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Regulatory framework for electronic communications

The opening-up of the telecommunications market to competition has acted as a catalyst on a sector previously reserved for oligopolies. To keep up with these changes, Europe's decision-making bodies have adopted legislation in tune with technological progress and market requirements. These developments have given rise to the adoption of a new regulatory framework on electronic communications, the main aim of which is to strengthen competition by making market entry easier and by stimulating investment in the sector.

ACT

Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (“Framework Directive”) [See amending acts].

SUMMARY

The “Framework Directive” forms part of the “Telecommunications Package” designed to recast the existing regulatory framework for telecommunications in order to make the electronic communications sector more competitive. This new regulatory framework consists of this Directive plus four specific Directives, namely the:

  • Directive on the authorisation of electronic communications networks and services (the “Authorisation Directive”);
  • Directive on access to, and interconnection of, electronic communications networks and associated facilities (the “Access Directive”);
  • Directive on the universal service (the “Universal Service Directive”);
  • Directive on the processing of personal data (the “Privacy and Electronic Communications Directive”).

Added to this list, there is also the recent Decision on a regulatory framework for radio spectrum policy (the “Radio Spectrum Decision”). The “Telecoms Package” was amended in December 2009 by the two Directives “Better law-making” and the “Citizens' rights”, as well as by a body of European regulators for electronic communications.

Scope, aim and definitions

The objective of this Directive is to establish a harmonised framework for the regulation of electronic communications networks and services. It also includes certain aspects of terminal equipment to facilitate access for disabled users. It contains horizontal provisions serving the other measures: the scope and general principles, basic definitions, general provisions on the national regulatory authorities (NRAs), the new concept of significant market power, and rules for granting certain essential resources such as radio frequencies, numbers or rights of way.

In response to the convergence of technologies and the need for horizontal regulation of all infrastructures, the new framework is no longer limited to telecommunications networks and services but covers all electronic communications networks and services. This includes fixed-line voice telephony, mobile and broadband communications and cable and satellite television. On the other hand, the content of services delivered over electronic communications networks, such as broadcasting content or financial services, is excluded, as is telecommunications terminal equipment to facilitate access for disabled users.

This Directive requires the adoption of national measures in terms of access to electronic communications with a view to respecting the fundamental rights and freedoms of natural persons.

National regulatory authorities

Independence

Member States must guarantee the independence of national regulatory authorities (NRAs) by ensuring that they are legally distinct from and independent of all organisations providing electronic communications networks, equipment or services. The NRAs, responsible for the ex ante regulation of markets, must not accept instructions from any other body.

Right of appeal

Effective national mechanisms must allow any user or provider of electronic communications networks or services the right of appeal to an independent appeal body in the event of any disputes with an NRA. Member States shall provide information related to appeals to the Commission and to BEREC.

Impartiality and transparency

Member States must ensure that national regulatory authorities exercise their powers impartially and transparently. They must also ensure that the NRAs make arrangements for consultation of the interested parties if they intend to take measures which could have a significant impact on the market. The NRAs are responsible for making the results of the consultation public.

Consolidation of the internal market

The NRAs, the Commission and BEREC must cooperate to determine the instruments, as well as the most appropriate solutions, to deal with any situation which may arise within the internal market for electronic communications. In certain cases, the Commission has the power to refuse measures proposed by the NRAs.

Obligations and tasks of national regulatory authorities

General tasks

To promote competition in the provision of electronic communications networks and services, the NRAs are tasked, in particular, with:

  • ensuring that users derive maximum benefit in terms of choice, price and quality;
  • encouraging efficient use and management of radio frequencies and numbering resources.

The NRAs must also contribute to development of the internal market, in particular, by:

  • encouraging the establishment and development of trans-European networks and the interoperability of pan-European services;
  • cooperating with each other and with the European Commission to ensure the development of consistent regulatory practice and application of the new regulatory framework for the telecommunications sector.

Lastly, the NRAs must promote European public interests by:

  • ensuring that all citizens have access to a universal service, as specified in the “Universal Service Directive”;
  • ensuring the availability of simple and inexpensive dispute resolution procedures;
  • contributing to ensuring a high level of protection of personal data and privacy (the “Privacy and Electronic Communications Directive”).

Member States shall cooperate with each other, as well as with the Commission to implement the strategic planning, coordination and harmonisation of the radio spectrum in the European Union.

Management of radio frequencies

The national regulatory authorities manage the radio frequencies for electronic communication services. Such radio frequencies must be allocated and assigned on the basis of objective, transparent, non-discriminatory and proportionate criteria. Beyond that, any undertaking intending to transfer rights to use radio frequencies must notify the national regulatory authority responsible for spectrum assignment. NRAs must ensure that competition is not distorted as a result of any such transaction.

Member States may, however, provide restrictions, where this is necessary to:

  • avoid harmful interference;
  • protect public health against electromagnetic fields;
  • ensure technical quality of service;
  • ensure maximisation of radio frequency sharing;
  • safeguard efficient use of spectrum;
  • ensure the fulfilment of a general interest objective (such as the safety of life or the promotion of social cohesion, in particular.

For a period of five years, holders of rights to use radio frequencies may submit an application to the NRA for a reassessment of the restrictions on their rights.

Undertakings may transfer or lease their individual rights to use radio frequencies.

Numbering, naming and addressing

Member States must ensure that NRAs control the assignment of all national numbering resources and the management of the national numbering plans. Adequate numbers must be provided for all electronic communications services. To this end, the national regulatory authorities must establish objective, transparent and non-discriminatory procedures for granting rights of use.

Rights of way

The purpose of granting rights of way is to allow an undertaking to install facilities on, over or under public or private properties. When a competent authority considers an application for the granting of rights of way it must act on the basis of transparent procedures, applied without discrimination and within six months.

Co-location andsharing of network elements and associated facilities for providers of electronic communications services

In certain cases, Member States may impose the sharing of facilities or property on an undertaking operating an electronic communications network. This type of decision is used when there is limited access to resources due to the need to protect the environment, health or public safety or when it is not possible to reproduce the infrastructures. These sharing and coordination arrangements may include rules for apportioning the costs of facility or property sharing adjusted for risk where appropriate.

Security and integrity of networks and services

Undertakings providing public communications networks or electronic communications services must ensure the security of the networks. The competent NRA must be informed of any breach of security or loss of integrity on the network. They will in turn inform the NRAs of the other Member States.

To protect network security, the NRAs have the power to issue binding instructions to undertakings providing communication networks.

Regulatory controls on undertakings with significant market power

An undertaking is considered to have significant market power if it is in a position to behave independently of competitors, customers and, ultimately, consumers.

Market identification and definition procedure

The European Commission is tasked with adopting a recommendation on relevant product and service markets in the electronic communications sector, taking into account the opinion of BEREC. The purpose of this recommendation is to identify markets displaying characteristics which may justify the imposition of the regulatory obligations set out in the specific Directives.

Following consultation with the NRAs and BEREC, the Commission may adopt a decision which identifies trans-national markets.

Market analysis procedure

After the adoption of the recommendation, the national regulatory authorities must carry out an analysis of the relevant markets, taking account of the guidelines set by the Commission. Where a national regulatory authority concludes that a market is not effectively competitive, it must identify the undertakings with significant market power and impose appropriate specific regulatory obligations on them.

Standardisation

The Commission shall publish a list of non-compulsory standards in the Official Journal. These standards should contribute to the provision of harmonised electronic communications networks and the associated facilities and services. In order to achieve this, Member States shall encourage the use of these standards.

However, the Commission has the power to make some of these standards compulsory, through the publication of a notice in the Official Journal.

Interoperability of digital television services

In order to promote the free flow of information, media pluralism and cultural diversity, providers of digital interactive television services are encouraged to use an open application program interface (API). Similarly, providers of enhanced digital television equipment are encouraged to comply with an open API in accordance with the minimum requirements of the relevant standards or specifications. "API" means the software interfaces between applications and the resources in the enhanced digital television equipment for digital television and radio services. Providers are also encouraged to adapt their services to the needs of disabled persons.

Dispute resolution

Disputes between providers of electronic communications networks or services in the same Member State, or between such undertakings and other undertakings benefiting from obligations of access and/or interconnection, are resolved by the national regulatory authority, which is required to issue a binding decision within four months. In the event of a cross-border dispute between parties in different Member States, any party may refer the dispute to BEREC who shall publish an opinion as to the action to be taken to resolve the dispute.

Where the Commission finds divergences with regard to regulatory tasks, it may issue a recommendation or a decision on the harmonised application of the provisions in this Directive.

Penalties

Member States shall lay down rules on penalties applicable to infringements of the provisions in this Directive.

They must inform the Commission of these provisions by 25 May 2011.

REFERENCES

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal

Directive 2002/21/EC

24.4.2002

24.7.2003

OJ L 108 of 24.4.2002

Amending act(s)Entry into forceDeadline for transposition in the Member StatesOfficial Journal

Regulation (EC) No 717/2007

30.6.2007

30.8.2007

OJ L 171 of 29.6.2007

Regulation (EC) No 544/2009

2.7.2009

-

OJ L 167 of 29.6.2009

Directive 2009/140/EC

19.12.2009

25.5.2011

OJ L 337 of 18.12.2009

AMENDMENT TO THE ANNEXES

Annex II - Criteria to be used by national regulatory authorities in making an assessment of joint dominance in accordance with the second subparagraph of Article 14(2)
Directive 2009/140/EC [Official Journal L 337 of 18.12.2009].

RELATED ACTS

REGULATIONS AND DIRECTIVES:

Regulation (EC) No 1211/2009 of the European Parliament and of the Council of 25 November 2009 establishing the Body of European Regulators for Electronic Communications (BEREC) and the Office (Text with EEA relevance).

Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services, Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (Text with EEA relevance)

COMMUNICATIONS:

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Progress report on the single european electronic communications market 2009 (15th report) [COM(2010) 253 final – Not published in the Official Journal].

This Communication reports on the situation of the electronic communications sector for the year 2009. Although the sector weathered the economic downturn in 2009, growth of the traditional markets such as fixed and mobile voice telephony slowed down. This could be explained by a decrease in consumer spending. Competition also weakened.
The Commission intends to take measures aimed at resolving the issues related to the divergences in regulatory approaches and to ensure an effective functioning of BEREC, with the aim of implementing effectively the regulatory framework.

Communication from the Commission of 24 March 2009 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Progress report on the Single European Electronic Communications Market 2008 (14th Report) [COM(2009) 140 final – Not published in the Official Journal].
This Communication reports on the situation in the electronic communications sector for 2008. During the year, the sector has grown and has been able to adjust to the economic difficulties.
Telecommunications revenues accounted for over 52% of those of the information and communication technologies (ITC) sector. The mobile market remains the most dynamic due to increasing call volumes and the take-off of mobile broadband. Mobile internet services are also expanding rapidly and encouraging growth in the sector. Conversely, revenues in the fixed telephony market fell by 5% compared with 2007, while internet voice telephony doubled its market share. The digital divide has been reduced, while the radio spectrum norms have been harmonised.
Overall, the competitive situation has improved. However, regulatory attempts still lack cohesion.

Communication from the Commission of 19 March 2008 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Progress Report on the Single European Electronic Communications Market 2007 (13th Report) [COM(2008) 153 final – Not published in the Official Journal].
The Commission reports on the situation on the single telecommunications market as at December 2007 on the basis of facts and figures provided by the NRAs and market players. According to the Report, the market is weighing increasingly on the European economy in general, with a growth rate of 1.9 % and revenue estimated at Euro 293 billion compared with Euro 289 billion in 2006. Investments, which are enjoying continued growth, exceeded Euro 50 billion in 2007. Mobile telephony remains the most dynamic sector, with turnover of Euro 137 billion, up by 3.8%. As regards third generation mobile telephony, its penetration rate has virtually doubled. Despite continued growth (Euro 62 billion compared with 58.5 billion in 2006) and a European penetration rate rising from 16.3 % in January 2007 to 20 % in January 2008, the potential of broadband is not fully exploited due to wide differences in availability between the best-performing Member States and other Member States or between urban and rural areas.
As regards consumers, this Report concludes that they have benefited from the strengthening of the competitive environment, be it in terms of falling prices, consumer protection or the quality of the basic services provided.
Lastly, the Commission comes back to the lack of cohesion of the regulatory environment and the barriers preventing the creation of a single telecommunications market. It refers to the reform proposals lodged in November 2007.

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 13 November 2007 - Report on the outcome of the Review of the EU regulatory framework for electronic communications networks and services in accordance with Directive 2002/21/EC and summary of the 2007 reform proposals [COM(2007) 696 final – Not published in the Official Journal].
The Commission proposes reducing the regulatory inconsistencies and obstacles to the single market in order to improve regulation, suggesting that the 2007 reform proposals should enter into force before the end of 2009. These proposals are based on the following:

  • better regulation for competitive electronic communications. The Commission proposes improving the existing regulatory framework by maintaining ex-ante regulation, subject to market trends. It also proposes simplifying access to radio spectrum in order to encourage investment in new structures and release the economic potential of spectrum;
  • completing the single market in electronic communications, currently segmented and suffering from a complete absence of coherence. The Commission recommends establishing an independent “European Electronic Communications Market Authority” which will build on the increased independence of NRAs and improve the existing coordination mechanisms;
  • increasing the level of consumer protection and facilitating access to and use of communications, including by disabled users. The proposals aim in particular to strengthen security and privacy and to promote a high quality of service and unobstructed access to digital content. The Commission wishes to ensure the independence of regulatory authorities, whose links with traditional operators are often overly close, so as to ensure competition and consumer rights.

RECOMMENDATIONS

Commission Recommendation of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communication networks and services [Official Journal L 344 of 28.12.2007].
The Commission lists seven markets which should be examined by national regulators. Several markets have been removed from the list provided in the 2003 Recommendation following the effective regulation of the wholesale market and developments in effective competition in the retail markets.

Last updated: 20.05.2010
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