EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

1.1. Objectives of the proposal

Europe must tap into new sources of growth to restore competitiveness, drive innovation and create new jobs. The global economy is evolving towards an Internet economy, and ICT should be fully recognised as a source of smart, sustainable and inclusive growth. Europe cannot afford to renounce the benefits of connected technologies which account for 50% of productivity gains in recent years, across all sectors; which create five jobs for every two lost; which is a driver of innovative new services which can quickly reach global scale if enabled to grow. This is the key for Europe to emerge stronger from the crisis, if we address impediments to growth arising from ongoing fragmentation. This has been fully acknowledged by the Spring European Council of 2013, the Conclusions of which foresaw that the Commission should report by October 2013 on the remaining obstacles to the completion of a fully functioning Digital Single Market, and present concrete measures to establish the single market in information and telecommunications technology as early as possible.

The general objective of the proposal is to move towards a single market for electronic communications in which:

- citizens and businesses can access electronic communications services wherever they are provided in the Union, without cross-border restrictions or unjustified additional costs;

- companies providing electronic communications networks and services can operate and provide them wherever they are established or their customers are situated in the EU.

This ambitious goal is important in itself, after over a decade of Union legislative interventions to liberalise and integrate these markets. Urgent and decisive measures to achieve it, as laid down in this proposal, are all the more vital because some of them will take time, after adoption, to produce all of their effects. A single market for electronic communications would promote competition, investment and innovation in networks and services by fostering market integration and the cross-border investment in networks and the provision of services. The specific measures proposed should lead to greater levels of competition on infrastructure quality as well as price, stronger innovation and differentiation, including in business models, and to easier planning of the commercial and technical elements of investment decisions regarding entry or expansion on wireless or fixed markets. It will thus underpin other measures taken to promote the ambitious broadband targets set out in the Digital Agenda for Europe as well as the establishment of a genuine Digital Single Market where content, application and other digital services can freely circulate. Enhanced levels of infrastructure competition and integration across the Union should also lead to a reduction in bottlenecks and thus in the need for ex ante regulation of electronic communications markets, making this over time a sector like any other economic sector subject to horizontal regulation and competition rules.

The growing availability of digital infrastructures and services would in turn increase consumer choice and quality of service, and contribute to territorial and social cohesion, as well as facilitate mobility across the EU; while for the digital economy at large, a better functioning electronic communications sector throughout the Union should lead to greater choice and quality of business inputs, enabling the attainment of productivity gains associated with ICT use as well as from modernised public services. The ultimate goal is to underpin European competitiveness in a world which increasingly depends on the digital economy to function and to grow.

Outstanding single market integration challenges include: first, to remove unnecessary obstacles in the authorisation regime and in the rules applying to service provision so that an authorisation obtained in one Member State is valid in all Member States, and that operators can provide services on the basis of consistent and stable application of regulatory obligations. Second, to ensure greater harmonisation for accessing essential inputs: by guaranteeing mobile operators predictable assignment conditions and coordinated timeframes to access spectrum for wireless broadband across the EU; by harmonising ways to access European fixed networks so that providers can more easily offer their services across the single market. Third, to guarantee common high levels of consumer protection across the Union and common commercial conditions in this respect, including measures to gradually end mobile roaming surcharges and safeguarding access to the open internet. These are distinct challenges, to which this proposal brings distinct solutions, but all are vital to commercial and investment decision-making in this sector and for consumers´ benefit, all must be addressed together now to unleash the single market . These sit alongside the wider challenges of building a digital single market, such as the rules that apply to on line content.

For Europeans to be able to enjoy new innovative high quality services, investment in next generation infrastructure needs to speed up. The right regulatory environment is crucial to contribute to a dynamic and competitive market. It must provide the right balance of risk and reward for those prepared to invest. And it can bring fragmentation of services provision to an end, so that their full benefits are available to all industries and users across the EU. In order to support these objectives, the Commission is adopting together with this proposal a Recommendation on consistent non-discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment.[1] This Recommendation will promote competition and enhance investments in high-speed networks by providing long-term stability of copper access prices, ensuring access seekers equal access to the incumbent operators' networks thereby ensuring a level playing field, and by setting out the conditions under which price regulation of NGA networks is no longer warranted, in order that investors in such networks would have greater freedom to discover appropriate pricing strategies to secure a return in the presence of competing infrastructures such as regulated copper, as well as cable in some areas and, increasingly, 4th generation mobile networks.

This proposal must also be considered in the context of other recent or impending initiatives in the field. The proposal builds upon and advances the main directives of 2002 governing the provision of electronic communications, as amended in 2009, by introducing directly applicable legislative provisions which shall operate in conjunction with the provisions of the directives on subjects such as authorisation, spectrum assignment and access to networks. The proposal is adopted against the background of the Commission proposal for a Regulation of the European Parliament and of the Council on measures to reduce the cost of deploying high-speed electronic communications networks[2], which already took the approach of addressing in a single instrument a number of distinct regulatory cost elements at various stages of the network investment process which, taken together, allow reductions in broadband roll-out costs of up to 30%. This proposal is also adopted in the knowledge that the Commission Recommendation on relevant markets[3] is to be reviewed in 2014, and that preparatory work is well advanced; rapid adoption and implementation of this proposal could allow a reduction in the number or scope of markets subject to ex ante regulation as part of the prospective analysis of the development of competition in a single market.

1.2. General context

In today's world, many new digital services and applications are coming online within the EU's single market. Today's innovation and growth opportunities are often digital in virtually every sector of the economy, ranging from the automotive sector (connected cars) to energy (smart grids), from public administrations (e-government) to general services (e-health). Running almost any kind of business, from small start-ups to large enterprises, requires access to state of the art services and infrastructure. This entire ecosystem depends on the connectivity provided by electronic communications networks.

Today, Europe is fragmented into 28 separate national communications markets, each with a limited number of players. As a consequence, while no operator is present in more than half of the Member States, most in far fewer, overall more than 200 operators serve a market of 510 million of customers. EU rules on, for example, authorisations, regulatory conditions, spectrum assignment and consumer protection are implemented in diverging ways. This patchy scenario raises barriers to entry and increases the costs for operators wanting to provide cross-border services thereby impeding their expansion. This stands in stark contrast with the US or China who have one single market of 330 and 1400 million customers respectively, served by four to five large operators, with one legislation, one licensing system, and one spectrum policy.

Economies of scale and new growth opportunities can improve the returns on investment in high-speed networks and can at the same time drive competition and global competitiveness. Yet within the EU, operators cannot benefit sufficiently from them. Other parts of the world are making significant digital efforts and investments - these investments are paying off for both investors and consumers, but in Europe such upgrades are not happening fast enough.

At the same time, due to fragmented national markets, consumers face less choice, services which are less innovative and of lower quality, and they still pay a high price to make calls across borders or ‘roam’ within the EU. This means they are unable to make the most of digital services potentially available today.

As a result, Europe is losing out on a major potential source of growth. In a world where ICT is pervasive, a fragmented electronic communications market undermines efficiency and productivity across the economy. The untapped potential of an EU single market in electronic communications is estimated at up to 0.9% GDP, or €110 billion per year.[4] The benefits from a single market for business communication services alone amount to almost €90 billion per year.[5]

A sound telecommunications market underpins a wider digital economy, whose dynamism of is reflected in its sustained employment growth. To give some idea of the scale and robustness of that wider economy, there are more than 4 million ICT specialists working in the EU, a number which keeps on growing despite the recession .In the wider economy, increasing ICT investment, improving e-skills in the labour force and reforming the conditions for the Internet economy could boost GDP by an additional 5% up to 2020,[6] and create 3.8 million jobs.[7]

Market barriers for electronic communications impede the benefits of cross-European services: better quality, economies of scale, greater investment, increased efficiency and stronger bargaining positions. This negatively affects the wider digital eco-system including EU equipment manufacturers, and content and application providers, from start-ups to governments. It also has an impact on economic sectors such as banking, automotive, logistics, retail, health, energy or transport that rely on connectivity to enhance productivity, for instance, through cloud computing, connected objects and integrated service provision.

1.3. Political background

The Digital Agenda for Europe (DAE), a flagship initiative of the EU's Europe 2020 Strategy, has already signalled this vital role of ICT and network connectivity. It sets out many initiatives to promote investment, enhance competition and reduce the cost of rolling out high-speed networks, to ensure that all Europeans have access to fast broadband. The Commission has also launched a Grand Coalition for Digital Jobs, to address the employment potential of this sector.

The Commission is also implementing initiatives to ensure a "Digital Single Market", and to promote online content, including e-commerce and e-government. It has also proposed a reformed EU Data Protection Regulation, to protect citizens’ privacy while facilitating innovation and business within a single market; and a strategy to promote cyber-security and defend EU critical infrastructures and networks, including a draft Directive on Network and Information Security,[8] which is a vital support to the confidence of citizens and consumers in the online environment.

Moving towards a single market in electronic communications would support the Digital Single Market ecosystem. Such a market would imply, not just modern infrastructure, but also innovative and secure digital services.

Recognising this, the 2013 Spring European Council stressed the importance of the digital single market for growth and called for the Commission to present (in time for the October European Council) concrete measures to establish a Single Market in ICT as early as possible. This proposal, together with the Commission Recommendation on consistent non-discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment, forms a set of balanced measures aimed at moving towards a Single Market in Telecommunications and fostering investment.

2. RESULTS OF CONSULTATIONS WITH INTERESTED PARTIES AND IMPACT ASSESSMENT

2.1. Views of stakeholders

Since the Spring European Council set out in its conclusions the need for concrete proposals to be presented before its October European Council, public consultations had to be conducted within this challenging time-table. In addition to specific formal consultations and consultative events, the Commission has engaged extensively with a wide range of stakeholder organisations to assess the general state of the electronic communications market and how to establish a single market. It has met and received submissions from stakeholders representing all industry segments, consumer organisations, civil society, and national regulators and governments.

On top of that, the Commission organised several consultative events attended by stakeholders representing all segments of the industry, consumers and civil society[9]. These consultations have shown that a large majority of stakeholders share the Commission's problem analysis and recognise that urgent action is needed.

Furthermore, discussions were held in the European Parliament and in the Council of Ministers (TTE Council). In Council, most delegations shared the problem analysis and the need for taking measures to move towards a single market, with a view to safeguard or improve competition and consumer choice, to address net neutrality and roaming and to avoid regulatory arbitrage whilst ensuring more regulatory consistency, including in spectrum management and at the same time avoiding excessive centralisation of competences. Discussions in the European Parliament showed strong support for the thrust of the Commission's proposals and highlighted in particular the urgency of eliminating roaming as part of a single market for electronic communications as well as of introducing a high level of consumer protection and clear rules on net neutrality.

2.2. Expertise

A major study was completed in 2012 on 'Steps towards a truly internal market for e-communications', also known as the "cost of non-Europe in telecoms".[10] The study assessed the state of the EU's single market for electronic communications and estimated the economic potential of a single market.

The Commission also used many other sources of evidence, such as the annual Digital Agenda Scoreboard and economic studies conducted by DG ECFIN, for instance on fragmentation of the telecommunications market in Europe.[11] The EU consultation mechanism under the regulatory framework has also highlighted inconsistent practices by national regulatory authorities (NRAs) when regulating relevant markets. Furthermore, in the context of the Radio Spectrum Policy Programme, the Commission detected a considerable lack of coherence across Member States regarding the authorisation and the opening of spectrum bands for technology-neutral use especially in terms of conditions attached and timing.

2.3. Assessment of the impact of the proposed Regulation

In line with its “Better Regulation” policy, the Commission services carried out an impact assessment of policy alternatives.

The main sources for regulatory fragmentation are linked to the main sector-specific requirements for the provision of electronic communications which are subject to EU law (authorisation, access to fixed and wireless inputs, compliance with end-user protection rules). While each of these elements has very distinct features, and the solutions to fragmentation will necessarily be very different, they are all vital if the main barriers to integrated provision of electronic communications networks and services in the Union are to be overcome. In particular, the assessment of solutions has been broken down by reference to a) barriers due to national authorisation regimes linked with inconsistency in regulatory approaches implemented by NRAs; b) lack of co-ordination in spectrum assignments and conditions as well as regulatory uncertainty as to the availability of frequencies; c) lack of wholesale products which allow the provision of services using the network of another operator with consistent service interoperability levels, in the framework of market remedies or reciprocal negotiations; d) fragmentation of consumer protection rules leading to uneven levels of consumer protection and varying commercial conditions, including high costs of roaming and international calls as well as blocking or throttling of services.

In order to tackle these sources of fragmentation, three policy options were selected for further analysis. The first option was based on the regulatory framework for electronic communications as it stands. The second option considered a single legislative instrument (a Regulation) adjusting the regulatory framework only where necessary for a single EU market for electronic communications, based on enhanced EU coordination. The third option included the substance of the second option, but replaced the current governance structure by a single EU regulator in order to achieve full regulatory coordination.

Each policy option was assessed against its effectiveness to achieve the policy objectives, focusing on the costs and benefits for demand and supply sides, including the impact on the structure of the EU electronic communications industry, the economy, jobs, consumer surplus and the environment.

The impact assessment report concludes that the second option is the best available. First of all, a single European authorisation aims at reducing the administrative burden for European operators and would ensure consistency of their regulatory treatment.

The coordination of use of radio spectrum within the Single market will ensure a synchronised availability of spectrum input and the application of consistent conditions attached to its use across Europe, thereby ensuring an efficient use of spectrum. At the same time, this would support a predictable investment environment for high-speed networks, including their wide territorial coverage, which is also a long-term end-user interest.

The availability of standardised wholesale access products at EU level as a potential remedy for significant market power will allow fixed operators to provide their connectivity services to their customers throughout the Union, with a high quality of service. Such availability is expected to have a positive effect on investments, especially across Member State borders, making it easier for companies to enter new markets to follow customer demand and allowing them to do so with access products of a high quality standard, thus enhancing competition and requiring operators to improve their offer by investing in infrastructure and services.

Common rules on quality of services will ensure the freedom of users to have access to services and applications of their choice and on the basis of clear contractual terms throughout the Union, without their internet access being unduly throttled or blocked. They will at the same time ensure the possibility to acquire specialised services for the provision of specific content, applications and services with an enhanced quality of services. Strengthened transparency and contractual rights would ensure the consumers' interest in high quality and reliable services and will strengthen the competitive dynamics of the market.

Finally measures on unjustifiable price differences between domestic and intra-EU calls and those facilitating the provision of Roaming Like At Home offers through roaming agreements aim at abolishing unjustified additional costs for electronic communications services provided across borders.

In conclusion this option would enhance legal predictability and transparency in the most efficient and timely manner. In particular, greater contestability of markets, more common operating conditions (input access, consumer-specific rules) as well as the pass-on of scale advantages due to customer price elasticity or competitive pressure, should lead to greater convergence. Greater competitive pressure, leading to incentives to differentiate, plus greater scale advantages, greater regulatory predictability, and a better environment for mass distribution of innovative services, should all in due course improve the investment environment. While these proposals are expected to have a positive impact on job creation, the precise social and employment impacts are difficult to assess at this stage. The Commission will pay special attention to this aspect during its monitoring and evaluation of the legislation.

Compared to the preferred option, 3 to 5 years more would be needed to achieve the desired result under options 1 (applying the current framework) and 3 (complete change of the regulatory governance for pan-EU services), with foregoing potential additional GDP up to 3.7% over the period 2015 – 2020.

It also takes least time to produce its effects and deliver all the specific objectives, thus achieving the highest possible economic and social benefits of all the options considered.

The Impact Assessment Board delivered an opinion on the draft impact assessment on 6 September 2013.

The report and its executive summary are published with the proposal.

3. LEGAL ELEMENTS OF THE PROPOSAL

3.1. Legal basis

The proposal is based on Article 114 of the Treaty on the Functioning of the European Union, as it relates to the internal market for electronic communications and its functioning.

3.2. Subsidiarity

The current regulatory framework has not been able to fully deliver its objective to establish a single market for electronic communications. The differences in national rules, while compatible with the existing EU regulatory framework, nevertheless create barriers to operating and acquiring services across borders, thereby limiting the freedom to provide electronic communications, as guaranteed under EU law. This has a direct effect on the functioning of the internal market. Member States have neither the competence nor the incentive to change the current regulatory landscape.

Measures at EU level are needed to tackle the underlying causes of the problem. First, the current fragmentation resulting from the national dimension of the general authorisation systems is countered by introducing a single EU authorisation. A single EU authorisation mechanism coupled with the home-country control on the withdrawal and/or suspension of such authorisation would facilitate registration of EU operators and the coordination of the most serious enforcement measures applicable to them. The proposal guarantees greater regulatory consistency and predictability to such companies by granting the Commission the power to require national regulators to withdraw proposed remedies which would be incompatible with EU law. The proposal would ensure much greater convergence in regulated conditions of access to fixed and wireless inputs which facilitate the provision of pan-European services. The full harmonisation of end-users' rights ensures that citizens and providers across the EU have similar rights and obligations, in particular the possibility to market and acquire services across borders under the same conditions.

The principle of subsidiarity is respected as EU intervention will be limited to the extent necessary to remove specified internal market barriers.

First of all, the single EU authorisation is available to operators intending to carry out their activities on a pan-EU dimension and the regulatory obligations inherently linked to the place where a network is located or a service is provided remain to be decided by the national regulator of that Member State. Revenues levied from spectrum assignments will remain with the Member State concerned, while more detailed regulatory principles on spectrum use complementing the high level objectives framed in the EU Regulatory framework still leave a large margin of discretion on details to Member States. Similarly, with regard to the notification procedure to the Commission on spectrum, this is based on a legal compatibility check, rather than substitution of Commission discretion for that of Member States, and is subject to further safeguards such as the examination procedure under comitology. The extension of the benefit of general authorisation to use of small-area wireless access points is confined to unobtrusive, low-power deployments strictly defined by implementing measures. Finally, the imposition of European virtual access products remains with the national regulatory authority of the Member State where the network is located, following a market analysis based on the existing framework; at the same time, the harmonisation of virtual access products uses the same mechanism as for physical wholesale access products foreseen already under the existing framework.

3.3. Proportionality

EU action is limited to what is necessary to achieve the objectives identified. Measures will focus on tackling clear bottlenecks to the Single Market, with the minimum necessary amendments to the existing regulatory framework needed in order to create the conditions for new cross-border electronic communications markets to develop at EU level. In doing so it would allow meeting the two-fold Single Market objective of freedom of provision and freedom of consumption of electronic communications services. At the same time, by leaving the existing regulatory framework largely untouched, including in the way that national regulatory authorities supervise markets, it avoids disrupting operations of those providers that would opt for keeping a national (or sub-national) footprint.

Moreover the development of new cross-border markets should take place under the 'better regulation' principle, i.e. by progressively decreasing regulatory pressure if markets are proven to be competitive within a more integrated European context but in accordance with the supervisory competences of national regulatory authorities and subject to ex post competition control. That is beneficial as the national regulatory authorities would also be the best placed to take account of the national specificities when (i) regulating access to physical infrastructures that by their nature remain geographically confined to national or regional level; and (ii) addressing consumer questions in a national context (notably in their language).

Accordingly, the proposed measures will not involve significant changes to governance or shift competences to the European level such as through an EU regulator or pan-European spectrum licensing.

The solutions will enable relevant stakeholders to exploit the synergies of a large single market and reduce inefficiencies in their operations and investments, in the most timely and effective manner. At the same time, the proposal ensures to those operators who opt to provide services in a single Member States continuity of the current rules while benefitting from improved and clearer rules concerning end-users rights, and a more predictable environment for access to spectrum inputs and to high-quality fixed network access products.

3.4. Fundamental rights

The proposal’s impact on fundamental rights such as the freedom of expression and information, the freedom to conduct a business, non-discrimination, consumer protection and the protection of personal data, has been analysed. In particular, the Regulation will safeguard access to the open internet; it sets a high standard for fully harmonised end-user rights, increases business freedom at European scale and should lead to a reduction in sector-specific regulation over time.

3.5. Choice of the instrument

The Commission proposes a Regulation as it ensures the removal of single market barriers by complementing the existing regulatory framework for electronic communications. This includes specific, directly-applicable rights and obligations for providers and end users; it also includes coordinating mechanisms regarding certain inputs at European level to facilitate the provision of electronic communications services across borders. A Regulation is important, for example, in a field such as open Internet and traffic management, where a truly common approach is necessary to avoid from the outset the current tendency towards divergent national solutions and to enable both integrated network management and the development of online content, applications and services which can be made available in a common way throughout the Union.

3.6. Structure of the proposal and main rights and obligations

General provisions (Chapter I, Article 1 and 2)

Chapter 1 contains the general provisions, including relevant definitions. It establishes regulatory principles pursuant to which the regulatory bodies involved shall act when applying this regulation in conjunction with the provisions of the existing framework

Single EU authorisation (Chapter II, Article 3 to 7)

Operators wanting to provide services in several Member States must currently be authorised in each of them. The Regulation introduces a single EU authorisation based on a single notification system in the Member State of main establishment of the European electronic communication provider (the home country) and sets out the conditions applicable to it. The withdrawal and/or suspension of the Single EU authorisation are subject to home-country control. Holders of a single EU authorisation are entitled to equal regulatory treatment in similar situations within and across Member States and new entrants and smaller cross-border operators are exempted from administrative charges and contributions to the universal service financing in Member States other than the home country (host countries). Holders of a single EU authorisation will further provide services throughout Europe on the basis of greater consistent application of regulatory obligations

The single European authorisation will thereby reduce unnecessary administrative hurdles and guarantee European providers more consistent rights and obligations to operate across the EU and achieve scale.

European inputs (Chapter III)

Section 1 (Articles 8 to 16)

Mobile providers in Europe today lack the necessary predictability regarding spectrum availability across the EU and must deal with diverging assignment conditions. It is thus more difficult to plan long-term, to invest across borders and eventually to gain scale. Such a patchy situation means that device manufacturers design their products for other markets with greater scale and growth prospects. To put an end to this unsustainable situation, harmonisation of spectrum inputs must be ensured by:

· Defining common regulatory principles applicable to Member State when defining conditions on the use of spectrum which is harmonised for wireless broadband communications.

· Empowering the Commission to adopt implementing acts to harmonise spectrum availability, the timing of assignments and the duration of rights of use for spectrum.

· A consultation mechanism enabling the Commission to review draft national measures concerning the assignment and the use of spectrum.

· Simplifying conditions for the deployment and provision of low-power wireless broadband access ('Wi-Fi', small cells) to enhance competition and reduce network congestion.

Section 2 (Articles 17 to 20)

Harmonised, high-quality virtual access to fixed networks would facilitate market entry and the provision of cross-border services both to end-users and businesses, and would help drive competition and investment. Today, virtual fixed access products are defined in a variety of manners across the EU. Virtual access to fixed networks to provide cross-border services is harmonised through:

· Defining common features of EU-harmonised virtual broadband access products (virtual unbundling, IP bit-stream and terminating segments of leased lines) when mandated on operators with significant market power.

· Accordingly, national regulators are required to take into account the introduction of such harmonised access products when imposing regulatory remedies, with due regard for existing infrastructure competition and investments and overarching proportionality requirements. The proposal also reflects decisional practice in a provision linking consideration of wholesale price control obligations on NGA networks with competitive constraints from alternative infrastructures, effective guarantees of non-discriminatory access and the level of retail competition in terms of price, choice and quality.

· A right for electronic communications providers to offer and access on reasonable terms harmonised connectivity products with assured service quality to enable new types of online services.

Rights of end-users (Chapter IV, Articles 21 to 29)

In Europe, both electronic communications providers and end-users face inconsistent rules regarding rights of end-users, leading to uneven levels of protection and a variety of diverging rules to comply with in different Member States. This fragmentation is costly for operators, unsatisfactory for end-users and eventually hinders the provision of services across borders and negatively impacts end-users' willingness to consume them. To guarantee an appropriate level of consumer protection across the EU, rules defining the rights of end-users are harmonised, including:

– non-discrimination between certain domestic and intra-EU (international) communications (unless differences are objectively justified),

– mandatory pre-contractual and contractual information,

– increased transparency and facilities to avoid "bill shocks",

– the right to terminate the contract after six months without costs (excluding the residual value of any subsidised equipment or other promotions),

– the obligation on providers to provide unhindered connection to all content, applications or services being accessed by end-users – also referred to as Net Neutrality - while regulating the use of traffic management measures by operators in respect of general internet access. At the same time, the legal framework for specialised services with enhanced quality is clarified.

Facilitating change of provider (Chapter V, Article 30)

Improved switching rules promote market entry and competition between electronic communication providers and allow end-users to choose more easily the provider which best meets their specific needs. Harmonised principles applicable to switching procedures are provided, such as cost-orientation, receiving provider-led process, automatic termination of contract with the transferring provider.

Organisational and final provisions (Chapter VI, Articles 31 to 40)

This Chapter contains first general provisions concerning sanctioning powers of the competent national authorities and rules on the Commission's power to adopt delegated or implementing acts.

Modifications to the Framework Directives as well as to the Roaming and BEREC Regulations are also set out. In particular, with regard to ex ante market regulation and given that each NRA is still responsible for its respective (national) markets, the modifications aim to foster greater consistency and stability across the EU with regard to NRAs' assessment of markets and imposition of regulatory obligations on holders of a single EU authorisation in order to avoid they face diverging obligations for the same market failure in each Member State where they are present. To this end, the provisions envisage a Commission power to require withdrawal of remedies imposed on companies with a single EU authorisation, as well as legal certainty concerning the criteria for identifying markets subject to such ex ante remedies, taking also into account competitive constraints from equivalent services provided by "over-the-top" (OTT) players.

While the Roaming III Regulation with its structural measures will inject greater competition into the market it is not expected of its own to create a situation where customers can confidently replicate their consumption behaviour in their home Member State when travelling abroad and thereby to end roaming surcharges overall in Europe. Article 37, therefore, builds on the Roaming Regulation, providing incentives to operators to provide roaming at domestic price levels. The proposal introduces a voluntary mechanism for mobile operators to enter into bilateral or multilateral roaming agreements which allow them to internalise the wholesale roaming costs and to gradually introduce roaming services at domestic price levels up to July 2016 while limiting the risk of price arbitrage. Such roaming agreements as such are not a novelty in the market. Roaming agreements already exist allowing their participants (subject to compliance with competition law) to realise economies of scale in the provision of roaming services as between contracting parties. The proposal however requires they are notified to improve their transparency. The proposed voluntary regime is designed to induce the pass-on of such legitimate scale economies to consumers through the provision of roaming services at domestic price levels, under conditions which ensure that roaming throughout the Union is covered and that consumers throughout the Union benefit in due course from such offers. At the same time, the proposal provides the necessary balance to allow operators to adjust their retail offers and to gradually ensure all of their customer base benefits from them. Without bileteral or multilateral roaming agreements it is unrealistic to imagine that an operator alone would be able to provide roaming at domestic price levels throughout the whole Union in the envisaged time frame.

Finally, changes in the BEREC Regulation are necessary to provide more stability to the body and allow it to play a more strategic role, in particular through the appointment of a professional three-year Chair.

4. BUDGETARY IMPLICATIONS

The proposed Regulation has no implications for the budget of the Union.

In particular, the proposal to amend the Regulation (EC) No 1211/2009 has no impact on either the number of establishment plan posts or the EU financial contribution to the BEREC Office and is in line with the figures set out in the Communication to the European Parliament and the Council (COM(2013)519 final).

2013/0309 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

laying down measures concerning the European single market for electronic communications and to achieve a Connected Continent, and amending Directives 2002/20/EC, 2002/21/EC and 2002/22/EC and Regulations (EC) No 1211/2009 and (EU) No 531/2012

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national Parliaments,

Having regard to the opinion of the European Economic and Social Committee[12],

Having regard to the opinion of the Committee of the Regions[13],

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) Europe has to tap all sources of growth to exit the crisis, create jobs and regain its competitiveness. Restoring growth and job creation in the Union is the aim of the Europe 2020 Strategy. The 2013 Spring European Council stressed the importance of the digital single market for growth and called for concrete measures, in order to establish a single market in information and communications technology (ICT) as early as possible. In line with the objectives of the Europe 2020 Strategy and with this call, this regulation aims at establishing a single market for electronic communications by completing and adapting the existing Union Regulatory Framework for Electronic Communications.

(2) The Digital Agenda for Europe (DAE), one of the flagship initiatives of Europe 2020 Strategy, has already recognised the role of ICT and network connectivity as an indispensable basis for the development of our economy and society. For Europe to reap the benefits of digital transformation, the Union needs a dynamic single market in electronic communications for all sectors and across all of Europe. Such a truly single communications market will be the backbone of an innovative and 'smart' digital economy and a foundation of the digital single market where online services can freely flow across borders.

(3) In a seamless single market in electronic communications, the freedom to provide electronic communications networks and services to every customer in the Union and the right of each end-user to choose the best offer available on the market should be ensured and should not be hindered by the fragmentation of markets along national borders. The current regulatory framework for electronic communications does not fully address such fragmentation, with national, rather than Union-wide general authorisation regimes, national spectrum assignment schemes, differences of access products available for electronic communications providers in different Member States, and different sets of sector-specific consumer rules applicable. The Union rules in many cases merely define a baseline, and are often implemented in diverging ways by the Member States.

(4) A truly single market for electronic communications should promote competition, investment and innovation in new and enhanced networks and services by fostering market integration and cross-border service offerings. It should thus help to achieve the ambitious high-speed broadband targets set out in the DAE. The growing availability of digital infrastructures and services should in turn increase consumer choice, quality of service and diversity of content, and contribute to territorial and social cohesion, as well as facilitating mobility across the Union.

(5) The benefits arising from a single market for electronic communications should extend to the wider digital ecosystem that includes Union equipment manufacturers, content and application providers and the wider economy, covering sectors such as banking, automotive, logistics, retail, energy and transport, which rely on connectivity to enhance their productivity through, for example, ubiquitous cloud applications, connected objects and possibilities for integrated service provision for different parts of the company. Public administrations and the health sector should also benefit from a wider availability of e-government and e-health services. The offer of cultural content and services, and cultural diversity in general, may be also enhanced in a single market for electronic communications. The provision of connectivity through electronic communications networks and services is of such importance to the wider economy and society that unjustified sector-specific burdens, whether regulatory or otherwise, should be avoided.

(6) This Regulation aims at the completion of the single electronic communications market through action on three broad, inter-related axes. First, it should secure the freedom to provide electronic communications services across borders and networks in different Member States, building on the concept of a single EU authorisation which puts in place the conditions for ensuring greater consistency and predictability in the content and implementation of sector-specific regulation throughout the Union. Second, it is necessary to enable access on much more convergent terms and conditions to essential inputs for the cross-border provision of electronic communications networks and services, not only for wireless broadband communications, for which both licensed and unlicensed spectrum is key, but also for fixed line connectivity. Third, in the interests of aligning business conditions and building the digital confidence of citizens, this Regulation should harmonise rules on the protection of end-users, especially consumers. This includes rules on non-discrimination, contractual information, termination of contracts and switching, in addition to rules on access to online content, applications and services and on traffic management which not only protect end-users but simultaneously guarantee the continued functioning of the Internet ecosystem as an engine of innovation. In addition, further reforms in the field of roaming should give end-users the confidence to stay connected when they travel in the Union, and should become over time a driver of convergent pricing and other conditions in the Union.

(7) This Regulation should therefore complement the existing Union regulatory framework (Directive 2002/19/EC of the European Parliament and of the Council[14], Directive 2002/20/EC of the European Parliament and of the Council[15], Directive 2002/21/EC of the European Parliament and of the Council[16], Directive 2002/22/EC of the European Parliament and of the Council[17], Directive 2002/58/EC of the European Parliament and of the Council[18], Commission Directive 2002/77/EC[19], as well as Regulation (EC) No 1211/2009 of the European Parliament and of the Council[20], Regulation (EU) No 531/2012 of the European Parliament and of the Council[21] and Decision No 243/2012/EU of the European Parliament[22]) and the applicable national legislations adopted in conformity with Union law, by establishing specific rights and obligations for both electronic communications providers and end-users, by making consequential amendments to the existing Directives and to Regulation (EU) No 531/2012 in order to secure greater convergence as well as some substantive changes consistent with a more competitive Single Market.

(8) The measures provided in this Regulation respect the principle of technological neutrality, that is to say they neither impose nor discriminate in favour of the use of a particular type of technology.

(9) The provision of cross-border electronic communications is still subject to greater burdens than those confined to the national borders. In particular, cross-border providers still need to notify and pay fees in individual host Member States. Holders of a single EU authorisation should be subject to a single notification system in the Member State of their main establishment (home Member State), which will reduce the administrative burden for cross-border operators. The single EU authorisation should apply to any undertaking that provides or intends to provide electronic communications services and networks in more than one Member State, thereby entitling it to enjoy the rights attached to the freedom to provide electronic communications services and networks in accordance with this Regulation in any Member State. A single EU authorisation defining the legal framework applicable to electronic communications operators providing services across Member States on the basis of a general authorisation in the home Member State should ensure the effectiveness of the freedom to provide electronic communications services and networks in the whole Union.

(10) The provision of electronic communications services or networks across borders may take different forms, depending on several factors such as the kind of network or services provided, the extent of the physical infrastructure needed or the number of subscribers in the different Member States. The intention to provide electronic communications services cross-border or to operate an electronic communications network in more than one Member State may be demonstrated by activities such as negotiation of agreements on access to networks in a given Member State or marketing via an internet site in the language of the targeted Member State.

(11) Irrespective of how the provider chooses to operate electronic communications networks or provide electronic communications services across borders, the regulatory regime applicable to a European electronic communications provider should be neutral vis-à-vis the commercial choices which underlie the organisation of functions and activities across Member States. Therefore, regardless of the corporate structure of the undertaking, the home Member State of a European electronic communications provider should be considered to be the Member State where the strategic decisions concerning the provision of electronic communications networks or services are taken.

(12) The single EU authorisation should be based on the general authorisation in the home Member State. It should not be made subject to conditions which are already applicable by virtue of other existing national law which is not specific to the electronic communications sector. In addition, the provisions of this Regulation and Regulation (EU) No. 531/2012 should also apply to European electronic communications providers.

(13) Most sector-specific conditions, for example concerning access to or security and integrity of networks or access to emergency services, are strongly linked to the place where such network is located or the service is provided. Consequently a European electronic communications provider may be subject to conditions applicable in the Member States where it operates, to the extent that this Regulation does not provide otherwise.

(14) Where Member States require contribution from the sector in order to finance universal service obligations and to the administrative costs of the national regulatory authorities, the criteria and procedures for apportioning contributions should be proportionate and non-discriminatory with regard to European electronic communications providers, so as not to hinder cross-border market entry, in particular of new entrants and smaller operators; individual undertakings’ contributions should therefore take into account the contributor’s market share in terms of turnover realised in the relevant Member State and should be subject to the application of a de minimis threshold.

(15) It is necessary to ensure that in similar circumstances there is no discrimination in the treatment of any European electronic communications provider by different Member States and that consistent regulatory practices are applied in the single market, in particular as regards measures falling within the scope of Articles 15 or 16 of Directive 2002/21/EC, or Articles 5 or 8 of Directive 2002/19/EC. European electronic communications providers should therefore have a right to equal treatment by the different Member States in objectively equivalent situations in order to enable more integrated multi-territorial operations. Furthermore, there should be specific procedures at Union level for the review of draft decisions on remedies within the meaning of Article 7a of Directive 2002/21/EC in such cases, in order to avoid unjustified divergences in obligations applicable to European electronic communications providers in different Member States.

(16) An allocation of regulatory and supervisory competences should be established between the home and any host Member State of European electronic communications providers with a view to reducing the barriers to entry while ensuring that the applicable conditions for the provision of electronic communications services and networks by these providers are properly enforced. Therefore, while each national regulatory authority should supervise compliance with the conditions applicable in its territory in accordance with Union legislation, including by means of sanctions and interim measures, only the national regulatory authority in the home Member State should be entitled to suspend or withdraw the rights of a European electronic communications provider to provide electronic communications networks and services in the whole Union or part thereof.

(17) Radio spectrum is a public good and an essential resource for the internal market for mobile, wireless broadband and satellite communications in the Union. Development of wireless broadband communications contributes to the implementation of the Digital Agenda for Europe and in particular to the aim of securing access to broadband at a speed of no less than 30 Mbps by 2020 for all Union citizens and of providing the Union with the highest possible broadband speed and capacity. However, the Union has fallen behind other major global regions - North America, Africa and parts of Asia - in terms of the roll-out and penetration of the latest generation of wireless broadband technologies that are necessary to achieve those policy goals. The piecemeal process of authorising and making available the 800 MHz band for wireless broadband communications, with over half of the Member States seeking a derogation or otherwise failing to do so by the deadline laid down in the Radio Spectrum Policy Programme (RSPP) Decision 243/2012 of the European Parliament and the Council,[23] testifies to the urgency of action even within the term of the current RSPP. Union measures to harmonise the conditions of availability and efficient use of radio spectrum for wireless broadband communications pursuant to Decision 676/2002/EC of the European Parliament and the Council[24] have not been sufficient to address this problem.

(18) The application of various national policies creates inconsistencies and fragmentation of the internal market which hamper the roll-out of Union-wide services and the completion of the internal market for wireless broadband communications. It could in particular create unequal conditions for access to such services, hamper competition between undertakings established in different Member States and stifle investments in more advanced networks and technologies and the emergence of innovative services, thereby depriving citizens and businesses of ubiquitous integrated high-quality services and wireless broadband operators of increased efficiency gains from large-scale more integrated operations. Therefore, action at Union level regarding certain aspects of radio spectrum assignment should accompany the development of wide integrated coverage of advanced wireless broadband communications services throughout the Union. At the same time, Member States should retain the right to adopt measures to organise their radio spectrum for public order, public security purposes and defence.

(19) Electronic communications services providers, including mobile operators or consortia of such operators, should be able to collectively organise the efficient and affordable coverage of a vast part of the Union's territory to the long-term benefit of end users, and therefore use radio spectrum across several Member States with similar conditions, procedures, costs, timing, duration in harmonised bands, and with complementary radio spectrum packages, such as a combination of lower and higher frequencies for coverage of densely and less densely populated areas. Initiatives in favour of greater coordination and consistency would also enhance the predictability of the network investment environment. Such predictability would also be greatly favoured by a clear policy in favour of long-term duration of rights of use related to radio spectrum, without prejudice to the indefinite character of such rights in some Member States, and linked in its turn to clear conditions for the transfer, lease or sharing of part of all of the radio spectrum subject to such an individual right of use.

(20) Coordination and consistency of rights of use for radio spectrum should be improved, at least for the bands which have been harmonised for wireless fixed, nomadic and mobile broadband communications. This includes the bands identified at ITU level for International Mobile Telecommunications (IMT) Advanced systems, as well as bands used for radio local area networks (RLAN) such as 2.4 GHz and 5 GHz. It should also extend to bands that may be harmonised in the future for wireless broadband communications, as envisaged in Article 3(b) of the RSPP and in the RSPG Opinion on "Strategic challenges facing Europe in addressing the growing radio spectrum demand for wireless broadband" adopted on 13 June 2013, such as, in the near future, the 700 MHz, 1.5 GHz and 3.8-4.2 GHz bands.

(21) Consistency between the different national radio spectrum assignment procedures would be favoured by more explicit provisions on the criteria relevant to the timing of authorisation procedures; the duration for which the rights of use are granted, fees and their payment modalities; capacity and coverage obligations; definition of the range of radio spectrum and spectrum blocks subject to a granting procedure; objective threshold requirements for the promotion of effective competition; conditions for the tradability of rights of use, including sharing conditions.

(22) Limitation of the burden of fees to what is required by optimal radio spectrum management, with a balance between immediate payments and periodic fees, would encourage investment in infrastructure and technology roll-out, and pass-on of the attendant cost advantages to end users.

(23) More synchronised radio spectrum assignments and consequential wireless broadband roll-out across the Union should support the achievement of scale effects in related industries such as for network equipment and terminal devices. Such industries could in turn take into account Union initiatives and policies regarding radio spectrum use, to a greater extent than has recently been the case. A harmonisation procedure for the timetables for assignment and minimum or common duration of rights of use in such bands should therefore be established.

(24) As regards the other main substantive conditions which may be attached to rights of use of radio spectrum for wireless broadband, the convergent application by individual Member States of the regulatory principles and criteria set down in this Regulation would be favoured by a coordination mechanism whereby the Commission and the competent authorities of the other Member States have an opportunity to comment in advance of the granting of rights of use by a given Member State and whereby the Commission has an opportunity, taking into account the views of the Member States, to forestall implementation of any proposal which appears to be non-compliant with Union law.

(25) Considering the massive growth in radio spectrum demand for wireless broadband, solutions for alternative spectrally efficient access to wireless broadband should be promoted. This includes the use of low-power wireless access systems with a small-area operating range such as so called 'hotspots' of radio local area networks (RLAN, also known as 'Wi‑Fi'), as well as networks of low-power small size cellular access points (also called femto-, pico- or metrocells).

(26) Complementary wireless access systems such as RLAN, in particular publicly accessible RLAN access points, increasingly allow access to the internet for end users and allow mobile traffic off-loading by mobile operators, using harmonised radio spectrum resources without requiring an individual authorisation or right of use of the radio spectrum.

(27) Most RLAN access points are so far used by private users as a local wireless extension of their fixed broadband connection. If end users, within the limits of their own internet subscription, choose to share access to their RLAN with others, the availability of a large number of such access points, particularly in densely populated areas, should maximise wireless data capacity through radio spectrum re-use and create a cost-effective complementary wireless broadband infrastructure accessible to other end users. Therefore, unnecessary restrictions for end users to share access to their own RLAN access points with other end users or to connect to such access points, should be removed or prevented.

(28) In addition, unnecessary restrictions to the deployment and interlinkage of RLAN access points should also be removed. Public authorities or providers of public services increasingly use RLAN access points in their premises for their own purposes, for example for use by their personnel, to better facilitate cost-effective on-site access by citizens to e-Government services, or to support provision of smart public services with real-time information, such as for public transport or traffic management. Such bodies could also provide access to such access points for citizens in general as an ancillary service to services offered to the public on such premises, and should be enabled to do so in conformity with competition and public procurement rules. The making available of local access to electronic communications networks within or around a private property or a limited public area as an ancillary service to another activity that is not dependant on such an access, such as RLAN hotspots made available to customers of other commercial activities or to the general public in that area, should not qualify such a provider as an electronic communications provider.

(29) Low power small-area wireless access points are very small and unobtrusive equipment similar to domestic Wi-Fi routers, for which technical characteristics should be specified at Union level for their deployment and use in different local contexts subject to general authorisation, without undue restrictions from individual planning or other permits. The proportionality of measures specifying the technical characteristics for such use to benefit from general authorisation should be ensured through characteristics which are significantly more restrictive than the applicable maximum thresholds in Union measures regarding parameters such as power output.

(30) Member States should ensure that the management of radio spectrum at national level does not prevent other Member States from using the radio spectrum to which they are entitled, or from complying with their obligations as regards bands for which the use is harmonised at Union level. Building on the existing activities of the RSPG, a coordination mechanism is necessary to ensure that each Member State has equitable access to radio spectrum and that the outcomes of coordination are consistent and enforceable.

(31) Experience in the implementation of the Union's regulatory framework indicates that existing provisions requiring the consistent application of regulatory measures together with the goal of contributing to the development of the internal market have not created sufficient incentives to design access products on the basis of harmonised standards and processes, in particular in relation to fixed networks. When operating in different Member States, operators have difficulties in finding access inputs with the right quality and network and service interoperability levels, and when they are available, such inputs exhibit different technical features. This increases costs and constitutes an obstacle to the provision of services across national borders.

(32) The integration of the single market for electronic communications would be accelerated through establishment of a framework to define certain key European virtual products, which are particularly important for providers of electronic communication services to provide cross-border services and to adopt a pan-Union strategy in an increasingly all-IP environment, based on key parameters and minimum characteristics.

(33) The operational needs served by various virtual products should be addressed. European virtual broadband access products should be available in cases where an operator with significant market power has been required under the terms of the Framework Directive and the Access Directive to provide access on regulated terms at a specific access point in its network. First, efficient cross-border entry should be facilitated by harmonised products that enable initial provision by cross-border providers of services to their end customers without delay and with a predictable and sufficient quality, including services to business customers with multiple sites in different Member States, where this would be necessary and proportionate pursuant to market analysis. These harmonised products should be available for a sufficient period in order to allow access seekers and providers to plan medium and long term investments.

(34) Secondly, sophisticated virtual access products that require a higher level of investment by access seekers and allow them a greater level of control and differentiation, particularly by providing access at a more local level, are key to creating the conditions for sustainable competition across the internal market. Hence, these key wholesale access products to next-generation access (NGA) networks should also be harmonised to facilitate cross-border investment. Such virtual broadband access products should be designed to have equivalent functionalities to physical unbundling, in order to broaden the range of potential wholesale remedies available for consideration by national regulatory authorities under the proportionality assessment pursuant to Directive 2002/19/EC.

(35) Thirdly, it is also necessary to harmonise a wholesale access product for terminating segments of leased lines with enhanced interfaces, in order to enable cross-border provision of mission-critical connectivity services for the most demanding business users.

(36) In a context of progressive migration to 'all IP networks', the lack of availability of connectivity products based on the IP protocol for different classes of services with assured service quality that enable communication paths across network domains and across network borders, both within and between Member States, hinders the development of applications that rely on access to other networks, thus limiting technological innovation. Moreover, this situation prevents the diffusion on a wider scale of efficiencies which are associated with the management and provision of IP-based networks and connectivity products with an assured service quality level, in particular enhanced security, reliability and flexibility, cost-effectiveness and faster provisioning, which benefit network operators, service providers and end users. A harmonised approach to the design and availability of these products is therefore necessary, on reasonable terms including, where requested, the possibility of cross-supply by the electronic communications undertakings concerned.

(37) The establishment of European virtual broadband access products under this Regulation should be reflected in the assessment by national regulatory authorities of the most appropriate access remedies to the networks of operators designated as having significant market power, while avoiding over-regulation through the unnecessary multiplication of wholesale access products, whether imposed pursuant to market analysis or provided under other conditions. In particular, the introduction of the European virtual access products should not, in and of itself, lead to an increase in the number of regulated access products imposed on a given operator. Moreover, the need for national regulatory authorities, following the adoption of this Regulation, to assess whether a European virtual broadband access product should be imposed instead of existing wholesale access remedies, and to assess the appropriateness of imposing a European virtual broadband access product in the context of future market reviews where they find significant market power, should not affect their responsibility to identify the most appropriate and proportionate remedy to address the identified competition problem in accordance with Article 16 of Directive 2002/21/EC.

(38) In the interests of regulatory predictability, key elements of evolving decisional practice under the current legal framework which affect the conditions under which wholesale access products, including European virtual broadband access products, are made available for NGA networks, should also be reflected in the legislation. These should include provisions reflecting the importance, for the analysis of wholesale access markets and in particular of whether there is a need for price controls on such access to NGA networks, of the relationship between competitive constraints from alternative fixed and wireless infrastructures, effective guarantees of non-discriminatory access, and the existing level of competition in terms of price, choice and quality at retail level. The latter consideration ultimately determines the benefits to end users. For example, in the conduct of their case-by-case assessment pursuant to Article 16 of Directive 2002/21/EC and without prejudice to the assessment of significant market power and the application of EU competition rules, national regulatory authorities may 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, which is one important parameter of retail competition.

(39) It is to be expected that intensified competition in a single market will lead to a reduction over time in sector-specific regulation based on market analysis. Indeed, one of the results of completing the Single Market should be a greater tendency towards effective competition on relevant markets, with ex post application of competition law increasingly being seen as sufficient to ensure market functioning. In order to ensure legal clarity and predictability of regulatory approaches across borders, clear and binding criteria should be provided on how to assess whether a given market still justifies the imposition of ex-ante regulatory obligations, by reference to the durability of bottlenecks and the prospects of competition, in particular infrastructure-based competition, and the conditions of competition at retail level on parameters such as price, choice and quality, which are ultimately what is relevant to end users and to the global competitiveness of the EU economy. This should underpin successive reviews of the list of markets susceptible to ex ante regulation and help national regulators to focus their efforts where competition is not yet effective and to do so in a convergent manner. The establishment of a true single market for electronic communications may in addition affect the geographical scope of markets, for the purposes of both sector-specific regulation based on competition principles and the application of competition law itself.

(40) Disparities in the national implementation of sector-specific end-user protection rules create significant barriers to the single digital market, in particular in the form of increased compliance costs for providers of electronic communications to the public wishing to offer services across Member States. Moreover, fragmentation and uncertainty as to the level of protection granted in different Member States undermines end-users' trust and dissuades them from purchasing electronic communications services abroad. In order to achieve the Union's objective to remove barriers to the internal market it is necessary to replace existing, divergent national legal measures with a single and fully harmonised set of sector-specific rules which create a high common level of end-user protection. Such full harmonisation of the legal provisions should not prevent providers of electronic communications to the public from offering end-users contractual arrangements which go beyond that level of protection.

(41) As this Regulation harmonises only certain sector-specific rules, it should be without prejudice to the general consumer protection rules, as established by Union acts and national legislation implementing them.

(42) Where the provisions in Chapters 4 and 5 of this Regulation refer to end-users, such provisions should apply not only to consumers but also to other categories of end-users, primarily micro enterprises. At their individual request, end-users other than consumers should be able to agree, by individual contract, to deviate from certain provisions.

(43) The completion of the single market for electronic communications also requires the removal of barriers for end-users to have access to electronic communications services across the Union. Public authorities should therefore not raise or maintain obstacles to the cross-border purchase of such services. Providers of electronic communications to the public should not deny or restrict access or discriminate against end-users on the basis of their nationality or Member State of residence. Differentiation should, however, be possible on the basis of objectively justifiable differences in costs, risks and market conditions such as demand variations and pricing by competitors.

(44) Very significant price differences continue to prevail, both for fixed and mobile communications, between domestic voice and SMS communications and those terminating in another Member State. While there are substantial variations between countries, operators and tariff packages, and between mobile and fixed services, this continues to affect more vulnerable customer groups and to pose barriers to seamless communication within the Union. This occurs in spite of a very significant reduction, and convergence in absolute terms, of termination rates in the different Member States, and low prices on transit markets. Moreover, the transition to an "all-IP" electronic communications environment should in due course bring additional cost reductions. Any significant retail tariff differences between domestic fixed long-distance communications which are communications other than those within one local area identified by a geographic area code in the national numbering plan, and fixed communications terminating in another Member State, should therefore be justified by reference to objective criteria. Retail tariffs for international mobile communications should not exceed the euro-voice and euro-SMS tariffs for regulated roaming calls and SMS messages, respectively, provided for in Regulation (EU) No 531/2012 unless justified by reference to objective criteria. Such criteria may include additional costs and a reasonable related margin. Other objective factors may include differences in related price elasticity and the easy availability to all end users of alternative tariffs from providers of electronic communications to the public which offer cross-border communications within the Union at little or no extra charge, or of information society services with comparable functionalities, provided that end users are actively informed of such alternatives by their providers.

(45) The internet has developed over the past decades as an open platform for innovation with low access barriers for end-users, content and application providers and internet service providers. The existing regulatory framework aims at promoting the ability of end-users to access and distribute information or run applications and services of their choice. Recently, however, the report of the Body of European Regulators for Electronic Communications (BEREC) on traffic management practices published in May 2012 and a study, commissioned by the Executive Agency for Consumers and Health and published in December 2012, on the functioning of the market of internet access and provision from a consumer perspective, showed that a significant number of end-users are affected by traffic management practices which block or slow down specific applications. These tendencies require clear rules at the Union level to maintain the open internet and to avoid fragmentation of the single market resulting from individual Member States' measures.

(46) The freedom of end-users to access and distribute information and lawful content, run applications and use services of their choice is subject to the respect of Union and compatible national law. This Regulation defines the limits for any restrictions to this freedom by providers of electronic communications to the public but is without prejudice to other Union legislation, including copyright rules and Directive 2000/31/EC.

(47) In an open internet, providers of electronic communications to the public should, within contractually agreed limits on data volumes and speeds for internet access services, not block, slow down, degrade or discriminate against specific content, applications or services or specific classes thereof except for a limited number of reasonable traffic management measures. Such measures should be transparent, proportionate and non-discriminatory. Reasonable traffic management encompasses prevention or impediment of serious crimes, including voluntary actions of providers to prevent access to and distribution of child pornography. Minimising the effects of network congestion should be considered reasonable provided that network congestion occurs only temporarily or in exceptional circumstances.

(48) Volume-based tariffs should be considered compatible with the principle of an open internet as long as they allow end-users to choose the tariff corresponding to their normal data consumption based on transparent information about the conditions and implications of such choice. At the same time, such tariffs should enable providers of electronic communications to the public to better adapt network capacities to expected data volumes. It is essential that end-users are fully informed before agreeing to any data volume or speed limitations and the tariffs applicable, that they can continuously monitor their consumption and easily acquire extensions of the available data volumes if desired.

(49) There is also end-user demand for services and applications requiring an enhanced level of assured service quality offered by providers of electronic communications to the public or by content, applications or service providers. Such services may comprise inter alia broadcasting via Internet Protocol (IP-TV), video-conferencing and certain health applications. End-users should therefore also be free to conclude agreements on the provision of specialised services with an enhanced quality of service with either providers of electronic communications to the public or providers of content, applications or services.

(50) In addition, there is demand on the part of content, applications and services providers, for the provision of transmission services based on flexible quality parameters, including lower levels of priority for traffic which is not time-sensitive. The possibility for content, applications and service providers to negotiate such flexible quality of service levels with providers of electronic communications to the public is necessary for the provision of specialised services and is expected to play an important role in the development of new services such as machine-to-machine (M2M) communications. At the same time such arrangements should allow providers of electronic communications to the public to better balance traffic and prevent network congestion. Providers of content, applications and services and providers of electronic communications to the public should therefore be free to conclude specialised services agreements on defined levels of quality of service as long as such agreements do not substantially impair the general quality of internet access services.

(51) National regulatory authorities play an essential role in ensuring that end-users are effectively able to exercise this freedom to avail of open internet access. To this end national regulatory authorities should have monitoring and reporting obligations, and ensure compliance of providers of electronic communications to the public and the availability of non-discriminatory internet access services of high quality which are not impaired by specialised services. In their assessment of a possible general impairment of internet access services, national regulatory authorities should take account of quality parameters such as timing and reliability parameters (latency, jitter, packet loss), levels and effects of congestion in the network, actual versus advertised speeds, performance of internet access services compared with specialised services, and quality as perceived by end-users. National regulatory authorities should be empowered to impose minimum quality of service requirements on all or individual providers of electronic communications to the public if this is necessary to prevent general impairment/degradation of the quality of service of internet access services.

(52) The measures to ensure better transparency and comparability of prices, tariffs, terms and conditions, and quality of service parameters including those specific to the provision of internet access services, should increase the ability of end-users to optimise their selection of providers and thus benefit fully from competition.

(53) End-users should be adequately informed of the price and the type of service offered before they purchase a service. This information should also be provided immediately prior to connection of the call when a call to a specific number or service is subject to particular pricing conditions, such as calls to premium rate services which are often subject to a special rate. Where such an obligation is disproportionate in view of the duration and cost of the tariff information for the service provider compared to the average call duration and the cost risk to which the end-user is exposed, national regulatory authorities may grant a derogation. End-users should also be informed if a free-phone number is subject to additional charges.

(54) Providers of electronic communications to the public should inform end-users adequately inter alia on their services and tariffs, quality of service parameters, access to emergency services and any limitation, and the choice of services and products designed for disabled consumers. This information should be provided in a clear and transparent manner and be specific to the Member States where the services are provided, and in the event of any change, be updated. Providers should be exempted from such information requirements as regards those offers which are individually negotiated.

(55) Availability of comparable information on products and services is paramount to the ability of end-users to make an independent evaluation of offers. Experience shows that availability of reliable and comparable information increases end-user confidence in the use of services and enhances the willingness to exercise their choice.

(56) Contracts are an important means of giving end-users a high level of transparency of information and legal certainty. Providers of electronic communications to the public should give end-users clear and comprehensible information on all essential elements of the contract before the end-user is bound by the contract. The information should be mandatory and not be altered except by subsequent agreement of the end-user and the provider. The Commission and several national regulatory authorities recently found considerable discrepancies between the advertised speed of internet access services and the speed actually available to end-users. Providers of electronic communications to the public should therefore inform end-users, prior to the conclusion of the contract, of the speed and other quality of service parameters which they can realistically deliver at the end-user's main location.

(57) With respect to terminal equipment, contracts should specify any restrictions imposed by the provider on the use of the equipment, for example by way of ‘SIM-locking’ mobile devices, and any charges due on termination of the contract prior to the agreed expiry date. No charges should be due after expiry of the agreed contract duration.

(58) In order to avoid bill shocks, end-users should be able to define maximum financial limits for the charges related to their usage of calls and internet access services. This facility should be available free of charge, with an appropriate notification that can be consulted again subsequently, when the limit is being approached. Upon reaching the maximum limit, end-users should no longer receive or be charged for those services unless they specifically request the continued provision as agreed with the provider.

(59) Experience from Member States and from a recent study commissioned by the Executive Agency for Consumers and Health has shown that long contract periods and automatic or tacit extensions of contracts constitute significant obstacles to changing a provider. It is thus desirable that end-users should be able to terminate, without incurring any costs, a contract six months after its conclusion. In such a case, end-users may be requested to compensate their providers for the residual value of subsidised terminal equipment or for the pro rata temporis value of any other promotions. Contracts which have been tacitly extended should be subject to termination with a one-month notice period.

(60) Any significant changes to the contractual conditions imposed by providers of electronic communications services to the public to the detriment of the end-user, for example in relation to charges, tariffs, data volume limitations, data speeds, coverage, or the processing of personal data, should be considered as giving rise to the right of the end-user to terminate the contract without incurring any costs.

(61) Bundles comprising electronic communications and other services such as linear broadcasting have become increasingly widespread and are an important element of competition. Where divergent contractual rules on contract termination and switching apply to the different services composing such bundles, end-users are effectively prevented from switching to competitive offers for the entire bundle or parts of it. The provisions of this Regulation regarding contract termination and switching should, therefore, apply to all elements of such a bundle.

(62) In order to take full advantage of the competitive environment, end-users should be able to make informed choices and switch providers when it is in their interests. End-users should therefore be able to switch without being hindered by legal, technical or procedural obstacles, including contractual conditions and charges. Number portability is a key facilitator of consumer choice and effective competition. It should be implemented within a minimum delay so that the number is effectively activated within one working day of concluding an agreement to port a number. Settlement of outstanding bills should not be a condition for execution of a porting request.

(63) In order to support the provision of one-stop-shops and to facilitate a seamless switching experience for end-users, the switching process should be led by the receiving provider of electronic communications to the public. The transferring provider of electronic communications to the public should not delay or hamper the switching process. Automated processes should be used as widely as possible and a high level of protection of personal data should be ensured. Availability of transparent, accurate and timely information on switching should increase the end-users' confidence in switching and make them more willing to engage actively in the competitive process.

(64) Contracts with transferring providers of electronic communications to the public should be cancelled automatically after switching without any additional steps being required from end-users. In the case of pre-paid services any credit balance which has not been spent should be refunded to the switching consumer.

(65) End-users need to experience continuity when changing important identifiers such as email addresses. To this end, and to ensure that email communications are not lost, end-users should be given the opportunity to opt, free of charge, for an email forwarding facility offered by the transferring internet access service provider in cases where the end-user has an email address provided by the transferring provider.

(66) Competent national authorities may prescribe the global processes of porting numbers and switching, taking into account technological development and the need to ensure a swift, efficient and consumer-friendly switching process. Competent national authorities should be able to impose proportionate measures to protect end-users adequately throughout the switching process including appropriate sanctions that are necessary to minimise risks of abuse or delays and of end-users being switched to another provider without their consent. They should also be able to set an automatic compensation mechanism for end-users in such instances.

(67) National regulatory authorities should be able to take effective action to monitor and secure compliance with the provisions of this Regulation, including the power to impose effective financial or administrative penalties in the event of any breach thereof.

(68) In order to take account of market and technical developments, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of adapting the Annexes. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing-up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

(69) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission as regards the decision requiring Member States to adapt their plans for compliance with a common timetable for granting rights of use and allowing actual use.

(70) The implementing powers relating to the harmonisation and coordination of authorisation of radio spectrum, characteristics of small-area wireless access points, coordination between Member States regarding allocation of radio spectrum, more detailed technical and methodological rules concerning European virtual access products and the safeguarding of internet access and of reasonable traffic management and quality of service, should be exercised in accordance with Regulation (EU) No182/2011 of the European Parliament and of the Council.[25]

(71) In order to ensure consistency between the objective and the measures needed to complete the single market for electronic communications pursuant to this Regulation and some specific existing legislative provisions and to reflect key elements of evolving decisional practice, Directive 2002/21/EC, the Directives 2002/20/EC and 2002/22/EC and Regulation No 531/2012 should be amended. This includes making provision for Directive 2002/21/EC and the related Directives to be read in conjunction with this Regulation, the introduction of strengthened powers of the Commission in order to ensure consistency of remedies imposed on European electronic communications providers having significant market power in the context of the European consultation mechanism, harmonisation of the criteria adopted in assessing the definition and competitiveness of relevant markets, the adaptation of the notification system under Directive 2002/20/EC in view of the single EU authorisation as well as the repeal of provisions on minimum harmonisation of end-users rights provided in Directive 2002/22/EC made redundant by the full harmonisation provided in this Regulation.

(72) The mobile communications market remains fragmented in the Union, with no mobile network covering all Member States. As a consequence, in order to provide mobile communications services to their domestic customers travelling within the Union, roaming providers have to purchase wholesale roaming services from operators in a visited Member State. These wholesale charges constitute an important impediment to providing roaming services at price levels corresponding to domestic mobile services. Therefore further measures should be adopted to facilitate lowering these charges. Commercial or technical agreements among roaming providers which allow a virtual extension of their network coverage across the Union provide a means to internalise wholesale costs. To provide appropriate incentives, certain regulatory obligations laid down in Regulation (EC) No 531/2012 of the European Parliament and the Council[26] should be adapted. In particular, when roaming providers, through their own networks or through bilateral or multilateral roaming agreements ensure that all customers in the Union are offered by default roaming tariffs at the level of domestic tariffs, the obligation of domestic providers to enable their customers to access voice, SMS and data roaming services of any alternative roaming provider should not apply to such providers, subject to a transitional period where such access has already been granted.

(73) Bilateral or multilateral roaming agreements can allow a mobile operator to treat roaming by its domestic customers on the networks of partners as being to a significant degree equivalent to providing services to such customers on its own networks, with consequential effects on its retail pricing for such virtual on-net coverage across the Union. Such an arrangement at the wholesale level could allow the development of new roaming products and therefore increase choice and competition at retail level.

(74) The Digital Agenda for Europe and Regulation No 531/2012 establish the policy objective that the difference between roaming and domestic tariffs should approach zero. In practical terms, this requires that consumers falling into any of the broad observable categories of domestic consumption, identified by reference to a party's various domestic retail packages, should be in a position to confidently replicate the typical domestic consumption pattern associated with their respective domestic retail packages while periodically travelling within the Union, without additional costs to those incurred in a domestic setting. Such broad categories may be identified from current commercial practice by reference, for example, to the differentiation in domestic retail packages between pre-paid and post-paid customers; GSM-only packages (i.e. voice, SMS); packages adapted for different volumes of consumption; packages for business and consumer use respectively; retail packages with prices per unit consumed and those which provide "buckets" of units (e.g. voice minutes, megabytes of data) for a standard fee, irrespective of actual consumption. The diversity of retail tariff plans and packages available to customers in domestic mobile markets across the Union accommodates varying user demands associated with a competitive market. That flexibility in domestic markets should also be reflected in the intra-Union roaming environment, while bearing in mind that the need of roaming providers for wholesale inputs from independent network operators in different Member States may still justify the imposition of limits by reference to reasonable use if domestic tariffs are applied to such roaming consumption.

(75) While it is in the first place for roaming providers to assess themselves the reasonable character of the volumes of roaming voice calls, SMS and data to be covered at domestic rates under their various retail packages, national regulatory authorities should supervise the application by roaming providers of such reasonable use limits and ensure that they are specifically defined by reference to detailed quantified information in the contracts in terms which are clear and transparent to customers. In so doing, national regulatory authorities should take utmost account of relevant guidance from BEREC. In its guidance, BEREC should identify various usage patterns substantiated by the underlying voice, data and SMS usage trends at the Union level, and the evolution of expectations as regards in particular wireless data consumption.

(76) In addition, the significant reduction in mobile termination rates throughout the Union in the recent past should now allow the elimination of additional roaming charges for incoming calls.

(77) In order to provide stability and strategic leadership to BEREC activities, BEREC Board of Regulators should be represented by a full-time Chairperson appointed by the Board of Regulators, on the basis of merit, skills, knowledge of electronic communication market participants and markets, and of experience relevant to supervision and regulation, following an open selection procedure organised and managed by the Board of Regulators assisted by the Commission. For the designation of the first Chairperson of the Board of Regulators, the Commission should, inter alia, draw up a shortlist of candidates on the basis of merit, skills, knowledge of electronic communication market participants and markets, and of experience relevant to supervision and regulation. For the subsequent designations, the opportunity of having a shortlist drawn up by the Commission should be reviewed in a report to be established pursuant to this Regulation. The Office of BEREC should therefore comprise the Chairperson of the Board of Regulators, a Management Committee and an Administrative Manager.

(78) Directives 2002/20/EC, 2002/21/EC and 2002/22/EC and Regulations (EC) No 1211/2009 and (EU) No 531/2012 should therefore be amended accordingly.

(79) The Commission may always seek BEREC's opinion in accordance with Regulation (EC) No 1211/2009, when it considers it necessary for the implementation of the provisions of this Regulation.

(80) This Regulation respects fundamental rights and observes the rights and principles enshrined in the Charter of Fundamental Rights of the European Union, notably Article 8 (the protection of personal data), Article 11 (freedom of expression and information), Article 16 (freedom to conduct a business), Article 21 (non-discrimination) and Article 38 (consumer protection).

(81) Since the objective of this Regulation, namely to establishes the regulatory principles and detailed rules necessary to complete a European single market for electronic communic