The second article from the series that deals with the key provisions of the newly proposed European Electronic Communications Code will focus on the amendments related to regulation of services and end-user protection.
In the area of service regulation and end-user protection, the European Commission concluded, as part of its ex post evaluation of the existing telecom rules, that competition between local service providers that bundle network access with content services and global providers of OTT services reinforces the right of the European Union to ensure a level playing field between these two groups of actors. Action was also deemed necessary at an EU level in order to reduce fragmentation of the end-user protection rules among the different Member States. Such fragmentation results in heightened compliance costs for cross-border service providers and further hinders the development of innovative services. Thus, the aim behind the new end-user protection rules in the EEC Code is to introduce full harmonization across the EU with a few targeted exceptions (for example, regarding maximum contract duration).
In order to reflect the market developments since the last reform back in 2009 and the continued need for sector-specific rules, Article 2(4) of the Code introduces an amended definition of ‘electronic communications service’. The definition now presents three types of service categories that fall under the common label of an “electronic communications service”: (i) internet access services, (ii) interpersonal communications services, encompassing 2 sub-categories: number-based services and number-independent services, and (iii) services consisting wholly or mainly of the conveyance of signals, such as transmission services used for M2M communications and for broadcasting. The majority of obligations applicable to interpersonal communications providers will be linked to the use of public numbering resources – an approach that has been endorsed by regulators since at least the last review of the framework but which is also contested by traditional telecoms. In particular, the rules that would apply to number-based interpersonal communications services (traditional telecommunications voice services, SMS and Skype services when interconnected to the PSTN) shall cover: contract duration, transparency, information on quality of service, number portability led by the receiving provider, consumption monitoring tools, comparison tools for both prices and quality of service and switching rules for bundles to avoid lock-in effects. At the same time, number-independent interpersonal communications services (such as WhatsApp, Snapchat, Hangouts, Messenger, Skype) will be subject only to obligations for ensuring interoperability and security (Article 40 of the Code). Obviously, the newly proposed definition does not fully deliver the promised level playing field between traditional telecoms and OTT service providers but it is certainly an effort to bring the two groups closer in terms of balancing the regulatory burden.
It is of key importance to note that in view of the end-user protection rules the EEC Code introduces a full harmonization approach to the extent possible, instead of the presently applicable minimum harmonization policy. As clarified by Article 94 of the Code, Member States are prevented from imposing both less stringent and also more stringent provisions than those established by the Code. The regulatory aim is to lessen the compliance burden and to avoid distorting market conditions across the Member States. Additionally, the proposal reduces the regulatory burden by lifting obligations where they are no longer needed or are adequately covered by general consumer law. One key example is the repeal of the power of national regulators to directly impose retail price regulation on SMP operators (Article 17 of the Universal Service Directive). Also certain provisions on contracts, transparency, equivalence of access by disabled users, directory services and interoperability of consumer digital TV equipment have been streamlined and partly deleted due to overlap or other redundancies (Articles 95-98, and Articles 103-105).
Pursuant to Article 95 of the Code, as part of the information requirements before the conclusion of a contract, providers of number-based interpersonal communication services and providers of internet access services will have to present consumers with a contract summary template which includes the details of the provider, the main characteristics of the service, the price, the contract duration and the conditions for renewal and termination. After conclusion of the contract, the summary will become an integral part of it. Within 12 months after entry into force of the Code, BEREC will issue a decision on the content of the contract summary template which will identify in greater detail the information requirements.
Article 96 of the Code will require NRAs to ensure that end users have access free of charge to at least one independent comparison tool which will enable them to compare and evaluate prices and tariffs as well as quality of service parameters of different publicly available electronic communications services. Notably, the scope of the provision again excludes number-independent interpersonal communication services. The comparison tools shall be operated in a way that guarantees equal treatment to service providers; its owners and operators shall be clearly disclosed and it shall include a broad range of offers that cover a significant part of the market. Upon request, comparison tools will be certified by the respective NRA.
Under Article 98 of the Code, a general rule is established that contracts concluded between consumers and undertakings providing publicly available electronic communications services, other than number-independent interpersonal communications services, shall not mandate an initial commitment period that is longer than 24 months. At the same time, Member States are allowed to adopt even shorter maximum duration for the initial commitment period. However, installment contracts can be concluded for periods longer than 24 months where the consumer has agreed in a separate contract to be bound for installment payments for the deployment of a physical connection.
Pursuant to Article 98, paragraph 3, end-users shall have the right to terminate their contract without incurring any costs upon notice of changes in the contractual conditions proposed by the provider of publicly available electronic communications services other than number-independent services, unless the proposed changes are exclusively to the benefit of the end-user or they are strictly necessary to implement legislative or regulatory changes. Providers will need to notify end-users, at least one month in advance, of any such change, and shall inform them at the same time of their right to terminate their contract without incurring any costs if they do not accept the new conditions. Member States shall ensure that notification is made in a clear and comprehensible manner on a durable medium. Here, it is interesting to note that according to the position of the Court of Justice of the European Union expressed in its decision of 5 July 2012 on Case C-49/11 Content Services the website of an online service provider cannot in principle be viewed as a “durable medium” since it does not allow consumers to store information which is personally addressed to them, in a way they can access and reproduce it unchanged for an adequate period, without the supplier being able to amend the content unilaterally. If the same logical conclusion which the CJEU reached when interpreting the provisions of the Distance Selling Directive, later replaced by the Consumer Rights Directive, is to be applied to the provision of Article 98 of the Code, then the electronic communications service providers will have to inform the end-users about changes in the contractual conditions by way of a dedicated e-mail message or a SMS instead of merely publishing the information on their company websites.
Article 98, paragraph 5 of the Code clarifies that in case of permissible early termination of a contract by the end-user two types of compensations will be due – pro rata temporis compensation for the value of the subsidized equipment if such is bundled with the contract and pro rata temporis reimbursement for any promotional advantages that were marked as such at the time of contract conclusion. Furthermore, after payment of the due compensation for the subsidized terminal equipment, the service provider will be prevented from blocking its usage on other networks or for requiring any charges for its unblocking.
Finally, in view of the widespread take-up of triple-play and quad-play bundle offerings, Article 100 of the EEC Code imposes a rule that if a bundle includes just a single electronic communications service (excluding number-independent communications services), then all the rules in the Code imposing obligations for transparency, contract duration, contract termination and change of provider will apply to all other elements of the bundle irrespective of the fact whether they represent an electronic communications service or not. In addition, the subscription to additional services or goods linked to the same provider will not lead to restarting the contract period of the initial contract unless those additional services or goods are offered on promotional prices that are available only under the condition that the existing contractual period is re-started.