HomeInsightsEuropean Electronic Communications Code – UK deprioritised regulation of OTTs, Ofcom’s focus on consumer protection

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The European Electronic Communications Code (the “EECC”) is an EU Directive that consolidates, updates and replaces the four Directives that made up the EU regulatory framework for electronic communications in 2002 (as revised in 2009). It entered into force on 20 December 2018 and EU Member States have until 21 December 2020 to transpose it into national law.

The EECC introduces a renewed focus on increasing regulatory stability; promoting investment in very high capacity networks; coordination of radio spectrum between the Member States and harmonization of spectrum management rules; ensuring the security of networks and services; strengthening and broadening the consumer rights; as well as extending the scope of regulation to OTT services albeit with a  limited scope of obligations.

Although the UK left the EU on 31 January 2020, under the terms of the Withdrawal Agreement, the UK remains under an obligation to implement EU Directives into domestic law until the end of the Brexit transitional period, which expires on 31 December 2020. It follows, that the UK (as any other Member State) has until 21 December 2020 to implement the provisions in domestic law. The EECC implementation workstreams cover the broad categories of access and investment incentives, radio spectrum, consumer protection and universal service obligations.

With regard to the new pro-investment measures that support the UK’s plans for nationwide gigabit broadband, Ofcom will have new information-gathering powers on operators’ planned network rollout to allow the government to better target public investment in poorly-connected areas as well as help inform industry investment. Ofcom will have a broad duty to promote take-up of gigabit-capable networks. In areas where it is costly or difficult to install new networks Ofcom will have the power to impose obligations on operators already present to offer network access or to share equipment such as mobile masts with other operators.

In relation to consumer protection, which is the focus of the second part of this article, the UK government was clear that Ofcom should proceed to implement the EECC’s end-user rights provisions in full.

New definitions of services introduced by the EECC

The EECC broadens the scope of the legislative framework governing electronic communication services (ECS) to include a new category of services referred to as number independent interpersonal communication services. This is a move to ‘level the playing field’ between ‘over-the-top’ and traditional telco services (i.e. the number based interpersonal communication services). The EECC divides the ECS into three main sub-categories:

  • internet access services (IAS),
  • interpersonal communications services (IPCS) which in turn includes a distinction between (i) number-based (NBICS) and (ii) number-independent interpersonal communications services (NIICS); and
  • conveyance services, such as a transmission services used for machine-to-machine services (the “M2M Services”) or for broadcasting.

Priorities set by the UK government

The UK government set its transposition priorities earlier in 2020 explaining that it decided to prioritise the transposition of certain articles of the EECC for the original transposition deadline of 20 December 2020 and deprioritise others. In particular, it has decided not to prioritise the inclusion of NIICS in the scope of the UK ECS regulation with the explanation that:

The potentially wide-ranging and complex nature of the NIICS requires work involving several government departments, engagement across the communications industry and detailed analysis and policy work. As such, the government has not treated the application of the narrow band of consumer rights and light-touch security provisions to NIICS as critical for the 21 December 2020 deadline.”[1]

On that basis, the UK transposition will cover only IAS, NBICS (as the only sub-category of ICS) and conveyance services.

This may create uncertainty regarding the exact scope of obligations the providers of NIICS will be subject to in the UK compared to the mainland Europe especially given that there is currently no visibility on any timelines for the subsequent consultations that the UK government referred to.

Transposition measures to be adopted by Ofcom focus on consumer protection

Ofcom’s main implementation efforts focused on the “End User Rights” chapter of the EECC, which contains a package of measures to protect end-users and include a range of requirements, in areas such as provision of information in contracts, transparency, comparison tools and publication of information, quality of service, contract duration and termination, switching and porting and bundled offers.

The end-user rights provisions apply to different categories of customer: some only apply to residential customers/consumers; some also apply to microenterprise, small enterprise[2] and not for profit customers; while others apply to all end-users, including large enterprise customers.[3]

Ofcom will implement these requirements by modifying the existing General Conditions of Entitlement which providers of ECS must comply with if they want to provide services in the UK (GCs).

Ofcom consulted on the transposition of these rights with the industry in December 2019, July 2020 and latest in October – November 2020.[4] It is expected that the final set of revised regulatory rules will be published by Ofcom before 21 December 2020 in line with the EECC implementation deadline.[5]

Key measures and timetable for their implementation

Ofcom will introduce a new set of measures that protect broadband, mobile, pay TV and landline customers. Key measures and deadlines for their implementation are summarised below and discussed in more detail in the following sections, which also explain which category of customers will benefit from each such set of measures.

Measure Impl. Deadline Lead-times
Ban on selling ‘locked’ devices December 2021 12 months
Access to information for disabled customers December 2021 12 months
Better contract information (pre-contract information
& summary of key contract terms)
June 2022 18 months
Stronger rights to exit June 2022 18 months
New rules for bundles June 2022 18 months
New rules on broadband switching December 2022 24 months

 

Implementation of some of these measures may be relatively straightforward but most of them will require a complex review, by the relevant operators, of their customer facing information, systems and processes and, in particular, the existing customer journeys.  A typical example is the new and highly prescriptive requirement regarding the Contract Information and Contract Summary. The practical implementation means that the relevant operator would need to launch a major project across various internal departments analysing the existing customer journeys using several different onboarding and communications channels (from brick and mortar through to telesales up to the fully digital on-line or app-based experience), identifying all the gaps and subsequently implementing all required changes separately for each such channel.  What used to be a streamlined telesales process may now be combined with some form of a digital delivery of the necessary information (e.g. by email, SMS with a hyperlink, etc.), requiring confirmation by, for example, an OTP, accompanied by the necessary system logs for future records – as the service provider will have to demonstrate at which stage of the process the obligatory information was provided to the customer.

Ban on selling locked devices

Currently, some providers sell mobile devices that are locked to a particular network and cannot be used on other networks until they are unlocked. This, according to Ofcom, may represent additional disincentive to switching as some customers apparently experience difficulties in unlocking their device. Ofcom refers to that over one third of customers who had considered switching, but decided not to, said device locking was one of the factors that put them off. As a result, Ofcom decided to ban the sale of locked mobile devices altogether to remove this hurdle for customers.

Access to information for disabled users

Currently the rules enable blind or vision impaired customers to request certain correspondence relating to communication services in a format that is accessible (e.g. braille or large print), free of charge, if they cannot access standard communication formats.

The new rules on accessibility will cover all communications, such as price changes or payment reminders (except marketing materials) and benefit all customers who need alternative formats because of their disabilities.

In addition, Ofcom proposed that such users should have access to a free video relay service for contacting the emergency services in addition to the existing rules including the provision of text relay and emergency SMS.

Pre-contract information & summary of key contract terms

The new information obligations aim at ensuring customers are given clear and comprehensive information about their communications services and the terms and conditions that apply to them before they enter into a binding contract with service providers. They apply to all publicly available ECS, except for M2M Services, and strengthen the position of not only residential customers but also small businesses or not-for-profit organisations, unless they have explicitly agreed to waive their rights.

There are two categories of such information:

  1. specific information about the service the customer is signing up to (the ‘Contract Information’), and
  2. a short summary of the key contract terms (the ‘Contract Summary’),

in writing/ on a durable medium, before they are bound by a (valid and enforceable) contract.

There are important repercussions for the customer contracting process as Ofcom made clear that (i) a contract shall become effective after the Contract Information and Contract Summary has been received by the customer and the customer has provided an express consent to enter into a contract, and (ii) the Contract Information and Contract Summary provided to the customer becomes an integral part of the contract that cannot be altered without the express consent of both parties.

The Contract Information involves the information on the service provider, the service and its parameters, limitations and other key service terms with additional guidance on:[6]

  1. core subscription price: it includes any activation, recurring and consumption-related fees but excludes any add-ons, the provider must clearly explain any conditions for a future price increase due to, e.g., inflation;
  2. the price of individual elements of a bundle: where the individual elements of a bundle are available for separate purchase including specific example of bundled mobile handset contracts;
  3. contract duration and conditions for renewal and termination of linked contracts: this refers to a special category of arrangements,[7] which are based on linked/ dependent contracts where the commitment periods for individual services end on different dates: the consequences of such interdependency must be made clear to customers including amount(s) of any early termination fees;
  4. conditions on terminal equipment (locked mobile handsets): information on terminal equipment locking and its unlocking including any fees applicable;
  5. arrangements for provisioning of the service (i.e. an exact date for when the service will start or a latest date for migration completion if reference to an exact date is not objectively possible).

For the Contract Summary, Ofcom refers to the EU Implementing Regulation,[8] which stipulates the standard format and structure of the information to be provided. Ofcom explained, that it will put a lot of weigh on these requirements and in instances, where the providers diverge from the template, they will have to provide an objective and reasonable justification for doing so.

The details of such requirements gave rise to numerous concerns raised by the service providers, in particular regarding the process for providing the Contract Summary and getting customer consent during the customer journey, the exact timing for providing such information, the understanding of the notion of a durable medium as well as introducing any changes to the contract information and contract summary.

Providers mainly took issue with appropriateness of certain requirements in light of phone sales journeys and other customer onboarding channels brought by the digital economy, the specific nature of sales of pre-paid SIM cards, distribution by resellers or requirements for upgrades, migrations or renewals. Most of them emphasized the vast amount of changes and their impact on the existing sales processes and systems including revising sales scripts and retraining staff. This has been largely taken onboard by Ofcom, which recognised the extent of such changes, providing them with 18 months for implementation.

Exit rights

The new measures aim at strengthening customers’ right to exit their contract (without the payment of exit fees other than for the remaining value of any retained equipment) if providers choose to make changes to their contractual terms during the term of the contract. Currently, customers only have this right only if a contractual change is likely to be of material detriment to them.

Under the new rules a much broader set of changes would give a customer the right to exit unless such change is (i) not exclusively to their benefit, (ii) purely administrative in nature with no negative effect on the customer, or (iii) required by law.

The new rules will apply to all contracts, from the implementation date, including existing contracts and new contracts. Surprisingly, this broad exit rights apply to all categories of customers, including large enterprise customers. They will apply to all service with the exception of M2M services, where the end-users are residential, small businesses or not for profit customers. As mentioned earlier, this right to exit, will also apply to other services or equipment bought as part of a bundle with a communications service.

Furthermore, customers must also be permitted to exit their contract on no more than one month’s notice when the contract reaches the end of the commitment period and would automatically roll on a monthly basis. This will apply to consumers, small businesses and not-for-profit customers unless they expressly agree a longer notice period.

New rules on bundles

The EECC introduced new definitions and rules on bundles with the aim to further limit possibilities for customers’ lock in due to various conditions including different commitment periods applicable to the individual components of the bundle.

The consultation gave rise to concerns about giving Ofcom powers to regulate non-ECS elements of bundles, potentially including services subject to different regulatory regimes (i.e. the regulatory clash), which – as some considered, went beyond the purpose and/or jurisdiction of the EECC. In light of these concerns, it has been decided that Ofcom’s powers should only extend to those services that are most relevant, and closely related to, telecoms. As a result, a bundle has been defined narrowly as it must include IAS or NBICS. This means that in addition to voice and broadband services, a bundle may include digital services such as email and cloud storage; content services, such as TV or video on demand content or music streaming services; and terminal equipment.

Such bundles are then caught by the following key principles:

  1. the conditions and procedures for contract termination must not act as a disincentive to switch;
  2. commitment periods must not exceed 24 months whereas this rule will newly apply to all elements of bundles offered to small businesses and not for profit customers, unless those customers expressly agree otherwise;[9]
  3. preventing service providers from extending the duration of a contract (i.e. re-setting the commitment period) when a customer subsequently purchases an additional service or terminal equipment, unless the provider obtains that customer’s express consent; and
  4. extending end-of-contract notifications and annual best tariff information to bundles.

Broadband switching

Ofcom will introduce new rules to ensure a customer’s new broadband provider leads the switch providing a seamless switching experience and ensuring the shortest possible timelines.

While there are already established processes for switching within the UK fixed copper networks and between mobile providers, there are currently no regulated processes in place for residential customers switching between providers on different fixed networks. The new switching process will enable moving across different fixed networks (for example, between Virgin Media and a provider using the Openreach network or a full fibre network provider such as CityFibre) or between providers that use the same fixed network, but connect customers using different technologies.

A summary of the key changes:

  1. as a general rule, all switches are to be led by the gaining provider;
  2. switching must take place as soon as possible, ideally on the date and within the timeframe agreed with the customer;
  3. on the date of switching, the losing provider must cease to provide its services and the gaining provider must start to provide its services and where relevant, any numbers must also be ported and activated on this date;
  4. the customer can request to port its number(s) for at least one month post termination of the original contract without being charged for porting;
  5. providers must take all reasonable steps to ensure all customers are adequately informed before and during the switching process, including on rights to compensation;
  6. for pre-paid mobile services, the customer can request a refund of any unused credit;
  7. specific rules for residential customers:
    • providers must ensure continuity of service, where technically feasible, whereas any loss of service must not exceed one working day,
    • right to automatic compensation for missed appointments or if the switch takes longer than one working day or doesn’t happen,
    • a ban on notice period charges beyond the switch date.

Ofcom also noted that despite the engagement of the Office of the Telecommunications Adjudicator (OTA) the industry has been until to date unable to agree on a single fixed switching process. To tackle this, Ofcom plans to shortly publish further consultation to establish a new process for residential customers.

The below summarizes some further rules.

Usage notifications

Ofcom decided to introduce a new requirement to ensure that residential customers, small businesses and not-for-profit customer are notified when a service included in their tariff plan is fully used up. The notification will also include any usage charges these customer will incur if they continue to use the relevant service.

Additional transparency obligations

Ofcom further extended the scope of information, which providers must publish about them and their services. It will now also cover the contact details of the service providers, details about quality of service levels and on restrictions on equipment that can be used, clear breakdown of charges included within tariff allowances as well as any limitations on access to the emergency services. The information published on providers’ websites must be clear, comprehensive and machine-readable, and in a format that is accessible to disabled customers.

Information sharing with price comparison tools

Consistent with the EECC rules, there will be a new requirement that service providers must make available, free of charge and in open data formats certain information on their services for the purposes of providing a specific comparison tool.

Alongside this, Ofcom will be publishing a statement on changes to its accreditation scheme for price comparison websites, including changes to implement EECC rules regarding independent comparison tools.

[1] Government response to the public consultation on implementing the European Electronic Communications Code 22 July 2020, page 65; available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/902879/Government_response_EECC.pdf.

[2] Microenterprises and small enterprises further referred to as small businesses.

[3] In the course of the consultative process, Ofcom made certain tweaks to these definitions compared to how these are defined in EU law such as, for example, introducing a headcount thresholds for not for profit customers, removing a financial threshold from the definition of microenterprise and small enterprise customers, or consolidating the small enterprise and microenterprise definitions into a single definition.

[4] Fair treatment and easier switching for broadband and mobile customers – Implementation of the new European Electronic Communications Code, published by Ofcom on 27 October 2020 as available at https://www.ofcom.org.uk/__data/assets/pdf_file/0023/204980/statement-eecc-revised-proposals.pdf.

[5] https://www.ofcom.org.uk/consultations-and-statements/category-1/proposals-to-implement-new-eecc.

[6] Full list of items will be provided in Annex 1 to Condition C1.

[7] In Ofcom’s terminology “non-coterminous linked contracts”. Ofcom has also issued a guidance on how it will assess if the linked contracts deter switching in breach of the revised GC.

[8] The EU Commission published its Implementing Regulation on the contract summary of 17 December 2019, including the accompanying template, in the Official Journal of the European Union on 30 December 2019 (the “EU Implementing Regulation”).

[9] This means that providers may offer contracts with a minimum duration exceeding 24 months provided that these categories of customers expressly agree to such longer duration when they sign up.

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