radio spectrum use. To this end, the Commission should table a legislative proposal for a radio spectrum action programme, says the co-decision report by Catherine Trautmann (PES, FR).
 
Use the "digital dividend" to bridge the digital divide
 
Up to now, specific services have been chosen for each frequency band. For example, wide bands in the range up to 1 GHz are reserved for broadcasters because they serve a specific general interest purpose. However, digitisation allows the transmission of 6 to 8 TV channels in the spectrum space previously needed for just one analogue channel. The switchover from analogue to digital terrestrial TV by the end of 2012 will therefore free up a significant amount of high-quality spectrum, known as the "digital dividend".
 
This freed-up spectrum could, for example, be used for additional TV programmes, mobile broadband, radio-frequency identification (RFID) applications (such as road charge collection or biometric passports), road safety applications and new e-services such as e-government or e-health, stresses the Industry Committee's own-initiative report, drafted by Patrizia Toia (ALDE, IT).  The released frequencies could accommodate new and open broadband technologies and access services which will help overcome the "digital divide", say MEPs.
 
Allow any frequency to be used for any application...
 
The electronic communications framework reform seeks to introduce service and technology neutrality as binding principles, i.e. any frequency band may be used for any application. Thus, a band which is now used for broadcasting could, for instance, be switched to provide wireless broadband services in the future. The Industry Committee backs this approach but stipulates that spectrum allocation must nevertheless comply with national frequency allocation plans and with the International Telecommunication Union's Radio Regulations.
 
This new, more flexible approach to spectrum management will also allow secondary trading of frequencies, another novelty introduced by the revised framework directive. In future, undertakings will be able to transfer or lease their individual rights to use frequencies in certain bands to other undertakings, so long as this transfer is in line with national frequency allocation plans.
 
...but safeguard media pluralism
 
Only general interest aims - such as ensuring safety of life, promoting social, regional or territorial cohesion, avoiding inefficient use of radio frequencies, or promoting cultural and linguistic diversity and media pluralism - can justify measures which require a service to be supplied in a specific frequency band.
 
Broadcasters' right to use the part of the radio frequencies they need to fulfil the specific general interest objective of delivering broadcasting services remains unchanged. Yet, "the part of their radio frequencies which becomes unnecessary for the fulfilment of that objective shall be subject to the new assignment procedure", says the electronic communications framework directive as amended by the Industry Committee.
 
No time to waste for re-allocation of digital dividend
 
"The immediacy of switchover in some Member States and the differences in national switchover plans require a response at Community level that cannot wait until the reform directives enter into force", says the own-initiative report on the digital dividend.  MEPs call on the Commission to propose measures to Parliament and Council for better coordinating the use of the digital dividend at EU level.
 
Moreover, Member States, together with the Commission, should identify common spectrum sub-bands of the digital dividend for different application clusters that could be harmonised on a technology-neutral basis. The Industry Committee supports the idea of dividing the Ultra High Frequency (UHF) spectrum into clusters for uni-directional services such as fixed or mobile broadcasting and other mobile multimedia services and for bi-directional services such as wireless broadband. A coordinated approach is "the most efficient way to avoid harmful interference", say MEPs.
 
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Expand the regulators' tool box

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Industry Committee MEPs stress that any ex-ante, sector-specific regulation should be progressively reduced as competition in the electronic communications markets develops and that the telecoms market should eventually be governed by competition law only.  No later than three years after the revised electronic communications framework takes effect, the Commission should review whether ex-ante regulation is still needed, says the committee.
 
National regulatory authorities should be able to define markets on a sub-national basis, says the report drafted by Catherine Trautmann (PES, FR) on the framework directive for electronic communications networks and services. This would enable a national regulator to lift regulatory obligations in geographic areas where there is already effective infrastructure competition, even if they are not defined as separate markets, say MEPs in the committee.
 
Commission and national regulators to cooperate more closely on market regulation
 
The co-decision report proposes a new "co-regulation" procedure which requires national regulatory authorities to consult the Commission and the new Body of European Regulators in Telecommunications (BERT) before taking regulatory decisions. If the Commission believes that the measure a national regulator intends to impose could create a barrier to the single market and BERT also considers the measure inappropriate, the Commission may oblige the regulator to amend the proposed draft measure.
 
Functional separation as "an exceptional measure"
 
The revised access directive (Trautmann report) enables a national regulator to require, as "an exceptional measure", an incumbent operator to separate its network infrastructure from the units offering services using this infrastructure - a regulatory instrument known as "functional separation". Yet, unlike the full "ownership unbundling", being debated for the EU gas and electricity markets (i.e. separation of generation assets from supply networks), functional separation does not change the overall ownership of telecoms network access and services.
 
MEPs stress that national regulators may only use this new tool in cases of "important and persisting competition problems or market failures" on wholesale markets, where any other regulatory tools have failed to achieve effective competition and if there is little prospect of future infrastructure-based competition. In such cases, the separate business unit would then provide all network user firms with access products and services on the same timescale and equal terms regarding price and service levels.
 
British national regulator OFCOM has already introduced functional separation in the UK telecoms market and regulators in Sweden and Italy are considering doing likewise. The framework directive as amended by the Industry Committee lays down that in future both the Commission and BERT have to confirm that no other measure has achieved effective competition.
 
Share infrastructure such as ducts or antennae
 
Another regulatory tool that the revised framework directive will give national regulators is the possibility of requiring operators to share "passive network elements and associated facilities". Undertakings that have the right to install facilities on, over or under public or private property could, for example, be required to open the use of building wiring, masts, antennae, towers, ducts, conduits, manholes and cabinets to competitors. Any sharing arrangements should lay down rules for apportioning the costs of property sharing and ensure that there is an adequate sharing of risks between the companies, say MEPs.
 
The Industry Committee asks national regulators to support market-driven investment and innovation in new and enhanced infrastructure, for example by encouraging investment sharing and by ensuring appropriate risk-sharing among the investor and firms wanting access to new facilities.
 
Invest in next-generation networks
 
To foster the deployment of new fibre-optic networks, MEPs advocate "appropriate incentives for investments in new high-speed networks that will support innovation in content-rich internet services and strengthen European international competitiveness". These "next-generation access networks" will provide ubiquitous and converged service infrastructure for electronic communications, computing and media.
 
If public authorities subsidise the rollout of future-proof high-capacity infrastructure, their support should be granted through open, transparent and competitive procedures that do not favour any given technology a priori and provide access to infrastructure on a non-discriminatory basis, stress MEPs in the committee.
 
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BERT vs. EECMA

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The Industry Committee backed Pilar del Castillo's (EPP-ED, ES) proposal for a Body of European Regulators in Telecommunications (BERT). Unlike the European Electronic Communications Market Authority (EECMA) advocated by the Commission, BERT will be based on the existing European Regulators' Group. MEPs in the committee favour BERT's leaner structure of a Board of Regulators composed of the 27 national regulatory authorities.
 
As an independent expert advisory body, BERT will issue opinions and recommendations to help both the Commission and individual national regulators to  apply the electronic communications regulatory framework effectively and consistently.  BERT will thus help to ensure a level playing field for market players, fair competition and high-quality services across the EU by ensuring that national regulators use similar tools when faced with similar market situations.
 
How to fund BERT
 
BERT should be funded by the Community (one third) and by direct contributions from national regulatory authorities (two thirds), according to an amendment adopted by the Industry Committee. However, these funding provisions might be reviewed ahead of the plenary vote. 
 
Keep ENISA
 
BERT should not take over tasks relating to network and information security, says the amended proposal. The Commission had originally proposed merging the existing European Network and Information Security Agency (ENISA) with the new European Electronic Communications Market Authority (EECMA). 
 
ENISA was established on 10 March 2004 for five years. The European Parliament has already prolonged ENISA's mandate until March 2012, in a vote at the June plenary session. The extra time would "allow further reflection on the general direction of the European efforts towards an increased network and information security", says the text adopted.
 
By 1 January 2014 BERT's mandate should be reviewed to ascertain whether it needs to be extended, say MEPs.
 
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Strengthen consumer rights to universal service

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The aim of the proposed changes to the directive on universal service and users’ rights in electronic communication is to improve consumer protection.  Amendments presented by the EP’s Internal Market Committee in a report by Malcolm Harbour (EPP-ED, UK) notably strengthen the obligation on operators to provide a minimum service of a specific quality, accessible to all users at an affordable price. This “universal service” means in particular that there should be free access to emergency telephone numbers (both the pan-EU 112 number and national ones), the existence of at least one directory enquiries service and an adequate geographical coverage of public payphones and other telecommunication access points.  The definition of “universal service” itself is not affected by the proposed changes, but an amendment from the committee asks the Commission to present in autumn 2008 proposals explicitly to include mobile telephony and broad band internet connection in its scope.
 
A better informed user is a better protected consumer
 
The Commission’s proposals give consumers the right to better information on prices, tariffs and terms and conditions.  MEPs in the committee have adopted amendments to go further, notably as regards the description provided by the operator of the public telecommunication and electronic communication services which it undertakes to provide.  This means that contracts would need to specify the way emergency calls are made and their location traced, any restrictions on access to certain content or types of equipment (for example if VOIP – Voice Over Internet Protocol – calls are blocked on mobile phones which otherwise offer internet connections), the applicable legal conditions, the types of customer and after-sales service available, payments methods, charges, if any, for transferring a number to another operator or for terminating a contract.
 
All this information should be transparent, comparable, appropriate and up to date,, and it should be published in a form which is clear, comprehensible and easily accessible, according to MEPs.  The user should be able to obtain a contract from the operator of his or her choice before signing it.
 
MEPs in the committee also want users to be warned about current issues concerning illegal use of electronic communication and the distribution of malicious, illicit or copyright-infringing material.   Consumers should be able to receive information on available methods to protect themselves against risks to the security of their personal data.  This type of information should be standardised and issued be the public authorities.
 
Better access to 112 – the European emergency number
 
The revision of the directive aims to promote the use of and improve access to the European emergency number 112.  Authorities should, say MEPs, take steps to ensure the widest possible coverage for emergency telephones services, including via the national emergency numbers. Emergency numbers should be available without interruption across the whole EU, even if there is a break in a communications network following a disaster or some other case of force majeure. All number to 112 should receive an appropriate response and allow the location of the caller to be identified.
 
In another important change, the MEPs introduced a right for users to have access to all number in the EU, including emergency number and other free-phone numbers in their country and elsewhere in the EU, whatever the technology involved (fixed line, mobile or VOIP).  Nevertheless some technical modifications will be needed before emergency calls can be made via a home computer.
 
Rights of people with disabilities better recognised
 
MEPs in the committee are proposing further changes regarding the rights of people with disabilities.  They should have the same access to electronic communication services, including the telephone service, as other users.  Public authorities should promote the manufacture and sale of equipment adapted to the needs of people with particular disabilities – for example, telephones with video or text facilities which facilitate access, also for elderly people, or sub-titling of television programmes.
 
The Internal Market Committee also proposed that Member States should be obliged to ensure access to the emergency number for reporting missing children – 116000.
 
Number portability and length of contracts
 
Consumers have the right to keep their number when they decide to change operator.  But operators often find ways to frustrate this “number portability”, notably by imposing long waiting periods.  The Commission is proposing that the number should be transferred within a maximum of one day.  MEPs want to add the possibility of a penalty for operators which fail to respect the rule.  But at the same time, they are asking that the national telecom regulator should be able to lengthen this period if necessary to prevent customers having their operator changed overnight against their will.  Many users have found themselves victims of this illegal practice known as “slamming”.
 
MEPs in the committee want to harmonise the maximum length of contracts at 24 months, with the option for users to terminate the contract at the end of the first year.
 
Technological neutrality
 
No technical constraint aimed at detecting or preventing violation of intellectual property rights by internet users, such as illegal music downloads, should be accepted if it inhibits the sale of equipment, stresses the report.  Surfers should also be free to access all types of legal content and to use all legal applications and services of their choice without “unreasonable restrictions” such as reductions of speed or quality of their connection.  National regulators should be able to intervene if there are infringements of this rule.
 
In certain situations, however, it would still be possible for an operator legally to restrict the access of a customer to a particular service.  For example, it would be allowed to block some SIM card functions for customers who have accepted only to use a particular operator’s network in exchange for obtaining their handset at a reduced price.  But the customer should be made aware of this restriction in the contract.
 
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Better privacy protection and action against illegal activity on the internet

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A revision of the 2002 directing on the processing of personal data and privacy protection in the field of electronic communications is a further element of the “telecoms package”.  For this measure, Parliament’s amendments are mainly from an opinion adopted by the Civil Liberties Committee, and were included in the Harbour report adopted by the Internal Market Committee on the basis of the enhanced cooperation procedure.
 
The aim of the revision is to improve the security and integrity of electronic communications networks.  In particular, this means better protection for users’ personal data and improving measures against spam and “cyber attacks”.  New measures are proposed to promote legal content in and legal use of communication systems.
 
Better protection for personal data
 
The existing directive harmonises various national rules with the aim of ensuring an equivalent level of protection for fundamental rights and freedoms in the processing of personal data.  Amendments from the Civil Liberties Committee aim to extend this harmonisation to the right to privacy, confidentiality and to security of information technology.
 
As electronic communication systems have developed, the quantity of personal data being held which can be linked back to the individual user is growing ever greater.  This mass of information is stocked, passed between operators and processed in a variety of ways.  This creates a situation conducive to ever more violations of data security, even if actual cases of serious damage to a user’s interest (destruction, loss or alteration of data, unauthorised access) are relatively rare.
 
Network security
 
Service providers are already obliged to take appropriate steps to reduce the risks of security violations.  The Civil Liberties Committee wants to add systems to detect predictable vulnerabilities.  An amendment says that “any legal or physical person” can process traffic data if technical measures to guarantee the security of electronic communications make it “strictly necessary”.
 
With the amendments put forward by MEPs, the directive would also set out that a security violation such as the theft of a list of customer from an internet service provider must be notified to the regulator.  Users should be alerted to the breach if its seriousness makes this necessary.  Those committing breaches of data security could also face criminal sanctions as set out by the Member States.
 
Public Interest Information 
 
National regulatory authorities should, according to the Internal Market Committee, encourage as far as appropriate cooperation between operators and those interested in the promotion of lawful content.
Public interest information (relating to copyright, child pornography, viruses, risks to personal security) operates on the principle of standardised information, prepared by the public authorities, and sent by the ISPs to all the subscribers.
 
Protection against spam and cyber-attacks
 
Other changes introduced by MEPs aim to increase protection against spam.  The processing of personal data by service providers, even if compliant with existing legislation, should require the prior consent of the user.  The user should always be free to withdraw his or her consent at any time.
 
The installation of “cookies” on users’ computers should be subject to prior consent.  Commercial communication (including promotions, prizes and gifts) by telephone or via computer networks should be signed and identifiable with an address allowing users to request not to receive further material.  MEPs want the directive to state that it is illegal to send e-mail containing links to malicious or fraudulent material. 
 
Finally, the reform aims also to see better protection against viruses, Trojan horses or spyware.  The text voted by MEPs in the committee would make clear that such programs are banned, whatever the system of storage (CD-ROM, flash memory, USB sticks) or the download method (internet, telephone or mobile).
 
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