Countdown to the new European Electronic Communications Code
What electronic communications network operators and service providers should expect
26 November 2020
Member States (including the UK) are required to implement the EU Directive establishing the European Electronic Communications Code ("EECC") as national law by 21 December 2020.
The EECC is the most important regulatory change in the industry for some time as it both consolidates and updates the existing legal framework governing the provision and use of electronic communications networks and services across the EU.
Electronic communications network operators and service providers will need to examine if and how the EECC applies to their business, and be prepared to comply with the regime when operating in the UK and EU. Traditional operators may be well prepared for the changes, however, a far wider pool of over-the-top (OTT) providers, including those businesses offering Internet-based services such as email and video applications, will now fall within the expanded scope of the EECC and shoulder the associated regulatory obligations for the first time.
Background to the new EECC
In December 2018, the European Commission published the EECC aimed at harmonizing the existing legal frameworks governing the use and provision of electronic communication services and networks across the EU. Member States were given a two year grace period to implement the EECC into national law, with 21 December 2020 being the deadline. Individual member states have reached varying stages in the implementation process and, with COVID-19 placing added emphasis on the crucial role of connectivity, many countries are forging ahead with transposing most of the key provisions under the EECC into national law for the December deadline.
The EECC consolidates and updates four of the five existing Directives which comprised the EU framework for the regulation of electronic communications networks and services in the EU (the Framework Directive (2002/21/EC), the Access Directive (2002/19/EC), the Authorisation Directive (2002/20/EC) and the Universal Service Directive (2002/22/EC) (each as amended by the Better Regulation Directive (2009/140/EC)) - the ePrivacy Directive (2002/58/EC) is now to be considered separately). This approach retains the 'national' emphasis for regulation and enforcement, although it is worth noting that the BEREC Regulation established BEREC as a formal regulatory body with broad powers across the EU.
To assist interested parties in their assessment of how the EECC may impact their business operations across the EU, Clifford Chance will be providing an analysis of the key EECC provisions, the UK government's transposition approach and a cross border overview of the implementation progress in certain EU Member States. The below provides a short introduction to the EECC and the headline changes introduced under the new regulation.
What are the core objectives of the EECC?
- Drive investment in very high capacity networks and services, such as full fibre networks and 5G, through sustainable competition.
- Support efficient and effective use of radio spectrum.
- Maintain the security of networks and services.
- Provide an improved level of consumer protection.
Key changes for electronic communication service providers and digital infrastructure investors
Co – investment measures
The EECC introduces a new co-investment regime for very high capacity networks (being fibre optics). To foster investment in such networks, network operators with significant market power (SMP Operators) will be exempt from certain access regulations if they engage in co-investment opportunities (for example, committing to co-ownership, co-financing, risk-sharing and entering into purchase agreements). All such arrangements will be subject to oversight by the national regulatory authority (NRA).
As part of the effort to encourage investment in wireless networks and accelerate the rollout of 5G, the EECC sets out rules to facilitate co-ordinated and efficient spectrum management, including:
- powers for NRAs to impose 'use it or lose it' conditions on individual spectrum grants
- for NRAs to provide for passive and active sharing of infrastructure, commercial roaming access agreements, and joint roll-out of radio area network (RAN) infrastructure
- a prohibition on NRAs preventing spectrum sharing
- for NRAs to adopt appropriate spectrum licence durations, including for a minimum of 20 years for wireless broadband
- enhanced allowances for spectrum trading and leasing in an efficient manner
- powers for NRAs to attach competition-friendly conditions to spectrum licences, such as the provision of wholesale access and national or regional roaming
The loosening of restrictions on spectrum sharing and trading should facilitate more dynamic uses of spectrum and reduce barriers to entry for new players, stimulating market development.
New operators caught in the scope of the EECC
With a new definition of 'electronic communications service' (compared to the existing regulatory framework), the EECC captures providers of 'interpersonal communications services' (aka OTT services) such as WhatsApp, Viber and Skype for the first time within the regulatory regime. Machine-to-machine and broadcasting transmissions are also included in the expanded definition. Excluded from the definition of 'interpersonal communications services' are non-interactive communications such as linear broadcasting, video on demand, websites, and communications channels that only form an ancillary part of another service – such as with online games.
Of the new regulatory obligations applicable to the OTT providers, it will be interesting to see how consumer protection and security obligations will be managed in practice. Likewise, with NRAs taking a watching brief on emergency services dialling limitations imposed by OTT services for now, the heightened potential for future application of these regulations is something for these service providers to consider.
What about the UK?
The Department for Digital, Culture, Media & Sport (DCMS) has confirmed that the EECC will be implemented into UK law by 21 December 2020, Brexit notwithstanding. A small number of EECC requirements have, however, been deprioritised and in May 2020, Ofcom disclosed that communications providers will be granted at least 12 months to implement any changes, regardless of the December implementation date. In a statement published in October 2020, Ofcom revealed that the period for implementation will be extended up to 24 months for certain provisions.
Impact on industry players – what should you consider?
Timing is the most important factor at this stage of the EECC implementation process.
Electronic communications network operators and service providers must be aware of the new rules and be prepared to comply with them by the deadline subject to the Ofcom extension. Investors in telecoms infrastructure will also take a keen interest in how changes introduced by the EECC impact the nature of competition within the industry.
Industry players should also consult the EECC and seek assistance where necessary to understand how exactly the new EECC will apply to their business and operations.
Traditional service providers, specifically SMPs, will need to weigh up the benefits of entering into the co-investment regime. Though the promise of lighter regulation will stimulate investor interest in this sector, it remains to be seen how the regime will adopted by individual Member States.
The co-investment programme could also be considered too narrow given that it is limited to fibre network investments only. If mobile network investments were included in the remit of this regime greater competition could be fostered, ultimately improving end-user experience. Albeit, few MNOs currently have SMP in their jurisdiction.
From the perspective of the NRAs, the enhanced powers of BEREC should not be overlooked. Under the EECC, decisions made by a NRA can be challenged and overridden by BEREC and any draft measures relating to telecoms regulation may need to be amended or withdrawn if BEREC or the Commission require it.