The 4G spectrum auctions dominate across the featured countries while developments relating to cookie regulation and net neutrality feature throughout. These issues require careful consideration in doing business and developing new propositions.
The new cookie legislation, changing the regime to an opt-in system, entered into force on 6 August 2012. Industry players are awaiting clarification, either from the Belgian Privacy Commission or from the legislator in relation to the scope of the (non-intrusive) cookie consent exemptions. The BIPT (Belgian Institute for postal services and telecommunication) has initiated the spectrum auction process for 800 MHz frequencies (the so-called digital dividend). The BIPT simultaneously launched, on 14 November 2012, a public consultation at the request of Minister of Economy regarding a bill amending the Belgian Electronic Communications Act and a draft royal decree with regard to the terms for allocation and use of this frequency band. The Consultation ended on 14 December 2012. The draft texts will go through the decision-making process and BIPT has stated that it hopes to complete the allocation procedure by the end of the year.
At the end of 2012, the Belgian Privacy Commission announced its intention to launch a public consultation in cloud computing. The consultation will in all likelihood take place in the course of the year, be open to all stakeholders active in cloud computing and deal with contractual and privacy issues. The Belgian Privacy Commission's aim is to deliver an opinion on this matter that will be more practical than the existing opinions of other national Data Protection Authorities and the Article 29 Working Party's opinion 05/2012.
The Ministry of Industry and Information Technology (MIIT) has issued a draft Proposal for Mobile Virtual Network Operator (MVNO) Business Trail for public comment on 8 January 2013. The Proposal relates to the “Implementation Opinions on Encouraging and Guiding Private Capitals to Further Invest in the Telecommunications Industry” (Opinions) issued by MIIT in June 2012. The Proposal opens the door for domestic non-state-owned companies. MIIT is soliciting public opinions until 6 February 2013.
Based on the provisions listed in the PRC Telecommunications Regulation and the Measures on the Administration of Telecommunications Business Operation and applicable to VATS, the draft Proposal sets forth the detailed requirements and requested documents for government approval. However, neither the draft Proposal nor other PRC regulations provides a definition of “domestic non-state-owned company”. Thus, the draft Proposal does not introduce any changes to market entry thresholds for foreign investors. The trial period is initially set for 2 years, and the intended domestic non-state-owned companies can submit applications for the mobile telecommunication resale business within the first year after the trial begins. For a more in-depth summary of this development please click here.
The spectrum auction for 800 MHz and 2600 MHz bands will continue in 2013 due to the interest of four companies qualified to bid (Telefónica O2 Czech Republic, Vodafone Czech Republic, T-Mobile Czech Republic, and PPF Mobile Services) The Czech Telecommunication Office has set a total reserve price for CZK 7.4 billion (€ 289.4 million).
After releasing an analysis of the mobile communication market, the Czech Telecommunication Office concluded that the relevant market is not competitive since entities with significant market power are operating in the business. To remedy the situation, the Office will support the entrance of mobile virtual operators to the market. The analysis is currently open to public discussion while the conclusions are expected to result in regulatory action in 2013.
The existing monopoly of the Czech Post Office in postal services of mailings up to 50 grams of weight and price of CZK 18 was abolished with effect from 1 January 2013. This was the final step in the process of creating a liberal and competitive market for postal services. New competitors are expected to enter the market in 2013.
The spectrum auction for 800 MHz frequency band began in January 2013. Licences will be granted for a fixed period of 20 years and will cover nearly the whole of Finland. A maximum of three frequency pairs will be granted per organisation. Parliament will also require an analysis of the impact of the 800 MHz spectrum auction on competition in the field and on consumer prices before licences for mobile communications are granted for the 700 MHz band.
The Finnish Communications Regulatory Authority (FICORA) will impose, for the eight telecom operators with significant market power, an obligation to comply with the price caps determined by FICORA in the local loop and wholesale broadband access markets. Wholesale products with a connection speed of under 8 Mbit/s will only be obliged to publish the tariff information and delivery terms of the wholesale products they offer. The final decisions will enter into force in March 2013 and the operator-specific maximum prices will be determined by separate decisions during 2013.
The parliamentary Programme for Electronic Media is about to be transferred into the legislation and practice. The Programme includes alignments inter alia on frequency band use, criteria for programme content and adequate transfer period for the switch to full use of high-definition technology.
Improvements to disabled persons' rights to basic communication services (telephone subscriptions according to a disabled person's needs and broadband access of 1 MHz) have also been proposed.
New plan for ultra fast broadband. An inter-ministerial study is currently consulting various stakeholders, communities and private operators on its proposed roadmap that should lead to the adoption of a scheme for the deployment of very high speed broadband in France. This is expected in February. The draft report presents guidelines on priorities to be given regarding aid and general organisation of broadband deployments.
The government has indicated that it wishes to make a symbolic break with the previous broadband program, the failure of which is referred to in the report. The amount of state aid is not specified but should cover about half of the requirement for subsidising eligible deployments. A bonus will be given for large supra-departmental projects. Thus, the State will mobilise two financial tools for local government investment. The first is access to loans from savings funds available in the context of provision of €20 billion generated by the increase of maximum amount of regulated savings. The second will be supply of a subsidy fund from 2014.
In addition, the project will result in "a phase out of copper" in a gradual and controlled manner as it is not economically appropriate to maintain two parallel networks, copper and fibre. The legal, operating and financial conditions of such an operation will need to be discussed with the incumbent - France Telecom. The extinction of copper is crucial for communities that want to invest in the deployment of fibre.
Finally, accurate monitoring of deployments, both public and private, is also recommended in the form of a deployment observatory at national and communal level, updated every 6 months.
In late 2012, BNetzA initiated a hearing on possible scenarios for the future assignment of frequencies in the 900 and 1800 MHz band that are currently assigned to the four mobile network operators and used for GSM mobile services. The current frequency assignments are set to expire at the end of 2016. In order to provide the market with long term security on its regulatory actions, BNetzA intends to already decide during 2013 in what manner the spectrum will be assigned in the future. The four scenarios BNetzA considers are (1) an extension of the current assignments, (2) a competitive award procedure for the frequencies (most likely an auction), (3) an award procedure for this spectrum plus additional frequencies from the 700 MHz band (so-called Digital Dividend II) that may become available for broadband services by 2017 and (4) a combined award procedure together with all other spectrum for wireless access services that is up for renewal until 2025. Comments on these scenarios were to be submitted by 31 January and it is expected that BNetzA will determine its course of action during this year.
In December 2012, the German incumbent Deutsche Telekom submitted an application to BNetzA for amendment of the remedies decision on unbundled access to the local loop in order to allow Deutsche Telekom to implement the so-called Vectoring technology. Vectoring enhances the DSL service speed based on copper wire significantly, but it also requires (more) operational control over the copper wires between the customer access point and the street cabinets. Consequently, Vectoring impacts the ability of the incumbent to provide unbundled access to the local loop to competitors and converts such access to a product similar to bitstream. The upside is much higher bandwidth for individual loops.
Deutsche Telekoms claims to be willing to invest altogether €6 billion Euros into the Vectoring rollout but requires legal/regulatory backing that restricts the access of competitors to the unbundled local loop. No wonder that the submission is highly disputed as competitors not only claim the loss of access but also the devaluation of their investment in fibre optic based next generation access networks. Consequently, this crucial regulatory issue will keep the market busy for quite some time, at BNetzA but possibly also in courts, no matter whether BNetzA rejects, modifies or accepts the submission.
Also in late 2012, BNetzA published a draft catalogue of security measures for the operation of telecommunications and data processing systems and the processing of personal data. This catalogue is foreseen in recent German legislation implementing Art 13a of the framework directive. The draft was open to comments by interested parties until 31 January 2013. It is expected that following the review of the comments submitted, the final catalogue will be adopted by BNetzA in consultation with the German Federal Commissioner for Data Protection and Freedom of Information as well as the German Federal Office for Information Security. The final catalogue will be binding on German operators of public telecommunications networks and public telecommunications services and it is to be expected that at least some of them will have to review and update their security measures in order to comply with the catalogue's requirements.
The Hungarian cookie regulations are likely to be modified in 2013. The Data Protection and Freedom of Information Authority and the Media and Communications Authority are planning to initiate an amendment to the rules on cookie use set out in the Electronic Communications Act, since the current wording does not properly implement the respective rules of the E-privacy Directive. The exemptions from consent requirement (necessary for transmission of a communication over networks, provision of service by an information society service provider) are intended to be implemented.
The legal dispute over the spectrum auction process for 900 MHz frequency is expected to come to an end in 2013. A state-owned consortium – a potential fourth MNO in the Hungarian market - was named as one of the winners of the original auction. Magyar Telekom, Telenor and Vodafone challenged the resolution of the Media and Communications Authority and in September 2012 the Metropolitan Court nullified the original decision. In October 2012, an appeal against the judgment of the Metropolitan Court was filed with the Curia and it is expected to decide on the appeal in Q1 2013. This much-awaited decision may significantly affect the Hungarian mobile communications market.
The Media and Communications Authority issued a communication on best practice regarding net neutrality in November 2012. This document sets out recommendations on requirements such as transparency of service descriptions, monitoring of service quality and traffic management. Electronic communications service providers must specify the steps necessary to meet these requirements in the form of self-regulation by 28 February 2013 and must meet these requirements by 31 May 2013.
The spectrum auction for 800, 900, 2100 MHz frequencies resulted in KPN, Vodafone, T-Mobile and Tele2 as winners, paying a total sum of €3.8 billion. The licenses run until 2030. The outcome provides new opportunities for network sharing between license owners and third parties, for instance cable companies.
The new strict net neutrality provision entered into force on 1 January 2013, which prohibits providers of internet access services from blocking or delaying applications on the internet, unless specified otherwise. ISPs will need to look for new ways to differentiate their services in the context of the net neutrality provision. If attempts to prevent price discrimination between certain type of internet users for gaming, VoIP, video or music are too strict, it may ultimately drive up the overall price level for consumers.
The new cookie legislation also entered into force on 1 January 2013. OPTA is working on policy guidelines resulting in analytic cookies falling under the regime for communication cookies (no informed consent required), if used for internal purposes only and not for profiling.
The merger between the Dutch Competition Authority, OPTA and the Consumer Authority, which will result in the Consumers and Markets Authority (ACM), a new super NRA with unprecedented extensive powers to levy substantial fines, has been delayed. Fierce discussion in the Parliament on the independent status, powers and safeguards may end up in subsequent amendments to the ACM Incorporation Act and the ACM Co-ordination Act in 2013.
A revised Telecommunications Act will be passed in 2013, updating the current legislation, dating from 2003. This will resolve certain issues that have negatively affected the competitiveness of telecom operators, penalizing the deployment of new networks, investment and service provision. Deep structural reform will be carried out, since the modification of the current regulations will result in greater ease of network deployment by operators and facilitate the spread of broadband, fostering a faster internet service. This will boost the digital economy and create new business models and economic growth. Moreover, users will see improvements in coverage, increased internet speed and cost reductions. User protection will be also improved.
A Digital Agenda for Spain will be adopted in the first half of the year. This policy document will focus on the following key points: removing barriers to deployment and investment in ultrafast networks; transforming the manufacturing sector through a more intensive and efficient use of digital technologies; putting the citizen at the centre of public administration through digital channels; ensuring privacy, trust and security in the digital realm; promoting R+D+I (Research, Development and Innovation) as an element linked to the development of talent and future opportunities in new sectors; promoting training for digital inclusion and the formation of new ICT profiles.
Setting up a single authority merging regulators from different economic sectors. A new regulatory agency merging the national competition authority and the sector-specific bodies governing telecoms, energy, postal services, broadcasting, rail transport and the airport sector will be operational before summer. This initiative forms part of the legislative package envisaged/adopted by the government in order to overcome the serious economic crisis Spain is going through. According to the Spanish authorities, the measure will be beneficial in terms of cost saving (approximately €30 million), legal certainty and efficiency by public administrations. The issue is controversial both a national and EU level (Brussels has recently called into question the compatibility of this initiative with the relevant Community directives, specially in the telecoms and energy sectors).
Review of the MVNOs market. According to the 2013 Action Plan of the Telecoms Regulator (CMT), the review process related to the MVNO market will conclude in the near future. CMT is currently working on a draft proposed measure that was subject to public consultation in 2012 and envisaged the elimination of the specific regulatory obligations imposed on the operators with SMP in the provision of the relevant wholesale services. In its draft proposal, the regulator considered that the wholesale access obligation contained in the new rules on spectrum (RD 458/2011), together with the positive evolution of the mobile market during the past six years, would ensure that MVNOs may continue offering their services. Moreover, if operators fail to reach mutually satisfactory agreements, CMT would continue to be responsible for resolving conflicts, as has been the case already.
More precise guidelines from the Post and Telecoms Authority emerged during late 2012 as regards on how to comply with the Swedish cookie regulations that came into force in 2011. The technical solution that should be used for obtaining consent is still an open issue, although the information that needs to be provided is rather more clear now. It remains to be seen how the market adapts to the requirements.
The Post and Telecoms Authority issued in January 2013 a first draft of a new regulation and recommendation concerning the content of terms and conditions between electronic communication service providers and end users. The Post and Telecoms Authority considers this an important part of its work in creating an "open Internet" and to make it easier for consumers to choose a service fit for their purposes. The regulation has been debated extensively during the last year and certain major operators have strongly opposed the content, arguing that the implementation is not realistic considering how the market works. The regulations are expected to come into force this summer.
The Post and Telecoms Authority is also working on two additional regulations for the communications sector that will affect both providers of electronic communication services and providers of communication networks. The regulations will concern obligations to ensure operational stability and protection of data, and are planned to come into force during 2013.
Seven companies have qualified to bid for the 800 MHz and 2.7 GHz bands in the 4G spectrum auctions beginning in January 2013. hey are EE, HKT-PCCW, Hutchison (Three), MLL Telecom, Niche Spectrum Ventures (owned by BT), Telefonica UK (O2) and Vodafone. Ofcom has set a total reserve price for both bands of £1.5 billion; the Government is hoping for £3.5 billion, although industry sources suggest £2-3 billion may be more realistic. he winners will be announced in February/March.
In addition, as part of the Government’s initiative to find an additional 500 MHz for release to the private sector, the largest holder of public sector spectrum, the MOD, has announced plans to auction or release a large swathe, around 200 MHz, of spectrum in the 2.3-2.4 GHz and 3.4-3.6 GHz bands, in 2013/2014 and 2015/2016 respectively. Also the MOD, already having to pay administrative incentive pricing for use of its spectrum, needs to generate revenues and cut costs, so plans to consult with other Government departments on the future use or release of the 870–872 MHz and 915–917 MHz bands with the intention of possibly transferring management responsibility for this spectrum to Ofcom.
Following the 4G auction, Ofcom will set annual licensing fees for the ongoing 900 MHz and 1800 MHz licences (now liberalised to allow 4G services), to reflect full market value and taking account of sums bid in the auction. This is a matter of major concern for the MNOs, particularly Vodafone and Telefonica O2.