On 11 june 2009 the European union Council of Telecoms Ministers (the Telecoms Council) sent the European telecoms reform package to conciliation in response to an eleventh-hour amendment by the European Parliament concerning the right to internet access (known as ‘amendment 138’). The package proposes to establish a new European telecoms body, enhance regulation of the telecoms market and European radio spectrum (the Better Regulation Directive), and strengthen the protection of consumers (the Citizens Rights Directive). However, the controversy over amendment 138 has eclipsed hard-fought compromises between the Telecoms Council and the European Parliament.
Background
The reform of the EU telecoms regulatory framework has been on the European Commission’s policy agenda since it reviewed the existing 2002 Common Regulatory Framework in 2006. The Commission published its first reform package in November 2007. Comments from the Telecoms Council and the European Parliament led to a revised compromise package in November 2008.
This revision provided a useful framework for the negotiations between the Council and the European Parliament in the weeks preceding the European Parliament’s vote. Most contentious issues were resolved, including the competencies and composition of the proposed European regulator, the harmonisation of the allocation of spectrum rights and the degree of oversight the Commission should exercise over the national regulatory authorities (NRAs). However, the European Parliament’s endorsement of amendment 138 in its second reading vote of 6 May 2009 plunged the time frame for the adoption of the reform package into uncertainty.
Endorsed package
The reform package as endorsed by the European Parliament takes the above compromises into account. In particular, member states’ opposition to creating extensive new institutions, extendingthe Commission’s oversight and harmonising the radio spectrum has diluted some of the Commission’s central proposals. Some of the key provisions are outlined below.
A European regulatory body
The European Parliament endorsed the creation of a Body of European Regulators for Electronic Communications (BEREC) to replace the European Regulators Group (the ERG). BEREC will facilitate co-operation between NRAs and the Commission, and provide expert guidance to the Commission on its regulatory oversight of the telecoms sector.
BEREC, which comprises 27 NRA heads and one representative from the Commission, has a narrower mandate than the Commission’s proposal for a European Telecoms Authority, as it does not adopt the competencies of the European Network and Information Security Agency. However, it should still provide a more structured and efficient framework of co-operation than the present set up. The new body will be supported by an independent office with expert staff, and, in contrast to the ERG, decisions will be made by either simple majority or two-thirds majority, rather than unanimity.
Greater Commission oversight of markets
The European Parliament also endorsed strengthening the Commission’s powers to co-ordinate NRA activity. The Commission, co-operating with BEREC, will have the power to make recommendations to NRAs to amend or withdraw remedies it considers would distort competition or create regulatory inconsistencies in the single market. The Commission’s initial proposal for a power to veto such remedies, and in some cases replace them with its own preferred remedies, has therefore been removed. The package also enables the Commission to adopt binding harmonisation decisions if divergences in the implementation of remedies persist in the long term.
Radio spectrum rights
The European Parliament approved measures intended to address Europe’s increasing demand for bandwidth by expanding wireless internet access. The package focuses on promoting flexibility in spectrum use under the principle of service and technology neutrality, whereby any frequency band may be used for any application in accordance with national frequency allocation plans. The Commission’s proposals to introduce pan-European trading rights and harmonise how wireless systems are authorised were excluded from the endorsed compromise package. That said, the package does foresee the Commission tabling a future legislative proposal for a multi-annual radio spectrum auction programme.
Functional separation remedyand strengthening the NRAs
The European Parliament endorsed the new remedy of functional separation for use by NRAs on operators with significant market power, based upon the success of the UK’s creation of Openreach out of BT in July 2006. Subject to explaining the necessity of such a measure to the Commission, NRAs will be able to require a telecoms operator to separate the wholesale provision of access products from its services businesses.
Infrastructure sharing and Investment in next generation access (NGA) networks
The European Parliament approved measures requiring NRAs to promote ‘efficient investment and innovation in new and enhanced infrastructures’, namely, NGA networks based on optical fibres and wireless technologies. In doing so, NRAs must take appropriate account of the risk incurred by the investing undertakings and should allow for co-operative agreements between investors and access-seeking parties to diversify risks. Additionally, NRAs will have powers to require dominant operators to share the use of ‘network elements and associated facilities’, suchas building wiring and antennae towers, with competitors.
Negotiations continue
The approval of these compromises by the European Parliament is a significant step towards the adoption of the telecoms reform package. However, the Telecoms Council’s response to the European Parliament’s endorsement of amendment 138 in relation to internet access rights means that further compromises have become necessary.
Amendment 138 requires NRAs to apply the principle that:
‘… no restriction may be imposed on the fundamental rights and freedoms of (internet) end-users, without prior ruling by the judicial authorities.’
The European Parliament considers this necessary to comply with Article 11 of the Charter of Fundamental Rights of the European Union on freedom of expression and information.
Certain member states, including France, consider that amendment 138 undermines national legislative proposals allowing NRAs to interfere with citizens’ internet access to protect intellectual property rights. Citizens, they suggest, can always seek judicial review of the decision and any compensation later.
As the Telecoms Council failed to reach political agreement over amendment 138, the reforms will be put to the conciliation procedure provided for in Article 251(4) of the EC Treaty, which sets out the legislative process for the enactment of the reform package. Under conciliation, representatives of both the European Parliament and the Council, aided by the Commission, have six weeks (which may be extended by two weeks on the initiative of either institution) to approve a new compromise position.
Conciliation should begin in autumn 2009, once the newly-elected European Parliament is officially inaugurated and the relevant committees are established. If conciliation negotiations are successful, the reform package could be adopted in the next parliamentary term.
Failed conciliation, however, could delay the reform of the telecoms sector considerably. Negotiating the issue of internet access may reopen several other compromises due to the wider tensions surrounding member state sovereignty and fundamental rights, and legal links between the packages’ interrelated proposals. Further negotiations could also delay the Commission’s recommendation on NGA, designed to spur investment in broadband access, and the introduction of a further directive intended to boost the uptake of 3G services across Europe.
Recent develpoments indicate that such a delay can be averted. The European Parliament and the Telecoms Council had already agreed an informal compromise text on the issue of internet rights, largely adopting the member states’ position (the European Parliament refused to vote on this text because it had not been approved by its industry committee). A possible stumbling block was avoided when each of the MEPs with leading responsibility for the telecoms package were re-elected in the June 2009 European elections. The European Commission is in any case going ahead with its preparations for BEREC to be up and running from 1 January 2010.
A recent decision by the French Constitutional Court should also help. On10 June 2009 the Court overturned a French law that proposed an out-of-court procedure to cut off internet users persistently sharing copyrighted material, ruling that an individual can only be denied their right to internet access by an order of the court. It remains to be seen whether this judgment is sufficient to ally the European Parliament’s insistence that a citizen’s right to internet access can only be protected by European legislation.
By Niamh Grogan, partner,and Neil Jepson, trainee solicitor, SJ Berwin LLP. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it , This e-mail address is being protected from spambots. You need JavaScript enabled to view it .