Summary

After a legislative procedure lasting more than two years (see our earlier alert), the European Union has finally published its new “European Electronic Communications Code” (EECC). It provides updated rules for providers of traditional mobile and fixed telecoms services, establishes regulations for new online communications services and aims at further harmonizing a single European telecommunications market.

The EECC will enter into force December 20, 2018. However, as it’s an EU Directive, there will be no immediate legal effect on telecoms companies. The EECC must be transposed into the national law of each of the 28 - or, following Brexit, 27 - EU Member States within the next two years.

While the EECC is rather specific on most of the issues, Member States still have some leeway regarding the implementation of the Directive’s rules. So it remains to be seen whether the EECC will actually lead to the single telecoms market envisaged by the Commission, and this leeway still leaves room for network operators and service providers to argue for more favorable rules on a national level.

Background

Adopting the EECC was part of the European Commission’s Digital Single Market strategy. It was also seen as a long-overdue modernization step for the European telecoms regulatory framework, that had not undergone any major amendments since 2009. The existing framework has failed to lead to a European single market for telecoms networks and services. Instead, the sector has remained fragmented into separate national markets. In addition, the inconsistent implementation of the current regulatory framework into Member State law, and the equally inconsistent application of the law by the national regulatory bodies, resulted in regulatory uncertainty, especially for cross-border telecoms offerings and investments.

The current framework also provides uncertainty regarding the application of its rules to new business models. In many Member States, it was - and still is - disputed whether over-the-top (OTT) communications services should be regulated in the same manner as traditional telecoms services. Further, the existing framework for the regulation of industry players with large market power is often perceived to be burdensome with respect to the fast roll-out of new high-speed mobile (5G) or fixed networks.

Key Issues addressed by the EECC

To address these issues, the EECC provides for the following new rules:

1. Market regulation – encouraging investments in high-speed networks: The EECC retains the current principle of applying access and price regulation to market players with “significant market power” (SMP), subject to a densely-regulated procedure of market definition and analysis. However, to encourage investments in mobile and fixed high-speed networks, the EECC introduces new mechanisms to establish exceptions from such regulation if SMP operators engage in building these networks. Such exceptions will be based on binding commitments by the operator that must be accepted by the respective national regulatory authority.
2. Spectrum/5G – more harmonization: The EECC provides for more harmonized rules for the management of radio spectrum, even though the procedure suggested by the European Commission to coordinate spectrum licensing procedures - in particular with the upcoming 5G roll-out in mind - did not make it into the final text. The EECC does provide for rules facilitating new market entrants, implements the “use it or lose it principle” with respect to the withdrawal of spectrum licenses, and facilitates a shared use of mobile frequencies (e.g., based on national roaming) by the respective mobile network operator and other mobile providers that do not operate their own mobile networks.
3. OTT services – integration into the regulatory regime: The EECC broadens the scope of regulation to include all interpersonal communications services – including OTT services. However, the full level of regulation will only apply to phone number-based services and not to number-independent ones. Under the new framework, many OTT communications services will still only become subject to a limited set of new requirements, while others - specifically those that allow a breakout to the public switched telephone network (PSTN) - will be regulated on the same level as traditional telecoms services. This might solve the long-going debate on the regulation of OTT service, which continues to be subject to litigation pending before the European Court of Justice.

For a quick overview over the OTT-specific aspects of the EECC, please refer to our infographic that can be downloaded here.