Communications Industry Predictions for 2014

27 January 2014

The Communications sector will face a number of legal and regulatory challenges throughout 2014. Several members of the international team at Bird & Bird have identified the key issues of particular significance to the Communications sector in their respective jurisdictions, which are summarised below.

The fallout from the Snowden revelations relating to government surveillance will continue to permeate public discussion with implications for cybersecurity and data protection policy. Spectrum reform and consolidation in the market feature throughout many of the countries surveyed.  The Connected Continent reforms will dominate policy debate in Europe, and despite lofty ambitions it is unlikely that the reform package will survive in its current form – however, there is greater political appetite for the roaming and consumer reforms and net neutrality may also emerge as a 'vote winning' issue.

News by jurisdiction:

 

Australia

The National Broadband Network (NBN) 

Without doubt, the biggest feature on the Australian communications landscape in the year ahead will be the effect a change of government to a Liberal (conservative) government on 7 September 2013 has on the NBN. The NBN was the previous government’s 'Fibre to the Home' broadband plan and Australia’s biggest infrastructure project. The new PM Tony Abbott and Communications Minister Malcolm Turnbull stated prior to the election to revisit the NBN rollout plan would be a policy objective and the new government has appointed a new Board to the NBN and undertaken a strategic review of it – the new Board is now seeking to develop a plan to give effect to the strategic review. The new government has stated that it will seek to reprioritise underserved areas and use a greater mix of technologies to keep costs down.

Mobile Network Coverage 

Australia is by most measures a huge land mass with a relatively small population to service and mobile phone coverage has been a challenge, particularly for the challenger carriers Vodafone and Optus – with Telstra historically holding a significant coverage advantage. The challenger carriers have suffered from the classic problems of allocating the correct spend to attract the most customers and risking poorer coverage in more remote areas. In particular, Vodafone will seek to regain customer support in 2014 having invested to lift its network standard through significant infill and a network sharing project with Optus. 

There is also significant movement in the cheaper pre-paid SIM-only market where something of a price war erupted leading to some consolidation and fallout with one of the significant wholesale intermediaries (ISP One) collapsing in August last year. ISP One supplied to Aldi Mobile and Kogan Mobile and customers still face an uncertain future. Prepaid SIMs have traditionally been an area where getting the right regulation, particularly around identity, has been a challenge and it may be that 2014 sees some modernisation of the current and largely ineffective identity checking system.

China

4G

The Ministry of Industry and Information Technology (MIIT) issued 4G licences to China Mobile, China Telecom and China Unicom for adopting Time Division Long Term Evolution (TD-LTE) technology, a Chinese technology, at the end of 2013 and is reported to have made plans to grant 4G licences for LTE-Frequency Division Duplex (FDD) network in 2014. The PRC government reportedly allocated the relevant spectrum as follows:

Carrier

Spectrum band allocation

China Mobile

1880-1900 MHz, 2320-2370 MHz and 2575-2635 MHz

China Unicom

2300-2320 MHz and 2555-2575 MHz

China Telecom

2370-2390 MHz and 2635-2655 MHz

 

The purpose of the issuance of the 4G licences is to promote consumer spending on information technology. In accordance with the policy issued by MIIT, the PRC government aims to increase consumer spending on information technology to RMB 3.2 trillion by 2015. MIIT believes the adoption of 4G technology will accelerate the procurement of network equipment, upgrading of mobile phones and development of new applications with wide economic benefits.

VATS in Shanghai Pilot FTZ

The Shanghai government and MIIT will implement a more open policy in the value-added telecoms services (VATS) industry in the new pilot free trade zone in Shanghai region in 2014 (the Shanghai Pilot FTZ).

According to the new policy, foreign investors will not be subject to the 50% cap on foreign investment in two types of the VATS: (1) information services (limited to application stores for this purpose); and (2) store and forwarding services (voice mails, emails, facsimiles, etc.). Note that online data processing and transaction processing services (limited to business e-commerce) are still subject to a 55% cap on foreign investment.

The new policy also proposes to open up certain other types of VATS, such as call centres, domestic multi-party telecommunications services, Internet access services and domestic Internet virtual private network services. Of these types of VATS, only domestic Internet virtual private network services will be subject to a 50% cap on foreign investment.

VATS providers shall be required to register and base their service facilities in the Shanghai Pilot FTZ but can provide their services nationwide (except the Internet access service, which can only be provided within the Shanghai Pilot FTZ).

Although the implications of this new policy remain to be seen, foreign companies seeking to establish new or expand VATS in China may consider investing in the Shanghai Pilot FTZ in order to take advantage of these new initiatives.


Czech Republic

In 2014, the Czech Telecommunications Office (CTO) will allocate additional frequencies for fast mobile networks. CTO has inferred that for fast mobile networks the 700 MHz band (currently used for digital television) and the 1400 MHz band (currently used for digital radio) will be released. Spectrum re-farming in the 900 MHz band can also be expected in 2014.  CTO will re-offer the LTE-ready frequencies that operators did not purchase in 2013 (in 2013, three mobile operators obtained all frequencies offered in the lucrative 800 MHz band and only some of the frequencies of the higher bands 1800 and 2600 MHz).

Changes in Czech telecoms legislation will allow for the early termination of fixed-term contracts in 2014. This will result in better mobility of customers in the market as they can be expected to transfer from one mobile operator to another more easily than before (the statutory period for a mobile number transfer when switching operators was also shortened in 2013 from 10 days to 3 days) and, conversely, mobile operators may offer different price adjustments or provide bonuses in order to retain their customers.

During 2014, CTO plans to join the Open Data project and will grant access to up to 50 various datasets in an accessible open format. The data will include, for example, the register of entities providing electronic communications and postal services in the Czech Republic, statistics of inspections, proceedings and fines imposed by the CTO, various individual indicators on the electronic communications market in the Czech Republic or international roaming, a database of allocated frequencies, and also the budget, invoices and contracts of the CTO. The aim is to allow the development of applications on top of these datasets and, ultimately, to strengthen transparency and public scrutiny of government services.

The guidelines published by the CTO on 3 January 2014 relating to the content of end user agreements on telecoms services may become a useful tool for consumers when contracting with telecoms providers, although it remains to be seen whether the guidelines will actually result in any substantial changes to the contractual terms of the major players in the telecoms market.


EU

Electronic communications is high on the 2014 agenda in Brussels. Top among the Greek presidency’s priorities will be promoting the proposal for a Regulation of the European Parliament and of the Council on electronic identification and trust services for electronic transactions in the internal market (e-IDAS). Part of the working programme of the presidency is the mid-term review of the Digital Agenda for Europe. The presidency will also examine the objectives of the 'Europe 2020' strategy and will deal with the definition of European positions at the Plenipotentiary Conference and at the World Telecommunication Development Conference of the International Telecommunication Union (ITU). On satellite issues, the presidency will place particular emphasis upon international relations and the common minimum standards on the rules for access to the Public Regulated Service (PRS) provided by the GNSS under the Galileo Programme.[1]

Connected Continent Proposals

On 11 September 2013, Commissioner Kroes launched a draft Telecoms Single Market regulation for a 'Connected Continent' for the purpose of introducing harmonised legislation for a single authorisation, new criteria for regulating markets, article 7 veto on remedies, and stabilising copper network access prices. Roaming operators will also lose the right to charge for incoming calls while a user is travelling abroad in the EU as of 1 July 2014. Operators will have to charge no more than a domestic long-distance call for all fixed line calls to other EU member states, and no more than the euro-tariffs for regulated voice and SMS roaming communications for mobile communications to other EU member states. The proposal aims to end discriminatory blocking and throttling and deliver effective net neutrality. It goes wider than the measures in the US (which do not prevent blocking or throttling of services such as VOIP on mobile).

New rights for consumers, quality of service, better contracts and more transparency, and new one-stop switching rules are introduced. Parliament, the industry and member states have highly criticised the proposals for lacking true investment incentives and being too prescriptive. It is expected that the proposal will be adopted as a directive instead, with a deletion of the common timetable for spectrum and the virtual broadband access products. The Greek presidency has identified the proposal as a key priority for the first half of 2014. The Council will produce a progress report reflecting its position, aiming to contribute to its timely adoption. Discussions in the Council Working Party are not expected to start earlier than March 2014. Although Commissioner Kroes is aiming for having the package adopted in 2014, final agreement between Parliament and the Council is not expected before 2015.

Cybersecurity

The Cybersecurity Strategy for the European Union and the Commission proposal for a Directive on Network and Information Security (NIS) put forward legal measures and give incentives that aim at securing the EU's online environment. By strengthening preparedness, cross-border cooperation and information exchange, the proposed directive aims to enable citizens to reap the full benefits the digital environment offers. It seeks to extend the information security and breach notification obligations currently imposed on parts of the electronic communication sector to key providers of information society services. This includes providers of e-commerce platforms, Internet payment gateways, social networks, search engines, application stores and cloud computing services, therefore impacting parts of the communication sector which are not currently caught by these obligations.

In addition to regulatory pressure, the Snowden disclosures and recent high profile cybersecurity breaches mean that consumers are more concerned about the security of their communications and data. Cyber incidents in 2014 are therefore likely to carry a more serious risk of reputational damage than has previously been the case, pushing the issue up the agenda for senior management who will no longer be able to regard cybersecurity as something for just their technology teams to be concerned about.

By setting incentives to foster investments, transparency and user awareness, the cybersecurity strategy aims to boost competitiveness, growth and jobs in the EU. The strategy addresses international cooperation as a key priority. The Greek presidency aims to reach a political agreement to reflect the position developed by the Council in advance of the negotiations with Parliament. The proposal is scheduled for final reading in Parliament in April 2014.

Broadband network incentives

On 26 March 2013, the Commission issued a proposal for a Regulation for cost reduction of the roll-out of broadband networks. This initiative looks at ways to facilitate and reduce the cost of rolling out high-speed electronic communications networks by eliminating inefficiencies in the roll-out process. Some of these inefficiencies can be eliminated by implementing simple measures, such as a more intensive use of existing physical infrastructure, cooperation with utility companies, and improved coordination of all the actors involved in network roll-out. Parliament and the Greek presidency have prioritised the proposal. Trilogue (informal tripartite meetings attended by representatives of the European Parliament, the Council and the Commission) for reaching a first reading agreement in April 2014 will start end January.

The Commission aims to support broadband projects at local and regional level. The main instruments for this are the structural and rural development funds. In the present programming period from 2014-2020, the Commission has proposed that Member States and Regions draft smart specialisation strategies that should include plans for digital growth and NGA. To foster and leverage private investment, the European Commission has also put forward a new Connecting Europe Facility, proposed for the next multi-annual financial framework (2014-2020).

Personal data protection

In 2012, the Commission proposed a major reform of the EU legal framework on the protection of personal data; a new Data Protection Regulation will eventually replace the existing Data Protection Directive and be directly applicable in all EU member states without a need for national implementing legislation. The Regulation is awaiting Parliament's first reading/single reading/budget first stage in March 2014. They will strengthen individual rights and tackle the challenges of globalisation and new technologies.

Key changes in the reform include a single set of rules on data protection, valid across the EU. Unnecessary administrative requirements, such as notification requirements for companies, will be removed.  A summary of the key aspects of these changes is set out below:

  • Instead of the current obligation on all companies to notify all data protection activities to data protection supervisors, the Regulation provides for increased responsibility and accountability for those processing personal data.
  • Companies and organisations must notify the national supervisory authority of serious data breaches as soon as possible (if feasible within 24 hours). Organisations will only have to deal with a single national data protection authority in the EU country where they have their main establishment. Likewise, people can refer to the data protection authority in their country, even when their data is processed by a company based outside the EU.
  • Wherever consent is required for data to be processed, it is clarified that consent has to be given explicitly, rather than assumed. 
  • People will have easier access to their own data and be able to transfer personal data from one service provider to another more easily (right to data portability). This will improve competition among services.
  • A ‘right to be forgotten’ will help people better manage data protection risks online: people will be able to delete their data if there are no legitimate grounds for retaining it.
  • EU rules must apply if personal data is handled abroad by companies that are active in the EU market and offer their services to EU citizens. 
  • Independent national data protection authorities will be strengthened. They will be empowered to fine companies that violate EU data protection rules. This can lead to penalties of up to 5% of the global annual turnover of a company.
  • A new directive will apply general data protection principles and rules for police and judicial cooperation in criminal matters. The rules will apply to both domestic and cross-border transfers of data.

As indicated, the Regulation intends to introduce enhanced powers to fine organisations up to 5% of their annual global turnover for breaches of the new law. In the meantime, however, data protection authorities across the EU have been busy with enforcement action of their own. 2013 was a record year for fines, with the UK Information Commissioner's Office paying particular attention to breaches of data security requirements. We can expect this trend of more and higher fines to continue.

2014 is also likely to see further scrutiny around data transfer laws, in particular transfers to the US using the 'Safe Harbor' initiative in the wake of the NSA scandal. Amidst continuing discussions over Safe Harbor, it is possible that the European Parliament could pass a resolution requiring a review of the program, thereby potentially calling into question the validity of the three thousand or so current certifications facilitating transfers to US organisations.

Cloud computing

Cloud computing is developing rapidly, from individuals using the cloud to store personal data to major companies who have moved much of their IT services into it. The Commission aims to help build the EU Digital Single Market for cloud computing. It has therefore launched a three-pronged cloud computing strategy aiming to cut through the jungle of different standards, to identify safe and fair contract terms and conditions, and establish a European Cloud Partnership, with the participation of public authorities and industry, to stimulate the take-up and effective use of cloud computing, particularly by Europe's public sector.

The cloud is the “killer app” for superfast broadband. The Commission aims for cloud computing standards and certification schemes. Cross-border and interoperable cloud pilot projects will be set in motion this year in mission-critical areas of business and public life, such as eID, smart cities, eHealth, eEducation, and research and digital content services, building on existing large scale pilots.[2]


Germany

We expect that in 2014, the German communications sector will be influenced by political decisions of the newly-formed grand coalition government as well as by policy making and regulatory decisions of the national regulatory authority, BNetzA (Bundesnetzagentur).

Government Policy

The new government intends to add the principle of network neutrality to the regulatory objectives of the German Telecommunications Act. Mobile network operators shall be required to permit the use of Internet-telephony but may also be allowed to charge additional appropriate fees for such use. Network management will remain possible in justified cases although deep packet inspection for the purposes of distinguishing services or monitoring subscribers shall be prohibited.

The government also intends to enact legislation to re-implement the Directive 2006/24/EC on the retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks. Previous German legislation to this effect had been annulled by the German Constitutional Court in 2010. The government plans to impose an obligation for that this data to be stored on servers in Germany.

As a reaction to the “Snowden-affair”, the government intends to require European providers of electronic communications services to encrypt their traffic at least within the EU and to prohibit them from disclosing data to foreign intelligence agencies. Further, the government expresses support for introducing throughout Europe a requirement upon companies to notify any transfer of customer data without the customers’ consent to foreign government agencies.

BNetzA

Also as a result of the “Snowden-affair” and the subsequent debate on data privacy, the competent German regulatory authorities (the Federal Commissioner on Data Privacy and Freedom of Information and BNetzA) have started to initiate audits at communications network operators and service providers. The market expects these audits to continue in 2014.

In December 2013, BNetzA published its draft work programme (Vorhabenplan) for the year 2014. The draft work programme includes the following activities:

  • conducting market reviews of a number of regulated telecoms markets including call origination/termination on public telephone networks, ULL, wholesale broadband, mobile call termination and broadcasting transmission; and
  • updating several regulatory orders as well as rate regulation decisions including interconnection rates for fixed and mobile termination, the regulatory orders for access to the ULL, bitstream access and broadcasting transmission and a review of the standard offerings for ULL and bitstream access.

Spectrum policy will be a major issue in 2014, particularly the future assignment of the current GSM frequencies (the current assignment of these frequencies expires in 2016). In the summer of last year, BNetzA published a draft decision for consultation on the award procedure in which it proposes to reserve 2 x 5 MHz in the 900-MHz-band for each of the four current mobile network operators in Germany with the remaining spectrum awarded in an auction proceeding together with frequencies from the 700-MHz-band.

Spectrum policy will be significantly influenced by two developments not fully within BNetzA’s control: the outcome of the merger control proceeding concerning Telefónica’s acquisition of E-Plus as well as the decision on the future use of the 700-MHz-band for the Digital Dividend II, which requires the approval of the German federal states that are as of now reluctant to agree to this step.

Independent of its draft work programme, BNetzA also published draft documents outlining its numbering policies and plans. BNetzA’s intends to make policy changes concerning the allocation and management of premium and value added services numbers including restricting the allocation of such numbers to service providers instead of to the numbers’ actual users (currently a common business-model in Germany).


Hong Kong

2014 will be important for the re-assignment of 3G spectrum used by over 80% of total mobile data users as of Q4 2013.  The current assignments of the 3G spectrum will expire in 2016. The Communications Authority (CA) will adopt a hybrid approach, which consists of administrative assignments and a market-based auction, to re-assign the 3G spectrum. The incumbent 3G mobile network operators (MNOs) will be offered a right of first refusal to be re-assigned two-thirds of the 3G spectrum which each of the MNOs holds. The rest of the 3G spectrum is expected to be auctioned in Q4 of 2014.

The results of the coming re-assignment will be influenced by the CA's decision on whether to consent to the proposed acquisition of CSL New World Mobile (currently the largest MNO in the city) by HKT (currently the smallest MNO). To increase likelihood of obtaining the CA's consent, HKT has voluntarily offered pro-competition measures including not to participate in the auction of 3G spectrum in 2014 if the acquisition is approved.

The CA may refuse to give consent to the proposed acquisition if the CA considers that the proposed acquisition will give rise to anti-competitive concerns. If the proposed acquisition proceeds, the Li Ka-shing family (already controlling HKT and another MNO) will control more than 50% of mobile services in Hong Kong. It has been reported in local media that the CA will probably take more than three months in early 2014 to review whether the proposed acquisition will substantially lessen competition in the telecommunications market.

While the CA regulates mergers in the telecommunications currently, the recently established Competition Commission will have concurrent jurisdiction with the CA to decide whether to object to the proposed acquisition when the Competition Ordinance becomes fully effective on a date in 2014 to be confirmed.


Hungary

The Hungarian Data Protection and Freedom of Information Authority plans to issue practical guidelines on compliance with cookie regulation. It is also likely that the Hungarian Data Protection and Freedom of Information Authority in co-operation with the Media and Communications Authority (MCA) will initiate the amendment of the rules on cookie use set out in the Electronic Communications Act since the current wording does not properly implement the exemptions from consent requirement (necessary for the transmission of a communication over networks and provision of services by an information society service provider).

The MCA announced an innovation-focused spectrum tender concept with a view to promoting broadband services. The MCA has launched a tender process for the use of the free parts of 450 MHz spectrum which can among others be used for smart metering and M2M services. The licensee will primarily be obliged to develop digital public services. The MCA will also launch further tender processes in 2014 for the use of the free parts of 800, 900, 1800 and 2600 MHz spectrum as well as 26 GHz spectrum. The MCA expects increased competition, lower consumer prices and the expansion of broadband and wireless services as a result of the spectrum tender.

The MCA plans to implement some changes in the regulation of spectrum use and licensing. A "light licensing" process is likely to be introduced in 2014, which will potentially be applied in case of the auction of 80 GHz spectrum. The regulatory framework for allocation and use of spectrum is planned to be simplified in the course of which a number of MCA decrees will be merged with a view to increasing the transparency of the regulation.


Netherlands

In the Netherlands a draft law amending the Telecommunications Act (TA) will be issued containing new regulations with respect to frequencies, numbering, rights of way, end user protection, dispute resolution, network integrity and continuity (Verzamelwet). End user compensation in the case of service disruptions will be made mandatory for telecoms operators. The draft law will be issued for public consultation in March. It is expected to enter into force in July 2015.

New legislation for cookies will be issued, introducing an exemption to request prior consent for placing and reading analytic cookies on end users' equipment in article 11.7a TA (wijziging cookiebepaling). The draft law was in consultation earlier in 2013. It is expected to enter into force in January 2015.

For the Authority for Consumers and Markets a new law will be adopted containing parallel legal powers with respect to end user protection, exchange of information with other competent authorities, requests for information, penalties, fines and binding instructions to companies (ACM Stroomlijningswet). The new law will enter into force in July 2014.

The revised EU consumer directives are put forward for adoption in an implementation law, containing detailed provisions with respect to e-commerce, online transactions and general end user protection (Implementatiewet herziene consumentenrichtlijnen). The implementation act needs to enter into force no later than 13 June 2014.

The sub-terrain networks information exchange act (WION) will be amended through an exemption for notification of digging activities in agricultural lands, to enter into force 1 July 2014.

New legislative initiatives are expected with regard to privacy, security of networks and services, and mandatory security breach notification for electronic information systems (cyber incidents). Furthermore, a legislative proposal introducing a general security breach notification obligation for privacy infringements will enter into force in 2014.

A separate ministerial decree will be issued with respect to the mandatory sale of spectrum in case of non-usage, and transparency with respect to traffic management in case of network congestion, to enter into force 1 April 2014. Further amendments of spectrum regulation are expected with regard to the extension of scarce spectrum licences.


Poland

On 30 December 2013, the President of the Office of Electronic Communications (UKE) announced an auction for five general exclusive frequency licences in the 800 MHz band and for fourteen general exclusive frequency licences in the 2600 MHz band used to provide high-speed mobile Internet (LTE). The licences will be granted for a fixed period of 15 years. The auction participants that receive 800 MHz licences will be obliged to cover the whole territory of Poland with their own networks within three years from obtaining the licence. For the first time, UKE decided to use the auction model instead of a normal tender to select the successful licensees. The deadline for submitting initial offers expires on 14 February 2014. The auction should end in the second half of 2014 at the earliest and has an estimated total value of EUR 432,000,000. As a result of the auction, LTE technologies will spread further which should result in strengthening the promotion of multimedia services, mobile payments and competition in the telecoms market.

On 8 January 2014, the Polish Council of Ministers approved the National Broadband Plan which is a part of its strategy of the 'informatisation' of Poland and implementation of the European Digital Agenda. The Plan is aimed at ensuring general access to high-speed Internet of at least 30 Mb/s and use of Internet of at least 100 Mb/s by 50% of households by the end of 2020. Until November 2013, 2,240 km out of a projected 26,000 km of broadband networks had already been constructed with significant financing from EU funds.

Moreover, Polskie Inwestycje Rozwojowe S.A. (Polish Investment for Development S.A. - a state-owned company intended to act as an equity investor and mezzanine financing provider for infrastructure projects) and HAWE S.A. recently signed a framework agreement for the development of a fibre to the home network in Poland. In its first stage, 870,000 consumer lines will be constructed from 2015-2019.

Following a series of high-profile acquisitions in 2013 (Cyfrowy Polsat took over control of Polkomtel), it is expected that 2014 will be another year of consolidation on the Polish TMT market, especially in pay-TV and the IPTV sector, and bundled phone, Internet and TV packages will become increasingly popular. As the revenues from classic telecoms services (both fixed and mobile) in general will continue to drop, TMT companies will have to look for new products and services to offer to customers, such as mobile payments or smart metering and other ICT solutions.


Spain

New Spanish competition and markets authority

Last autumn the Spanish government established the statute of the new macro-regulator that merges the Communications NRA (Comisión Nacional de Telecomunicaciones) and eight other sectoral NRAs. The Spanish competition and markets authority (CNMC), created by the Law 3/2013, came into being on 7 October 2013. The aim of the newly created CNMC, according to the Spanish government is "efficacy, the legal certainty and the transparency in the markets and among sectoral regulators, in order to guarantee an effective competition [between them]".

The cornerstone of the new CNMC is its Board, which comprises a collegiate decision-making body which can work in plenary session or in two Chambers: the Competition and the Regulatory Chamber. Aside from the Board, the CNMC is divided into four Directorates: Telecommunication and Audiovisual, Competition, Energy and Transport and Postal Sectors. In this respect, the Telecommunication and Audiovisual Directorate is broadly in charge of the same administrative tasks as the previous communications NRA.

New Communications Act

On 13 September 2013, the Council of Ministers approved the referral to the Parliament of the new Spanish Telecommunications Act bill.

The four pillars of the new bill are: i) market unity, in order to create a uniform regulatory framework throughout the entire Spanish territory; ii) administrative simplification, removing regulatory barriers that regional administrations impose on network deployments and telecoms services; iii) network deployment, extending the coverage of networks through cost reduction with the aim of bringing cost reductions to the users; and iv) more competition and improved services to users - through periodic market analysis and the potential imposition of specific obligations and competitive conditions on providers. Moreover, the bill tightens control of public radio and amends the Law of Services of the Information Society and Electronic Commerce, introducing details on "cookies" and establishing obligations for its providers.

Due to the government majority in Parliament, the bill is expected to be enacted in a very short time; likely in the next 3 months.


Sweden

During 2013, several discussions and debates in society have focused on data retention. The operators have expressed discontent with the requirements to retain data and the burden of costs that has been placed on the operators for such retention.

The Post and Telecoms Authority (the PTA) issued in December 2013 a new regulation regarding payment by law enforcement agencies to telecoms operators when requesting traffic data. The Data Retention Directive (2006/24/EC), as implemented in Swedish legislation, has required the Swedish operators to retain traffic data for a certain time period and bear the costs of such data retention. However, the law enforcement agencies shall compensate the operators for the costs of providing the requested data in each given situation. Previously, such compensation was based on individual agreements between the individual operator and the law enforcement agency. Now, the new PTA regulation sets out the compensation to be paid for such requests. 

Late December 2013, an intense debate took place regarding the Swedish Security Police (Sw: SÄPO) requiring direct access to retained data without having to request such data from the operators. The Security Police has required the operators to implement an IT system providing the Security Police direct access to such data as the police should be allowed to obtain. The operators, however, have found it important to protect the confidentiality of such data, and will therefore maintain the existing structure according to which the operators assess the legal grounds of each request made by the law enforcement agencies (e.g. the Security Police). The requirement to implement the IT system in question has been raised since the Security Police has expressed discontent due to the operators taking too much time to provide the data. The PTA has expressed doubts in relation to the lawfulness of an implementation of such an IT system. This debate is likely to continue over the coming year.

The EU proposal for a Single Market Initiative has also generated much attention in Sweden during 2013. Overall, the proposal has been heavily criticised due to the tight time frame and the lack of adequate analysis of its implications. The extent to which the proposal will affect the Swedish telecoms market during the coming years will depend upon the results of the ongoing negotiations within the European Union. During 2014, it will of course continue to generate a lot of focus.


UAE

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The UAE Telecommunications Regulatory Authority (TRA) remains reserved about disclosing future developments in the UAE’s regulatory landscape.

One area of change, however, is likely to revolve around the provision of free or paid public Internet access by companies, as well as the amount of user information that must be collected when doing so.

The TRA has recently issued confidential instructions to both of the UAE’s telecoms licensees (Etisalat and du). Under the new instructions, any entity offering either free or paid public access to the Internet is considered to be a Public Internet Access Provider (PIAP). All PIAPs will be required to obtain an “appropriate managed Internet solution” from either Etisalat or du (presumably at a cost) in order to continue providing Internet access to customers.

One mandatory element of the “appropriate managed Internet solution” requires identifiable information, such as the mobile phone number, of all users to be collected by all PIAPs. PIAPs must pass the information on to the relevant licensee (Etisalat or du), who will then pass the information to the TRA, potentially for use by the security services.

The new requirements are effective as of 31 December 2013 and are likely to require any company who provides either free or paid public access to the Internet to customers, such as hotels, cafes, sports venues, conference facilities, and offices, to revisit their privacy policy to ensure liability is mitigated, and perhaps consider the business impact of the likely new costs associated with providing the service.


UK

In 2014, the UK will see a number of significant regulatory changes and reviews (most of which have a spectrum dimension) as well as a possible market structure shake-up with the potential for significant M&A and further consolidation. Consumer market trends centred increasingly on portable technology and sensors, such as wearable computing, will continue to drive demand for wireless data and M2M communication. 

Regulatory developments
UK Spectrum Strategy

The Department for Media, Culture & Sport (DCMS) expects to publish and develop a "UK Spectrum Strategy" along with Ofcom early this year which will form the basis of UK spectrum policy in the next 10-15 years. In addition to providing a general framework for spectrum policy, the UK Spectrum Strategy will address a number of specific matters including moving towards meeting the EU's objective of making available at least 1200 MHz of spectrum for mobile broadband and the potential clearance and release of the 700 MHz band.

Changes to spectrum management regulation; improvements to the Electronic Communications Code

Changes to regulation are also expected relating to spectrum management and the land access rights of operators. The spectrum management changes include mechanisms to facilitate dynamic spectrum access, a process to optimise frequency use and management by allowing licensees to surrender all or part of a licence to Ofcom for value, increased powers for the Secretary of State to direct Ofcom on spectrum matters (powers previously deployed to speed up the 4G auction) and enforcement measures such as the ability of Ofcom to levy monetary penalties for breaches of licence conditions. 

The Electronic Communications Code is also to be amended to improve the ability of operators to deploy broadband infrastructure. These amendments may contain measures recommended by the Law Commission in its 2013 report which include providing a clearer definition of the market value that landowners can charge for the use of their land, resolving inconsistencies between the Code and other pieces of legislation and changes to the dispute resolution procedure under the Code.

Narrowing of appeal rights to CAT

The government has proposed to narrow the scope of the grounds on which appeals against Ofcom's decisions under the Communications Act and the Competition Act can be heard in the Competition Appeals Tribunal (CAT). Currently, pursuant to EU communications law, such appeals are required to take into account 'the merits'. Although the proposals have caused concern and been widely criticised, not just by the telecoms industry, if the government maintains its stance appeals may be allowed only on very specific grounds similar to judicial review.

Annual fees for 900 and 1800 MHz licensees

Ofcom is expected to finalise its decision regarding the licence fees payable for use of spectrum in 900 and 1800 MHz bands following the conclusion of its consultation in January 2014; this decision may possibly lead to legal challenges. 

Preparations for the release of 2.3 and 3.4 GHz spectrum in 2015-2016

In line with government policy, Ofcom will continue its activities to make available the spectrum best suited for mobile data applications, the next proposed releases being in the 2.3 and 3.4-3.6 GHz bands currently held by the Ministry of Defence (MOD). Ofcom is providing technical advice to the MOD on this initiative.

Wholesale directory market review

Ofcom may finally conduct a review to determine new wholesale directory information obligations to apply to BT. At present, no new condition has been imposed on BT since the Court of Appeal and the European Court of Justice found the conditions previously imposed on BT were unlawful.

New consumer rights regulations

On 13 June 2014, The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 come into force impacting the commercial practices of UK businesses including telecoms providers. This regulation implements the Consumer Rights Directive 2011/83/EU, and as the name suggests, provides a broad range of consumer rights relating to the provision of information, cancellation of contracts (including cooling off periods), passing of risk / title in goods and prohibitions on certain additional charges (such as additional telephone charges for customer enquiries).

Market / corporate developments

Whilst there are many corporate developments which may occur, possibilities include:

  • the oft-rumoured entry of AT&T in the European market, with Vodafone a potential takeover target;
  • Geo, a fibre network company, to be sold by its current owners Alchemy;
  • Macquarie Group's sale of its 25% interest in Arqiva to existing institutional investors or outsiders; and
  • although JV mobile operator EE's IPO proposal has apparently been withdrawn by its owners, this does not preclude an unsolicited offer for EE.
Consumer and device trends

IOT

There is growing acknowledgement of the exciting possibilities for the ICT industries, and the broader business world, of the 'Internet of Things' aka the 'Internet of Everything'. Embracing not just the Internet but mobile communications as well, many of the drivers of new applications for wireless communications will be part of the IOT, e.g. portable and wearable technology focused on health and wellbeing. In time this will also help drive investment in fixed infrastructure to service accelerating capacity requirements.

Contributors



[1] http://gr2014.eu/sites/default/files/gr%20pres%20programme_teliko_7.1.2014_0.pdf

[2] The information in this section was compiled from the Commissions' website and adapted for this bulletin. https://ec.europa.eu/digital-agenda/

Authors

Michelle Chan

Michelle Chan

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China and Hong Kong

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Chloupek-Vojtech

Vojtech Chloupek

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Czech Republic & Slovakia

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Hejl-Pavel

Pavel Hejl

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Heun-Sven-Erik

Sven-Erik Heun

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Germany

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Dr. Zoltán Tarján

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Hungary

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Feyo Sickinghe

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