European Union: The EU Telecoms Reform Package - Key Changes

Last Updated: 3 March 2010
Article by Tom Coulson

More than ever telecommunications are central to our lives and work. Economic and social activities have come to rely on telecoms services and infrastructure, with internet access, mobile phones and TV services used every day by millions. However with new services constantly being offered, the existing rules relating to the telecoms sector require updating to keep up to date with technological developments. Pan-European growth in the telecoms sector is also currently hampered by 27 different and inconsistent regulatory systems across Europe. After two years of squabbling, the European Parliament has finally approved the EU's Telecoms Reform Package to combat this. This new European legislation, expected to be implemented into the 27 Member States' national legislation by June 2011, introduces significant changes to telecoms law. This article looks at the key changes that the reform package will introduce, including facilitating high speed internet broadband connections, strengthening competition and consumer rights and expanding the role of EU level institution in telecommunications regulation in Europe.

Expanded Bandwidth And Wireless Internet Access

Competition is a crucial driver of investment in the telecoms sector. However the European Commission acknowledged that the former state monopolies still hold a position of structural dominance linked to their networks which were initially built using mostly taxpayers' money. The result of this is a stifling of competition and barriers to the creation of a single EU telecommunications market. By way of example, 2007 research figures suggested that in the EU broadband markets, the incumbents had an overall market share of 55.6%. In many Member States the incumbents dominance was well in excess; in Italy (64.8%), Germany (66.7%), Portugal (70.1%) and Cyprus (89.89%). A key aim of the reform was therefore to address the concern that there is currently a lack of effective competition in network choice.

In order to pave the way for more choice and competition, the telecoms package introduces measures designed to expand bandwidth and wireless internet access. Until now, certain bandwidths have been reserved for second generation mobile phone networks; however the new legislation will require Member States to allow these frequencies to be used for new services. The availability of new bandwidths will therefore facilitate increased competition and investment as new operators make use of this newly freed radio spectrum.

The issue of bandwidth, available spectrum and their implication on network competition is currently very topical given the proposed merger of Orange and T-Mobile. Those against the tie up argue that the proposed merger will give Orange and T-Mobile an unfairly dominant position in the market, as the combined entity will hold a huge 84% of the highly important 1800MHz spectrum band; the spectrum key to enabling fourth-generation (4G) wireless technologies. Competitor operators are calling for the new Orange and T-Mobile entity to give up this bandwidth, and at the time of writing the Office of Fair Trading is to decide shortly if it will seek to review the planned merger in the UK. Whatever the outcome, the Orange and T-Mobile example goes to show that expanded bandwidth is necessary if the Commission is to fulfil its aims of attracting new operators and increased competition in the telecoms sector.

The Commission's aim will be assisted by the switching off of traditional analogue broadcasting across the EU. Radio spectrum freed as a result of the switchover from analogue to digital TV, to be completed in 2012, will also give new operators opportunities to make use of newly available radio spectrum. It is envisaged that this expanded bandwidth will be used for wireless broadband and other innovative services; the net result being an increase in take up of 3G within the EU.

The reforms will also help make giant strides towards overcoming the 'digital divide'. By better managing radio spectrum and effectively making it available for wireless broadband services, this will promote the penetration of wireless internet services into those rural regions where installing fibre cables is currently too costly.

Fundamental Rights To Internet Access

A second significant and highly topical introduction of the reforms is the recognition of fundamental rights to internet access. Early drafts of the reform package did not contain provisions for the protection of internet users' rights. However during 2009, a contentious French Bill allowing internet users to be kicked offline for illegally downloading copyrighted material without intervention from a court, caused the European Parliament to seek to enshrine a fundamental right to internet access for all citizens.

The French Bill provided that illegal file-sharers would receive two warnings, with their internet connection being cut off for a year if they offended for a third time. The European Parliament attempted to impose restrictions on Member States from restricting internet access without a ruling by a judicial authority. This issue caused considerable disagreement, as a number of Member States favoured a system whereby police or regulatory bodies were able to cut off users' internet access immediately.

The disagreement between the European Parliament and Member States threatened to derail the entire reform package until a compromise was eventually reached in late November 2009. After lengthy negotiations, it was agreed that any measures taken by a Member State to restrict a user's access to the internet must '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. Therefore the new reform requires restrictions on internet usage to be appropriate and subject to suitable judicial safeguards. Member States will no longer be able to apply a 'three strikes and you're out' law to cut off repeat offenders from the internet.

Protection Of Personal Data

To reflect the responsibility that arises as a result of the sheer volume of consumer data held by telecoms companies, the reform package also seeks to bolster operators' responsibilities. Network operators and service providers will be obliged to notify the authorities of personal data breaches; an issue which recently hit the press when it was alleged that staff at T-Mobile passed on private details of mobile phone customers, including their numbers and addresses, which were then sold illegally to rival phone companies. Other legislative changes in this area will ensure that personal data is only accessed by authorised personnel for authorised purposes.

New EU Telecoms Body

The current European Regulators Group (ERG) which brings together the heads of national regulatory authorities (NRAs), has had difficulties in ensuring consistent implementation of telecoms rules within the 27 Member States. The telecoms package therefore provides for the creation of a Body of European Regulators for Electronic Communications (BEREC) to replace the ERG. The BEREC will comprise the heads of the 27 NRAs and will issue opinions, recommendations and guidelines, draw up regulatory best practice to be disseminated among NRAs and provide the Commission with technical and regulatory advice when reviewing draft regulatory measures. This is designed to allow the Commission to benefit from the joint expertise of national regulators, ensuring that the 27 national regulators work as an efficient team on the basis of common guiding principles and ensure pan-European consistency in the implementation of telecoms legislation.

Other Significant Reforms

Other reforms of the telecoms package include:

  • New guarantees for an open and more 'neutral' net. The reforms are designed to ensure that European consumers have an ever-greater choice of competing broadband service providers. Concerns were raised that dominant operators may be able to degrade, through certain traffic management techniques, the quality of certain services to unacceptably low levels to strengthen their dominant positions in the market. Therefore the new legislation requires NRAs to set minimum quality levels for network transmission services so as to promote 'net neutrality.'
  • Consumers must be informed about the nature of the service to which they are subscribing, ensuring they can understand what services they subscribe to and, in particular, what they can or cannot do with the communications services. For example, currently VoIP applications such as Skype are blocked by some mobile operators. The new rules will oblige operators to inform a consumer of these limitations before signing the contract.
  • The reform package also includes measures requiring NRAs to promote efficient investment and innovation in new and enhanced infrastructures, such as optical fibres and wireless technologies.
  • The telecoms package extends the Commission's powers in reviewing national regulatory measures and strengthens the Commission's powers to co-ordinate national regulatory activity. The new rules will give the Commission a right of veto over remedies proposed by NRAs to ensure a consistent approach. The new rules also enable the Commission to adopt further harmonisation measures in the form of binding decisions, if divergences in the implementation of remedies persist across the EU in the longer term.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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