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Topics: Connected Continent
Organisations: Cable Europe

connected continentcable europeproposal

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

Cable Europe Position Paper on the Commission’s proposed regulation laying down measures to complete the European single market for electronic communications and to achieve a Connected Continent

31 October 2013

Cable Europe welcomes the Commission’s “Connected Continent” legislative package.

The package covers a proposal for a regulation and, complementing the regulation and intrinsically linked with it, a Recommendation on non-discrimination and costing methodologies which provides the right cement for a positive investment climate for both incumbents and alternative operators. At a time where competition and investment are crucial to Europe’s future, a flexible and balanced Recommendation sends a clear signal supporting the need for further infrastructure-based competition which will push wider investment in NGA networks. Cable Europe is also pleased to see that the Recommendation recognizes that regulation of access prices affects all players in the market – not just the regulated entities and those who seek access to their networks. Cable operators act as a catalyst for investment by competing providers and this Recommendation will help to enable us to continue playing this role in the future.

Cable Europe considers there is a bright future in Europe where less regulation and more pricing flexibility allows for space to grow, compete with one another to the letter of the law, consolidate and push for a more international and serviceoriented Connected Continent. And there are elements in the proposed regulation which could lead to less regulation while encouraging market forces. But to invest you need a good investment environment where risk levels are not aggravated by ignificant variations in the market that Europe is still trying to turn into a single one. Infrastructure-based competition is key to drive investment in broadband. This is expressly recognised in recital 38 of the draft regulation which gives the possibility to national regulatory authorities to consider that “in the presence of two fixed NGA networks, market conditions are competitive enough to be able to drive network upgrades and to evolve towards the provision of ultra-fast services”.

See below specific comments on the proposed regulation.

Articles 3 & 4 – single EU authorization

We share the Commission's view that every European electronic communications provider has the right to provide electronic communications networks and services in the whole European Union, and to exercise the rights linked to the provision of uch networks and services in each Member State. We also welcome the equal treatment of such providers by the competent national regulatory authorities of different Member States in objectively equivalent situations. This creation of an EU authorization truly underlines the single market objective.

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

However, we feel the EU's standing legal practice that the country of origin principle is applicable (e.g. the E-Commerce Directive and the AVMS Directive) would require the proposal to further analyse and clarify how the EU authorization fits in the existing EU acquis communautaire.

We also think that the EU authorization impinges upon complex legal issues involving jurisdiction and coordination among legal and regulatory bodies (not only NRAs) that are extremely complex and also affect other regulated sectors.

The proposed regulation reads to deal mostly with the relationship between the host Member State and the home Member State. However, the practicalities seem to be under-exposed. The EU Regulatory framework consists of Directives, Recommendations and Regulations. The Directives and Recommendations leave room for national interpretation when transposing into national law. This together with NRAs applying and interpreting national law may result in differences per country. How will this be dealt with by the EU authorization when practical difficulties arise, for example when a European electronic communications provider operating cross border is confronted with guidelines of the NRA in the host Member State on a specific topic, where these guidelines might deviate from those in the home Member State? And will a European electronic communications provider be ubject to market analysis in the host Member State for all jurisdictions it operates in or will there still be a role for the home Member State or vice-versa? These as well as other 'practicalities' require additional analysis, to ensure that multiterritorial operators can claim jurisdiction with one authority without conflicts and additional complexities arising with authorities in other Member States.

Nonetheless we welcome the Commission’s efforts to simplify the regulatory obligations and jurisdictional requirements faced by operators who have invested in several European territories. The concept of a pan-European authorization is an essential building block for a successful single market in telecoms.

In this respect we believe that the rights attributed to end users in article 21(1), prohibiting restrictions by public authorities on undertakings established in another Member State, should be added to the EU authorization chapter of the proposal. Ensuring that the country of origin principle is effectively enforced within the telecoms single market is in our view an ‘obligation’ required of NRAs and not only a right conferred upon end users.

Article 9 - Spectrum use for wireless broadband communications

Under point 4 e), the Commission highlights “the wide territorial coverage of high peed wireless broadband” and requires NRAs to take this and other criteria into account when establishing authorization conditions.

Cable Europe has expressed concerns in the past that the current EU process for radio spectrum allocation fails to take full account of the complexity of the entire electromagnetic ecosystem and the risk of interference caused by radio equipment on electronic equipment. In particular there is not enough consideration given to the coexistence of electronic equipment in the rapidly changing radio environment

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

despite the compliance of that equipment with current EU standards relevant to demonstrate conformity with the R&TTE1 and EMC2 Directives.

We request to include a reference in Article 9.4 to the fact that coexistence between new and existing services operating in a given radio spectrum band hould be established as a core principle from the outset of the radio spectrum allocation process in order for Europe to fully benefit from growth and innovation of both existing and new services. This reference should be made by an addition to the list of regulatory principles in Article 9 paragraph 4. Cable Europe suggests the following wording: “ensuring coexistence between new and existing services to avoid interference with existing radio and non-radio services and equipment.”

Likewise, a reference should be included to the growing importance of Wi-Fi in complementing cellular networks’ services as part of the overall strategy for high peed wireless broadband. The increasing use of Wi-Fi (not only with regard to more and more end user devices being in place, but also with regard to machineto-machine communication for example) requires the availability of sufficient unlicensed spectrum to avoid congestion. Such a reference could be added in Article 9 paragraph 4 lit. b) and be phrased as follows: “ensuring the most efficient use and effective management of radio spectrum, in particular by taking into account the increasing importance of Wi-Fi for the availability of high-speed wireless broadband in public space and by ensuring the sufficient availability of unlicensed spectrum.”

Article 14 and 15 – Access to radio local area networks and deployment and operation of small-area wireless access points

Recitals 26 and 27 should be modified to acknowledge the fact that RLANs not only allow mobile traffic off-loading by mobile operators and spectrum efficiency, but also, to some extent, facilitates fixed-mobile convergence by enabling those fixed network operators who do not possess spectrum to offer wireless services.

In that regard, any measure to facilitate the development of these services by fixed telecom operators is to be welcomed.

Having said that, these services are still at a relatively early stage of development and, without an analysis and proper impact assessment of existing and potential problems, the detailed provisions contained in articles 14 and 15 are premature.

Article 17 – European Virtual Broadband Access Products

The draft Regulation refers to European virtual access products (access products at Layer 2 and Layer 3). We welcome the fact that the wholesale access products in this article will apply only to providers with Significant Market Power, in conformity

1

Directive 1999/5/EC of 9 March 1999 on radio equipment and telecommunications terminal equipment

and the mutual recognition of their conformity

2

Directive 2004/108/EC of 15 December 2004 on the approximation of the laws of the Member States

relating to electromagnetic compatibility and repealing Directive 89/336/EC

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

with the EU regulatory framework. Consequently such remedies need to be appropriate and proportionate.

In any event, we consider that the characteristics described in Annex 1 with respect to “Offer 1” are too detailed and should not prescribe that the handover point is necessarily closer to the customer than a point defined at regional level. Likewise it should not prescribe multicast functionality because that should be evaluated according to the competitive condition of the TV market in each Member tate.

Article 19 - ASQ Connectivity Product

First of all, it is unclear to us what type of services this article is covering. Therefore the scope of this article should be clarified.

Secondly, as already indicated in connection with articles 14 and 15, further analysis and proper impact assessment are needed to show the necessity and proportionality of this measure. As expressed in the chapter on legal elements of the proposal, the provision is inserted so as to “enable new types of online ervices”. Here, Cable Europe highlights the well-known fact that vast numbers of online services with a wide variety of use have been introduced over the past years without the existence of any obligations for operators as regards IP interconnection.

Here, Cable Europe would also like to refer to the summary of BEREC’s positions on net neutrality (BoR (12) 146, p. 3-4), in which it is concluded that the Internet ecosystem has managed to adapt IP interconnection arrangements to reflect inter alia changes in technology, in the relative market power of players, in demand patterns and business models without the need for regulatory intervention. As uch, the need for the proposed ASQ product can be strongly questioned.

However, we do believe that any operator should have the right to provide an ASQ connectivity product. This can be helpful to streamline national discussions where the offer of a range of service classes is not necessarily considered legitimate.

The scope of an ASQ connectivity product should be interconnectivity between ‘peers’ which means a provider can refuse a request in case the requesting provider is unable or unwilling to also make available a reciprocal product. This adheres to the notion of promoting network investment without excluding upfront any type of provider.

Finally, we are concerned with introducing a new set of obligations which are not warranted under the SMP analysis envisaged by the current regulatory Framework. Therefore, it should be indicated more clearly that negotiations should completely be left to the negotiating parties and do not see the need for intervention from NRAs in case no agreement is found as suggested in paragraph 3.

A need for a standardized (cf. minimum requirements in Annex II) interconnection product is, as has been highlighted by BEREC, not apparent. And this should be further clarified, also reconsidering proportionality of the proposal.

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

Article 21.3 – Tariffs for fixed calls to another Member State

While we welcome the Commission’s intention to reduce barriers to seamless communication within the Union, we have doubts as to the proportionality of what would essentially be a cap for end-user prices. First, the necessity of this measure eems questionable in view of the fact that competition within the Member States has led to the broad availability of affordable tariff packages serving the needs of customers who engage in cross-border communications (e.g. flat rate options for calls terminating in another Member State). This is, as stated in recital 45, already an objective factor justifying deviations from the price cap stipulated in Article 21 paragraph 3. Second, a cap for end-user prices would impose a regulatory remedy on providers of electronic communications without having a basis within the existing regulatory framework.

Article 23 - Quality of Service

We welcome the Commission's view that every customer and European electronic communications provider should be free to agree on data volumes, speeds and pecialised services with an enhanced quality of services. This ensures consumer choice and competition between providers for the best Internet. Market developments demonstrate that there are various technologies competing to deliver internet access (DSL, Fibre, cable, LTE, satellite, etc.). These technologies are constantly evolving to deliver end customers with the best quality of service. Operators are competing for these customers and as a result cannot afford to degrade the Internet quality.

We also welcome that the correlating freedom shall be granted to electronic communications providers and content providers. We support a two-sided market approach and would therefore complete the wording of article 23.1 as follows: “To the same end, providers of content, applications and services and providers of electronic communications to the public shall be free to agree with each other on the treatment of the related data volumes”.

Under article 23.2, is it stated that “the provision of specialised services shall not impair in a recurring or continuous manner the general quality of internet access ervices”. In Cable Europe’s view, this wording might run contrary to the established and widely accepted manner in which specialized IP services are provided.

Furthermore, Cable Europe would like to underline that, according to the Universal Service Directive and article 24.2 of the proposed regulation, national regulatory authorities already have the power to impose minimum quality of service requirements on providers of electronic communications to the public in order to prevent the general impairment of quality of service for internet access services or to safeguard the ability of end-users to access and distribute content or information or to run applications and services of their choice. Hence, in the event of an impairment of the quality of internet access services – for whatever reason – national regulatory authorities do already possess the regulatory tools to

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

afeguard the general quality of internet access service. As such, the proposed wording appears superfluous, and the proportionality of the measure can be trongly questioned.

So, following the principle of proportionality and with the view of avoiding a forced and radical change in the way specialized IP services can be provided as well as in order to increase legal certainty, Cable Europe suggests that the referred sentence is deleted.

Under article 23.5 the Commission defines the legitimate grounds for traffic management. This approach in our view enforces an overly rigid framework on operators’ ability to address new and emerging congestion and/or network resilience issues with appropriate and proportionate traffic management procedures.

Here, Cable Europe would like to refer to the summary of BEREC’s positions on net neutrality (BoR (12) 146, p. 6), in which the following high level conclusion is drawn: “It would neither be relevant nor appropriate within the current regulatory framework to define a priori reasonable and unreasonable traffic management practices (e.g. through white lists or black lists). It calls for a case-by-case analysis instead, taking into account not only the practice itself but also the behaviour of parties and market characteristics.”

In line with BEREC’s conclusion, we would recommend shifting this approach so that article 23.5 addresses the legitimacy of traffic management practices from the perspective of potential competition abuses. Such an approach would then define the illegitimate grounds for traffic management such as distortion of competition and presume that all other grounds (until proven otherwise) are legitimate.

The confinement of the legitimacy of traffic management to “temporary or exceptional” network congestion will also constrain cable operators’ ability to manage their networks to ensure a fair allocation of what is, after all by the law of physics, a shared resource. Operators should instead be able to manage their networks in the most efficient way necessary to ensure an acceptable level of ervice for all end users.

Should the wording of article 23.5 remain in place, we suggest the amendment to article 23.5.d as follows: “minimize the effects of temporary or exceptional network congestion provided that equivalent types of traffic are treated equally”. As such, it would be possible for operators to choose to manage the most relevant – from a user experience perspective – and the most congestion-driving traffic types instead of managing whole categories of traffic, which – contrary to the aim of both the Commission and operators – could result in larger traffic volumes than necessary being temporarily affected by traffic management measures.

Article 25 - Transparency and Public Information

Cable Europe agrees that transparency is key for the customers as more transparency would allow them to vote with their feet for the appropriate provider of the services required.

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

However, as the 2009 EU Regulatory Framework provisions on transparency are till being implemented in the Member States we would welcome an evaluation period to test the current rules. At least we do not see if the proposed regulation will overrule each and every national law or if national law can define additional rules. This comment is also valid for articles 26, 27 and 28.

Furthermore, we question whether it is reasonable to introduce detailed regulation regarding consumer information at EU level, which results in too detailed regulation, as opposed to national measures and incentives for increased transparency.

Finally, Cable Europe considers that the best way to improve the measurement of the quality parameters provided in article 24 would be to base them on a certificate process following a self- or co-regulation approach with the industry. Cable Europe is not in favour of the Commission’s proposal in Article 25 para. 2 to give the Commission the power to adopt methods for measuring tools.

Article 28 - Contract termination

The proposals in Article 28 paragraphs 1 and 2 seem to contradict each other: On the one hand, contract periods of 12 to 24 months shall be possible (para. 1). But on the other hand any contract can be terminated with a one-month notice period once 6 months or more have elapsed since the conclusion of the contract (para. 2). Such contradiction will result in legal uncertainty.

According to para. 2, a maximum contract period would de facto be reduced to six months. This renders para. 1 obsolete. It would also have consequences on the pricing of products: the provision that allows for the compensation for subsidized equipment is not sufficient as in most cases marketing/sales and other administrative costs and – especially in cable business – installation costs are to be reflected in end-customer prices. To avoid losses, end-customer prices might have to be raised significantly to recoup such costs within the 6 months period. The consumers who do prefer a 12 or 24 months contract will therefore be impacted.

Furthermore, Cable Europe would like to stress that several operators within the EU, amongst them cable operators, already today offer consumers the possibility to enter into contracts without any contract period at all. As such, the need for the uggested provision in article 28.2 is not apparent and the text should be deleted.

As regards the proposal in article 28.3, Cable Europe highlights that established practice in several Member states is that an obligation for operators to inform consumers in advance of tacit extensions is necessary only if the initial contract period is extended and not if the contracts become contracts without a fixed term – in particular if the term of notice is one month. Therefore, Cable Europe suggests that article 28.3 is amended so that it is clear that the obligation to inform consumers is applicable only if the initial contract period is tacitly extended.

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

It is unclear if paragraph 5 refers to new rules or if it is just declaratory. In our view, the term “non-conformity of performance” and the resulting “end-user remedies” have to be defined at national level.

Article 29 – Bundled offers

Article 29 proposes that in case of a bundled product the provisions on contract termination and switching shall apply to all elements of the bundle.

Many cable operators offer bundled products (2-play, 3-play, sometimes even 4- play) but not always is the “bundle” a real bundle.

Even if products are marketed and sold together they often remain completely independent from each other. That is the case where each product is sold with a eparate contract and where separate prices for each product are agreed. In the cable industry’s view, a real bundle requires that all different product parts are sold together with one contract and one price.

Cable Europe asks for a clarification in this regard to make sure that separate products even if marketed as a “bundle” do not fall under the scope of Article 29.

Article 30 - Switching

We have concerns with the wording of para. 5. When reading this on a standalone basis it may indicate that a contract can be terminated before the end of the contract period just because a customer wants to switch to another operator.

To ensure para. 5 is read in the correct context – and to ensure legal certainty – a reference should be included with respect to the end users rights and obligations when terminating a contract.

As regards article 30.7 (email forwarding service), Cable Europe notes that such a provision might result in significant administrative costs for operators. If at all, the forwarding of emails should instead be done at the requesting consumer’s cost.

Article 35 (3) – Amendments to Directive 2002/21/EC

We welcome in particular the inclusion of the three criteria test to assess the competitiveness of relevant markets in the 2002/21/EC Framework directive. The amendments to article 15 of the framework directive are also welcomed in particular the reference to infrastructure-based competition and to the fact that the Commission – when assessing the markets - shall take into account all relevant competitive constraints irrespective of whether the networks, services or applications which impose such constraints are electronic communications networks or services.

Article 37 – Amendments to Regulation No 531/2012

European Cable Communications Association

Avenue des Arts 41  1040 Brussels, Belgium  T: +32 2 521 17 63  F: +32 2 521 79 76  E: info@cable-europe.eu  www.cable-europe.eu

Clarification is needed on the proposed roaming provisions. At the time being we fear indeed that MVNOs and cable deals are squeezed out. It is therefore important that any regulatory reform create a structure that would allow MVNOs to compete in the market.

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