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MEMO/09/568

Brussels, 18 December 2009

EU Telecoms Reform: 12 reforms to pave way for stronger consumer rights, an open internet, a single European telecoms market and high-speed internet connections for all citizens

"The EU telecoms reform brings about consumer choice, a new dose of competition, an effective European system of independent telecoms regulators, new investment into competitive infrastructures, more space for new wireless services and a more open Internet for all citizens. The reform also strengthens the single telecoms market by promoting effective competition and consistent rules of the game across all 27 EU Member States. This will open up new opportunities for telecoms operators, for cross-border communication services and for European private and business consumers. And it will give a new boost to Europe's vibrant digital economy."Viviane Reding, EU Telecoms Commissioner

The following are the 12 most prominent reforms in the new package of rules for Europe's telecoms networks and services, as proposed by the European Commission in November 2007 ( IP/07/1677 ), politically agreed between the negotiators of the European Parliament, the Council of Telecoms Ministers and the Commission on 5 November ( MEMO/09/491 ) and formally endorsed by the European Parliament at its third reading on 24 November 2009 (IP/09/1812 ) :

1. A right of European consumers to change, in 1 working day, fixed or mobile operator while keeping their old phone number . Currently in the EU it takes on average 8.5 days for a mobile number and 7.5 days for a fixed number to be changed, with some customers facing a two to three week wait ( MEMO/09/126 ). In the future, consumers will be able to do this in 1 working day. In addition, under the new rules, the maximum initial duration of a contract signed by a consumer with an operator will be no longer than 24 months. Operators must also offer consumers the possibility of agreeing to a contract with a maximum duration of 12 months.

2. Better consumer information: Under the new telecoms rules, consumers will receive better information ensuring they understand what services they subscribe to and, in particular, what they can or cannot do with those communications services. Consumer contracts must specify, among other things, information on the minimum service quality levels, as well as on compensation and refunds if these levels are not met, subscriber's options to be listed in telephone directories and clear information on the qualifying criteria for promotional offers.

3 . Protecting citizens' rights relating to internet access by a new internet freedom provision: Following the strong request of the European Parliament, and after long negotiations on this point, the new telecoms rules, in a new Internet freedom provision ( see Annex 1 ), now explicitly state that any measures taken by Member States regarding access to or use of services and applications through telecoms networks must respect the fundamental rights and freedoms of citizens, as they are guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and in general principles of EU law. Such measures must also be appropriate, proportionate and necessary within a democratic society. In particular, they must respect the presumption of innocence and the right to privacy. With regard to any measures of Member States taken on their Internet access (e.g. to fight child pornography or other illegal activities), citizens in the EU are entitled to a prior fair and impartial procedure, including the right to be heard, and they have a right to an effective and timely judicial review.

EU Telecoms Commissioner Viviane Reding said on this matter: "The new internet freedom provision represents a great victory for the rights and freedoms of European citizens. The debate between Parliament and Council has also clearly shown that we need find new, more modern and more effective ways in Europe to protect intellectual property and artistic creation. The promotion of legal offers, including across borders, should become a priority for policy-makers. 'Three-strikes-laws', which could cut off Internet access without a prior fair and impartial procedure or without effective and timely judicial review, will certainly not become part of European law."

4 . New guarantees for an open and more "neutral" net: The new telecoms rules will ensure that European consumers have an ever greater choice of competing broadband service providers. Internet service providers have powerful tools at their disposal that allow them to differentiate between the various data transmissions on the internet, such as voice or 'peer-to-peer' communication. Even though traffic management may allow premium high-quality services (such as IPTV) to develop and can help ensure secure communications, the same techniques may also be used to degrade the quality of other services to unacceptably low levels or to strengthen dominant positions on the market. That is why, under the new EU rules, national telecoms authorities will have the powers to set minimum quality levels for network transmission services so as to promote "net neutrality" and "net freedoms" for European citizens. In addition, thanks to new transparency requirements, consumers must be informed – before signing a contract – about the nature of the service to which they are subscribing, including traffic management techniques and their impact on service quality, as well as any other limitations (such as bandwidth caps or available connection speed).

The Commission also made a political commitment ( see Annex 2 ) to keep the neutrality of the internet under close scrutiny and to use its existing powers as well as new instruments available under the reform package to report regularly on the state of play in net neutrality to the European Parliament and the Council of Ministers. " Under the reformed rules, the Commission will be Europe's first line of defence when it comes to net neutrality ", said EU Telecoms Commissioner Viviane Reding.

5 . Consumer protection against personal data breaches and s p am: European citizens' privacy is a priority of the new telecoms rules. Names, email addresses and bank account information of the customers of telecoms and internet service providers, and especially the data about every phone call and internet session, need to be kept safe from accidentally or deliberately ending up in the wrong hands ( IP/09/571 ). Operators must respond to the responsibility that comes with processing and storing this information. Therefore, the new rules introduce mandatory notifications for personal data breaches – the first law of its kind in Europe. This means that communications providers will be obliged to inform the authorities and their customers about security breaches affecting their personal data. This will increase the incentives for better protection of personal data by providers of communications networks and services.

In addition, the rules concerning privacy and data protection are strengthened, e.g. on the use of “cookies” and similar devices. Internet users will be better informed about cookies and about what happens to their personal data, and they will find it easier to exercise control over their personal information in practice. Furthermore, internet service providers will also gain the right to protect their business and their customers through legal action against spammers.

6 . Better access to emergency servi c es, 112: The new telecoms rules will ensure that European citizens gain better access to emergency services by extending the access requirements from traditional telephony to new technologies, strengthening operators' obligation to pass information about caller location to emergency authorities, and by improving general awareness of the European emergency number '112'.

In addition, provisions on access to telecoms services for Europeans with disabilities have been strengthened so that they can benefit from the same usability of services as other citizens, but by different means. For the first time, the EU's telecoms rules will include a provision on the availability of terminal equipment offering the requisite services and functions for users with disabilities.

7. National telecoms regulators will gain greater independence: The new telecoms rules reinforce national telecoms regulators' independence by eliminating political interference in their day-to-day duties and by adding protection against arbitrary dismissal for the heads of national regulators.

8 . A n ew European Telecoms Authority that will help ensure fair competition and more consistency of regulation on the telecoms markets . The reform creates a very important tool for making a single European telecoms market a reality: the new European Telecoms Authority "BEREC " (Body of European Regulators for Electronic Communications) that will replace the loose cooperation behind closed doors that exists today in the "European Regulators Group" with a more transparent and more efficient approach. BEREC decisions will be taken, as a rule, by majority of the heads of the 27 national telecoms regulators: by a simple majority when BEREC gives opinions in the context of the Commission's analysis of remedies notified by national regulators, and by a two thirds majority in other cases. Such BEREC decisions will be prepared by an independent supranational Office with expert staff. BEREC will also advise, support and complement the independent work of national telecoms regulators, especially when it comes to regulatory decisions with a cross-border relevance. A decision on the seat of BEREC still needs to be taken by the Governments of the 27 Member States.

9 . A new Commission say on the competition remedies for the telecoms markets: The new EU telecoms rules will give the European Commission the power to oversee regulatory remedies proposed by national regulators (e.g. on the conditions of access to the network of a dominant operator; or on fixed or mobile termination rates). The objective is to avoid inconsistent regulation that could distort competition in the single telecoms market. When the Commission, in close cooperation with BEREC, considers that a draft remedy notified by a national regulator would create a barrier to the single market, the Commission may issue a recommendation that requires the national regulator to amend or withdraw its planned remedy. The new rules also enable the Commission to adopt further harmonisation measures in the form of recommendations or (binding) decisions if divergences in the regulatory approaches of national regulators, including to remedies, persist across the EU in the longer term, e.g. on broadband access conditions or on mobile termination rates.

10. Functional separation as a means to overcome competition problems: National telecoms regulators will gain the additional tool of being able to oblige telecoms operators to separate communication networks from their service branches, as a last-resort remedy. This new remedy has been advocated since 2007 by the European Commission and by the 27 national regulators. Functional separation can rapidly improve competition in markets while maintaining incentives for investment in new networks. Functional separation has been implemented in the UK since January 2006 where it triggered a surge in broadband connections (from 100.000 unbundled lines in December 2005 to 5.5 million 3 years later). The new EU rules on functional separation will add legal certainty for countries currently moving towards different forms of separation (Poland, Italy), while ensuring overall consistency for the benefit of the single market, effective competition and consumer choice.

11. Accelerating broadband access for all Europeans: Currently, in rural areas of the EU only an average of 70% of the population can have access to a broadband network connection ( IP/09/343 ). The reform will help in overcoming this "digital divide" by better managing radio spectrum and by making it effectively available for wireless broadband services in regions where building a new fibre infrastructure is too costly; and by allowing Member States to expand universal service provisions beyond narrow-band internet access.

The reform in particular puts a much stronger emphasis on technology and service flexibility in spectrum use, making it easier for operators to introduce innovative technologies and services. This increased flexibility will bring important economic gains and has the potential to generate an estimated additional 0.1% of GDP per annum. In particular, it will allow the "digital dividend", the radio spectrum freed as a result of the switchover from analogue to digital TV, to work for the economic recovery as also stressed in the Commission's recent Communication on transforming the digital dividend into social benefits and economic growth ( IP/09/1595 ).

A further important reform proposed by the Commission in parallel to the negotiations on the telecoms reform package was already adopted by Parliament and Council on 16 October 2009 ( IP/09/1545 ): the modernisation of the GSM Directive, which will allow operators to introduce new services, starting with 3G and extending later to other new technologies, to operate in the GSM band which was previously reserved exclusively for GSM services.

This should lead to industry savings estimated at € 1.6 billion in capital costs for a single Europe-wide network, and enable faster roll-out of full 3G coverage. Th e reformed GSM Directive will boost the take up of 3G in the EU, from the existing 3G customer base which was estimated at over 90 million in December 2008 . 3G penetration rates are currently the highest in Italy, Austria, Sweden and the UK where they exceed 20% of the total subscribers.

12. Encouraging competition and investment in next generation access networks: The new rules bring legal certainty for investment in next generation access (NGA) networks. These networks, based on new optical fibre and wireless network technologies, are replacing less efficient traditional copper-wire networks and will allow high-speed internet connections. The reform of the telecoms rules reaffirms the importance of competition in this new sector while at the same time preserving incentives to invest by taking into account the risks involved in allowing access to NGA networks and allowing for various cooperative arrangements between investors and access-seeking operators. In this way, the new rules will also ensure telecoms operators receive a fair return on their investments. On the basis of the new rules, the Commission plans to issue a recommendation for the regulation of access to NGA networks in the first half of 2010, taking into account the results of public consultations in 2008 and 2009 ( IP/08/1370 and IP/09/909 ). The rules governing the sharing of network elements, such as ducts or in-building wiring, between operators are also updated by the reform. Besides improving competition and services for businesses and consumers, this will also help lower the overall financial costs for operators of deploying NGA networks.

Background

The EU telecoms reform package comprises 5 different EU Directives (Framework Directive, Access Directive, Authorisation Directive, Universal Service Directive and the e-Privacy Directive) and a new Regulation setting up the European Body of Telecoms Regulators BEREC. It has been accompanied by a Directive to reform the GSM Directive of 1987 to free airwaves for 3G and other mobile services ( IP/09/1545 ).

The reform is being adopted through the codecision procedure, which means that it has to be approved both by Members of the European Parliament (by majority) and national governments in the Council of Ministers (by qualified majority). The procedure starts with Commission proposals, which the European Parliament and Council then discuss and amend. As the Council did approve all but one amendment of the European Parliament adopted in the second phase of the process, a conciliation committee was set up to find a compromise. The conciliation committee is made up of 27 members of the Council or their representatives and an equal number of representatives from Parliament, who make up the European Parliament delegation. A compromise on a new Internet freedom provision was found on 5 November, which opened the way for a final endorsement by the Council of Ministers and the European Parliament plenary in November 2009, two years after the reform had been proposed by the European Commission.

Next steps:

  • Establishment of the European Body of Telecoms Regulators BEREC (spring 2010) – Note that a decision on the definitive seat of BEREC will require agreement between the governments of all 27 Member States;

  • Transposition of the telecoms reform Directives (Better Regulation Directive and the Citizens’ Rights Directive) into national legislation in the 27 EU Member States (by June 2011).

    Annex 1

The new Internet Freedom Provision

Article 1(3)a of the new Framework Directive

“Measures taken by Member States regarding end-users’ access to or use of services and applications through electronic communications networks shall respect the fundamental rights and freedoms of natural persons, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and general principles of Community law.

Any of these measures regarding end-users’ access to or use of services and applications through electronic communications networks liable to restrict those fundamental rights or freedoms may only be imposed if they are appropriate, proportionate and necessary within a democratic society, and their implementation shall be subject to adequate procedural safeguards in conformity with the European Convention for the Protection of Human Rights and Fundamental Freedoms and general principles of Community law, including effective judicial protection and due process. Accordingly, these measures may only be taken with due respect for the principle of presumption of innocence and the right to privacy. A prior fair and impartial procedure shall be guaranteed, including the right to be heard of the person or persons concerned, subject to the need for appropriate conditions and procedural arrangements in duly substantiated cases of urgency in conformity with the European Convention for the Protection of Human Rights and Fundamental Freedoms . The right to an effective and timely judicial review shall be guaranteed.”

Annex 2:

European Commission Declaration on Net Neutrality,

added to the telecoms reform package

The Commission attaches high importance to preserving the open and neutral character of the Internet, taking full account of the will of the co-legislators now to enshrine net neutrality as a policy objective and regulatory principle to be promoted by national regulatory authorities 1 , alongside the strengthening of related transparency requirements 2 and the creation of safeguard powers for national regulatory authorities to prevent the degradation of services and the hindering or slowing down of traffic over public networks 3 . The Commission will monitor closely the implementation of these provisions in the Member States, introducing a particular focus on how the "net freedoms" of European citizens are being safeguarded in its annual Progress Report to the European Parliament and the Council. In the meantime, the Commission will monitor the impact of market and technological developments on "net freedoms" reporting to the European Parliament and Council before the end of 2010 on whether additional guidance is required, and will invoke its existing competition law powers to deal with any anti-competitive practices that may emerge.

Annex 3

Mobile phone penetration in the EU

Figures and graphics available in PDF and WORD PROCESSED


Status of broadband take-up in the EU
(Broadband means an always-on internet connection with a bandwidth capacity

of at least 144 kilobits per second)

Figures and graphics available in PDF and WORD PROCESSED


Fixed number portability – days required to port a number

Figures and graphics available in PDF and WORD PROCESSED


Mobile number portability – days required to port number

Figures and graphics available in PDF and WORD PROCESSED


The new Single Market Procedure for assessing market definitions and
significant market power findings proposed by national telecoms regulators

(Article 7 of the Framework Directive 2009)



* BEREC - Body of European Regulators for Electronic Communications

The new Single Market Procedure for assessing regulatory remedies
proposed by national telecoms regulators

(Article 7a of the Framework Directive 2009)



* BEREC - Body of European Regulators for Electronic Communications

1 :

Article 8(4)(g) Framework Directive

2 :

Article 20(1)(b) and 21(3)(c) and (d) of the Universal Service Directive

3 :

Article 22(3) of the Universal Service Directive


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