The new EC Regulatory Framework was implemented on 25 July 2003. The basis for the new regulatory framework is five EC Communications Directives that are intended to converge and harmonise communication regulation throughout the EC. The first four of the five Directives below were implemented by the Communications Act 2003. The fifth is being implemented separately in the Autumn of 2003 .

Legal basis for framework

The principal legal documents of the new framework are:

Directive 2002/19/EC - on access to, and interconnection of, electronic communications networks and associated facilities (the Access Directive);

Directive 2002/20/EC - on the authorisation of electronic communications networks and services (the Authorisation Directive);

Directive 2002/21/EC - on a common regulatory framework for electronic communications networks and services (the Framework Directive);

Directive 2002/22/EC - on universal service and users' rights relating to electronic communications networks and services (the Universal Service Directive) and;

Directive 2002/58/EC - concerning the processing of personal data and the protection of privacy in the electronic communications sector (the Privacy Directive).

The Framework Directive provides the overall structure for the new regulatory regime and sets out the policy objectives and regulatory principles that NRAs must follow. It also requires that market analyses be carried out before regulation is imposed. The Authorisation Directive establishes a new system whereby persons do not require prior authorisation before providing electronic networks and services. It includes provisions relating to enforcement of conditions and the specific obligations which can be imposed. The Universal Service Directive deals with the obligation to provide a basic set of services to end-users. The Access Directive sets out the terms on which providers may access each others’ networks and services with a view to providing publicly available electronic communications services. Finally, the Privacy Directive establishes users’ rights with regard to the privacy of personal data.

Other relevant legal documents

Other elements of the EC package are:

Directive 2002/77/EC - Competition in the markets for electronic communications services

Regulation 2887/2000/EC - on unbundled Access to the Local Loop

Guidelines 2002/C 165/03 - on Market Analysis and the calculation of Significant Market Power

Decision 2002/627/EC - establishing the European Regulators Group for electronic communications, networks and services

Decision 2002/676/EC - on a regulatory framework for radio spectrum policy in the European Community (Radio Spectrum Decision)

Recommendation - on Article 7 notifications

List of standards - and/or specifications for electronic communications networks, services and associated facilities and services under Article 17 of the Framework Directive

Decision 2003/548 - on the minimum set of leased lines with harmonised characteristics and associated standards referred to in Article 18 of the Universal Service Directive

Recommendation 2003/558 - on the processing of caller location information in electronic communications networks for the purpose of location-enhanced emergency call services

Main changes from the previous regime

The new regime has some significant changes from the old. The principal ones which relate to telecommunications are:

• The existing licence regime is abolished and replaced by a general authorisation regime with general conditions of entitlement (that is, conditions which apply to all) and specific conditions (that is, conditions which apply to individuals); (Frequently asked questions about general conditions can be found below.)

• NRAs may only impose ex-ante controls on individual operators determined as having significant market power (SMP) following a review of the relevant market;

• The definition of SMP has changed and is now explicitly linked to the competition law concept of dominance;

• Appeals against NRA decisions may now be on both merits and process (previously on process only);

• Disputes between operators which are referred to the NRA for settlement must be resolved by the NRA in four months (previously six months); and

• There’s an explicit goal of harmonisation in the new framework.

  – NRAs must work together with the Commission and other NRAs in the European Regulators’ Group (ERG) to establish common approaches and remedies;

  – when analysing markets NRAs must take full account of the Commission’s Recommendation on market definition and on market analysis and assessment of SMP; and

  – NRAs must notify the Commission on the outcome of market analyses and the Commission has the power to veto certain decisions.

Further information

For further information on the new EC Communications Directives and Oftel's implementation see: .

What will apply on 25 July 2003

Publications and Consultation documents

Stakeholders' Group

EU Market Review

Frequently asked questions (FAQs) by service providers about the new regulatory framework

Or contact:

Andrew McWhir – tel: 020 7634 5306 or e-mail at andrew.mcwhir@oftel.gov.uk

The New Framework Directives

Background

• There are four EC Directives on communications (the ‘Directives’):the Framework Directive (2002/21/EC), the Authorisation Directive (2002/20/EC), the Universal Service Directive (2002/22/EC) and the Access and Interconnection Directive (2002/19/EC). They came into force in April 2002 and had to be implemented by the Member States by 25 July 2003.
• In the UK, implementation will occur mainly through the provisions of the Communications Act 2003 (the ‘Act’) http://www.hmso.gov.uk/acts/acts2003/20030021.pdf , which received Royal Assent on 17 July 2003, in particular Part 2 of the Act (Networks and Services).
• In other areas, the Act goes beyond the provisions of the Directives eg regulation of premium rate services and SMP apparatus conditions.
• The rights and obligations created by each of the Directives, and their implementation in the Act, are briefly outlined below.

Framework Directive

• Directive 2002/21/EC
• Establishes a harmonised framework for the regulation of electronic communications services (ECSs), electronic communications networks (ECNs) and associated facilities (AFs). It lays down tasks for National Regulatory Authorities (NRAs) and establishes procedures to ensure the harmonised application of the regulatory framework throughout the EC.
• In the UK, it is intended that Ofcom will be the new NRA for the purposes of the new Directives. However, Ofcom will not be ready to assume these functions and duties until later this year. Until that time, the Secretary of State has ordered that the Director General of Telecommunications (the Director, or Oftel) will be the NRA for the purposes of the new Directives. Oftel is able to act under the provisions of the new Communications Act 2003.
• Oftel’s decisions under Part 2 of the Act are appealable to the Competition Appeals Tribunal on the merits (sections 192ff). Sections 135-145 enable Oftel to require information for the purposes of carrying out its functions.
• Section 4 imposes a duty on Oftel to act in accordance with six Community requirements set out in the Framework Directive.
• Other requirements of the NRA under the Framework Directive include management of radio frequencies (implemented by Chapter 2 of Part 2 of the Act: spectrum use, sections 152-184); controlling the assignment and management of numbering (implemented by sections 56-63 of the Act); and market definition and analysis (implemented by sections 78-86).
• NRAs must also make provisions for dispute resolution between undertakings, which has been implemented by Part 2, Chapter 3 of the Act (sections 185-191), including the imposition of a new 4 month deadline for resolution by the NRA, and the option of making provisions for use of alternative dispute resolution (ADR).

Authorisation Directive

• Directive 2002/20/EC. The Authorisation Directive requires the abolition of licences, to be replaced by a general authorisation to provide ECNs, ECSs and Afs. Persons providing ECNS or ECSs are called ‘communications providers’ in the Act.
• Because of the way in which the UK legal system works (ie you are permitted to do anything which you are not prevented from doing), every person has a ‘general authorisation’ because they are not prevented by law from providing an ECN, ECS, or AF. There is no specific provision in the Act enabling persons to provide networks and services, and no communications provider will be given a ‘general authorisation’ in the way that they were previously given a licence to run telecommunications systems.
• The general authorisation may be subject to requirements to provide advance notification to the NRA, to pay administrative charges to the NRA, to comply with general and specific conditions, to comply with the electronic communications code and to provide information to the NRA. In practice, Oftel does not currently intend to use its power to require advance notification from communications providers, although it will be collecting administrative charges from those communications providers that meet a certain threshold of ‘relevant turnover’, in order to pay for its running costs. Oftel will be issuing a formal notice, which will require communications providers who have a turnover from networks or services of £5million or more to provide Oftel with details of turnover so that it can assess administrative charges.
• All communications providers are subject to the general conditions, although different classes of provider will have different obligations. Part A of the Annex to the Authorisation Directive lists the types of general condition which may be imposed on communications providers. Oftel has set the new general conditions in accordance with this and sections 45 to 64 of the Act, http://www.oftel.gov.uk/publications/eu_directives/2003/cond_final0703.pdf
• The general conditions fall into the following broad categories: network/service integrity and operability; encouragement of access and interconnection; ‘universal service’ including use in emergencies; consumer protection; and allocation and adoption of numbers.
• The Authorisation Directive also provides that specific obligations may be imposed on providers of ECNs and ECSs: NRAs are permitted to make specific conditions in relation to universal service, access and significant market power (SMP). These provisions are implemented by sections 65 – 72 of the Act (universal service conditions), sections 73 to 76 of the Act (access-related conditions) and sections 87 to 92 of the Act (SMP services conditions).
• Oftel is currently undertaking various market reviews in order to ascertain whether to impose new specific SMP conditions. Draft measures covering new SMP conditions are to be notified to the European Commission after 25 July 2003 under Article 7(3) of the Framework Direction. Subject to the Commission’s power to veto, the earliest that these new SMP conditions will be in place will be September. To avoid a regulatory gap due to the abolition of licences, some pre-existing licence conditions are being continued. Further details in respect of the continuation regime can be found at http://www.oftel.gov.uk/publications/eu_directives/cont_notices/index.htm.
• Article 10 of the Authorisation Directive covers enforcement powers and allows the NRA to impose financial penalties. The Act provides powers for Oftel to enforce the general and specific conditions (see sections 94-104). In particular, section 97 provides for the ability to impose financial penalties of up to 10 per cent of turnover for breach of any conditions made under section 45.

Universal Service Directive (‘USD’)

• Directive 2002/22/EC.
• The USD defines a minimum set of services of specified quality which are to be made available to all users at an affordable price, regardless of their geographic location and in the light of specific national conditions.
• On 25 July 2003, the Universal Service Order made by the Secretary of State comes into force, setting out the universal services that need to be provided in the UK in order to comply with the USD http://www.legislation.hmso.gov.uk/si/si2003/20031904.htm.
• The services and facilities covered by the USD and the Universal Service Order include the provision of access to the public telephone network and publicly available telephone services at data speeds sufficient to support functional internet access; the adequate provision of public pay telephones; the availability of comprehensive directories and directory enquiry services; and special measures for users with low incomes or disabilities.
• Oftel must ensure the availability of the services and facilities set out in the Universal Service Order by setting general and specific conditions. Oftel has set new specific universal service conditions in accordance with the Universal Service Order and sections 65 to 72 of the Act. These conditions will came into effect on 25 July 2003, together with an associated direction relating to the removal of public payphones http://www.oftel.gov.uk/publications/eu_directives/2003/uso0703.pdf.
• In the UK, Oftel has proposed that BT and Kingston should be designated as the universal service providers. But Oftel has also recommended that Ofcom should conduct a full review of universal service in 2004, including a review of the funding of the provision of universal services.
• Articles 17-19 of the USD give NRAs the ability to impose regulation on providers with SMP in certain retail markets, including regulation relating to carrier pre-selection and leased lines. These provisionsare implemented in the Act by sections 90 to 92 relating to the setting of SMP conditions.
• The USD requires some form of dispute resolution to be available for individual customer complaints. Under sections 52 to 55 of the Act, Oftel has the power to approve industry schemes and has invited applications. The Telecommunications Ombudsman, which currently provides a free and efficient service, is likely to be approved, but Oftel also has fall-back powers to establish its own scheme or approve any others. Further information on the Telecommunications Ombudsman can be found at http://www.otelo.org.uk/website/html/content.php?ID=1.

Access Directive (‘AID’)

• Directive 2002/19/EC.
• The Access Directive harmonises the way in which Member States regulate access to ECNs, ECSs and AFs (access is a concept which includes interconnection). It establishes rights and obligations for communications providers seeking interconnection and/or access to networks, services and associated facilities of other communications providers.
• The Access Directive allows for the imposition of specific obligations on individual communications providers in certain situations, for example where they have been found to have SMP as a result of a market review. These provisions have been implemented in the Act by sections 73 to 76 and 78 to 92, which allow for the setting of access-related conditions, and SMP services conditions following market reviews.
• The Access Directive requires that certain obligations be imposed on communications providers controlling conditional access to digital television and radio services. Oftel has set new conditional access conditions in accordance with these provisions and section 75 of the Act http://www.oftel.gov.uk/publications/eu_directives/2003/condac0703.pdf
• Articles 8 - 13 of the Access Directive set out a maximum list of obligations that can be imposed on communications providers found to have SMP in wholesale markets including obligations relating to network access, transparency, cost orientation,price control, and accounting separation
• Oftel is in the process of conducting and finalising reviews of various communications markets, based on the list of markets set out in the EC Commission’s Recommendation,, in order to ascertain which providers have SMP in those markets and should be subject to new SMP conditions.
• Article 5 of the Access Directive allows for the imposition of specific access related obligations in limited circumstances, but without the necessity of holding a market review and finding SMP. These provisions have been implemented by sections 73 to 76 of the Act, and Oftel is likely to use them to impose obligations on persons controlling access to application programme interfaces (APIs) and electronic programme guides (EPGs), as well as obligations with respect to national roaming on mobile networks. Like the SMP conditions, any such conditions will be subject to consultation with stakeholders and the EC Commission. They are therefore unlikely to be set until September at the earliest.

The general conditions of entitlement – Q&A

What does this mean?

The general conditions are a set of rules which will apply to the provision of an electronic communications network or an electronic communications service from 25 July 2003, which is the implementation date for the new EC Communications Directives. These new Directives require the abolition in the UK of the current telecommunications licensing regime. Licences are to be replaced by a regime of general authorisation to provide electronic communications networks and services coupled with general and specific conditions. The general conditions will apply to all network and service providers (or all network and service providers of a particular type), whereas the specific conditions will be imposed on individuals, for example those with significant market power or designated universal service obligations.

What is an ‘electronic communications service’ or ‘electronic communications network’?

These terms have strict legal definitions in the new EC Directives and the Communications Act. In general terms, an electronic communications service is a conveyance service for signals, for example a fixed or mobile telephone service. An electronic communications network is a transmission system used for the conveyance of signals, for example a telephone network or an IP data network (used for the transmission of data signals e.g. emails).

What happens next?

The conditions enter into force on 25 July 2003 by virtue of the publication of a notification by the Director under section 48(1) of the Communications Act. The conditions may be modified in future, but only after a consultation in accordance with the procedures set out in the Act. The Director will enforce the conditions, until Ofcom is ready to assume full functions later this year.

Which companies will the new general conditions cover?

Under the new Directives and the Communications Bill, general conditions may be set which apply to anyone providing an electronic communications network or an electronic communications service. However, most of the general conditions proposed in the consultation document are drafted so that they only apply to a limited set of network or service provider, for example providers of publicly available telephone services or providers of public electronic communications networks. It will be the responsibility of all providers of electronic communications networks and services to read the general conditions and determine which conditions apply to them, depending on the kind of network or service they are providing. To assist, Oftel has produced guidance aimed at service providers (see http://www.oftel.gov.uk/publications/eu_directives/2003/spfaq0503.htm ) and ISPs (see http://www.oftel.gov.uk/publications/eu_directives/2003/ispfaq0303.htm )

In simple terms, what are the main differences between this and the old system? And what differences could this mean for consumers?

The main difference is that all communications providers will only need to look to one set of general conditions to ensure they are complying with the law. There will not be different ‘licences’ containing different conditions any longer. This also means that communications providers are responsible for ascertaining which of the general conditions applies to them and their operations – they will not be issued with a personal licence which sets out their obligations. The obligations themselves are similar to those contained in current licences, although they have been redrafted in line with the new EC Communications Directives and the Communications Act. The new general conditions ensure that all communications providers provide a basic level of consumer protection. By looking at the general conditions, a consumer will be able to gain an understanding of their rights as against a communications provider, for example, what they may require in their contracts, termination and disconnection rights, and itemised billing.

What about dominant companies?

Companies who have been found to have Significant Market Power (SMP) as a result of a market review may be subject to further specific conditions which will apply in addition to the general conditions. Oftel is currently undertaking the process of market reviews to determine which companies should be subject to these specific conditions under the new regime. These will be the subject of separate Oftel consultation.

Does this mean you are relaxing regulation?

While there are obligations which apply to telecommunications systems operators at present which will not be carried forward into the new regime, it is more accurate to say that the general conditions represent a simplification and application of appropriate regulation. One set of general conditions applicable to all will provide a more streamlined and transparent regime for current and new operators and service providers.

Which companies will be required to negotiate interconnection under the new regime?

A company which provides a public electronic communications network will be required to negotiate interconnection with other such companies. Oftel has produced further guidance on this aspect of the new regime: http://www.oftel.gov.uk/publications/eu_directives/2003/intercon0503.htm

What will happen after the Directives come into force but before Ofcom is set up?

Under either the Communications Act 2003, the Director will be responsible for setting and enforcing the general conditions until the formal ‘hand over’ to Ofcom, expected later this year.

Will Oftel be able to fine companies in that period?

Yes – new powers allow the Director to impose a penalty of up to 10% of turnover upon a company or individual for breach of a general or specific condition.

Has Oftel used its powers to fine companies?

Oftel currently only has powers to fine companies under the Competition Act – not for breach of a licence condition.

Will Ofcom still have Competition Act powers?

Yes – Part 5 of the Communications Act sets out where Ofcom will share Competition Act powers with the Office of Fair Trading.

Does the Government have to approve the conditions that Oftel has drafted?

No.

What about the other industries that will come under Ofcom - how will they be regulated?

The new framework required by the EC Directives is intended to apply electronic communications networks and services providers, which will include some companies using radio spectrum under licence or exemption from the Radiocommunications Agency, and also some broadcasters. Further details on how the new Directives will effect the regulation of radio spectrum can be found on the RA’s website www.radio.gov.uk. The new Directives do not apply to the provision of content, only conveyance, and the networks over which such conveyance occurs.

Can you give an example of a communications network operator/service provider that won't need to meet all the general conditions? Which ones will they still need to meet?

Because most of the general conditions have a consumer protection focus, most of them only apply where a communications network or service is being provided directly to the public. However, the following obligations will apply to all providers of electronic communications networks and services in the circumstances set out in the draft condition:

• Standardisation and Specified Interfaces;
• General Access and Interconnection Obligations (confidentiality requirements where negotiating network access); and
• The obligations in the numbering conditions (where adopting or using telephone numbers).

The remaining conditions are drafted so as to apply only to subset of network or service provider, such as

• providers of public electronic communications networks (General Access and Interconnection Obligations, Must Carry Obligations (for broadcasters));
• providers of public telephone networks (Proper and Effective Functioning of the Network, Provision of Additional Facilities, Emergency Planning);
• providers of public electronic communications services (Requirement to Offer Contracts with Minimum Terms, Quality of Service, Codes of Practice and Dispute Resolution, Metering and Billing);
• providers of publicly available telephone services (Transparency and Publication of Information, Operator Assistance, Directories and Director Enquiry Facilities, Emergency Call Numbers, Non-Payment of Bills, Special Measures for End-Users with Disabilities, Itemised Bills, Emergency Planning, Proper and Effective Functioning of the Network); and
• providers of public pay telephones (Public Pay Telephones).

Depending on the type of network or service that is actually being provided, and the circumstances in which such provision is taking place, a network operator or service provider may need to meet some, all or none of the general conditions. It will be the responsibility of the individual network or service provider to determine when their activities fall within the scope of any obligation imposed by a general condition.

The conditions that an ISP has to meet will be different from the ones a network operator has to meet. In what ways will they vary?

To the extent that an ISP is providing electronic communications services to the public, they will have to meet the obligations that apply to the provision of such services (e.g. Requirement to provide Contracts with Minimum Terms, Codes of Practice and Dispute Resolution, Metering and Billing). If the ISP is also running a network they will also be subject to relevant obligations. Further information for ISPs can be found at http://www.oftel.gov.uk/publications/eu_directives/2003/ispfaq0303.htm

How will Oftel/Ofcom ensure that operators are meeting the conditions? Will you check or simply wait for someone to complain?

Oftel/Ofcom will be entitled to require information from operators with respect to their compliance with the conditions where Oftel/Ofcom suspect that a contravention has occurred. In general, this will mean that a complaint will be received leading to an investigation. However, Oftel/Ofcom can initiate their own investigations of they consider that there may be a breach. If a breach is discovered, Oftel/Ofcom then may take enforcement action.

Note: The information posted here is intended to be helpful and informative but needs to be read with the understanding that the information is general in nature. This information cannot be taken as applying absolutely to individual cases where a particular set of circumstances needs to be taken into account. This information can not act as a substitute for specific legal advice. Any person requiring legal advice in relation to the new regime is advised to seek their own independent legal advice. This information does not fetter the discretion of the Director General of Telecommunications or Ofcom to resolve any dispute or investigate any matter to which this information addresses.