Commission maintains its softly, softly approach on net neutrality (whilst carrying big stick)

Net neutrality. A topic that stirs strong emotion and strident commentary that sometimes bears little resemblance to the underlying issues.

The European Commission today published a remarkably thoughtful, balanced and considered Communication on the open internet and net neutrality in Europe.

It concludes that the current rules on transparency, switching and quality of service that form part of the revised electronic communications framework should produce competitive outcomes and that as the package is still being implemented it is too early to introduce additional measures.

However, the Commission:

  1. will work with the European national regulators’ collective body – BEREC – to explore potential issues including barriers to switching, practices of blocking, throttling or equivalent effect, transparency and quality of service and will publish a report by the end of 2012 any evidence uncovered;
  2. reserves its right to take action under the general competition rules (arts 101 and 102 TFEU) should that be needed;
  3. if required, issue additional guidance;
  4. if guidance is not sufficient, consider what additional legislative or other measures may be needed – focussing particularly on switching and transparency; and
  5. continue to work with member states on stimulation of broadband roll-out.

The relative calmness of the debate compared with the political polarisation in the US is striking. However, whilst the Commission is currently taking it easy, it is also signalling that it is prepared to use competition rules or introduce new laws should that be needed.

Europe to review data retention rules

Readers will recall from the curious case of Mr Spitz that European telecoms operators already retain very large amounts of information about their customers. In an evaluation report adopted today by the European Commission, the Commission proposes to review the existing rules.

The Commission summarise the main findings of the report as:

  • Most Member States take the view that EU rules on data retention remain necessary for law enforcement, the protection of victims and the criminal justice systems. As criminal investigation tools, the use of data related to telephone numbers, IP address or mobile phone identifiers have resulted in convictions of offenders and acquittals of innocent persons.
  • Member States differ in how they apply data retention. For example, retention periods vary between 6 months and 2 years, the purposes for which data may be accessed and used, and the legal procedures for accessing the data, vary considerably.
  •  Given that the Directive only seeks to partially harmonise national rules, it is not surprising that common approach has not emerged in this area. The overall low level of harmonisation can however create difficulties for telecommunication service providers and in particular smaller operators. Operators are reimbursed differently across the EU for the cost of retaining and giving access to data. The Commission will consider ways of providing more consistent reimbursement of the costs.
  • Data retention represents a significant limitation on the right to privacy. Whilst there are no concrete examples of serious breaches of privacy, the risk of data security breaches will remain unless further safeguards are put in place. The Commission will therefore consider more stringent regulation of storage, access to and use of the retained data.

The Commission will now commence a consultation with stakeholders prior to publishing its proposed amendments to the existing Data Protection Directive.

This area is very sensitive politically, as it draws one of the lines between the interest of the state and the interests of citizens. As such some countries have delayed implementation of existing rules and in others their legality has been subject to challenge. It remains to be seen how the Commission will seek to meaningfully engage on those issues which are not really addressed to a substantive extent in the report.

European Commission tries to marshal stakeholders for World Radiocommunications Conference 2012

The European Commission published on 6 April a Communication on policy objectives for the International Telecommunications Union World Radiocommunications Conference 2012 (WRC 12). WRC 12 is the next quadrennial meeting of governments and other stakeholders to coordinate international spectrum policy and to update the Radio Regulations.

In marked contrast to many Commission documents, the Communication shows the Commission’s nervousness at Europe’s negotiating position in a forum where each Member State is (at least in theory) separately represented.  Although the European Conference of Postal and Telecommunications Administrations (CEPT) develops European Common Proposals, CEPT has more of a technical harmonisation focus than the Digital Agenda policy of the Commission and its members are wider than members of the European Union.

In preparation for the Communication, the Commission asked the Radio Spectrum Policy Group (RSPG), which represents the Member States, to provide an Opinion on policy issues likely to be in play at WRC12. That Opinion identified a number of policy areas, which the Commission has addressed in its Communication. In summary these areas (by reference to WRC12 agenda numbering) are:

  • Digital Dividend 790-861 MHz (1.17):  the aim is for balanced coexistence between EU-wide wireless broadband and diminishing use of aeronautical radionavigation systems on the EU’s Eastern border. Obligations to protect digital broadcasting should remain in force, but no further obligations added.
  • Galileo 1283.5-2500 Mhz and 5000-5030 MHz (1.4/1.18): ensure Galileo has frequencies it needs to operate without harmful interference.
  • Single European Air Traffic Control 960-116 MHz 5091- 5150 MHz (1.4/1.7):  ensure Europe can develop and implement the best system.
  • Communications Satellites 21.4-22 GHz (1.7/1.13/1.25/7): oppose any division into national assignments and protect air traffic management objectives.
  • Unmanned Aerial Systems 5000-5030 MHz (1.3): protect Galileo.
  • Software Defined Radio and Cognitive Radio (1.2/1.19): work towards more flexible approach, but no change to Radio Regulations.
  • Short Range Devices (1.22): resist any additional constraints.
  • Scientific Research and Climate Change 275-3000 GHz, 22.5-23.15 GHz, 37 GHz, 3-50 MHz (1.6/1.11/1.12/1.16/1.24/1.15): promote new allocations and protect scientific services in relevant bands.
  • Tuning Ranges for Electronic News Gathering (1.5):  No change to Radio Regulations, but de facto harmonisation through Recommendation.

So far as the agenda for WRC16 is concerned, the Commission suggests that the debate on mobile broadband should not be restricted to particular bands.

The Communications concludes with a wish from the Commission that the role of the EU is bolstered in the ITU – in part no doubt to avoid the rather messy preparation process being followed. The next steps will be for the European Parliament and Council to consider the Commission’s Communication.

European Commission refers Spain to European Court over ‘telecoms tax’ and tells them to speed up spectrum refarming implementation

Hola! As yesterday’s readers will know, I am currently in Madrid working from Olswang’s new Spanish office, soI thought it appropriate to give today’s post something of a Spanish slant as Spain has been attracting Neelie Kroes‘ (Europe’s Digital Agenda Commissioner) ire this week.

On 14 March she referred Spain (and France) to the European Court of Justice on the basis that their imposition of turnover related levies which were then directed towards funding  broadcasters. The Commission press release notes that: ‘A law on financing the Spanish public broadcaster RTVE entered into force in September 2009 and imposed a charge of 0.9% on the gross revenues of telecoms operators to make up for the loss of revenue from paid advertising this broadcaster. In October 2010, telecoms operators made the first payments to CMT, the national telecoms regulator. The charge was expected to generate revenue of around €230 million in 2010.’  and goes on to explain that the basis of the reference: the levy is incompatible with EU telecoms rules and in particular Article 12 of the telecoms Authorisation Directive (2002/20/CE), which provides that charges can be levied on telecoms operators only to cover certain administrative and regulatory costs (mainly authorisations and regulatory functions) and should be objective, transparent and proportionate.

On the same day, she requested Spain (and this time Hungary as well) get on with ensuring that the necessary national implementation rules are in place to permit refarming of existing 900 MHz GSM spectrum by the 9 May deadline. Whilst the request has no legal force, the Commission is clearly concerned at the apparent lack of progress and failure to respond may well lead to further infringement action against Spain.

Tighter regulation of mobile data roaming casts shadow over Barcelona from Brussels

With MWC 2011 still in full swing there are no shortage of topical issues to blog about, but whilst the mobile industry celebrates its achievements in Barcelona, back in Brussels the European Commission continues to go about its business. On Monday, the Commission published its latest consumer research on perceptions of roaming costs which showed continued consumer concern over the costs of both voice and data roaming.

The existing Roaming Regulation has dramatically reduced roaming voice revenues for operators for intra-EU roaming, with some reduction in roaming data revenues. The existing rules expire on 30 June 2012, so this research feeds into the Commission’s review of its replacement which started in December 2010. In that review, Neelie Kroes, Vice-President of the European Commission for the Digital Agenda said: “Huge differences between domestic and roaming charges have no place in a true EU Single Market. We need to address the source of current problems, namely a lack of competition, and to find a durable solution. But we are keeping an open mind on exactly what solution would work.” 

Speaking at MWC on Monday (launching the research) she further said: “I would love to be able to say to you today that the roaming market is competitive, that data roaming charges approach domestic prices, that bill shocks are a thing of the past, that prices for voice and SMS roaming are not clustered around the maximum levels permitted.  Regrettably, I cannot.”

The Commission’s Digital Agenda’s target is to have a single market for telecoms services in which the difference between national and roaming charges should approach zero by 2015. Whilst this week has seen some of the operators announce cheaper data roaming plans in an attempt to head off further regulation, the Commission seems to be preparing the ground carefully for further aggressive regulation of roaming.

‘Illegal state aid’ challenge to tax levied on BT’s UK fibre network fails in European Court

In a decision dated 21 January, but only released this week, the EU’s General Court in Luxembourg has dismissed Vtesse’s appeal against a decision of the European Commission that rates (a UK land use tax) levied on BT’s UK fibre network did not constitute state aid.

Vtesse originally complained to the Commission in 2004, but the Commission closed its case in December 2006 on the following basis:

In conclusion, it should be recalled that business rates are a tax on the value of the property concerned. They are not a tax on profits or revenues. They are normally applied on all non-domestic properties, and consequently are applied to all telecommunications networks. According to British case-law all telecommunications networks are valued as a whole. There are several methods for valuing such property. When all methods can be applied, they should result in the same valuation. The use of a specific valuation method depends on the circumstances of the case.

It now appears that the VOA has applied to BT and Kingston the general rules concerning business rates as laid down in the legislation and case-law. It is clear that the valuation of BT’s and Kingston’s hereditaments as well as the revisions of these rateable values, are carried out on the basis of a different method than in the case of their competitors. However, the Commission can conclude that there is no evidence that the use of this different method is not justified by the objective differences between those firms and their competitors and by the extent of the evidence available to the VOA.

There is no evidence that the application of a different valuation method to BT and to Kingston has resulted in an advantage to these firms in comparison with their competitors. Since there is no evidence of an advantage, the Commission can conclude that the non-domestic rates system has not provided State aid to BT and/or Kingston within the meaning of Article 87(1) EC during the period considered by the Commission i.e. 1995-2005.

Vitesse appealed on the basis that the Commission didn’t carry out a full and proper investigation before closing the case. It appears from reports of the General Court’s judgement that the court did not engage with this substantive ground of appeal, instead dismissing the appeal on the basis that Vtesse was unable to demonstrate that it was individually concerned by the action. The court apparently observed that Vtesse would have needed to establish causality between the contested state aid and any change in Vtesse’s market position.

Against the backdrop of a government policy objective to encourage competitive roll-out of fibre networks this decision will clearly disappoint BT’s competitors.

Cognitive radio: the road to mobile broadband delivery, or the path to anarchic interference?

For those who are not familiar with the term, cognitive radio (also sometimes described as white-space radio) describes a way of using radio spectrum in which unlicensed devices do not use particular assigned frequencies but rather constantly assess the available spectrum, determine which parts of it are currently unused and make use of that spectrum to transmit information. There has been significant publicity concerning the US’s pro-white-space policy, leading to some concern within Europe that the US may be stealing a march on Europe. 

Last week the European Radio Spectrum Policy Group (a high-level advisory group that assists the European Commission in the development of radio spectrum policy), published responses to its November 2010 consultation on its Draft Opinion on Cognitive Technologies. The draft opinion being consulted on recommended that:

  • “implementing measures to introduce the CR technologies in some bands could be left to Member states as long as border coordination issues are addressed and the following recommends [SIC] are taken into account
  • a platform shall be created to allow researchers, academia and regulators to coordinate research activities
  • Administrations, when implementing CR technologies that require to utilise databases should (possibly with guidance developed in the CEPT):
    a. indicate how the databases should be certified or accredited, supplied and updated by national regulatory bodies, and to supply relevant information to CR systems
    b. provide information to database managers on algorithms;
    c. provide information on incumbents directly or through a designated entity;
  • Administrations and the EC should request ETSI to study the relevant means that could be implemented in order to secure the access from CR devices to the relevant database and the exchange of information between them;
  • Administrations, in relation with the EC and TCAM, should give to ETSI relevant information on suitable data elements, equipment behaviour and output signal radio characteristics which will allow ETSI to develop harmonised standards
    that any Cognitive Radio harmonised standard developed by ETSI should include:
    a. compliance testing instructions under R&TTE Directive;
    b. relevant information on how CR device could access only certified or authorised databases;
    c. HS information that should be given to CR devices from the database for a given period of time;
    d. information to be supplied by the CR device to the database including appropriate geolocation information;
    e. means needed to secure transmission between the database and the CR device;
  • TCAM should keep Notified Bodies up to date regarding specific requirements under the R&TTE Directive for CR devices;and
  • in order to provide some confidence to all stakeholders, EC should investigate if JRC facilities can be made available.”

As with any technological development capable of disruptive change, the responses were predictably mixed. The strongest adverse reactions came from current users of licensed spectrum, mobile operators and broadcasters, who have most to lose not only from any potential interference by cognitive radio with their licensed spectrum use but who also from the potential diminution in value of existing licensed spectrum were unlicensed cognitive radio to be widely deployed. Vendors, for whom cognitive radio represents both a market opportunity, but also a risk if new entrants exploit the technology, remained on the fence by recognising the potential, but also the risks.

At this stage it is unlikely that much beyond ‘co-ordinate and play nicely’ will come out of the RSPG process in the short-term, but the issue is also being considered at national level. In the UK, Ofcom has been considering potential new uses for the digital dividend since 2005. In 2007 Ofcom concluded that cognitive devices could use white spaces without requiring individual licences, provided that there was no harmful interference to licensed spectrum use, such as digital terrestrial television and programme-making and special events (‘PMSE’). At the same time, Ofcom decided that any liberated spectrum should be auctioned off, with one package reserved for auction to PMSE users. None of the spectrum will be expressly reserved for unlicensed use by cognitive devices.

Ofcom is now working with industry to establish whether white spaces can be used without causing harmful interference. Ofcom recently consulted on the proposed parameters for such use, concluding that cognitive devices should sense the presence of other signals or use a geolocation database to discover unused spectrum. Geolocation is being further considered after studies showed that the signal levels devices would need to sense down to, in order to ensure no harmful interference, are extremely low.

Ofcom consulted on geolocation to seek feedback on the following issues:

  • Whether there should be just one database or several;
  • The type and format of information to be provided by the device to the database(s) and to be returned from the database(s) to the device;
  • The frequency of update of the database(s) and the periodicity with which devices will need to re-consult;
  • The modelling algorithms and device parameters to be used to populate the database(s); and
  • The maintenance of the database(s): who should be responsible for hosting and maintaining the database(s), and who should incur the associated costs?

Responses to the consultation were broadly supportive of Ofcom’s proposals. Ofcom concluded that no competition will be held to select a database. Organisations can apply at any time to become database operators, but operators will be regulated and each database will need to be registered.  

Ofcom’s focus is on technological capability, and wants industry to take the lead before regulating. In any case, white spaces cannot be utilised until switch-over completes in 2012.  Ofcom also intends to cooperate with the rest of Europe in seeking international agreement, which may cause further delay. No European solution is likely to be implemented until complete analogue switch-off is achieved; whether the 2012 deadline will actually be met is uncertain.