In review: TMT regulation in Switzerland

All questions

Overview

Switzerland's technology-neutral approach to regulation encourages digital services, thereby allowing ample room for development of technology-driven business models. In past decades, the liberalisation of telecommunications services in Switzerland has been synchronised with that of the European Union, and the Swiss telecommunications market has developed positively. The current framework has helped in developing potent and reliable communications networks, which serve as the backbone to existing and upcoming communication technologies. The disruptive effect of these new technologies (e.g., blockchain) respectively as new ways of connecting people and devices (e.g., over-the-top (OTT) services, internet of things) nevertheless creates challenges for regulators. Accounting for these developments, the parliament has amended the regulatory framework. The revised Federal Telecommunications Act (TCA) entered into force on 1 January 2021. The amendments strengthen consumer protection as a main goal (e.g., by implementing stricter provisions regarding telephone marketing, spoofing prevention, obligations of telecommunications service providers to prevent spam mails and calls, a right of the authorities to withdraw or block domain names and phone numbers in the event of non-compliance, transparency duties of telecommunications service providers regarding their service quality and intervention rights of the Federal Council regarding internet roaming). In addition, the revised TCA expressly regulates net neutrality.

Due to the constitutional public service mandate, broadcasting continues to be subject to stronger state regulation and control. Based on the assumption that a purely market-driven broadcasting landscape would not be able to provide the constitutionally required services, the Federal Act on Radio and Television (RTVA) creates a public service-oriented framework. Nevertheless, the convergence of electronic media as well as today's usage behaviour of consumers are challenging current broadcasting laws in many ways. Broadcasters and especially publishers struggle to cope with digitisation. The Federal Council attempted to tackle these challenges by creating a new Federal Act on Electronic Media, which would have included non-linear media offerings as a possible public service. However, the proposal faced strong opposition from various stakeholders. The Federal Council retreated and merely sent a package of measures in favour of the media into parliamentary consultation. As part of this package, parliament enacted the Federal Law on the Promotion of Online Media. However, voters rejected the federal law in a referendum on 13 February 2022. Consequently, the Federal Law on the Promotion of Online Media will not enter into force.

On the other hand, voters have adopted the 'Lex Netflix' on 15 May 2022. Lex Netflix deals with a revision of the Federal Act on Film Production and Film Culture (Film Act, FiA) of 14 December 2001. The revised FiA requires global streaming services, such as Netflix, Amazon, HBO and Disney, to contribute to the federal treasury.² This contribution will be used to foster and support Swiss film and TV production.

Regulation

i The regulators

Switzerland regulates the telecoms market on a federal level. The Federal Communication Commission (ComCom) is the main independent regulatory and licensing authority. It consists of seven independent specialists. Neither the Federal Council nor any federal department may intervene in and affect its decisions.

ComCom is responsible for:

1. granting licences to telecommunications services providers that wish to use the frequency spectrum;
2. granting universal service licences;³
3. laying down access conditions (unbundling, interconnection, leased lines, etc.) when service providers fail to reach an agreement;
4. approving national numbering plans;⁴
5. fixing the terms of application of number portability and carrier selection; and
6. decisions about supervisory measures and administrative sanctions.

In carrying out its tasks, ComCom may instruct and take account of the Federal Office of Communications (OFCOM). OFCOM handles questions pertaining to telecommunications and broadcasting (radio and television). It prepares the decisions of the Federal Council, the Swiss Federal Department for the Environment, Transport, Energy and Communication (DETEC) and ComCom. It is sometimes not easy to draw a strict line between OFCOM's and ComCom's tasks. OFCOM is responsible for:

1. preparing the commercial transactions of ComCom, making the necessary applications and implementing its decisions;
2. ensuring compliance of market participants with the law and their telecommunications licences;
3. issuing those telecommunications licences in respect of which ComCom is not competent; and
4. managing addressing resources in accordance with international standards.

OFCOM is obliged to take appropriate measures to ensure a sufficient supply of numbering elements and communication parameters. It thereby entrusted the administration and allocation of country-specific .ch and .li top-level domains to the SWITCH Foundation. SWITCH maintains Switzerland's Domain-Name Registry and allocates the domain names to individual users with private law contracts.

The broadcasting sector has three main authorities responsible for the granting of licences:

1. the Federal Council is the licensing authority for the Swiss Broadcasting Corporation;
2. with respect to other licences, licensing competence has been delegated to DETEC; and
3. OFCOM carries out supervision with regard to licensing and other regulatory requirements.

Other key authorities are the Independent Complaints Authority for Radio and Television (ICA), which deals with complaints relating to the editorial programme and rules on disputes over denied access to a programme, as well as the Federal Media Commission, which advises the Federal Council and the Federal Administration in relation to media issues.

Next to the sector-specific regulators mentioned above, several agencies with horizontal powers play a significant role in telecoms and media regulation.

In particular, the Federal Competition Commission (ComCo) has been actively involved in regulating telecoms infrastructure and the media market.⁵ Its tasks are combating harmful cartels, monitoring dominant companies for signs of anticompetitive conduct, enforcing merger control legislation, and preventing the imposition of restraints of competition by the state. ComCom, as the competition authority specific to the telecommunication sector, consults ComCo on matters related to market dominance or general aspects of competition. ComCo seeks ComCom's and OFCOM's opinions on issues specific to telecommunications.

The Federal Price Inspectorate is competent to carry out price investigations concerning companies with market power and is consulted by public authorities, which decide on tariffs of a public or private company. If it detects price abuse, the Inspectorate primarily attempts to reach an amicable settlement with the company concerned but may also prohibit an increase in prices or order a price reduction.

In addition, the Federal Data Protection and Information Commissioner (FDPIC)⁶ is competent and active in regulating the privacy aspects of telephone and internet communication.

Finally, the Swiss Fair Competition Commission monitors fairness in advertising, combining a great deal of expertise and different points of view. The decisions of the Swiss Fair Competition Commission are not enforceable in the same manner as a court decision. However, the decisions are published on the website of the Swiss Fair Competition Commission and often discussed in the media. Therefore, there is an indirect binding power to these decisions. A company that does not follow a decision might damage its reputation. The Swiss Fair Competition Commission deals with unfair advertising in all kinds of media. Many cases also deal with spam phone calls or spam emails.

ii Main sources of law

The main sources of law for the telecoms sector are as follows:

1. the Federal Telecommunications Act (TCA) of 30 April 1997;
2. the Ordinance on Telecommunications Services (OTS) of 9 March 2007;
3. the Ordinance on the Use of the Radio Frequency Spectrum (OURFS) of 18 November 2020;
4. the Ordinance on Addressing Resources in the Telecommunications Sector of 6 October 1997;
5. the Ordinance on Internet domains (OID) of 5 November 2014;
6. the Federal Act on the Surveillance of Post and Telecommunications (SPTA) of 18 March 2016; and
7. the Ordinance on the Surveillance of Post and Telecommunications of 15 November 2017.

Notably, the TCA was partially revised in 2019 and the altered executing ordinances were published in November 2020.⁷ These amendments entered into force on 1 January 2021. Relevant changes are highlighted hereinafter.

For the media sector, the main sources of law are the Federal Act on Radio and Television (RTVA) of 24 March 2006 and the Ordinance on Radio and Television (RTVO) of 9 March 2007.

iii Regulated activities

The TCA sets forth the conditions for the provision of telecommunications services. The following licence requirements still exist in Switzerland: a ComCom licence is required to provide a universal service;⁸ and telecommunications services providers need a ComCom licence to use the frequency spectrum.⁹

Until recently, all other providers of telecommunications services had to notify OFCOM, which would register them upon such notice.¹⁰ One major novelty of the revised TCA is the abolishment of this general notification duty. Pursuant to Article 4 TCA only two registration requirements remain:

1. telecommunications service providers that use frequencies for which a licence is mandatory must register with OFCOM;¹¹ and
2. furthermore, providers that use addressing resources that are administered on a national level must also register with OFCOM.¹²

All providers must comply with the TCA, whether they have to register with OFCOM or not. In particular, radio frequencies cannot be used simultaneously and not all available frequencies suit each purpose. This is why the radio frequency spectrum may only be used in compliance with the detailed usage regulations set forth by the OURFS. With the revision of the TCA real-time transmission of speech by means of addressing elements provided for in a numbering plan (voice over internet protocol (VoIP)) is also explicitly regulated.¹³

With regard to media distribution, whoever wants to broadcast a programme service has to comply with the RTVA and its specific obligations. In principle, any person wishing to broadcast a programme service to the Swiss public must hold a licence.¹⁴ There are three different licences:

1. the public broadcaster needs a public broadcasting licence from the Swiss Federal Council;¹⁵
2. broadcasters of regional programmes can apply to DETEC for a fee-sharing licence.¹⁶ This licence sets forth, among other things, the broadcasting region, means of broadcasting as well as organisational and operational requirements. As the name suggests, these broadcasters are compensated for their contribution to public service with a share of the broadcasting fees to be paid by the consumers; and
3. DETEC may award a licence for wireless terrestrial broadcasting of a programme service that takes account of local or regional particularities (licence with a performance mandate, but without a share of fees).¹⁷

Broadcasters that request neither a share of fees nor a guaranteed wireless distribution can operate their service without a licence. However, they must notify OFCOM in advance of their programme service.¹⁸

iv Ownership and market access restrictions

In general, there is no restriction of foreign ownership for telecommunications providers. Subject to international obligations to the contrary, the revised TCA, however, allows prohibiting foreign telecommunications providers from using radio frequencies or addressing resources if no reciprocal right is granted.¹⁹ Moreover, a registered office or branch office in Switzerland is required for value-added services.²⁰

The granting of a radio communication licence can be denied if serious anticompetitive effects are expected.²¹ Hence, one operator cannot (directly or indirectly) operate more than one nationwide mobile telecommunications network.

Media regulation is more protective. Any person wishing to obtain a broadcasting licence must be a natural person residing in Switzerland or a legal entity domiciled in Switzerland.²² In the absence of any international commitment to the contrary, broadcasting licences may be refused to foreigners, companies with foreign control or Swiss companies with foreign participation unless reciprocal rights are granted.²³ Currently, no broadcaster or broadcasting company may hold more than two radio and two television licences.²⁴ Parliament decided to abolish this two plus two licence restriction as part of the measures in favour of the media; however, the respective amendment could still be challenged by a referendum against the entire package of measures.

v Transfers of control and assignments

Transfer of a licence in part or as a whole to a third party requires the consent of the licensing authority. In the case of a transfer of a universal licence or a telecommunications service licence, ComCom's approval is required.²⁵ Approval can be refused only if the acquirer does not meet the licensing conditions or cannot guarantee an interference-free and efficient use of frequencies.²⁶ In the case that a licence was granted by ComCom, this also applies to the economic transfer of the licence; for example, a change of control in licensee.²⁷

The transfer of broadcasting licences requires DETEC's consent. This also applies to the economic transfer of a licence. Pursuant to the RTVA, transferring more than 20 per cent of the licensee's stock qualifies as an economic transfer.²⁸