The sweeping update to European telecoms legislation — the European Electronic Communications Code (EECC) — was formally adopted in December 2018. Member states now have two years to incorporate it into national law.
Despite the revolution in telecommunications over the last decade, the last time the EU made any significant changes to the sector’s regulation was in 2009. The aim of the EECC is to drive investment in new high-capacity networks (principally the fifth generation of mobile telecommunications, or 5G, and new fibre networks) and create a ‘level playing field’ between telecommunications companies and over-the-top providers (OTTs).
From the proposal to the political agreement, the rhetoric has been dramatic. The Commission’s proposal threatened the existence of a digital single market in Europe — as did failing to adopt it, depending on who you asked. Meanwhile, a proposal to cap intra-EU call charges appeared from the European Parliament mid-way through the discussion and picked up steam in its latter stages, to the point where it seemed to eclipse all other issues.
With the EU machinations over (for now), who benefits?
Telecoms operators: Less pleased than they’d hoped to be
One of the key aims of the EECC is to promote access to and take-up of very high capacity connectivity (fixed and mobile) across the EU. In this respect, the legislation feels familiar. The EECC continues to oblige national regulatory authorities to analyse telecommunications markets and determine whether any operators dominate the market. Such operators will continue to be designated as having significant market power (SMP) and face additional obligations in that territory.
However, if these operators invest in very high capacity networks (5G or fibre), they can reach an agreement with the national regulator to relax obligations it otherwise would face under European law. The Commission hopes this quid pro quo will encourage investment.
Mobile telecoms operators are not too certain it will. The Commission’s proposal included 25-year spectrum licences and a peer-review system to make sure member states rolled out 5G spectrum in time. After member states balked, they were haggled down to 20 with no peer-review. Operators say the increased uncertainty will inhibit the deployment of 5G.
Fibre operators, untouched by such concerns, are understandably happier with the provisions.
OTTs: Not as bad as it could have been
The EECC redefines electronic communication services. Previously, this had been a function of whether an organisation provided a service consisting wholly or mainly in the “conveyance of signals”. Specifically excluded were “Internet society services”. No more.
In the EECC, electronic communications services encompass Internet access services and interpersonal communications services, in addition to those conveying signals. Interpersonal communications services are further subdivided between “number-dependent” and “number-independent” services. The former includes standard telephony services, while the latter encompasses OTT services like Skype, WhatsApp and others.
The proposal to include OTTs prompted fierce industry resistance and divided member states. Their inclusion, however, does not signal total defeat, although regulatory uncertainty will increase. Number-independent interpersonal communications services will have to comply with some of the regulatory obligations imposed on traditional telecoms service providers, such as ensuring their services are secure. They will otherwise be subject to a “like-for-like” rule, where regulation will depend on the features their services provide. They will not be subject to the general authorisation regime, which requires services to register with national regulatory authorities.
This compromise has not pleased traditional telecoms operators, who wanted a level playing field.
Telecoms disrupters: Facing uncertainty
There will inevitably be more in telecoms than is dreamt of in the EECC’s philosophy. Those business models that do not quite fit into the boxes provided by the legislation will not have the luck of those disrupters that preceded them. Where OTTs benefited from years of being excluded from the regime, the EECC is intended to apply to the next generation of services. Where the legislation is silent, European regulators will fill the gap.
Member states: Have lived to manage their spectrum another day
The EECC seeks to introduce spectrum harmonisation measures and procedures. The Commission’s proposals would have seen strict harmonisation of the rules around awarding 5G spectrum. However, member states, keen to avoid Commission encroachment on their prerogatives, gave a political commitment to coordinate on 5G spectrum release in return for less stringent conditions.
Consumers: Won cheaper phone calls and a Europe-wide minimum broadband standard
Telecoms operators’ loss is, setting aside the economic arguments about the wisdom of price caps, consumers’ gain. After gaining a taste for free roaming, many consumers realised the discrepancy of it being cheaper to place EU calls abroad than at home. The European Parliament took up this cause and persuaded the Commission and the member states to cap the cost of intra-EU calling to €0.19/min. Although argued in discussions about the EECC, this provision will instead appear in the separate BEREC Regulation.
The EECC also diverts the focus on legacy services, such as public payphones and user directories, to basic universal service broadband. Under this provision, member states are obliged to ensure that all end-users have affordable access to broadband and voice communications of at least 30 Mbps.
Member states will now have around two years to transpose most of the EECC into national law, with intra-EU call caps coming into effect sooner. Variations are likely as national regulatory authorities assume their new responsibilities in different ways.
The EECC will ultimately be judged according to the speed of the future 5G roll-out. As the EU finds itself increasingly left behind compared to the US and Asia, it has no time to lose.
In the meantime, it is for businesses to prepare.