The new Legislative Decree (the Decree) implementing EU Directive No. 2018/1972 establishing the European Electronic Communications Code (the Directive) was published in the Official Journal on December 9, 2021, and will enter into force on December 24, 2021.
The Decree reshapes the Italian Electronic Communications Code, introducing significant changes (the new Code) with the purpose of:
- updating and harmonizing the regulation of electronic communications (telecommunications) networks and services;
- promoting efficient, effective and coordinated use of the radio spectrum and the deployment of very high capacity networks, including fixed, mobile and wireless networks;
- creating a regulatory environment favorable to investment and co-investment in very high capacity networks;
- clarifying tasks and roles of government and regulatory authorities, which include the Italian Ministry of Economic Development (MISE), the Italian Communications Regulatory Authority (AGCom) and the Italian Agency for the national cybersecurity (Cybersecurity Agency);
- simplifying authorization and licensing procedures;
- facilitating market entry and promoting competition; and
- reinforcing end-user protection.
Main changes in the new Italian Electronic Communications Code
Definitions and scope of application
Article 2 of the new Code rewrites the definitions consistently with the Directive with the aim of reflecting in the legal framework the evolution of the technology and the markets and the EU regulation policies.
Of particular relevance is the new definition of “electronic communication service” which now covers three types of service:
- internet access service
- interpersonal communications service
- services consisting wholly or mainly in the conveyance of signals such as transmission services used for the provision of machine-to-machine services and for broadcasting.
The broadening of the definition of “electronic communications service”, with the explicit inclusion of interpersonal communications services, makes it possible to bring within the scope of the new Code communications services provided by over-the-top operators (OTT).
It is also worth noting that the new Code provides for a definition of “machine-to-machine communication service” which is relevant because “machine-to-machine” services are now subject to a partially differentiated regime, in particular regarding the “justice purpose obligations” and the end users’ rights.
General objectives of the regulation
In line with the Directive, the promotion of the connectivity and access to very high capacity networks, including fixed, mobile and wireless networks and of their usage by all citizens and businesses, has been now added in Article 4 of the new Code. It has been included in the list of the general objectives of the electronic communication networks and services regulation, beside the current ones, ie the promotion of the competition, the development of the internal market and the promotion of end users’ interests.
Roles and tasks of government and regulatory authorities
In line with the Directive, the roles of the government and regulatory authorities – which include MISE, AGCom and the Cybersecurity Agency – have been strengthened. The new Code lists the roles and tasks of MISE and AGCom, including (besides those provided for by the Directive) the ones set forth by the current national framework.
Obligations regarding information, consultation and cooperation between MISE, AGCom, the Cybersecurity Agency and the Italian Competition Authority have been set forth to ensure the correct enforcement of the new Code.
It has been made clear that MISE and AGCom shall exercise their powers impartially, transparently and promptly.
As for the Cybersecurity Agency, it has been made clear that it shall carry out the tasks pertaining to the security of the electronic communications networks and services and the protection from the cyber threats. Roles previously attributed to MISE are now assigned to the Cybersecurity Agency. In particular, the Cybersecurity Agency shall identify:
- appropriate and proportionate technical and organizational measures – which are required to be adopted by the providers – to manage the risks posed to the security of networks and services; and
- the cases in which the security incidents are to be considered to have a significant impact on the operation of network and services.
It has been set forth that the providers of electronic communications networks and services are required to adopt any binding instructions issued by the Cybersecurity Agency, including those regarding the measures required to remedy a security incident or prevent one from occurring when a significant threat has been identified.
The new Code confirms that to provide electronic communications networks and/or services in Italy, a general authorization, granted by MISE, is needed. However, Article 11 of the new Code now expressly states that a general authorization is not required for number-independent interpersonal communications services.
It is also confirmed that the general authorization can be obtained by notifying MISE with a declaration to commence the provision of electronic communications networks and/or services. The notification suffices for exercising the rights derived from the general authorization.
Within 60 days from the declaration, in case of non-existence of the conditions and requirements necessary for the general authorization, MISE will prohibit the continuation of activity with a reasoned decision.
The new Code now directly specifies in Article 11 the list of information that providers may be required to submit with the declaration.
According to the new framework, MISE shall send to the BEREC (Body of European Regulators for Electronic Communications) any requests for general authorization made by interested operators, to enable the BEREC to keep an EU register of the providers of electronic communications services and networks.
Mapping of networks
MISE and AGCom have been empowered to ask for a wider range of information from providers, including information on electronic communications networks and associated facilities that is locally disaggregated and sufficiently detailed to allow geographical mapping of the infrastructures related to the electronic communications networks. The new Code establishes the possibility for MISE and AGCom to provide the information collected from companies not only to the European Commission – as provided by the former framework – but also to BEREC.
In accordance with the objective of developing and deploying very high capacity networks and the Directive’s provision according to which the national regulatory authorities shall implement and update a geographical mapping of broadband networks, AGCom and MISE have been empowered to carry out periodic analysis on the current and foreseeable reach of the broadband networks in Italy and on the related envisaged investments by the operators.
The penalties applicable to certain infringements have been increased. Furthermore, new administrative fines have been introduced.
Damages to electronic communications services or infrastructure
Besides the pecuniary administrative fine for anyone causing interference or disturbance to electronic communications services, a pecuniary administrative fine ranging from EUR1,000 to EUR10,000 has been introduced for anyone engaging in activities which cause damage to electronic communication services or to the works and objects inherent therein.
The “justice purpose obligations”
It has been confirmed that the “justice purpose obligations” include lawful interception and provision of information, to be provided by the operators upon request of the competent authorities.
It has been made clear that the obligation to fulfill the “justice purpose obligations” does not apply to the providers of “machine-to-machine” services, with the exclusion of the cases in which the use of such services may contribute to the provision of interpersonal communication services.
It has been set forth that operators, including international transit operators, are required to adopt measures to monitor and tackle cyber threats. Furthermore, it is now provided that operators are required to inform the Cybersecurity Agency about any event that could have an impact on the security of the information systems. Where the Cybersecurity Agency is aware of threats which could have an impact on the security of the information systems, it will order the operators that have adopted the aforementioned measures to activate them.
Access to land
The new Code provides for the simplification of the authorization procedures related to the installations of the radio infrastructures.
With regard to co-location and sharing of network elements and associated facilities for providers of electronic communications networks, the new Code specifies that AGCom will:
- coordinate the sharing process, also by issuing regulations or guidelines; and
- set down rules for apportioning the costs of facility or property sharing.
Access to radio spectrum
The new Code now provides for the general objectives and principles to be pursued by MISE and AGCom in spectrum management at national level. As set out in the Directive, MISE and AGCom will promote the harmonization of the use of the radio spectrum in the EU territory pursuing the objectives listed in Article 58 of the new Code, among which there are the following:
- pursuing wireless broadband coverage of the Italian territory and population at high quality and speed, as well as coverage of major national and European transport paths, including trans-European transport network; and
- facilitating the rapid development in the EU of new wireless communications technologies and applications, including, where appropriate, in a cross-sectoral approach.
The regime for the authorization of the use of the radio spectrum has been clarified. It specifies that AGCom and MISE shall facilitate the use of radio spectrum, including shared use, under the general authorization regime and limit the granting of individual rights of use for radio spectrum to situations where such rights are necessary to avoid interferences, promote innovation and quality and maximize an efficient use and share of the radio spectrum in light of demand and taking into account the criteria set out by Article 59 of the new Code. In all other cases, MISE and AGCom will set out the conditions for the use of radio spectrum in a general authorization.
MISE and AGCom, within their respective competences, shall define the conditions applicable to the individual rights of use of radio spectrum, in such a way to ensure its optimal and most effective and efficient use. Such conditions, including the level of use required and the possibility to fulfil this requirement through trading or leasing, will be defined with reference to both the assignment and to the extension of the individual rights of use.
The minimum period of duration of the individual rights of use is 15 years, with the possibility of an extension. The previous version of the Code did not set the duration of individual rights of use, as they were granted for a duration appropriate to the type of service and in any case did not exceed the duration of the general authorization. Moreover, it has been added that regulatory predictability will be ensured to the holders of the individual rights of use over a period of at least 20 years regarding conditions for investment in infrastructure which relies on the use of the radio spectrum.
MISE, in accordance with AGCom, has been empowered to decide on the renewal of individual rights of use for harmonized radio spectrum in a timely manner before the duration of those rights expired, except where, at the time of assignment, the possibility of renewal has been explicitly excluded. MISE may undertake such evaluation at its own initiative, as well as upon request from the owner of the rights of use (in the latter case, the request shall be filed not earlier than five years prior to expiry of the duration of the rights concerned).
Furthermore, with a view to promote competition and harmonize Member States’ regulations, it has been specified that MISE and AGCom shall:
- promote effective competition and avoid the distortions of competition within the internal market when deciding to grant, amend or renew rights of use for radio spectrum rights; and
- cooperate with the authorities of the other Member States to coordinate the use of harmonized radio spectrum taking due account of the different national market situations. This may include identifying one or, where appropriate, several common dates by which the use of specific harmonized radio spectrum is to be authorized.
New detailed provisions have been introduced on the trading and leasing of the rights of use of radio spectrum and on the regulation of the procedure for limiting the number of rights of use to be granted for radio spectrum.
Fees for the rights of use of the radio spectrum
Concerning the fees for the rights of use of the radio spectrum, in line with the Directive, the new Code now provides that MISE and AGCom shall seek to ensure that applicable fees are set at a level that ensures efficient assignment and use of radio spectrum, including by:
- setting reserve prices as minimum fees for rights of use for radio spectrum with regard to the value of those rights in their possible alternative uses;
- taking into account costs entailed by conditions attached to those rights; and
- applying, to the extent possible, payment arrangements linked to the actual availability for use of the radio spectrum.
New simplified conditions for access to Wi-Fi networks have been introduced. Access to a public electronic communication network through radio local area networks (RLANs), as well as the use of the harmonized radio spectrum for that provision, will be subject only to a general authorization. Where such provision is not part of an economic activity or is ancillary to an economic activity or a public service which is not dependent on the conveyance of signals on those networks, any undertaking, public authority or end-user providing such access will not be subject to any general authorization for the provision of electronic communications networks or services.
Access and interconnection
Article 70 of the new Code on access and interconnection mirrors Article 40 of the previous version of the Code, clarifying that MISE and AGCom, within their respective competence, shall ensure that there are no restrictions that prevent undertakings in the same Member State or in different Member States from negotiating between themselves agreements on technical and commercial arrangements for access or interconnection, in accordance with EU law.
The new Code confirms that AGCom will encourage and ensure adequate access and interconnection, and the interoperability of services, exercising its responsibility in a way that promotes efficiency, sustainable competition, the deployment of very high capacity networks, efficient investment and innovation, and gives the maximum benefit to end-users. Moreover, without prejudice to measures that may be taken regarding undertakings designated as having significant market power, it has been now provided that AGCom will be able to impose, in justified cases, where end-to-end connectivity between end-users is endangered due to a lack of interoperability between interpersonal communications services, and to the extent necessary to ensure end-to-end connectivity between end-users, obligations on relevant providers of number-independent interpersonal communications services which reach a significant level of coverage and user uptake, to make their services interoperable.
Market analysis and significant market power
The new Code introduces the possibility for AGCom to submit, together with at least one other Member State’s national regulatory authority, a reasoned request, including supporting evidence, to BEREC to conduct an analysis on the potential existence of a transnational market.
The new Code confirms that, in the case of identification by the European Commission of transnational markets, the national regulatory authorities concerned will jointly conduct the relative market analysis and, in a concerned fashion, decide on any imposition, maintenance and amendment or withdrawal of regulatory obligations. In this scenario, the new Code now provides that AGCom may also notify, together with at least one other Member State’s national regulatory authority, draft measures regarding the market analysis and any regulatory obligations in the absence of transnational markets, where market conditions in the respective jurisdictions are deemed sufficiently homogeneous.
Moreover, it has now been provided that AGCom, together with at least one other Member State’s national regulatory authority, may file a reasoned request to BEREC to conduct an analysis of transnational end-user demand for products and services that are provided within the EU in one or more of the markets listed in the Commission Recommendation on relevant product and service markets, indicating that there is a serious demand problem to be addressed according to the procedure set forth by Article 66 of the Directive.
The maximum period of time covered by market analysis is extended from three to five years.
Remedies on companies with significant market power, commitments and co-investment
The new Code confirms that, where an undertaking is designated as having significant market power on a specific market as a result of a market analysis, AGCom may impose the following obligations:
- accounting separation
- access to, and use of, specific network elements and associated facilities
- price control and cost accounting
- functional separation.
The new Code introduces a new obligation that may be imposed to undertakings designated as having significant market power, consisting in access to civil engineering.
In particular, AGCom may now impose obligations on undertakings to meet reasonable requests for access to, and use of, civil engineering including, but not limited to:
- buildings or entries to buildings
- building cables, including wiring, antennae, towers and other supporting constructions
- inspection chambers
This can be in situations where, having considered the market analysis, AGCom concludes that denial of access or access given under unreasonable terms and conditions having a similar effect would hinder the emergence of a sustainable competitive market and would not be in the end user’s interest. AGCom may impose obligations to provide access to civil engineering, irrespective of whether the assets that are affected by the obligation are part of the relevant market in accordance with the market analysis, provided that the obligation is necessary and proportionate to meet the objectives pursued by the new Code.
Furthermore, the new Code now provides that undertakings that have been designated as having significant market power in one or several markets may offer commitments, according to the procedure set forth by Article 90 of the new Code, to open the deployment of a new very high capacity network that consists of optical fiber elements up to the end-user premises or base station to co-investment. For example, this can be by offering co-ownership or long-term risk sharing through co-financing or through purchase agreements giving rise to specific rights of a structural character by other providers of electronic communications networks or services.
When AGCom assesses those commitments, it will determine – acquiring, where deemed appropriate, the opinion of the Italian Competition Authority – whether the offer to co-invest complies with all the conditions set forth by the second paragraph of Article 87 of the New Code. If AGCom concludes that the co-investment commitment offered complies with such conditions, it will make the commitment binding, and will not impose any additional obligations as regards the elements of the new very high capacity network that are subject to the commitments, if at least one potential co-investor has entered into a co-investment agreement with the undertaking designated as having significant market power. By way of derogation from this provision, AGCom may, in duly justified circumstances, impose, maintain or adapt remedies as regards new very high capacity networks to address significant competition problems on specific markets, where the national regulatory authority establishes that, given the specific characteristics of these markets, those competition problems would not otherwise be addressed.
The new Code introduces a completely new provision setting the conditions that AGCom is required to assess to designate “wholesale-only” undertakings (ie those undertakings which are absent from any retail markets for electronic communications services) as having significant market power. If AGCom concludes that the conditions set forth by Article 91 are fulfilled, it may impose on the wholesale-only undertaking designated as having significant market power only obligations of non-discrimination and of access to, and use of, specific network elements and associated facilities or relative to fair and reasonable pricing if justified on the basis of a market analysis including a prospective assessment of the likely behavior of the undertaking designated as having significant market power.
A new provision has been introduced concerning regulation of retail services. According to Article 93 of the new Code, AGCom may impose appropriate regulatory obligations on undertakings identified as having significant market power on a given retail market, where certain conditions are met. Such obligations may include requirements that the identified undertakings do not charge excessive prices, inhibit market entry or restrict competition by setting predatory prices, show undue preference to specific end-users or unreasonably bundle services.
AGCom may also apply to the undertakings concerned appropriate retail price cap measures, measures to control individual tariffs, or measures to orient tariffs towards costs or prices on comparable markets, to protect end-users while promoting effective competition.
AGCom will ensure that, where an undertaking is subject to retail tariff regulation or other relevant retail controls, the necessary and appropriate cost-accounting systems are implemented.
Universal Service obligations
The new Code updates the definition of universal service to reflect technological progress, market evolution and user demand for connectivity services. The definition of universal service, which previously included only voice communication services at fixed location, now also includes internet access service. Universal service obligations aim at assuring that all over the national territory, consumers have access at an affordable price to an available adequate broadband internet access service and to voice communications services at the quality level specified, including the underlying connection, at a fixed location, provided by at least one provider.
The new Code introduces the possibility for AGCom to grant rights of use for numbering resources from the national numbering plans for the provision of specific services to undertakings other than providers of electronic communications networks or services, provided that adequate numbering resources are made available to satisfy current and foreseeable future demand. Those undertakings shall demonstrate their ability to manage the numbering resources and to comply with any relevant requirements. AGCom and MISE, within their respective competences, may suspend the further granting of rights of use for numbering resources to such undertakings if it is demonstrated that there is a risk of exhaustion of numbering resources.
AGCom will make available a range of non-geographic numbers which may be used for the provision of electronic communications services other than interpersonal communications services, throughout the territory of the EU.
End users’ rights
Relevant changes have been introduced by the new Code aimed at reinforcing end-user protection. These changes pertain to:
- Information requirements for contracts with end users. An obligation has been introduced on providers of publicly available electronic communications services, other than transmission services used for the provision of machine-to-machine services, to provide consumers with a concise, easily readable and free-of-charge contract summary – drawn up in a standard format – which includes the main elements of the information requirements. The contract summary plays a key role, since the contract will become effective when the consumer has confirmed their agreement after receiving it.
- Duration of the contracts with consumers. In line with the Directive, it has been provided that the contracts between consumers and providers of publicly available electronic communications services, other than number-independent interpersonal communications services and other than transmission services used for the provision of machine-to-machine services, do not exceed a commitment period longer than 24 months. In addition the new Code sets forth the obligation to offer to consumers at least one tariff option with a maximum initial duration equivalent to 12 months.
- End users’ right to terminate the contract in case of any change in the contractual conditions (which are required to be notified to end users at least one month in advance). It has been provided that the right to terminate the contract may be exercised within 60 days after notification of the change in the contractual conditions, thus amending the previous version of the Code which does not provide for any term to be fulfilled by the end users to terminate the contract.
- End users’ right to terminate the contract in case of automatic prolongation. It has been provided that, in case of automatic prolongation of a fixed duration contract for electronic communications services other than number-independent interpersonal communications services and other than transmission services used for the provision of machine-to-machine services, after such prolongation, end users are entitled to terminate the contract at any time with a maximum one-month notice period and without incurring any costs except the charges for receiving the service during the notice period. At least two months before the automatic prolongation, providers are required to inform end-users, in a prominent and timely manner and on a durable medium, of the end of the contractual commitment, of the means by which to terminate the contract and of the best tariff relating to their services. Such information about the best tariff are required to be provided to end users at least annually.
The new Code now provides that all the provisions regarding the end users’ rights thereto included are not applicable to micro-enterprises providing number-independent interpersonal communications services, unless they also provide other electronic communications services.
However, according to the new Code, all providers are prohibited from applying any different requirements or general conditions of access to, or use of, networks or services to end users, for reasons related to the end-user’s nationality, place of residence or place of establishment (unless such different treatment is objectively justified).
Provider switching and number portability
The new Code introduces a specific regulation for the switching between providers of internet access services stating that:
- the providers concerned shall provide the end users with adequate information before and during the switching process and ensure continuity of the internet access service, unless technically not feasible;
- the receiving provider shall ensure that the activation of the internet access service occurs within the shortest possible time on the date and within the timeframe expressly agreed with the end user;
- the transferring provider shall continue to provide its internet access service on the same terms until the receiving provider activate its internet access service;
- loss of service during the switching process shall not exceed one working day;
- AGCom shall ensure the efficiency and simplicity of the switching process for the end-user.
As regards number portability the new Code provides that:
- in case of termination of a contract, the end user may retain the right to port the number to another provider for a minimum of one month after the date of termination, unless that right is renounced by the end user;
- in case of failure of the porting process, the transferring provider shall reactivate the number and related services of the end-user until the porting is successful;
- the transferring provider shall continue to provide its services on the same terms and conditions until the services of the receiving provider are activated;
- operators whose access networks or facilities are used by either the transferring or the receiving provider, or both, shall ensure that there is no loss of service that would delay the switching and porting process;
- the receiving provider shall lead the switching and porting processes and both the receiving and transferring providers shall cooperate in good faith;
- the transferring providers shall not delay or abuse the switching and porting processes, nor shall they port numbers or switch end-users without the end-users’ explicit consent;
- the end-users’ contracts with the transferring provider shall be terminated automatically upon conclusion of the switching process.