Essay: The EU Connected Continent

The proposal by the European Commission for an EU single market for electronic communications and to achieve a Connected Continent: How does the proposal seek to uphold (or not) the principle of harmonisation?
1. INTRODUCTION
1. The Commission of the European Union launched on 11 September 2013 the proposal to establish a ‘Connected Continent’ with a single market for electronic communication, a single authorisation, spectrum management, high quality of cross border consumer protection, guarantees for net neutrality and end user protection. This papers aims to describe how the proposal seek to uphold (or not) the principle of harmonisation in some of the proposals in the regulation.
2. On 11 September 2013, Madame Nellie Kroes, the former Vice President of the European Commission responsible for the Digital Agenda for Europe presented a legislative package for ‘Connected Continent: Building a Telecoms Single Market’ calling it the most ambitious plan in 26 years of telecoms market reform . The package aims at removing obstacles to a real single market in the European Union for electronic communications and to support the telecommunication sector to invest in new technologies and services. Furthermore, the Commission wants to reduce the administrative burdens in the authorisation processes, to coordinate the assignment of the radio-spectrum at the level of the European Union and to increase the network capacity. The proposal also wants to eliminate the extra costs on international calls and the roaming costs. The proposal received some critics because of the perceived lack of consultation and the hasty attempt to have it adopted in the previous legislature.
3. The proposal is based on article 114 of the Treaty on the Functioning of the European Union (TFEU) which allows for the adoption of ‘for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market’. In its Impact Assessment of the proposal, the Commission refers several times to the increased harmonisation in the area of spectrum management, the procedures for authorising operators in Member States, harmonisation of numbering resources, of consumer rules and standardised EU access products. The regulatory principle of harmonisation beside the other regulatory principles as described in article 8 of the ‘Better Regulation Directive’ will be used as guidance to analyse the package.
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2. The EU Connected Continent.
2.1 Background of the proposal.
4. Telecommunications was traditionally a national regulated market with state-owned enterprises which held a complete control over equipment and services provided. The liberalisation initiated at the end of the 1980s ran largely similar with the rise of the internet. The regulatory framework of 2002 intended to adapt all the regulations to the market and technological changes. The Commission also wished to coordinate the existing liberalisation and harmonisation legislation.
The rise of mobile internet since 2007 and the increasing use of the internet both in number of users as in the size of data traffic have led the Commission to review the convergence of telecom and internet in 2010.
5. The EU Regulatory Framework for electronic communications networks and services (the Regulatory Framework) is the basis for all national telecommunications laws in the EU Member States. The Regulatory Framework provides general and technology neutral rules applying to all electronic communications networks and services covering fixed and wireless telecoms, data transmission and broadcasting transmission. It contains also provisions for the structure and functioning of national telecommunications providers. It also sets out the framework for both general rules applying to all providers of electronic communications networks and services and particular rules which may only be imposed by national regulatory authorities (NRA) on operators with significant market power (SMP).
One of the main objectives of the Regulatory Framework was to align the sectorial regulation of the electronic communications market with general competition principles.
The Regulatory Framework consists principally of four key directives:
‘ a Directive on a common regulatory framework for electronic communication networks and services (the Framework Directive);
‘ a Directive on the authorisation of electronic communications networks and services (the Authorisation Directive);
‘ a Directive on access to, and interconnection of, electronic communications networks and associated facilities (the Access Directive); and
‘ a Directive on universal service and users’ rights (the Universal Service Directive).
6. This framework is supplemented by the Commission’s Radio Spectrum Decision, the Privacy and Data Protection Directive, and the Commission Directive on Competition in the market for electronic communications networks and services. These important documents are accompanied by various supporting Regulations, Decisions and Recommendations of the Commission.
The general structure of the Regulatory Framework entered into force in July 2003. Following a lengthy political process which started in 2006, on 19 December 2009, two Directives entered into force which update and amend the Regulatory Framework (the “2009 Revisions”):
‘ the Better Regulation Directive amends the Framework, Authorisation and Access Directive; and
‘ the Citizens’ Rights Directive amends the Universal Service and the Privacy and Data Protection Directive.
The new Regulatory Framework also established a new pan-European regulatory institution, the Body of European Regulators for Electronic Communications (BERE”).
2.2. Overview of the EU Connected Continent proposal.
2.2.1. Aim and content of the proposal.
7. AIM OF THE PROPOSAL. The general aim of the proposal is to enable the completion of a European Single Market for electronic communications by removing the identified obstacles to the Single Market and in which citizens and businesses can access electronic communications wherever they are provided in the Union, without cross-border restrictions or unjustified additional costs and companies providing electronic communications networks and services can operate and provide them wherever they are established or their customers are situated in the EU.
8. OBJECTIVES OF THE PROPOSAL. The proposal seeks to reduce administrative burdens related to gaining authorisation to operate, coordinate radio-spectrum assignment at EU level, and increase network capacity. It will also lead to the elimination of premiums on international call and on incoming calls when roaming.
The package includes proposals for the reform of the market’s regulatory framework, addressing cross- border issues and introducing a range of new rights for users and service providers. The reforms aim to:
‘ create a single EU authorisation system, requiring operators to notify the national regulatory authority (‘NRA’) in the country in which they are established rather than the NRAs of each Member State in which they operate;
‘ preserve net neutrality through non-discrimination, by preventing blocking and throttling of content and services by service provider;
‘ introduce new rights for consumers including requiring additional information on service specifications to be included in contracts, notice one month in advance of contract rollover with an option to oppose, and the right to terminate any contract after 6 months without penalty;
‘ end roaming charges which means that operators lose the right to charge roaming fees for incoming calls whilst a customer is travelling abroad in the EU;
‘ co-ordinate spectrum by way of a set of principles and criteria to ensure the development of an EU wireless space.
9. STRUCTURE OF THE PROPOSAL. The structure of the proposal is as follows:
Chapter I General provisions
Article 1 and 2: General provisions.
The articles 1 (Objective and scope) and 2 (Definitions) contain the general provisions, including relevant definitions. It establishes regulatory principles pursuant to which the regulatory bodies involved shall act when applying this regulation in conjunction with the provisions of the existing framework.
Chapter II Single EU authorisation
Article 3 to 7: Single EU authorisation
In the considerations 9 to 16, the Commission refers to the difficulties of provision of cross-border electronic communications especially when providers want to offer services in several countries, they still need to notify and pay fees in individual host Member States. The Commission wants to end this situation.
Chapter III European inputs
Section 1 – Coordination of use of radio spectrum within the single market
Article 8 to 16: Spectrum management
The second part of the proposal of Madame Kroes is related to the radio spectrum management as this is today an affair of national authorities as the radio spectrum used for high-speed wireless broadband is allocated at national level. The Commission consider that national level problems (mainly technical and bureaucratic delays) have led to procedural and licensing delays in spectrum allocation.
Even in those areas where harmonisation on this matter has started, the Commission esteems this not to be efficient. In consideration 17 of the proposal, the Commission refers to ‘the piecemeal process of authorising and making available the 800 MHz band for wireless broadband communications, with over half of the Member States seeking a derogation or otherwise failing to do so by the deadline laid down in the Radio Spectrum Policy Programme (RSPP) Decision 243/2012 of the European Parliament and the Council.’ . The Commission considers the radio spectrum as a public good and an essential condition for the creation of the internal market for mobile broadband in the Union which contributes to the implementation of the Digital Agenda for Europe.
Section 2 ‘ European virtual access products
Article 17 to 20: European virtual access
In article 17 up to and including article 20 of the proposal of the regulation, a proposal for a European Virtual broadband access product is drafted that enables that services with a high quality and equal functionalities can be offered in the whole European Union. The Commission refers with this to an EU-harmonised virtual broadband access products (virtual unbundling, IP bit-stream and terminating segments of leased lines).
Chapter IV Harmonised rights of end-users
Article 21 to 29: Rights of end-users
With the articles in chapter IV rules are defined to cope with the situation in the EU where electronic communications providers and end-users are confronted with ‘inconsistent rules regarding rights of end-users, leading to uneven levels of protection and a variety of diverging rules to comply with in different Member States’. Because of this defragmentation of rules, operators are losing profits and consumers lack protection. Furthermore, the provision of services across borders is hindered and consumers are afraid to use such services. The Commission wants to enhance the level of consumer protection across the EU by harmonising the rules defining the rights of end-users.
Chapter V Facilitating change of providers
Article 30: Facilitating change of provider
According to the Commission, improving the rules which allow consumer to switch from providers will promote ‘market entry and competition between electronic communication providers and allow end-users to choose more easily the provider which best meets their specific needs’. As described in the considerations 62 to 66, harmonising principles for switching operator procedures will allow end-users to switch providers when it is in their interests. End-users should be able to switch without being hindered by legal, technical or procedural obstacles.
Chapter VI Organisational and final provisions
Article 31 to 40: Organisational and final provisions
This Chapter contains first general provisions concerning sanctioning powers of the competent national authorities and rules on the Commission’s power to adopt delegated or implementing acts.
10. LEGAL BASE OF THE PROPOSAL. The proposal is issued on the basis of Article 114 of the Treaty on the Functioning of the European Union (hereinafter: TFEU) and therefore serves to improve the functioning of the internal market as the proposal stipulates: The proposal is based on Article 114 of the Treaty on the Functioning of the European Union, as it relates to the internal market for electronic communications and its functioning.
11. POSITIONS OF STAKEHOLDERS TOWARDS THE PROPOSAL. Some Member States appear to have reservations about the proposal’s complexity as well as about the fact that it had not been preceded by the usual formal consultation process.
The European Parliament has introduced 820 amendments to the proposed regulation. This reflects not only on the complexity of the proposal, but also indicates that there is a lot of doubt on sustainability. The European Parliament voted though the package on 3 April 2014 electing to amend certain of the Commission’s proposals and adopt the following position in the new proposed Regulation (although the text may still be amended by the Council). In addition the European Commission is to perform a full evaluation of the entire regulatory framework for electronic communications by 30 June 2016.
In the second semester of 2014 the Commission established its position on amendments of the European Parliament on first reading and some discussions were held within the Council or its preparatory bodies on the proposal.
The Committee on Industry, Research and Energy of the European Parliament in its Draft Report comes to the conclusion that some of the proposed measures should be subject to a deeper, structured public consultation and thorough ex-ante assessment of the expected impact and consequently be included in the next review of the framework for electronic communications on the proposal.
The Body of European Regulators for Electronic Communications (BEREC) is concerned about the shift of power from domestic regulators to the Commission, and warns that the single authorisation process may be operationally more costly and burdensome than the current system. It also argues that coordinating spectrum bidding gives larger operators an advantage given the capital and resources needed.
Telecommunications lobby groups as the European Telecommunications Network Operators’ Association (ETNO) are more positive on the proposal and welcomed the harmonisation of spectrum auctions and releases and the Recommendation on costing, but argues that allowing more market restructuring (mergers) and changing to a fully harmonised and lighter pan-EU framework are missing elements.
Other stakeholders claim that the proposal was rushed and argues that it lacks incentives for investment and innovation and does not address the necessary consolidation of mobile markets and does not reduce the overall regulatory burden. Large telecoms operators say that roaming and price caps would deprive the providers of the incomes needed to modernise networks. Some analysts argue that spectrum coordination would require leaders in spectrum release to align themselves with laggards and as such may be counter-productive and slow growth and doubt whether the proposal will fully achieve its aims. Other critise the proposal for not being bold enough since it does not create a single EU regulator or EU-level allocation of spectrum.
2.2.2. Overview of the principle of harmonization as provided for under the EU Connected Continent proposal.
2.2.2.1 The six governance principles.
12. In the document COM (1999) 539, Communication from the Commission of 10 November 1999, The 1999 Communications Review – Towards a new framework for Electronic Communications Infrastructure and associated services , principles for regulatory action have been defined which underpin the proposed regulatory framework. These regulatory principles, which are generally accepted as good governance principles inherent to EU policies are to govern regulatory action at the European and national level.
The principles are:
‘ Regulation should be based on clearly defined policy objectives.
‘ Regulation should be kept to a minimum to meet the defined objectives which is another formulation of the principle of proportionality.
‘ Regulation should enhance legal certainty and be consistent over time to allow all concerned to make investment decisions with confidence.
‘ Regulation should be technologically neutral or objective and non-discriminatory so all equivalent technologies or services should be treated in the same way.
‘ Regulation should be enforced as closely as practicable to the activities being regulated which is the principle of subsidiarity where the European level should take action if the objectives of the proposed action cannot be sufficiently achieved by member states and can therefore, due to the scale or effects of the proposed action, be better achieved by the Community.
de Destree mentions further following principles:
‘ Regulation should be flexible to be able to respond to rapid market developments. On a European level, EU law should provide only for general objectives and minimal procedure requirements to allow differentiation across member states. On the other hand, on a national level, broad power and a margin of discretion should be left to regulatory players.
‘ Regulation should be transparent. This means that legislation and the number of legal instruments should be kept at the minimum and that all regulators should widely consult the participants and make their information and decisions easily accessible.
‘ European regulatory bodies should share a common regulatory culture to ensure the establishment of a single market for electronic communication services.
2.2.2.2. Harmonisation.
13. DEFINITION. Article 114.1 TFEU serves as legal basis for adopting the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.
The objective of article 114 TFEU (ex Article 95 TEC) is to harmonise national laws and to ensure that the same rules are applicable throughout the whole EU preventing discrimination against equivalent goods from any Member State. Such an application of common rules throughout the whole EU is designed to contribute to the establishment and good functioning of the internal market (which is explicitly required by Article 114.1 TFEU). This also implies that, once the deadline for transposition expires, Member States are in principle not allowed to maintain any national legislation or any other measure which is inconsistent with the Directive.
Harmonisation is nearly always mentioned together with the principle of subsidiary. The principle of subsidiary and harmonisation imply a more harmonised regulatory culture but not necessarily for all market segments. The principle of subsidiary and harmonisation means that the optimal level of governance needs to be found for each aspect of regulation.
In its most common legal definition harmonisation of legislation means to approximate national laws, regulations and administrative provisions when differences between these national rules are considered to be part of the causes of trade barriers.
Harmonisation is not synonymous with unification or standardization. Unification means that a legislative measure is replacing the existing legal systems and replacing them with a single system. This leads to a uniform legislation in all the Member States which have to adopt this measure. Harmonisation leads also to a uniform system but gives Member States the opportunity (and duty) to a legislative measure to put in their own right. The purpose of harmonisation is therefore to create equal rights and obligations, but to let the Member States are free to do so in a way that fits them best.
14. WHY HARMONISATION? The Commission wants to establish a single market for electronic communications As Europe is fragmented into 28 separate national communications markets and EU regulations. EU rules on, for example, authorisations, regulatory conditions, spectrum assignment and consumer protection are implemented in diverging ways. Harmonisation seems indispensable to reach the objectives of the Commission. In order to create an internal market, different obstacles such as cultural differences, transportation difficulties, different languages and cultures and local customs should be overcome.
Harmonisation only addresses just one of the obstacles to the realization of the internal market, namely the differences in legislation of the different Member States. The Commission assumes that by removing legislative differences a major part of the obstacles to an internal market will be taken away. Harmonisation has a dual purpose. First of all, it has the aim to eliminate the existing differences between national laws so as to come to the second objective, namely to ensure that competition is not distorted.
15. POSITIVE HARMONIZATION VERSUS NEGATIVE HARMONIZATION. The form of harmonization by which a common standard is introduced throughout the Community is referred as ‘positive’ harmonization because new standards are introduced. The removal of existing barriers by striking down of national laws and regulations is known as ‘negative’ harmonization. When using ‘positive hamonisation’, the Commission can make a choice between varying degrees of harmonisation to reach the desired level.
16. MAXIMUM AND MINIMUM HARMONISATION. Through positive harmonisation the European legislator can bring closer together national legislations. There are several methods possible as there are multiple different degrees of harmonisation than just the maximum and the minimum. Maximum harmonisation has many synonyms, including ‘full’, ‘total’ or ‘exhaustive’ harmonisation. According to some legal doctrine the term ‘total’ harmonisation is to avoid since it is impossible to harmonise everything. The term ‘exhaustive’ harmonisation is mainly used by the Court of Justice.
17. Maximum harmonisation leaves the Member states with no scope for further independent action in the field covered by the harmonising directive. As far as the area is covered by a maximum harmonisation directive is concerned, member states must ensure that their national system provides exactly what is required by that directive. It is not possible to introduce a stricter standard. With a minimum harmonisation, the Community will set down a minimum standard with which all the Member States must comply. Beyond this minimum level, member states are free to set their own standards, subject to the requirements of the TFEU. This means that a general minimum standard is imposed where the parties may go under, but not above. In other words, when the European Union within a certain scope imposes a certain level of protection, Member States may offer neither more protection nor less. An advantage of minimum harmonisation is the fact that this preserves the individuality of each Member State. A disadvantage of this form of harmonisation would be the so-called ‘race to the bottom’ as minimum harmonisation can create the effect that Member States must adjust their legislation with a higher level of protection to a less stringent level. This is for example the case the case in consumer law when minimum harmonisation leads to a lower level of protection.
18. Maximum harmonisation doesn’t mean that the highest possible form of protection is imposed from above but obliges the Member States to transpose a directive which aims to impose this degree of harmonisation into their national law. The Member States are not allowed to differ from the directive by offering more or less protection. The concept of full harmonisation doesn’t mean neither that every aspect of the matter must be harmonised.
19. With the start of the European Union, the idea was to create a common basis of rights and the Member States were obliged to further deepen and complete these standards and the mechanism of minimum harmonization was used to this intent. From the point of view of the Member States, minimum harmonisation was seen as the tool of choice: there was not an overly large intervention in the national legislation and the Member States could themselves determine and impose more stringent measures. Many Member States therefore made use of by, for example, to allow a longer period than the minimum periods in the directives for consumer protection in the domains of distance selling, door-to-door sales and time-sharing.
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3. What does the proposal bring towards more harmonisation. A critical assessment of the principle of harmonisation in the proposal.
3.1. Harmonisation in the domain of single authorisation.
20. SINGLE AUTHORIZATION. The first topic that is dealt with in the proposal for the regulation is the ‘single authorisation’. In the considerations 9 to 16 of the proposal, the Commission describes how hard it is to offer services across borders in comparison with the provision of services in single Member States. The Commission refers to the fact that providers who want to offer services in several Member States need to report and notify this in several countries and also have to pay fees in those different countries. The Commission intends to put an end to this situation.
In article 4, the Commission therefore propose, that the European electronic communication providers need to submit only one notification (single authorisation) to the supervisor in their home Member State. However they have to do this notification in the language of both the home Member State if in the languages of all the other Member States where they want to start offering services.
The reason for this is that the home Member State will inform the other Member States about the notification. Although even as a single notification is sufficient, , the provider remains of course bound to the possible deviating regulation in the Member State in which it operates.
Regarding the contribution to the cost of universal service and the costs of the supervisor, the European provider only has to deal with the home Member State.
Each Member State shall check whether a provider follows the national regulations and inform the home Member State if this is not the case. Article 6 States that only the home Member State can suspend or halt the right of a provider to provide services, whether or not at the request of another Member State in which the infringements would have occurred.
21. HARMONISATION WITH REGARD TO THE SINGLE AUTHORISATION. The proposed measures indicate that the Commission wants to use maximum harmonization to remove the unnecessary obstacles in the authorisation regime and in the rules applying to service provision so that an authorisation obtained in one Member State is valid in all Member States, and that operators can provide services on the basis of consistent and stable application of regulatory obligations.
22. ASSESSMENT OF THE MEASURES WITH REGARD TO THE SINGLE AUTHORISATION. The report of the Council of the European Union mentions that most delegations were sceptical with regard to a single EU authorization as they esteems it to be not clear what concrete problems are addressed and why those problems could not be solved by better implementation of the current framework. There is also the risk of unequal treatment of EU and national providers, risk of forum-shopping and the impact on competences of host/home NRAs and that the proposal would increase complexity, administrative burden and related costs.
BEREC expressed its support towards the elimination of unreasonable obstacles to the provision of cross-border services across the EU but is not in favor of a single authorisation. BEREC fears that providers will be hampered by the fact that the notification should be done in all languages and will not reduce operators’ administrative burden. Furthermore the introduction of ‘home’ and ‘host’ supervisors could result in a special relationship between the provider and the parent national supervision. In addition, the proposal will lead to differentiated regulation for providers who are only active in one country compared to providers who want to offer services in more Member States.
Therefor BEREC proposes a single notification via a European template which would be the right balance between, one the one hand, a light authorization regime, ensuring a smooth access to the market by operators, and on the other hand, the need of National Regulating Authorities (NRA) to ensure basic market monitoring.
The Committee on Industry, Research and Energy (ITRE) is also not convinced of the proposal and proposes to delete most of article 3 and the articles 4 to 7.
3.2 Harmonisation in the domain of radio spectrum coordination in the EU.
23. RADIO SPECTRUM COORDINATION. The internal market for electronic communications and radio equipment is still far to be complete and with the proposal the Commission wants more coordination of use of radio spectrum within the Single market which will ensure a synchronised availability of spectrum input and the application of consistent conditions attached to its use across Europe, thereby ensuring an efficient use of spectrum. At the same time, this would support a predictable investment environment for high-speed networks, including their wide territorial coverage, which is also a long-term end-user interest. This would mean that Europeans get more 4G mobile access and Wi-Fi. Furthermore mobile operators will be able to develop more efficient and cross-border investment plans, thanks to stronger coordination of timing, duration and other conditions of assignment of spectrum. Member States would remain in charge, and continue to benefit from related fees from mobile operators, while operating within a more coherent framework. Such a framework will also expand the market for advanced telecoms equipment.
24. According to the Commission it is time that harmonization takes place, especially regarding the conditions, procedures, costs and duration of frequency licenses as only in this way the emergence of the scale which among other things is needed is facilitated for the cost-effective development of network equipment and mobile peripherals:
To put an end to this unsustainable situation, harmonisation of spectrum inputs must be ensured by:
‘ Defining common regulatory principles applicable to Member State when defining conditions on the use of spectrum which is harmonised for wireless broadband communications.
‘ Empowering the Commission to adopt implementing acts to harmonise spectrum availability, the timing of assignments and the duration of rights of use for spectrum.
‘ A consultation mechanism enabling the Commission to review draft national measures concerning the assignment and the use of spectrum.
‘ Simplifying conditions for the deployment and provision of low-power wireless broadband access (‘Wi-Fi’, small (‘Wi-Fi’, small cells) to enhance competition and reduce network.
25. As mentioned above, the Commission proposes in the articles 8 to 16 of the Connected Continent legislative proposal several measures to harmonise the virtual access to fixed networks in order to provide cross-border services and aiming at the gradual removal of national barriers [to the creation of the internal market], including [‘] different national conditions for allocating and assigning spectrum.
26. In article 8 some measures are proposed intended to increase the harmonisation of radio spectrum use for wireless broadband communications across EU member states. This means that the scope of the draft regulation is limited to the harmonized spectrum radio spectrum for wireless broadband communications and that the draft regulation is without prejudice to the right of Member States to take advantage of the fees to be paid by the operators for the use of the spectrum and the right of the Member States to organize and use their radio spectrum for public order, public security and defence.
27. The National regulatory authorities (NRA) are required to apply common regulatory principles and criteria when defining the conditions attached to the licences foruse of harmonised EU radio frequencies for broadband communications as described in articles 9, 10 and 11. Moreover, NRAs must comply with specified authorisation conditions when defining assignments procedures. In particular, they are asked to establish timetables for assignment procedures, which will be used to set up a common timetable at EU level. With article 12, the duration of the radio spectrum rights of use will have the same duration in all EU countries.
28. In article 13 procedures for the coordination of authorisation and conditions for the use of radio spectrum for wireless broadband in the internal market are proposed. These procedures create a cooperation mechanism involving the NRAs and the Commission for better coordination of national assignment procedures and authorisation conditions. A veto-right is also established because the Commission would have the power to review draft national assignment procedures and require amendments. And more than that, the EC could make a proposal for the withdrawal of the national assignment procedure in case this goes against the required conditions for harmonisation.
29. The Commission wants also to extent the proposal to that part of the spectrum used for Radio Local Access network (RLAN or Wi-Fi) and low power small size cellular access points (articles 14 and 15 of the proposal).
Lastly, the removal of national barriers to the internal market is pursued by promoting greater coordination between EU member states to ensure the same conditions of access to radio spectrum across the EU. In this regard, the EC has the right of intervention in case of inconsistencies that tilt against cross-border coordination (article 16).
30. HARMONISATION. With regard to the harmonization of the radio spectrum management, according to M. Massaro and E. Bohlin it is important to make a clarification on the concept of harmonisation. In fact, two types of harmonisation can be distinguished. A first top-level of harmonisation regards the allocation of radio spectrum to certain uses, meaning that specific radio spectrum bands and technical conditions applied to these radio spectrum frequency bands to avoid interference are harmonised at EU level. In this regard, with the adoption of the Radio Spectrum Decision in 2002 the Radio Spectrum Committee (RSC) has been set up. Top-level harmonisation measures are adopted thanks to the work undertaken by this Committee. The RSC is composed of Member State representatives and chaired by the European Commission. The RSC develops technical conditions for the use of a specific radio spectrum band that are then included in what are called ‘implementing decisions’. This is a well-established cooperation mechanism between the European Commission and the EU Member States and this is the reason why this type of harmonisation is not an issue in the EU.
The second type of harmonisation regards instead the assignment of radio spectrum frequencies to users. This is a distinct level of harmonisation because unlike allocation, the assignment of radio spectrum frequencies is a national responsibility. Radio frequencies or radio frequency channels within each allocated radio spectrum band are assigned to specific individual users by means of national authorisations. National regulatory Authorities (NRAs) decide on the conditions that are attached to the national award procedure (e.g. spectrum caps) and to the actual licenses that are awarded (e.g. the duration of a licence). These conditions vary a lot from country to country and the EU has been unable to set common criteria to be used by NRAs when assigning radio spectrum. For this reason, the European Commission aims to solve with the Connected Continent legislative proposal this situation by partly modifying the existing regulatory system of radio spectrum.
31. ASSESSMENT. Member States reported through the Council of the European Union that they believe that the existing instruments and institutional set-up should be used in a more effective manner to deliver the expected results. Furthermore many of the new provisions are considered to be too prescriptive and often overlapping or even conflicting with provisions of EU or national legislation. Some Member States could also imagine another legal instrument, e.g. a Commission recommendation, to be better fit to deal with these issues.
32. The proposals with regard to domain of radio spectrum coordination in the EU give far-reaching powers to the European Commission at the expense of the powers of national supervisors. The Body of European Regulators for Electronic Communications (BEREC) contests this approach and states that the concession of spectrum a issue is with a political nature and therefore not should be treated in a technical procedure. Furthermore the fact of imposing tightly defined parameters and detailed criteria to be taken into account when awarding spectrum, risks to hamper innovation and regulatory advances. The proposal also introduces a new layer of bureaucracy which could slow down spectrum release, and would not necessarily lead to more efficient spectrum usage.
The European Parliament has also proposed in its reading of the proposal the introduction of minimum licence terms of 25 years for spectrum in harmonized bands, which would be retroactive, and also provisions to facilitate spectrum trading. BEREC fears the consequences of the proposed measures as changing licence durations retroactively.
BEREC believes that the proposed harmonisation objectives could be more effectively achieved by less intrusive, more focused and proportionate means within the current institutional set-up. Consideration should be given to the possibility of developing best practices around auction design (including around terms such as licence duration and conditions for spectrum sharing, about which the Commission has expressed concern), within the existing framework.
33. The question is what will be the effect of these proposed measures in practice. Regardless of the final interpretation of the regulations, the effects will probably be limited in the short and medium term. All frequency bands that are currently being used have been auctioned and will therefore not be available for the market. In addition, a number of countries have recently completed the multiband – auction or will do this within short term. Since the European Commission has no powers to intervene in the already licensed spectrum, it could take some time before the envisaged measures for the currently important frequency bands will reach the intended effect of a uniform spectrum management.
3.3 Harmonised rights for end-users.
3.3.1. Harmonisation of end-user rights.
34. The Commission considers that greater harmonisation in the area of the protection of the end-users by means of a new regulation is necessary because not enough has been achieved this with earlier directives. The Commission proposes to replace the consumer protection provisions of the Universal Service Directive (Directive 2009/136/EC) with new provisions.
The Telecommunication Single Market proposal should address the problems consumers face in a fragmented European market by introducing certain common consumer standards; removing charges for incoming calls while roaming, as well as unjustified surcharges for intra-EU calls; and introducing new, common consumer protections, including to safeguard access to the open internet.
The main consumer protection proposals are:
‘ Article 23 Net neutrality: while operators would be allowed to provide ‘enhanced quality’ services over the net, they would not be allowed to impair the general quality of access to other internet content when providing these services. This issue will not be discussed in this paper.
‘ Article 25 and 26 Transparency: operators should be required to publish more detailed information on the terms and conditions under which services are provided, including process and quality.
‘ Article 27 Expenditure control: operators should be required to provide ways to control their expenditure and avoid bill shocks.
‘ Article 28 Contract termination: the conditions under which consumers can terminate contracts without having to pay penalties would be regulated.
‘ Article 30 Switching: the proposal seeks to harmonise various elements of the switching process. This includes a requirement that the process is led by the receiving provider.
Furthermore, the Commission is of the opinion that consumers will also profit from providers in other Member States if they know that they can rely on the same set of rules.
35. END-USER? The wording used in the articles in Chapter 4 of the draft Regulation differs with regard to the extent of the provisions for professional end users. In the articles21, 23, 24 and 27, the term ‘end-user’ is used and includes the professional end-users. Article 25 is applicable ‘for offers which are individually negotiated’. Article 26 mentions in the first paragraph ‘consumers, and other end-users unless they have explicitly agreed otherwise’ and in the second paragraph ‘end-users, unless otherwise agreed by an end-user who is not a consumer’. Article 28, first paragraph talks about ‘consumers’ while the second paragraph mentions ‘Consumers, and other end-users unless they have otherwise agreed’. Article 30 is applicable for ‘all end-users’. Consideration 40 of the proposal stipulates: Where the provisions in Chapters 4 and 5 of this Regulation refer to end-users, such provisions should apply not only to consumers but also to other categories of endusers, primarily micro enterprises. At their individual request, end-users other than consumers should be able to agree, by individual contract, to deviate from certain provisions.
There is little consistency to be found in these descriptions. Apparently the Commission wants the regulation to be applicable to all end-users unless the non – consumer wants a deviation?
36. The current EU regulatory framework provides for sector-specific consumer protection for users of electronic communications services. A number of the EU provisions in this context have an enabling character and the telecoms consumer rules in general are considered a set of minimum harmonisation measures. This means that EU consumer protection rules in telecommunications are now implemented with varying levels of detail, focus and impact at national level.
In consideration 40 of the proposal, the Commision clearly shows its intention to remove barriers to the internal market by replacing existing, divergent national legal measures with a single and fully harmonised set of sector-specific rules which create a high common level of end-user protection.
37. According to the consideration 71, the European Commission seeks to introduce maximum harmonization as the minimum harmonisation of end-users rights provided in Directive 2002/22/EC will become redundant by the repeal of provisions on minimum harmonisation of end-users rights provided in Directive 2002/22/EC made redundant by the full harmonisation provided in this Regulation.
3.3.2. Minimum or maximum harmonisation and consumer protection.
38. The question is now to assess the appropriate degree of harmonisation to be used in order to reach the objectives set by the European Commission in its proposal. Professor Marco B.M. LOOS of the Centre for the Study of European Contract Law of the University of Amsterdam, explains in his paper Full harmonization as a regulatory concept and its consequences for the national legal orders. The example of the Consumer rights directive that with regard to the functioning of the internal market, the European Union has exclusive competence in so far as the establishment of competition rules is concerned and shared competence in all other areas. Where consumer protection is concerned, the Union and the Member States have shared competence as well. Article 2 paragraph 2 of the TFEU indicates that until the European Union has made use of its competence, the Member States remain free to legislate and adopt legally binding acts. However, when the Union does exercise its competence, Member States are no longer free to regulate these matters themselves. This implies that when harmonisation takes place, and unless the harmonisation measure taken by the European Union provides otherwise, the Member States are no longer free to maintain or introduce national legislation in the harmonised area.
39. In the area of consumer protection, article 169 paragraph 2 TFEU indicates that measures may be taken (a) ‘pursuant to Article 114 in the context of the completion of the internal market’, as well as (b) to support, supplement and monitor the policy pursued by the Member States. Measures not taken in the context of the internal market may, however, only be based on minimum harmonisation, paragraph 4 of article 169 indicates. However, where harmonisation is intended to contribute to the completion of the internal market, the European Union is free to choose between minimum and full harmonisation. Article 114 paragraph 3 TFEU only requires that in developing the harmonisation measure the Union must take ‘as a base a high level of consumer protection’. Article 114 TFEU provides the possibility of full harmonization.
40. Consumer protection has historically been regulated in the EU using a minimum degree of harmonisation, which has allowed the Member States to maintain or implement stricter legislation and therefore differing (and higher) levels of consumer protection in certain areas. On the basis of minimum harmonisation clause, Member States are allowed to introduce or maintain consumer protection rules that exceed the level of protection offered by these directives. That makes it easier for Member States to absorb a directive into their national legislation as only the minimum requirements of the directive must be met. However, this implies of course that the effect of the harmonisation measure is limited as the aim of harmonisation is to approximate the regulation of the Member States; the national laws in fact still differ when Member States make use of the minimum harmonization clause and as consequence consumers and firms cannot be sure if they will have the same level of protection as in their country when they are seeking services abroad. Therefore, minimum harmonization is assessed as not to remove the barriers to the internal market in a sufficient way.
41. When the European Union uses full harmonisation, Member States are required to revoke national legislation that is not conform with the proposed level of consumer protection, irrespective of whether the existing national level of consumer protection is higher or lower than the new European level. Full harmonisation therefore leads to a uniform level of consumer protection throughout the European Union. The Commission is of the opinion that full harmonization will remove the barriers to the internal market that result from the existence of different rules in the Member States. From the perspective of the functioning of the internal market, full harmonisation of ‘key concepts’ of European consumer law is mandatory in order to create legal certainty for both consumers and businesses.
Nevertheless, the Commission states in the proposal its wish that the full harmonisation of the legal provisions should not prevent providers of electronic communications to the public from offering end-users contractual arrangements which go beyond that level of protection.
3.3.3. Harmonisation of different domains of end-users rights.
3.3.3.1. Harmonisation of required information.
42. HARMONISATION OF REQUIRED INFORMATION AND TRANSPARENCY. Article 25 sets out detailed rules to the providers about the publication of transparent, comparable, adequate and up-to-date information. These transparency requirements are valid for consumers and business users who contracted services based on standard propositions. The information shall be published in a clear, comprehensive and easily accessible form in the official language(s) of the Member State where the service is offered, and be updated regularly. The information shall, on request, be supplied to the relevant national regulatory authorities in advance of its publication. The information obligation of article 25 could become a great administrative burden for the national regulators as all information need to be checked within a reasonable period of time.
43. Article 26 contains detailed requirements for information which should be provided at the conclusion of the agreement with the end users. It will not be easy to for the obligations resulting from article 26 to develop clear parameters and measuring methods in order to determine, for example, the internet speeds. Paragraph 3 of article 26 requires the internet service provider to make the obligatory information available in an understandable and easily accessible format and in the language of the country of the end user and to keep this information regularly up to date. The information is an integral part of the contract and cannot be changed unless the contracting parties agree. The end-user shall receive a copy of the contract in writing. The provisions of article 26 seem to contain a contradiction since it is impractical to keep the information regularly up to date and to reach for each change simultaneously an agreement on the adjustment of the existing contracts. This would mean that any form of adjustment of practical information would lead to a contract renewal. This can surely not be the intention of the Commission.
3.3.3.2. Harmonisation in the domain of expenditure control.
44. HARMONISATION OF EXPENDITURE CONTROL. The article 27 paragraph 1 stipulates that providers have to give end users a free of charge possibility to obtain information of their consumption of services and that a financial limitation set by the end-user is not exceeded.
3.3.3.3. Harmonisation in the domain of contract termination rates.
45. HARMONISATION IN THE DOMAIN OF CONTRACT TERMINATION RATES. In article 28 of the proposal, the Commission want to limit the contracts with end-users to 24 months duration and the end-user can always terminate the contract after a period of six months. This seems to be in line with the actual Belgian legislation. The proposal stipulates in paragraph 2 that no compensation shall be due other than for the residual value of subsidised equipment bundled with the contract at the moment of the contract conclusion and a pro rata temporis reimbursement for any other promotional advantages marked as such at the moment of the contract conclusion. Such subsidies are not allowed in Belgium. In Netherlands the real depreciation period is used and therefore the time frame of six month is too short.
According paragraph 5 of article 28, any significant and non-temporary discrepancy between the actual performance regarding speed or other quality parameters and the performance indicated by the provider shall be considered as nonconformity of performance for the purpose of determining of the contract. This description is not clear. It is not clear how this paragraph should interpreted and how the assessment should be executed. There are no concrete measures proposed by the European Commission on the basis of which an assessment is given and by whom. This will entail legal uncertainty and the consequences are left to national law. The same uncertainty is raised by the words used in paragraph 6 as no definition is provided for the terms ‘significantly exceed’ or ‘special promotional price’.
3.3.3.4. Harmonisation in the domain of international mobile calls.
46. HARMONISATION IN THE DOMAIN OF INTERNATIONAL MOBILE CALLS. Within the EU Connected Continent proposal, the Commission intends via Amendments to Regulation (EU) No 531/2012 to measures to gradually end mobile roaming surcharges as part of a single market for electronic communications. The Commission wants to create a true European communications space by phasing out the difference in charges paid for domestic, roaming and intra-EU calls:
– Roaming: operators will lose the right to charge for incoming calls while a user is travelling abroad in EU as of 1st July 2014.
– European fixed calls: operators will have to charge no more than a domestic long-distance call for all fixed line calls to other EU member states. Any extra costs have to be objectively justified.
– European mobile communication: operators will have to charge no more than the euro-tariffs for regulated voice and SMS roaming communications for mobile communications to other EU member states. Any extra costs have to be objectively justified.
47. The Commission wants to reduce the roaming rates in its proposal to the level of national rates. Article 37 builds on the Roaming Regulation, providing incentives to operators to provide roaming at domestic price levels. The proposal introduces a voluntary mechanism for mobile operators to enter into bilateral or multilateral roaming agreements which allow them to internalise the wholesale roaming costs and to gradually introduce roaming services at domestic price levels up to July 2016 while limiting the risk of price arbitrage. . According to many Member States, the proposal creates legal uncertainty for the mobile providers, because the current roaming regulation entered into force and the providers are obliged to make high investment costs. The existing legal framework should be given the opportunity to show its merits before additional changes are proposed.
48. This part of the proposal even as it is strongly supported by the European Parliament in April 2014 encountered resistance from the Member States as they reached on 05 March 2015 a compromise on the abolition of the roaming charges. The Member States have agreed that mobile roaming charges should stay in place until the end of 2018, in opposition to European Commission. A majority of the Member States in the European Council has voted in favor of keeping roaming charges in place until at least 2018, but they plan to introduce measures to make it cheaper to use mobile phone when travelling within the EU. The charges will be allowed until 30 June 2018 or three years longer than what was planned. The European Parliament wanted to end roaming charges on 15 December 2015.
3.3.4. Position of stakeholders with regard to harmonised rights for end-users.
49. BEREC is supportive of the objectives of the Connected Continent legislative proposal to increase the level of consumer protection across the European Union but is questioning the upgrade of the minimum harmonisation provisions adopted in the Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive) to a ‘fully harmonised’ mandatory framework in the proposal of the European Commission. BEREC fears that due to the ‘one size fits all’ approach, Member States and NRAs risk being deprived of the ability to respond to the changing needs of their respective markets and national consumers in the future. In some cases Member States and NRAs may even have to step back from measures already in force, reducing rather than enhancing consumer protection. The full harmonization approach is considered as not to be proportionated and could lead to unintended consequences which ultimately go against the consumer interest. These concerns are reinforced given that the nature of the legal instrument removes the possibility of discretion at the national level to decide how best to implement the provisions.
50. The European Economic Area Standing Committee of the EFTA states supports the Commission’s intention to establish a consumer friendly internal market for electronic communications services. However, the Committee find it unfortunate that the Commission has put forward a draft regulation entailing total harmonisation of end-user rights contrary to the current regulatory framework, according to which Member States may apply a stricter regime for the protection of consumers.
3.3.5. Assessment of the harmonisation and end-user protection.
51. Especially from the different studies about the harmonisation of the protection of consumer rights, it becomes clear that maximum harmonisation is not easy to reconcile with the aim of consumer protection, especially not where the regulation would require Member States to revoke protective provisions that exceed the maximum level of protection allowed under the proposed regulation. Maximum harmonisation could therefore lead to a reduction in end-user protection. Minimum harmonisation could provide better results, as end-users will at least receive the protection that is offered by the regulation, but Member States are allowed to introduce or maintain more protective rules.
52. But even in those areas where maximum harmonisation would seem feasible, for example with regard to matters of a technical or procedural nature, it is doubtful whether this instrument is appropriate in all cases. To take the example of the obligations to inform: if these were fully harmonised, would this mean that Member States are no longer allowed to impose stricter or more detailed information obligations in specific areas?
53. Member States seem to have a more favourable view on the consumer provisions than on the other parts of the proposal but they would however support minimum harmonisation as opposed to full harmonisation as in the proposal since that would allow them to go further in consumer protection nationally, to respond to the changing needs of their respective markets and would not put in question some national measures already in force with the consequence of reducing rather than enhancing consumer protection. Related to this issue is the issue of the appropriate legal instrument, where a number of delegations would prefer to see consumer protection to be regulated in a Directive, preferably the Universal Service Directive.
4. Recommendations on the EU Connected Continent proposal and harmonisation.
54. Based on the available information, the assessment of the different documents and reports on the proposal, following comments can be made on the proposal with regard to the use of harmonization. The use of maximum harmonization is considered by many stakeholders as not being justified in all the areas covered by the proposal. Especially in the domain of consumer protection if this would lead to reduced consumers protection, or because the same outcome, e.g. better coordination of spectrum allocation even as largely acknowledged as a worthwhile objective, or international calls, could be achieved using means under the existing framework (spectrum) or by letting the market play as it is fairly competitive (international calls). This remark about making better use of the existing framework was made with respect to several of the proposed provisions.
55. COHERENT AND CONSISTENT USE OF WORDING. Throughout the proposal, several of unclear notions or wording, e.g. the description or definition of ‘end-user’, ‘significantly exceed’ or ‘special promotional price’ is used and in order to eliminate doubt and uncertainty as much as possible, a coherent and consistent use of correct wording should be introduced.
5. Conclusion.
56. On 11 September 2013 the European Commission adopted a legislative proposal for a ‘Connected Continent: Building a Telecoms Single Market’ aimed at building a connected, competitive continent and enabling sustainable digital jobs and industries. According to the Commission, previous successive waves of reform by the European Union have helped transform the way telecommunications services are delivered in the European Union but the sector still operates largely on the basis of 28 national markets despite telecom services can nevertheless be delivered across networks and borders.
57. The ‘Connected Continent’ package includes the following measures:
– Single EU authorisation: the proposal introduces a simplified procedure for network operators and service providers to obtain authorisation to operate throughout the EU, rather than needing separate notifications to operate in individual Member States. The service operator can obtain EU authorisation through a single notification to its home country National Regulating Authority.
– European inputs for high-speed broadband: the proposal includes measures to foster the development of wireless and fixed broadband networks as for example common regulatory principles applicable to the use of spectrum and a European coordination mechanism for the authorisation procedure to assign spectrum.
– Single consumer space: the proposal calls for a full harmonization of end-user rights throughout the EU (transparency, pre-contractual and contractual information, no ‘bill shocks’, and contract termination). It also forbids discrimination in price between national calls and calls towards other EU countries.
58. Numerous comments on the proposal deal with the intent of the Commission to use the mechanism of maximum harmonisation. Minimum harmonization has failed according to the Commission in order to obtain an internal digital market. The differences between Member States remain large, which present a serious obstacle.
The Commission is proposing to upgrade the minimum harmonisation provisions adopted in 2009 to a ‘fully harmonised’ mandatory framework which in effect prohibiting national governments and NRAs from maintaining or introducing any additional consumer protection provisions going forward.
The Commission intents to establish a consumer friendly internal market for electronic communications services by putting forward a draft regulation entailing total harmonisation of end-user rights contrary to the current regulatory framework, according to which Member States may apply a stricter regime for the protection of consumers. There are fears that fully harmonised provisions may hamper the current level of protection and evolution of consumer protection and have a detrimental effect on established consumer rights.
59. Maximum harmonisation is considered as ‘one size fits all’ approach and antagonises Member States and increases resistance. The choice of legal instrument for these measures should be reconsidered. Maximum harmonisation undermines regulatory innovation and the development of best practice.
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