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Cracking the Code: Ireland upgrades its telecommunications regulatory enforcement regime & paves the way for delayed transposition of the European Electronic Communications Code in 2022

AUTHORs: Kate McKenna co-author(s): Simon Shinkwin, Ciarán Campbell Services: Telecommunications, Competition and Regulation DATE: 14/01/2022

The European Electronic Communications Code (the “EECC”), revises the entire legislative framework for the electronic communications sector in Europe.  It aims to codify all existing EU telecoms regulatory regimes in one legal instrument, and to ensure that ‘traditional’ and ‘online-only’ operators are subject to the same regulatory rules (‘technological neutrality’), so that the regulatory landscape is ‘fit for the digital age’

This article provides a summary of recent published draft Irish legislation transposing the EECC.  Matheson’s on-going Cracking the Code Series, provides in-depth analysis on different aspects of the EECC including (i) security and outage reporting obligations for internet-based providers (under Article 40 EECC), (ii) new customer contract obligations (under Article 102 EECC), and (iii) post-contractual obligations of ECS providers (under Article 105 EECC).

The recent publication of draft legislation was long-awaited. In September 2021, the European Commission issued Ireland with a ‘reasoned opinion’ on foot of its lengthy failure to transpose the EECC into Irish law, requiring Ireland to adopt legislation within two months of issuance, or be subject to potential infringement proceedings by the Court of Justice of the European Union.  Finally, following informal stakeholder consultation over the past 2 years, on 22 December 2021, the Department of the Environment, Climate and Communications, published draft legislation intended to transpose the EECC using two legislative instruments: (i) the Communications Regulation (Enforcement) Bill 2022 (the “Bill”), and (ii) the European Union (Electronic Communications Code) Regulations 2022 (the “Regulations”).  Specifically, a summary of the Bill and a full version of the Regulations were published in draft and the public was invited to comment on the draft Regulations only, by 11 February 2022.                        

What should industry stakeholders expect?

The Communications Regulation (Enforcement) Bill 2022

Unsurprisingly, the Bill designates the Commission for Communications Regulation (“ComReg”) as the competent authority for the purposes of enforcing the EECC.  Armoured with an enhanced and updated enforcement regime, ComReg has been tasked with ensuring that ‘Ireland’s regulatory landscape for electronic communications is robust and dynamic enough to meet the needs of the electronic communications sector over the coming years’[1].  The following aspects of the Bill are of particular interest:

  • New civil and updated criminal enforcement regime for ComReg:

The Bill will provide a newly established civil enforcement regime and make changes to the existing criminal enforcement regime, in order to give effect to the enforcement provisions of the EECC and in particular Article 29(1) of the EECC which provides that “within the limits of national law, national regulatory and other competent authorities shall have the power to impose such penalties. The penalties provided for shall be appropriate, effective, proportionate and dissuasive”.

The civil enforcement regime will comprise new investigation and adjudication powers for ComReg, where it considers there to be a ‘regulatory breach’ in the electronic communications sector.  These powers will enable ComReg to (i) impose administrative financial sanctions on undertakings up to a maximum of €5 million or 10% of annual turnover (whichever is the greater), and (ii) require undertakings to pay compensation to end-users (identical monetary caps to apply), subject to confirmation of the High Court.  ComReg civil fining decisions shall be confirmed by the High Court, unless they are irrational or erroneous in their reasoning or contain a clear error of law, and can be appealed on judicial review-type grounds within 28 days of issue.

ComReg will have a new legal basis for its current practice of entering into settlement agreements, based on binding commitments from undertakings.  ComReg will also have a new legal power to impose interim measures.  Having regard to ComReg’s criminal enforcement regime, the Bill will also provide for a higher penalty for the commission of an indictable offence so as to ensure parity with the above-described civil fine limits (a fine not exceeding €5 million).

All decisions in the exercise of ComReg’s new civil fining powers will be subject to an investigation report by an independent (and impartial) adjudicator, who will be responsible for the imposition of remedies, in order to ensure procedural fairness in the new scenario where ComReg will be, to some extent, ‘both Prosecutor and Jury’.

Under existing legislation, ComReg has a wide-range of enforcement / information request powers.  However, it is said that the Bill, in providing for investigations to be carried out by ComReg officials following ‘complaints or on an own initiative basis’, will equip ComReg with a ‘suite of investigatory powers’, in addition to those afforded to authorised officers under the existing Communications Regulation Act 2002.  One such notable inclusion being the ability to now impose civil fines in the event of an obstruction by an undertaking, of an authorised officer, in the exercise of their investigatory powers.

The proposed new regime will be welcomed by ComReg which is continuing to be one of the most active regulators in Ireland.  Although previous and ongoing enforcement proceedings taken by ComReg against traditional telecoms operators seek monetary fines exponentially higher than the proposed cap of €5 million as outlined in the Bill. 

  • Transposition of the EECC: Security

The Bill will transpose and ‘gold-plate’ the relevant network and service security provisions contained in Articles 40, and 41 of the EECC.  As part of this, the Bill proposes the introduction of a mechanism which would allow the Minister to specify security measures by regulation and to provide guidelines relating to network security.  Thus, providing a legislative basis to assist with enforcement of the electronic communications security measures.  In our Cracking the Code Series,  we outlined how ‘interpersonal communication services’ (“ICS”) defined as a service “normally provided for remuneration that enables direct interpersonal and interactive exchange of information via ECN between a finite number of persons” now falls within the regulatory remit of the EECC,  the result of which means that ICS providers must adhere to the regulatory requirements under Articles 40, and 41 of the EECC (ie, meet a particular network security standard and report significant incidents to its national regulator).  In short, ICS providers are now subject to investigation by ComReg.  The summary of the Bill does not stipulate whether ICS providers are to be exempt from certain security provisions and / or whether special accommodations are to be made (akin to Recital 95 of the EECC recognising that exceptions may be made for ICS providers if ‘justified on the basis of a risk assessment’).  Therefore, Irish-based tech companies, including internet-based messaging and calling services should continue preparations for full adherence to these security provisions.

  • New consumer protection measures

The Bill seeks to introduce a number of customer service protections, developed in close co-operation with ComReg.  These include the following:

(i) A compensation scheme for specific customer service failings by operators;

(ii) A new ‘Customer Charter’ which will act as a ‘one-stop-shop’ for customers to identify appropriate standards of service from operators (ComReg further intends to set enforceable minimum quality of standards); and

(iii) An enhanced alternative dispute resolution process for consumers.

The European Union (Electronic Communications Code) Regulations 2022

The remaining sections of the EECC will be transposed by way of secondary legislation, that is, the Regulations, which will be enacted at the same time as the Bill.  The Regulations will provide for a legislative framework in respect of a number of areas of the EECC including (i) the role of the regulator (ComReg), (ii) universal service obligations applicable to ECN / ECS, (iii) assignment and use of radio spectrum, (iv) end-user rights enjoyed by consumers of electronic communications services in the EU, and (v) the regime governing access to infrastructure obligations on operators deemed to have Significant Market Power.  To date, and following two years of industry consultation / workshops, there has been no material divergence, from an Irish perspective, regarding the terms of Directive 2018/1972. 

European Union Divergence

Achieving a consistent approach across all Member States is an important implementation objective of the EU.  However, there continues to emerge national inconsistencies in the implementation of the new EECC.  For example, in Spain, the EECC is set to be transposed through the General Telecommunications Law 2020 (“GTL”).  Under the GTL, the process by which operators of ECS (which extend to number-based ICS (“NB-ICS”) and number-independent ICS (“NI-ICS[2])) notify the Ministry of Economic Affairs and Digital Transformation of such services has been amended slightly. One such amendment being that NI-ICS providers are now subject to a communications procedure only and in addition, must comply with a set of obligations (ie, transparency requirements) before approval of their ECS operation is sent to the General Operators Registry.  Similarly, Belgium’s transposition of Directive 2018/1972 (adopted on 16 December 2021) goes further than what the EECC envisages with respect to the strengthening of end-user rights (particularly around transparency requirements, and restrictions on contract duration and termination).

Ireland will look to fully transpose the EECC into Irish law as soon as possible, with a view to circumventing any further infringement proceedings by the European Commission / the Court of Justice of the European Union.  However, with both the Bill and Regulations being approved by Government for priority drafting, it is advised that ECS and ECN providers, should continue, in earnest, to ensure their regulatory compliance.

Conclusion

We would advise all interested parties to review the published draft legislation and to engage with the Department regarding any preliminary concerns that they may have as part of the public consultation on the draft Regulations, which is open until 11 February 2022

Please contact Kate McKenna or Simon Shinkwin in Matheson with any queries.

[1] The Communications Regulation (Enforcement) Bill 2022 (Summary Document), December 2021.

[2] Terms introduced by the EECC; NB-ICS is a service that connects publicly assigned numbers, that is, numbers in national or international numbering plans.  While, NI-ICS is a service that does not connect publicly assigned numbers.