Background and Context
On September 14 the European Commission (EC) unveiled a series of measures of different legal nature, which together represent a very important and long-term effort to review the European telecommunications policy and legal framework. After years of assessment and consultation with stakeholders, the EC has identified three sets of problems: (i) the obstacles to unconstrained connectivity by means of ubiquitous, very-high-capacity (VHC) fixed and mobile infrastructures for a digital single market, (ii) the fitness of the existing legal framework to deal with rapid market and technological changes and (iii) regulatory redundancies and inefficiencies and a lack of coherence, resulting in unnecessary administrative burdens.

As a response, the important set of measures presented under what is often generically called the “Telecoms framework review” has these declared specific objectives: to contribute to ubiquitous connectivity in the internal market; to promote competition and user choice; and to simplify the regulatory intervention.

This set of measures includes essentially four main “blocs”:

1. A review of the current regulatory framework, which was approved in 2009, by reviewing five different European Directives and turning them into one single new legislative instrument, to be called the European Electronic Communications Code (full proposal available here).
2. An ambitious Action Plan for the development of 5G in Europe, including stimulus for investment (available here).
3. A review of the current rules on governance of telecommunications in Europe, by reinforcing the powers of the existing Body of European Regulators for Electronic Communications (BEREC).
4. Further policy and financial measures, at Union, national and local levels, including a "Wi-Fi for Europe" initiative to promote widespread availability of Wi-Fi connections for citizens across the EU.

This note will focus on the main regulatory aspects of this proposed reform. But it is important to keep in mind that in political terms and in the constant interaction and negotiation between the main stakeholders and the Commission to move forward in the proposed direction and reach its objectives, most of the proposed regulatory changes cannot be completely separated from the other proposed measure. This is (or pretends to be) a coherent global policy and regulatory reform to provide the best conditions for additional investment to boost Europe's digital economy and competitiveness, to encourage participation in the construction of a Digital Single Market and to meet Europeans' growing connectivity needs.

A recast of the current regulatory framework
This reform will follow a special procedure called “recasting”. It is defined as “the adoption of a new legal act which incorporates in a single text both the substantive amendments which it makes to an earlier act and the unchanged provisions of that act. The new legal act replaces and repeals the earlier act”. So, in other words, the new European Electronic Communications Code (Code) will amend several existing European Directives, and will integrate all the non-amended parts into a new legal text (also a Directive).

As it is well known, a Directive is only turned into enforceable obligations for public authorities or private individuals once it has been implemented by Member States into their national legislation, within a compulsory deadline. Each Member State is free to choose the most adequate legal instrument to do such implementation. Therefore, these five existing Directives are the legal background to a large list of legal instruments across the continent. All of them will need to be reviewed and adapted when the new Code is in force.

The existing framework was set up in 2002, and consisted of five directives: the Framework Directive (2002/21/EC), the Authorisation Directive (2002/20/EC), the Access Directive (2002/19/EC), the Universal Service Directive (2002/22/EC) and the Directive on privacy and electronic communications (2002/58/EC). Of these, the Code will modify and do a recasting of the first four (Framework, Authorization, Access and Universal Service), and leaves untouched the one on privacy and electronic communications, currently being subject to a different reviewing process.

The proposed changes
The measures proposed in the new Code address the objective of simplification and reduction of administrative burden. Several of the proposed changes under access, spectrum, universal service, services/end-users, numbering and governance policy areas aim to make rules clear; allow parties to easily understand their rights and obligations; and to avoid overregulation and administrative burdens.

The proposed changes include specifically: streamlining and geographic targeting of access regulation; the use (wherever possible) of general authorisation in preference to individual licences for spectrum; fostering secondary markets for spectrum; the removal of redundant universal service obligations such as requirements to ensure the provision of payphones and physical directories; narrowing of the scope of universal service availability obligations and ending of the sectorial sharing mechanism; clarifying the scope of the Regulatory Framework and the removal of redundant consumer protection obligations where these are already addressed through horizontal legislation or met by the market; harmonisation and clarification of rules and governance of numbering in the machine to machine (M2M) context; and aligning the remit of National Regulatory Authorities (NRAs) with BEREC.

If viewed in more detail, and following the scheme provided by the EC in its Communication accompanying the proposed reforms (full text available here), a summary of the list of changes can be seen as follows.

a) Rules regarding access to and take-up of VHC connectivity as a regulatory objective in itself, alongside the existing ones of promoting competition, contributing to the internal market and promoting the interests of citizens.

b) Rules requiring regulators to map network investment intentions, and enabling public authorities to seek investors in under-served areas.

To deliver appropriate incentives for investment in internet connectivity, the proposed Code makes targeted changes to market regulation designed to enable adequate returns on new investments relative to risks, giving Europe-wide predictability to the international investment community, while leaving adequate scope for adaptation to localised network conditions. This should allow regulators to increase transparency about network deployment plans and to provide investors with more predictability and protection.

c) Rules to prioritise network access remedies that directly support competitive infrastructure deployment wherever feasible, and reflecting the retail choices already available to end-users.

Current regulatory intervention will be softened, with the declared objective to weigh no more heavily than necessary on operators' investment decisions, while ensuring competitive outcomes.

The proposed Code, Articles 61 and 65, amends the market analysis procedures, codifying current best practices and aiming at more focused and legally certain access regulation, as well as tightening its geographical focus to ensure that access obligations are imposed only when and where necessary to address retail market failures and to assure end-user outcomes. The rules also lay down an obligation for regulators to take into consideration commercial access agreements in their market analyses. Furthermore, the article extends the current maximum three-year market review period to five years.

In the words of the EC, infrastructure-based competition is among the most effective ways of delivering new or upgraded internet connectivity in areas where population (or business) density can support more than one network. The Code, article 70, supports greater infrastructure competition by ensuring access to civil infrastructure, such as ducts, poles etc., where these are held by operators with Significant Market Power (SMPs).

Also containing information regarding the supporting of infrastructure competition, Article 59 of the proposed Code clarifies the conditions under which obligations can be imposed on all operators to ensure access to non-replicable network assets, such as in-house wiring and cables.

d) Rules establishing predictable regulatory conditions to promote co-investment and wholesale-only business models, facilitating deployment of VHC networks deeper into suburban and rural areas.

In areas where infrastructure-based competition may not be realistic, co-investment by rival operators is promoted by the new Directive, as it is understood that it allows pooling of costs, reduction of risks, overcoming of scale barriers by smaller operators and sustainable retail competition over time which is less dependent on regulation. Business models based on selling wholesale network access to retail operators can reduce competition risks, attract "patient" capital which supports longer-term investment in VHC networks and thus push out the dividing line between commercial and non-commercial deployment areas. This relatively new, but growing, business model receives with the Code a clearer and simpler regulatory treatment: Article 77 offers a simplified regulatory model for wholesale-only networks with significant market power, limited to fair, reasonable and non-discriminatory access rules and subject to dispute resolution as necessary. The provisions require strict conditions for a network to be seen as truly “wholesale-only”, and may be particularly appropriate for local very high capacity networks, which might nevertheless be considered to have significant market power in the future.

Article 72 clarifies the circumstances in which pricing flexibility can be granted to SMP operators, without compromising competition. Article 74, together with Annex IV, introduces provisions to facilitate commercial co-investment in new infrastructures and to draw the necessary regulatory consequences.

e) Changes in spectrum allocation rules; establishment of key principles for spectrum assignment in the Union, new Union-level instruments to establish assignment deadlines and licence periods (for a minimum of 25 years) and a peer review among national regulators to ensure consistent assignment practices.

The EU was first to develop 4G wireless technology, but late in deploying it compared to other advanced regions. As spectrum allocation and management is basically a competence of the Member States, there has been a constant and highly political debate about to what extent such fragmentation has had a direct negative impact on wireless network coverage and penetration overall in Europe. The EC estimates that such delays, if repeated, will endanger the successful introduction of 5G in Europe and the deployment of new innovative services. The EC states that in addition to faster processes to designate spectrum for electronic communications, with clear deadlines for when the spectrum is to be made available to the market, investors in the next generation of wireless broadband need more predictability and consistency regarding future licensing models and the key conditions for assigning or renewing national spectrum rights. Therefore, in the new Code the EC imposes a set of common standards, such as minimum licence duration to ensure returns on investment, greater scope for spectrum trading and leasing and consistency and objectivity in market-shaping regulatory measures (reserve prices, auction design, spectrum blocks and caps, exceptional spectrum reservations or wholesale access obligations). On the other hand, new rules clarify that operators should commit to use the spectrum assigned to them effectively.

f) Rules promoting a consistent approach to coverage obligations, to small cell deployment and to network sharing, with the goal to stimulate 5G deployment and rural connectivity.

Spectrum licenses come with coverage obligations, which are an efficient tool to address gaps in wireless connectivity and to ensure high-quality coverage of the EU population and territory. The EC wants such obligations to be better tailored, especially regarding main transport paths and rural areas.

g) Facilitation of spectrum sharing in 5G networks, and promotion of end-user access to Wi-Fi-based connectivity.

Shared use of spectrum, either on the basis of general authorisation or individual rights of use, can enable more efficient and intensive exploitation of this scarce resource. Users of radio spectrum under general authorisation will have greater regulatory protection from harmful in-band interference, so that obstacles to deploying Wi-Fi access points are removed and end-user access to shared Wi-Fi connections is made easier.

h) Rules modernising the universal service regime.

This, together with the amendments to the services and end-user protection rules, is perhaps the most “visible” part of the proposed changes, and the most understandable for the general public.

The proposal aims at modernising the universal service regime by removing the mandatory inclusion at EU level of legacy services (public payphones, comprehensive directories and directory enquiry services) from the scope and focusing on the basic universal service broadband, which would be defined by reference to a dynamic basic list of online services usable over a broadband connection. However, the Code—article 82—allows Member States to continue mandating those legacy services at the national level, if the need is duly demonstrated provided they adapt the financing regime too.

Affordability of universal service must be ensured at least at a fixed location but Member States will have flexibility to extend affordability measures to mobile services too, for the most vulnerable users: Article 79 lays down an obligation for Member States to ensure affordable access to all end-users to functional broadband internet access services and voice communications at least at a fixed location. In order to ensure affordability, Article 80 empowers Member States to require undertakings to have special tariff options for end-users identified as having low incomes or special social needs and/or to provide those end-users direct support and establishes a right to contract for consumers benefiting from special universal tariffs.

i) Rules pushing for maximum harmonisation of the main sector-specific end-user rules, applicable as appropriate to different categories of services.

Internet connectivity has enabled new forms of online communications services but existing sectorial rules do not apply to many of these new players; there is therefore a different regulatory framework for traditional operators and new communications platforms, which according to the former, creates a serious distortion to competition. The new rules intend to address a series of end-user issues in a proportionate and non-discriminatory way on the basis of the relevant characteristics of the services concerned. The EC declares the intention to establish a more level playing field which should ensure that network operators are not at a disadvantage when they also provide communications services.

Article 2(4) of the Code redefines the term “electronic communications service”. It contains three types of service categories:

1. internet access service,
2. interpersonal communications service, encompassing two sub-categories: i.e., one that is number-based and one that is number-independent, and
3. services consisting wholly or mainly of the conveyance of signals, such as transmission services used for Machine-to-Machine (M2M) communications and for broadcasting.

Many end-user provisions will only apply to internet access services and to number-based interpersonal communications services.

Number-independent interpersonal communications services will be subject only to obligations where public policy interests require applying specific regulatory obligations to be applied to all types of interpersonal communications services, regardless of whether they use numbers. This relates in particular to security provisions (Article 40). Additionally, while the EC has not wanted to go as far as to impose a full pan-European new standardization process, it reserves the right to do so in the event of an actual threat to end-to-end connectivity or to effective access to emergency services. Such standards could be imposed by NRAs where necessary (Article 59).

The proposal reduces the regulatory burden by lifting regulatory obligations where they are no longer needed or are adequately covered by general consumer law. One key example is the repeal of the power of national regulators to directly impose retail price regulation on SMP operators. Also certain provisions on contracts, transparency, equivalence of access by disabled users, directory services and interoperability of consumer digital television equipment have been streamlined and partly deleted because of overlap with horizontal rules or other redundancies (Articles 95–98, 103–105).

A limited number of new provisions are envisaged to address new challenges, e.g., better readability of contracts through a short-form summarising the essential contract information, the provision of consumption control tools to inform end-users about their current communications usage, enhanced provisions on price and quality comparison tools. Particular attention is given to switching rules for the rapidly increasing number of bundles to avoid lock-in effects: key sector-specific provisions, such as maximum contract duration and rights to contract termination, would apply to the entire bundle.

The Code also establishes a provision prohibiting discrimination based on nationality or the country of residence (Articles 92, 95, 96, 98 and 100).

The Code introduces the clarification of rules on long-term instalment payments for connections so that they are clearly consistent with end-user protection rules: while there is a general maximum service contract period of 2 years, longer separate agreements with end-users are allowed as a means to facilitate reimbursement of contributions to the deployment of a physical connection and to support network roll-out through instalment-based contributions to network capital costs.

j) Changes to numbering and emergency communication provisions.

In order to address competition issues in the M2M market (most importantly, the lock-in with a given operator), the proposal allows national regulators to assign numbers to undertakings other than providers of electronic communications networks and services (but without however requiring them to do so). The Code also requires national regulators to determine certain numbering resources for the extraterritorial use of national numbers within the EU, as a means of responding to the increasing demand for such extraterritorial use of numbering resources in particular for M2M applications.

Rules for harmonised numbers for services of social value are reviewed. Emergency communications provisions are also amended to ensure cross-border deployment and functioning of technical solutions for emergency communications. Legal clarity is brought regarding access to emergency services by all number-based interpersonal communications service providers. The proposed new provisions authorize the Commission to adopt delegated acts to ensure effective access to the single European emergency number 112 with regards to caller location, call routing to the “public safety answering points” and access for disabled end-users in a coherent way EU-wide.

k) Changes in governance and regulatory authority.

The EC proclaims as a goal, to be shared with Member States, to ensure that the new Code is applied in a consistent, predictable and far-sighted way in the long-term interests of end-users, in a competitive internal market. And for that, it proposes a different governance model that ensures regulatory stability and coherence: it will rest on the cooperation of strong and independent national regulators with adequate powers, working together with the Commission in a reinforced institutional structure (BEREC) with corresponding tasks, and having a more structured recourse to strategic expertise in regards to spectrum policy.

Next steps
This reform will now follow the ordinary legislative procedure, with some particularities imposed by the recasting technique, due to the fact that it is partly a review and partly a codification of existing law. Any temporary guess about the procedure is speculation, but an estimate could be of not less than 18 months before the text has gone through debate, amendments and agreement in Parliament and in the Council of Ministers, and is finally voted as EU law. Then, Member States will have 2 years to implement the changes in their national legislation.