Written by Ezra Steinhardt and Colin Warriner
On 12 September, 2013, the European Commission formally adopted a proposal for a new Telecommunications Regulation (the “Regulation”). The Regulation would, if enacted, reform the European Union’s telecommunication rules, including in areas such as net neutrality, spectrum allocation, roaming charges, and consumer rights in mobile and telecoms contracts. The proposal is now being considered by the European Parliament and Council.
This post, on reforms publicized as “consumer rights”, is the second part of a series on key aspects of the proposed Regulation.
The Regulation proposes a number of measures designed to strengthen the rights of European consumers in the telecoms and Internet access markets. If enacted, the proposals, which are described further below, will phase-out roaming charges within the EU, compel telecoms companies and Internet Service Providers (“ISPs”) to provide more information to consumers about service levels, and will make it easier for consumers to switch providers. In the short run, the measures are anticipated to hit revenues for telecoms companies (the Commission estimates an average annual loss of around 0.5% in revenue), but the Commission claims the benefits to consumers will also help business travellers, generating net benefits over the longer term for the economy.
Some of the key pro-consumer measures in the Regulation include:
- Phase-out of Roaming Charges. Currently, phone users pay different charges depending on whether they are calling domestically or travelling in Europe. The Commission has traditionally opposed this situation, though, on the grounds that premium roaming charges are contrary to the idea of a single market, and has designed the Regulation to end these charges. The Regulation introduces a three-step phase-out approach to accomplish this goal, as follows:
- Step One – Ending Incoming Call Roaming Charges. By July 2014, the Regulation will prohibit operators from charging for incoming calls while a user is travelling in the EU.
- Step Two – Phasing in “Roam Like At Home” Deals. Starting at the same time, in July 2014, telecoms operators will be encouraged to offer customers a new type of deal, that would make all calling, texting and data usage made within certain Member States (or the whole EU) cost the same as it would in a user’s home country. These deals, known as “roam like at home” deals, won’t likely initially cover the entire EU, but will instead be offered with coverage extending over a limited number of Member States at the outset.
- Rather than simply mandating that such deals be immediately extended to all consumers across all Member States right away, though, the Regulation instead creates a “glidepath” for operators, that is designed to push operators to slowly ratchet upwards the coverage of each operator’s “roam like at home” deal. In essence, the glidepath contains coverage benchmarks for “roam like at home” deals – i.e., an increasing number of Member States covered, or an increasing number of EU citizens covered – that are designed to cover a two year period, from July 2014 to July 2016, that operators must meet to remain on the “glidepath”. Those operators that do not meet – or that choose not to meet – the ever-wider glidepath coverage benchmarks will be effectively penalized by being made subject to the EU’s “Roaming Regulation” (Regulation (EU) No 531/2012), which requires operators to abide by price caps, or to allow their customers to use cheaper services offered by rival telecoms companies while travelling throughout the EU without needing to change their SIM card. The Commission hopes that this “stick” will incentivize operators to stay on the glidepath by entering into mutual agreements to maximise “roam like at home” coverage.
- Step Three – Ubiquitous “Roam Like At Home” Coverage. By July 2016, the Commission anticipates that “roam like at home” deals will be, as a result of the glidepath transition period, ubiquitous across the EU. This will have the effect of virtually eliminating premium roaming charges. However, the Regulation does still technically allow additional roaming charges, but only if either (i) the charging company can meet a strict threshold by showing that the charge can be objectively justified, or (ii) if customers make a “deliberate and explicit” choice to accept them in exchange for other unspecified benefits.
- Service level transparency for ISPs. The Regulation will also aim to improve transparency about Internet access service quality by requiring ISPs to publish information on data volume limitations and speeds actually available during normal and peak hours. National regulators would be required to monitor service quality and would be empowered to set minimum quality standards. Importantly, consumers would also have the right to terminate their contract or claim damages for “any significant and non-temporary discrepancy” between actual and advertised performance.
- Switching Internet and Phone Contracts. In its guidance, the Commission argues that consumers are “frequently” locked in to long-term Internet service and/or phone contracts. Article 28 would prohibit internet and phone contracts with an initial commitment period of over 24 months, and would require providers to also offer a 12 month-only option. Customers will have the right to terminate a contract without penalty after six months by giving a month’s notice. The Regulation would also ease the process of switching by encouraging the faster porting of phone numbers, by enabling consumers to receive compensation for abuse or delays, and by requiring an email forwarding facility to be provided to the consumer free of charge, for example.
- Further Consumer Rights Measures. To further strengthen greater transparency, the Regulation would also mandate that consumers be able to access independent service and price comparison facilities, using information to be published by communications providers. To help address another common issue for consumers – unexpected “bill shock” when the bill totals much more than expected – the Regulation will also enable consumers to agree a “maximum bill amount”, beyond which they will not receive further service or be charged without specific authorisation. Under the Commission’s proposal, each consumer’s service provider would be required to notify them when they have used 80 per cent of that amount.
Telecommunications companies have reacted critically to these proposals so far. That said, the Commission has also adopted proposals to lighten regulation for the industry and encourage sector growth (to be detailed in the next blog update). It remains to be seen if such measures will ease businesses’ fears over short-term revenue loss.