New Cable Distribution Act
Cable Distribution Service
Network Service Providers
Licences
Creation of Cable Network
Customer Relations
Cable Distribution and Telecommunications
Supervision
Liability
Comment
On July 21 2001 the new Cable Distribution Act came into force. The act regulates the terms and conditions for providing cable distribution services, replacing the act that had been in force since June 1 1999. The purpose of the new act is to liberalize the cable distribution market further to the recent liberalization of the telecommunications sector.
According to the new act 'cable distribution service' is regarded as the transmission of television or radio broadcasts and programmes to the customer through a cable network or master antenna system, with or without charge.
The owner of a cable network can be an undertaking registered in the Commercial Register or a registered legal entity that has been issued with a cable network licence. An undertaking accounting for more than 40% of the turnover of telephone services in Estonia, or an undertaking with a share of more than 10% (held directly or through shareholders or third parties) in the said undertaking, cannot be the owner of a cable network.
The owner of a master antenna system may be any self-employed person or registered legal entity that complies with the relevant laws.
The new act also introduces the term 'cable network service provider' to replace 'cable network operator', although the meaning remains the same.
A cable network service provider is an entity that transmits programmes to customers through a cable or telecommunications network, or a master antenna system. The service provider can be either the owner of the cable network or an entity that has entered into a contract with the holder of the cable network licence.
The new act appears to apply similar restrictions to service providers as to the owners of cable networks.
A cable network licence is an operational licence issued by the National Communications Board granting the right to establish, develop and operate a cable network.
Under the previous act, licences were issued through a public bid. Each local municipality defined its territory as one cable network area (or divided it into several areas depending on the number of customers). The application for arranging a public bid was submitted by the local municipality and the bidding itself was organized by the Communications Board. Based on the results of the bid, the Communications Board issued one or more licences per cable network. Thus, the range of entities that could create and operate a cable network was limited.
Under the new act, any undertaking that meets the relevant requirements and submits an application together with the required information and documentation has the right to obtain a cable network licence. The state fee for issuing a cable network license is Ekr1,000. Licences are issued within eight weeks of application.
Usually a licence is issued for 10 years and extensions are permitted. The state fee for extending a licence is Ekr500.
Licences are not transferable. If a cable network (or part of it) is transferred and the new owner submits a licence application within two weeks of the transfer of ownership, then the terms and conditions of the licence that was issued to the previous owner will apply until the Communications Board has reviewed the new application.
The licence may stipulate terms and conditions for licence holders which can be changed either by the Communications Board or at the holder's request. The state fee for changing the terms and conditions of the licence at the holder's request is Ekr1,000.
The owners of master antenna systems need not apply for licences if they wish to provide cable network services, although they must register their systems with the Communications Board. Master antenna systems are registered within four weeks of receiving applications and the required documentation. The state fee for registering master antenna systems is Ekr300.
The previous act provided that before commencing the operation of the cable network, the network had to pass a technical inspection to ascertain that the network was fit for use. After successfully passing the inspection, the communications board issued a permit of use. The new act does not require a technical inspection and issue of a permit. Instead, the act (and regulations adopted on the basis of it) stipulates technical requirements for cable networks; if they are not met the licence may be denied or declared invalid.
A separate broadcasting licence must be applied for if the licence holder or service provider wishes to transmit any programmes that it has created.
The 'customer' is deemed to be connected to a cable network or master antenna system, having concluded a connection or service provision agreement with the owner of the cable network, the master antenna system or the cable network service provider.
The connection agreement must be executed in writing, containing the mutual rights and obligations of the parties. Customers who have concluded the connection agreement are entitled to receive the main programme package offered by the relevant network owner.
The service provision agreement is concluded if a customer requests the transmission of programmes that are not contained in the main programme package. The service provision agreement must also be executed in writing, with the mutual rights and obligations of the parties.
Thus, there are now two separate agreements. However, if the network owner and service provider are the same, then both of the agreements may be contained in one document (but the clauses concerning connection and provision of services must be separable). Existing customer agreements must be brought into line with the new requirements by July 21 2002.
If ownership of the cable network is transferred to another person, the connection agreement remains valid, unless the new owner and the customer do not agree otherwise.
Cable Distribution and Telecommunications
In order to provide telecommunications services through a cable network, the telecommunications service provider must register the operation of the telecommunications network and the provision of the telecommunications services with the Communications Board. If necessary, an operation licence and a technical permit must be applied for. Thus, the network can be regarded as consisting of two parts - cable network for the provision of cable network services and telecommunication network for the provision of the telecommunications services. The network must comply with the requirements for both cable networks and telecommunications networks.
Supervision of compliance with legal requirements is exercised by the Communications Board, which is entitled to check whether a cable network or master antenna system complies with the necessary technical requirements and whether the provision of services complies with the requirements of the act.
The Communications Board may issue written warnings to the owners of the cable networks, master antenna systems or individual antenna systems concerning the violation of legal requirements, performance of certain activities or termination of illegal activities. Under the previous act, the Communications Board was entitled to issue a warning letter either to the operator or the owner of a cable network. This is not so under the new act, because the owners now create, develop and operate the networks and bear all liability.
The new act also obliges the cable network owner to inform the communications board by February 1 each year of changes that have taken place in the cable network during the preceding year, as well as the number of customers who concluded and terminated connection agreements.
Under the new act the legal entities continue to bear administrative liability for violation of legal requirements. Penalties are mostly financial, ranging between Ekr1,000 to Ekr1 million depending on the nature and gravity of the violation.
The new Cable Distribution Act has opened the cable distribution market, creating opportunities for healthy competition. It also stipulates detailed requirements for the provision of services and for customer agreements, providing better protection for customers and ensuring the quality of services. Several governmental or ministerial regulations are expected to be adopted, further specifying the requirements of the act.
For further information on this topic please contact Pirkko-Liis Harkmaa at Law Office of Lepik & Luhaäär by telephone (+372 6 306 460) or by fax (+372 6 306 463) or by e-mail ([email protected]).
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