TABLE OF CONTENTS

1........... Introduction.................................................................................................................... 5

2........... Procedural issues and consultation of interested parties.................................................... 5

2.1........ Identification................................................................................................................... 5

2.2........ Organisation and timing................................................................................................... 5

2.3........ Consultation and expertise.............................................................................................. 6

2.4........ Scrutiny by the Commission Impact Assessment Board................................................... 7

3........... Context.......................................................................................................................... 7

4........... Problem definition........................................................................................................... 8

4.1........ Low level of compliance................................................................................................. 8

4.2........ Problems related to the legal provisions of the Directive................................................. 12

4.2.1..... Ambiguity and complexity of the Directive..................................................................... 12

4.2.2..... Problems with the scope of the R&TTE Directive.......................................................... 14

4.3........ Regulatory barriers to market entry of innovative radio equipment.................................. 15

4.4........ Other issues.................................................................................................................. 18

4.5........ Problem tree................................................................................................................. 18

4.6........ Underlying drivers of the problem.................................................................................. 19

4.7........ Who is affected............................................................................................................ 20

4.8........ Foreseen evolution of the problem................................................................................. 20

4.9........ EU right to act.............................................................................................................. 21

5........... Objectives.................................................................................................................... 21

5.1........ General objectives........................................................................................................ 21

5.2........ Specific and operational objectives................................................................................ 22

5.3........ Consistency with other policies and objectives............................................................... 23

6........... Policy options............................................................................................................... 23

6.1........ Options addressing objective A..................................................................................... 23

6.2........ Options addressing objective B..................................................................................... 25

6.3........ Options addressing objective C..................................................................................... 26

7........... Analysis of impacts....................................................................................................... 27

7.1........ Identifying impacts........................................................................................................ 27

7.2........ Options addressing objective A: To achieve improved enforcement and compliance with the Directive 28

7.2.1..... Effectiveness:................................................................................................................ 28

7.2.2..... Impact on administrative costs....................................................................................... 30

7.2.3..... Direct costs of the options............................................................................................. 32

7.2.4..... Impact on third countries:.............................................................................................. 32

7.2.5..... Comparing the options addressing objective A. Preferred option.................................... 33

7.3........ Options addressing objective B: To make available a sound legal basis for the implementation of the essential requirements................................................................................................................. 34

7.3.1..... Effectiveness................................................................................................................. 34

7.3.2..... Impact on administrative and compliance cost................................................................ 35

7.3.3..... Comparing the options addressing objective B. Preferred option.................................... 37

7.4........ Options addressing objective C: to remove regulatory barriers to innovation in radio equipment 39

7.4.1..... Effectiveness................................................................................................................. 39

7.4.2..... Administrative and other costs....................................................................................... 39

7.4.3..... Comparing the options.................................................................................................. 40

8........... Preferred Options......................................................................................................... 40

9........... Implementation, Monitoring and Evaluation.................................................................... 42

9.1........ Transposition and implementation.................................................................................. 42

9.2........ Reporting and review.................................................................................................... 42

ANNEX I. LIST OF ACRONYMS AND GLOSSARY............................................................ 43

ANNEX II. PRODUCT SCOPE OF THE R&TTE DIRECTIVE............................................... 45

ANNEX III. BASIC ECONOMIC DATA OF THE EU MARKET COVERED BY THE DIRECTIVE 46

ANNEX IV. SUMMARY OF THE 2007 PUBLIC CONSULTATION.................................... 49

ANNEX V. LIST OF INTERVIEW PARTNERS FOR THE TECHNOPOLIS STUDY........... 51

ANNEX VI. SUMMARY OF THE 2010 PUBLIC CONSULTATION.................................... 54

ANNEX VII. ADDITIONAL ITEMS AFFECTING THE AMBIGUITY AND COMPLEXITY OF THE DIRECTIVE.................................................................................................................................................. 58

ANNEX VIII. LEGISLATIION AFFECTING THE PUTTING INTO SERVICE OF RADIO EQUIPMENT 59

ANNEX IX. DETAILED DESCRIPTION OF OPTION A1..................................................... 60

ANNEX X. ESTIMATION OF THE DIRECT COST OF A PRODUCT REGISTRATION SYSTEM 61

ANNEX XI. ESTIMATION OF ADDITIONAL COST POR SOME INDIVUAL PRODUCTS UNDER OPTION B2.................................................................................................................................................. 62

ANNEX XII................................................................................................................ SME TEST 63

ANNEX XIII. SELECTED REFERENCES............................................................................... 64

1. Introduction

The object of this Impact Assessment report is a possible revision of the R&TTE[1] Directive, Directive 1999/5/EC of the European Parliament and of the Council of 9 March 1999 on radio equipment and telecommunications terminal equipment and the mutual recognition of their conformity[2].

The R&TTE Directive establishes a framework for the placing on the market, free movement and putting into service in the EU of radio equipment and telecommunications terminal equipment. It addresses an estimated €63 billion market (2007[3]), covering inter alia mobile phones, mobile network transmitters and fixed telephones[4]. The Directive entered into force in 1999, replacing a wealth of national type-approval schemes and other regulations, and has been essential to achieve an internal market in this area.

The Second Progress Report on the operation of the R&TTE Directive, dated February 2010 (see reference [2][5]), has highlighted a number of emerging problems and margins for improvement to be addressed through legislative revision or other means.

This Impact Assessment report analyses these problems, presents the policy options that are being considered to address them, evaluates their impact and on that basis proposes recommended measures.

2. Procedural issues and consultation of interested parties

2.1. Identification

The lead Directorate-General for this impact assessment is DG Enterprise and Industry.

Other Directorate-Generals involved have been DG Information Society and Media, DG Competition, DG Internal Market and Services, DG Health and Consumers, DG Justice, DG Mobility and Transport, DG Environment, DG Taxation and Customs Union, DG Trade, Secretariat General.

The proposal is included in the Commission Work Programme 2011[6]. The reference of this proposal in Agenda Planning is 2009/ENTR/021 - Amendments to the R&TTE Directive.

2.2. Organisation and timing

The Impact Assessment Steering Group (IASG) met three times in order to discuss the preparation of this impact assessment: 1st March 2010, 6th October 2010 and 28th April 2011.

2.3. Consultation and expertise

Issues raised by the operation of the Directive and possible solutions to them have been discussed within TCAM[7], the standing committee of the Directive, since its establishment in 2000. In addition to Member States and the Commission, TCAM includes representatives from industry, European Standards Organisations, CEPT[8], notified bodies and consumer organisations.

A first public consultation took place in 2007, where 60 respondents answered some 120 questions on the operation of the Directive (see Annex IV). This consultation allowed to identify the main problems in the operation of the Directive as well as the possible remedies. Issues identified through this consultation were included in the Second Progress Report on the operation of the R&TTE Directive (see ref. [2]).

During 2009, an external contractor Technopolis developed for the Commission a study on the impact of different options addressing the need to improve traceability of products and their compliance with the requirements in the Directive. In the framework of the study, the consultant also carried out 49 interviews with different stakeholders, including SMEs (see ref. [8] and Annex V).

During 2010, three TCAM ad hoc working groups[9] were put in place in order to assess the impact of the different options pursuing the following objectives:

(1) To improve the traceability of R&TTE products and their compliance with the provisions in the Directive.

(2) To align the R&TTE Directive with the provisions of the New Legislative Framework (NLF[10]) in order to achieve its intended goals: improved coherence of legal texts with regard to market surveillance and notification of conformity assessment bodies, clarification of obligations for economic operators, harmonisation of conformity assessment procedures, simplification of EU safeguard measures

(3) To make the regulatory environment for placing on the market and putting into use radio equipment more receptive to innovative radio technologies

All three ad hoc working groups included the participation of public authorities and other interested stakeholders, namely companies, notified bodies, consumer representatives and standards organisations.

The Commission conducted a further public consultation between 16.07.2010 and 15.09.2010 focussing on the impact of some of the measures under consideration. The questions covered the following topics: improved compliance with the Directive, clarification of the Directive and reduction of administrative obligations, issues of scope and accessibility of R&TTE products for all kinds of users. An adapted consultation specifically sought the views of SMEs through the network Enterprise Europe[11]. The Commission received contributions from 122 respondents, including 50 SMEs, 36 other economic operators, national authorities, notified bodies, standardisation bodies and other respondents. (see Annex VI and ref. [12]).

During four meetings of TCAM in 2010, the Commission has consulted the Committee on the considered approach to address the issues subject to review.

There is a high level of consensus and support for aligning the Directive with the NLF and for clarifying and simplifying the Directive. Opinions are more divided on the possible introduction of compulsory registration, on some measures of administrative simplification such as the suppression of current article 6.4 (see 4.2.1 below), and on adaptations of scope such as those potentially affecting broadcast receivers (see 4.2.2 below).

2.4. Scrutiny by the Commission Impact Assessment Board

The Impact Assessment Board of the European Commission assessed a draft version of the present impact assessment report and issued its opinion on 27th June 2011. The Impact Assessment Board made several recommendations and, in the light of the latter, the final impact assessment report:

– Clarifies the relation between compliance with the R&TTE Directive and a more efficient use of spectrum, taking into account other legislation at EU and national level affecting the use of radio equipment

– Makes explicite all elements underlying Option A4, in particular the procedure for identification of categories of equipment to be subject to registration

– Indicates the positions of the main stakeholders with regard to the options considered

– Makes more explicite social impacts and impacts on consumers

– Clarifies how the proposed Options A1 to A4 facilitate and/or incentivise compliance by manufacturers based outside the EU

3. Context

The R&TTE Directive fully harmonises the placing on the EU market of the products falling within its scope. Only equipment complying with the requirements in the Directive may be placed on the market, and Member States may not introduce further restrictions addressing at national level the same requirements, namely the protection of health and safety, electromagnetic compatibility, and the avoidance of harmful interference. Other EU legislation on environmental aspects also applies to these products, in particular the directives on RoHS[12], WEEE[13] and Batteries[14], as well as implementing measures under the EcoDesign Directive[15].

With regard to putting into service of radio equipment, the legal environment is more complex. Radio equipment makes use of spectrum, the management of which is largely a national competence. Whereas equipment complying with the R&TTE Directive can in principle be used in the EU, national regulations, some of them harmonised at EU level, may introduce further restrictions on the use of radio equipment. When exercising this competence, Member States shall comply with applicable EU legislation (see Annex VIII and section 4.5 below for a more detailed description).

The Commission has issued two progress reports on the R&TTE Directive:

– A First Progress Report, of 22.4.2004, collecting the experience of the first five years of operation of the Directive (see ref.[1]) and announcing the intention of the Commission to examine the need for revising the Directive and to make proposals

The Telecommunications, Transport and Energy Council of 9-10 December 2004 adopted Conclusions on this first report and invited the Commission to examine the need for revising provisions of the R&TTE Directive and make the appropriate proposals

– A Second Progress Report, of 9.2.2010 (see ref.[2]) which, building on further experience on the operation of the Directive and on the 2007 public consultation, highlighted a number of emerging problems and margins for improvement to be addressed through legislative revision or other means

4. Problem definition

4.1. Low level of compliance

A low level of compliance with the requirements of the Directive has been observed, affecting both the essential requirements in the Directive (the protection of health and safety, electromagnetic compatibility, and the avoidance of harmful interference) and the related administrative requirements (e.g. CE marking, information on restrictions to use, Declaration of Conformity). The Second Progress Report (see ref.[2]) states:

“a very low level of compliance to the provisions of the Directive was observed among low power radio devices and to a lesser extent in other areas. A number of importers and manufacturers of this equipment are not aware of the Directive or deliberately ignore it”

This conclusion is based on evidence available from national Market Surveillance Authorities (MSAs) who cooperate within the administrative co-operation group ADCO-R&TTE[16]. Since the Directive entered into force, ADCO-R&TTE coordinated four EU-wide market surveillance campaigns (see ref. [3], [4], [5] and [6]).

The first campaign covered a broad range of products, subsequent campaigns focussed on a particular category: short-range devices, Private Mobile Radio (PMR[17]) and 2.4 GHz devices[18], and low-power FM[19] transmitters. The table in next page summarises the results of the 4 campaigns:

The campaigns have found values ranging between 28% and 56% for compliance with the essential requirements, and even lower values for administrative compliance.

The most recent consolidated report available, i.e. the 2009 final report of ADCO-R&TTE (see ref. [7]) also shows low levels of compliance. Of 6168 R&TTE pieces of equipment inspected, 68 % were compliant with the essential requirements and only 56% were compliant with both essential and administrative requirements.

Table 1. Summary of R&TTE market surveillance campaigns

|| 1st campaign 9/2002-10/2003 || 2nd campaign 1/2005-1/2006 || 3rd campaign 9/2008-5/2009 || 4th campaign 6/2009-10/2009

Product area || Broad range of products || Short-range devices || PMR (Private Mobile Radio) and 2.4GHz devices || Low-power FM radio transmitters

Sampled products || >1000 || 180 || 259 || 60

Observed administrative compliance || 24% || 42% only 12% compliant including requirements on technical documentation || 40% only 15% compliant including requirements on technical documentation || 17%

Observed compliance with essential requirements || Not included in the campaign || 56% || 53% (60% for radio aspects) || 28%

Observed overall compliance || 24% || 6% || 16% -22% for PMR -9% for 2.4 Ghz devices || 10%

Other elements || -Missing DoC and area of intended use particularly severe || -Missing design schemes in technical file was a major cause for non-compliance || -Missing design schemes in technical file was a major cause for non-compliance ||

MSAs have found that for a non-negligible part of equipment non-complying with the essential requirements, no evidence was available of a conformity assessment having taken place. Absence of a complete technical documentation has been a recurrent issue. Also basic requirements such as CE marking (15% absent/incorrect for equipment inspected in 2009) and a correct Declaration of Conformity (DoC) (33 % absent/incorrect for equipment inspected in 2009) are often not complied with. In many cases the equipment concerned consists of low-cost products for consumers, such as some toys with short-range radio features. However, the market surveillance campaigns also detected low levels of compliance for professional equipment such as PMR.

This situation affects consumers, law-abiding manufacturers, and public services. The following consequences can be identified:

(4) Low compliance prevents law-abiding companies from competing in a level-playing field with companies that do not comply with the legal requirements of the Directive. Products not complying with the Directive and/or the conformity of which has not been assessed benefit from lower costs and thereby gain competitive advantage over compliant products, thus distorting competition

(5) Low compliance exposes citizens to possibly unsafe products, thus potentially entailing accidents and negative health impacts. In this respect, three aspects are to be considered:

– Electrical safety hazards arising from insufficient assessment of risks associated to the electrical characteristics of the equipment. As most R&TTE products used by consumers, many of them battery-powered, are of relatively low-risk, direct consequences of non-compliance for human health and safety are usually limited

– Public exposure to electromagnetic fields (EMF) is a matter of concern. Primary responsibility in this area remains with Member States. At EU level Council Recommendation 1999/519/EC[20] includes recommended limits for the exposure to EMF of the general public. Harmonised standards giving presumption of conformity with the essential requirements in the R&TTE Directive are designed to ensure that the public is not exposed beyond the limits of the Council Recommendation. Compliance with the R&TTE Directive is important for public confidence in the effective surveillance of public exposure to EMF radiation, which in turn supports further deployment of radio technologies (e.g. base stations for mobile communications)

– Non-compliant radio equipment may create harmful interference with critical communication services such as those of security services, air traffic management or public safety. Nuisances on such critical communications may have fatal consequences or contribute to criminal activity, and several such cases have been reported within ADCO-R&TTE (e.g. long-range walkie-talkies interfering with aeronautical communications)

(6) Low compliance of radio equipment with the Directive also prevents a more intensive and efficient use of radio spectrum, negatively affecting the potential for economic growth and innovation in this area[21]. The R&TTE Directive is the only legal instrument with requirements on the use of radio spectrum (e.g. power, width of frequency band used, spurious emissions) to be complied with by radio equipment placed on the EU market. Though other EU-level and national regulations (see Annex VIII) often set further requirements on the use of spectrum, ensuring that only equipment complying with the R&TTE Directive is placed on the market is very important for an effective and efficient use of spectrum:

-First, through the interaction between the R&TTE Directive and other EU/national regulations on the use of radio spectrum: where confidence in the enforcement of the Directive is poor, national authorities are reluctant to authorise more intense uses of radio spectrum in their regulations

-Second, influencing the behaviour of users and manufacturers: equipment non-complying with the relevant R&TTE requirements creates harmful interference and dissuades users and manufacturers from using affected frequency bands; for example non-compliant walki-talkies interfering aeronautical communications oblige aviation authorities to reserve several frequency bands for these critical communications

Different elements concur in explaining the low level of compliance observed:

A) The current text of the R&TTE Directive is considered to be ambiguous and unnecessarily complex (see Annex IV and ref. [2]). Section 4.2 below develops these aspects. A relatively high effort is required from manufacturers in order to understand their obligations under the Directive.

B) Insufficient or inefficient enforcement by Market Surveillance Authorities:

– The relative low riskiness of the product area covered by the Directive, and the fact that phenomena such as excessive exposure to electromagnetic fields or interference among radio equipment are particularly difficult to ascertain, makes the detection by MSAs of the placing on the market of non-compliant products particularly difficult

– Market Surveillance is a national competence. MSAs monitor the market in order to detect and withdraw non-compliant products. Member States currently commit very different amounts of resources to market surveillance[22]. Under chapter III of Regulation 765/2008/EC[23], Member States shall entrust market surveillance authorities with the powers, resources and knowledge necessary for the proper performance of their tasks. Tight budgetary conditions and the limited political visibility of MSAs have not allowed to fully implement this requirement up to this date, and no fundamental change is foreseeable in the near future. Lack of cooperation among MSAs also reduces the efficiency and the dissuasive power of their action. This point is being addressed as well under NLF Regulation 765/2008/EC.

– Efficiency and effectiveness of MSAs is strongly hindered by the limited traceability of products and of manufacturers. Current provisions in the ‘Guide for the implementation of the Directive[24]’ include the obligation to provide the name and address of the manufacturer or his authorised representative in the DoC accompanying the product. Nevertheless, this non-legal obligation is not always followed, and often the data provided do not allow an effective contact (see ref. [9] and [3] to [6]). When a valid contact point cannot be found, MSAs are obliged to unfurl the distribution chain in order to contact the person responsible for placing the product in the EU market. As an illustration, a market surveillance authority mentioned difficulties for contacting the responsible entity in 50% of the cases, entailing a time effort ranging between 0.25 and 0.75 manXdays. (see ref. [9]). Many MSAs devote large amounts of time and resources in order to trace products and the manufacturer or the importer responsible for the product on the EU market, which are subtracted from the limited resources of MSAs. This can be also illustrated by the following statement given in an interview by another MSA:

“When we find a product and suspect it to be non-compliant, we first try to contact the person responsible for the market introduction. Frequently, such information is lacking, e.g. in the packaging or on the product. We then ask the retailer where we found the product from whom he/she got the device. We continue with this contact provided to us and ask the supplier where he obtained the product from. The story can repeat itself for so long till we get to the very first importer of the product… this is extremely in-efficient and also in-effective” (see ref. [8]).

Responsibilities of economic operators other than manufacturers, i.e. importers and distributors and other intermediators such as web-platforms, are absent in the current Directive. This creates difficulties in obtaining their cooperation in the enforcement of the Directive, cooperation which is particularly important when manufacturers are based outside the jurisdiction of the MSA.

The incentive matrix with which manufacturers are currently confronted is characterised both by a high perceived cost of compliance, driven by the complexity of the Directive, and a low risk of sanctions in case of non-compliance, taking into account the limited resources and efficiency of enforcement. Such an incentive matrix does not sufficiently encourage manufacturers to comply with the legal requirements, especially those manufacturers with an ephemeral presence on the market.

Table 2. Incentive matrix for compliance under the R&TTE Directive

Barrier/Incentive for compliance || Probability of effective sanction[25] in case of non compliance

High || Low

Perceived cognitive barrier to compliance || High || || X

Low || ||

4.2. Problems related to the legal provisions of the Directive

4.2.1. Ambiguity and complexity of the Directive

The Directive is generally considered to be too complex and ambiguous. The cases below have been identified within the 2007 consultation (see Annex IV and ref. [2]) and within TCAM[26].

There are different interpretations among MSs and industry on whether the essential requirement in article 3.2 ('effective use of spectrum... so as to avoid harmful interference') is only applicable to radio equipment when transmitting or also to the performance of reception by radio equipment. The community of standardisation is divided, with consequences on harmonised standards conferring presumption of conformity with the requirement[27]. This ambiguity also affects the possibility of systematically introducing harmonised standards setting requirements for all radio receivers in view of a more intensive and efficient use of radio spectrum.

The 'alert sign' must be affixed on products where restrictions on their use are applicable in one or more Member States. As indicated by consumer representatives within TCAM, the practical value of this sign for consumers is very limited. There have been extensive discussions on the distinction between this requirement and the obligation to notify to authorities the intention to place on the market equipment operating in non-harmonised bands, as per article 6.4[28]. Yet the distinction remains unclear for many companies. National authorities use these notifications in very different ways. While some consider that they facilitate informing manufacturers on possible restrictions on use of the equipment, other authorities do not make any use of such notifications. They add to administrative burden for industry (43 % of respondents consider a suppression of this requirement to bring in some or significant reduction of burden, see ref. [12]).

Member States have different interpretations on how to apply the requirements in the Directive to products and economic operators in the case of internet sales and other distance sales, as shown by discussions within TCAM. For example, the applicability to web-platforms based outside the EU of the concept of person responsible for placing on the market and ensuing obligations is unclear.

The ambiguities and redundancies above and others cited in Annex VII result in scarce resources of authorities and economic operators being consumed in interpretative discussions, lead to different approaches to the application of the Directive, and constitute a hindrance to the Internal Market.

The Directive also includes many administrative provisions and experience has shown that there is scope for administrative simplification. This refers in particular to the obligation to affix in 3 places, namely on the equipment, on the package and on user instructions the following elements, where applicable to a piece of equipment:

(a) CE marking

(b) Notified Body number

(c) Alert sign

These obligations create burden for businesses that have to adapt the design of labelling, packaging and accompanying documentation for products, and also for public administrations in charge of monitoring them.

Many R&TTE products are also covered with regard to other requirements by other pieces of EU Harmonising Legislation, e.g. for Toys, Machinery, Lifts, etc. The fact that many definitions, obligations and procedures are similar but slightly different is a source of difficulties and undue burden for economic operators.

4.2.2. Problems with the scope of the R&TTE Directive

· Problems arising from the application of the Directive to certain equipment

Within the scope of the Directive is currently included equipment for which the provisions of the Directive are not well adapted, in particular in the following cases:

Software-defined radio (SDR) is a technology allowing to modify key operating parameters of radio equipment (e.g. frequency range, modulation, output power) by changing its software. These parameters are central to compliance with all three essential requirements of the R&TTE Directive. SDR emerged in the military environment and has until now had a limited impact on the civil market. Most SDR products, in particular for base stations in mobile networks, remain today under the control of a single manufacturer. However, a foreseeable increased presence of SDR, in particular when independent software is uploaded on equipment, raises questions on conformity assessment of combinations of hardware and software, on marking and information requirements for products and, on allocation of responsibilities for non-compliance. Lack of appropriate provisions in the Directive creates legal uncertainty both for public authorities and for equipment manufacturers, and barriers to market uptake of these products.

Complex installations, e.g. a high power TV broadcasting transmitter, are often continuously modified, and include pieces of equipment that are not placed on the market. However, as the Directive does not include any specific provision for them, installations and their components should be treated like normal products, which creates some legal and practical problems. For example the application of the obligation of both the complete installation and its components to comply with the essential requirements is problematic. One third of respondents to the 2007 public consultation considered that installations where not sufficiently addressed in the Directive, while half of them considered this was not an issue.

The effects of multiple pieces of individually compliant equipment may cumulate (e.g. in-vehicle radars in congested traffic) and create risk to health or harmful interference. The Directive does not easily allow to deal with risk arising from these situations.

In the absence of voluntary industry agreements, lack of interoperability is an inconvenience for users and creates unnecessary waste of resources, as illustrated by the protracted inability of the market to generate a common standard for chargers for mobile telephones. The Directive already allows the Commission to take Decisions requiring certain equipment classes to interoperate with emergency services and with network interfaces, but not with accessories. As shown by requests from the public and from the European Parliament, there is a strong societal support for the ongoing Commission initiative to harmonise chargers for mobile telephones[29], and for extending such harmonisation to other equipment, e.g. laptops.

The definition of ‘terminal’, a constitutive element of the scope of the Directive, depends on national decisions on the location of the Network Termination Point (NTP). A fixed terminal may be considered a 'terminal' for the purposes of the Directive in some Member States but not in others: equipment such as an ADSL router may fall within the scope of the R&TTE D in a Member State and within the scope of EMCD[30] and LVD[31] in another one. Although the applicable essential requirements are the same in both cases, different administrative requirements and legal basis create burden for manufacturers (e.g. Declaration of Conformity for both R&TTE D and EMCD/LVD) and regulators, and prevent a more integrated Internal Market. This problem was highlighted by manufacturers and public authorities in the context of a related question within the 2010 consultation (see section 3 in ref. [12])

· Issues arising from products currently outside the scope of the Directive

Receive-only radio equipment (e.g. GPS or Galileo receivers, receiver side of car-openers) is generally included within the scope of the Directive[32]. Sound and TV broadcasting receivers, the most important category of such receivers, are excluded from the Directive, and are generally covered by the LVD and the EMCD or, in particular in the case of battery powered equipment, by the GPSD[33] and EMCD. The same equipment, if able to receive other data, falls within the scope of the Directive. Similar equipment is therefore subject to different legal frameworks and essential requirements, creating legal uncertainty and adding legal complexity to market surveillance.

Also outside the Directive are intentional radiators which transmit energy through radio waves for other purposes than communication. They include equipment such as frequency jammers, wireless chargers, heating applications, sensors and other usually falling under the denomination ISM (industrial, scientific and medical applications). Such equipment is not covered by the R&TTE Directive but by the LVD and the EMCD, or, in the case of battery powered equipment, by the GPSD and EMCD. If able to communicate, such equipment is however covered by the R&TTE Directive. Different equipment having the potential to create harmful interference is subject to different legal frameworks and essential requirements, adding legal complexity to market surveillance and also to market access for products not clearly falling within legal definitions.

4.3. Regulatory barriers to market entry of innovative radio equipment

Market access for new radio technologies depends on the possibility for manufacturers to comply with the R&TTE Directive, in particular through the availability of harmonised standards or of notified body opinions, but also on the availability of an appropriate allocation of spectrum and authorisation regime in the Member State where the equipment is intended for use, in particular where frequency bands are not harmonised by implementing measures under the Radio Spectrum Decision[34]. As identified within the public consultation held in 2007, a number of issues delay or discourage market entrance for innovative radio technologies in the EU (see ref. [11]). Within the scope of the R&TTE Directive are the following:

· Conformity with the Essential Requirements in article 3.2 of the R&TTE Directive[35] is usually based on harmonised standards the references of which have been published in the Official Journal of the European Union (OJEU). In past years, it has been the case that the delay for publication of references in the OJEU has been excessive, up to one year in some cases

· Manufacturers may place equipment on the market without following harmonised standards, provided that a positive opinion has been obtained from a notified body (NB). Difficulties in obtaining opinions from NBs have been reported in the absence of technical conditions defined for the use of spectrum . It is challenging for some notified bodies to be continuously updated on deliberations on rules for the use of spectrum and on compatibility studies developed by CEPT (see ref [11]).

Other issues fall mainly outside the scope of the R&TTE Directive:

· Lack of harmonisation of spectrum in the EU reduces economies of scale and makes national markets unattractive for innovators

· Excessive level of detail in the technical conditions for use of spectrum, as opposed to more flexible conditions allowing different technologies to share frequency bands

· A long and uncertain process for the re-allocation of spectrum when this is necessary for innovative use. The time necessary to complete the process depends on the complexity of the systems being considered and the presence of existing users of the bands to be re-allocated. Such a process and constellation of entities is in contrast with the more centralised and agile decision processes of trade partners and competitors such as US and Japan

· Lack of awareness among companies and SMEs of the regulatory decision-making processes for the placing on the market and the use of radio equipment

These issues reflect the complex processes involving the several entities responsible for different regulatory steps for the placing on the market and the putting into service of equipment using spectrum.

Technical conditions for use of spectrum are issued by Member States and may be harmonized either through binding EU Decisions pursuant to the Radio Spectrum Decision, or through non-binding CEPT Decisions or Recommendations (see Annex VIII for a more detailed discussion).

Relevant authorisation regimes under which radio equipment will operate are defined at national level according to the principles of the Authorisation Directive[36], which covers Electronic Communications.

The following figure presents a simplified view of the regulatory steps allowing the placing on the market and putting into service of radio equipment (see ref. [11]) where no harmonised standard is available and the frequency bands are not harmonised at EU level:

Figure 1: Simplified diagram for the preparation of harmonised standards and regulatory decisions allowing the placing on the market and putting into service of radio equipment

The current repartition of responsibilities involves a number of entities both at European and at national levels. Progress in the decision-making process usually needs iterative exchanges among the different entities, with associated delays necessary to ensure transparency and due consultation of interested parties, in particular users of spectrum.

Since 2007, the EU has taken a number of measures aimed at facilitating market access for innovative radio technologies. Such measures include:

– the improvements in the second part of 2010 of the process for the publication of references of harmonised standards in the Official Journal of the EU has allowed to achieve a substantial reduction of delays

– the review of the Framework Directive in 2009[37] has strengthened the emphasis on flexibility in regard to the use of spectrum for electronic communications services

– the harmonisation of a number of frequency bands introducing flexible usage conditions under the regime introduced by the Radio Spectrum Decision ( e.g. for Short Range Devices[38])

– the proposed Radio Spectrum Policy Programme[39] provides a strategic framework for the next 4-5 years in spectrum management, in particular in promoting innovation and encouraging efficient use of spectrum

As a summary to this section, market entrance for innovative radio technologies in the EU has to cope with a relatively complex and slow-moving system. Where innovative technologies do not fit within existing harmonised standards and regulatory conditions for use of spectrum, legal uncertainty arises, and can deter potential investors and innovators. Some limited issues regarding development/publication of harmonised standards and information of notified bodies on regulatory developments can be tackled within the framework of the R&TTE Directive and are addressed by the objectives and policy options below, but the most important issues arise in the area of spectrum regulation.

4.4. Other issues

Articles 3.1 and 3.2 contain the essential requirements at the core of the Directive. Article 3.3 allows the Commission to take Decisions in order to introduce additional essential requirements applying to categories of equipment to be defined. Since the entry into force of the Directive, the Commission has taken 5 decisions on the basis of article 3.3.e on access to emergency services. Article 3.3.f addresses support to ‘certain features in order to facilitate its use by users with a disability’. Until present, this article has not been the subject of a Commission Decision. In the course of the 2010 public consultation (see ref. [12]), stakeholders were invited to discuss whether this provision needed to be amended in order to make it more supportive of accessibility. Most respondents agreed on the potential value of article 3.3.f, while some called upon the Commission to take decisions on the basis of this article, and others preferred to focus on other instruments such as the Universal Service Directive[40], which addresses inter alia services for special categories of population. The conclusion is that article 3.3.f may be valuable in the future and should be kept as it is. Therefore, this aspect will not be discussed further under this impact assessment.

4.5. Problem tree

The following problem tree presents a stylised view of the causality links between the problems identified within the operation of the R&TTE Directive and their main consequences:

Figure 2: Problem tree identified within the operation of the R&TTE Directive

4.6. Underlying drivers of the problem

As noted above key drivers of the problems of non-compliance and complexity are the following:

(7) insufficient resources of MSAs, and inefficiencies in their use due to inappropriate legal instruments for enforcement and lack of operational cooperation among MSAs

(8) a diversity of interpretations by economic operators and Member States of the scope and requirements laid down in the Directive

(9) economic operators face an incentive matrix for compliance with the Directive which combines a relatively high complexity with a low probability of sanctions

(10) increasing proportion of manufacturers non located in the EU, in particular in East Asia, who have more difficulties in understanding the EU legal framework and the Directive

For the other problems, the drivers are:

(11) technological change driving the appearance of software-defined radio and the growing presence or radio components in many different products raising the issue of cumulative effects of technology

(12) different regulatory approaches raising the issue of specialised equipment falling within the R&TTE scope and other legislations

(13) a multiplicity of entities regulating the use of spectrum at EU and at national level, and an only partial harmonisation of spectrum; the revision of the R&TTE Directive only offers limited opportunity to address this issue

4.7. Who is affected.

As already mentioned in sections 4.1 to 4.6, several categories of stakeholders are affected by the current framework put in place by the R&TTE Directive and its implementation:

(14) Users of R&TTE equipment, public services and citizens in general are exposed to an important share of non-compliant equipment.

(15) Manufacturers are affected by distortion of competition, by the complexity and ambiguity of the Directive, by issues of scope and by difficulties in bringing innovations to the market

(16) Market Surveillance Authorities are affected by difficulties in efficiently enforcing the Directive, in dealing with its complexity and ambiguity and with issues of scope

4.8. Foreseen evolution of the problem

NLF Regulation 765/2008, which became applicable on 1 January 2010, should lead to a certain improvement of the current situation. It strengthens the obligations of Member States on market surveillance and provides for reinforced cooperation and information exchange on non compliant products. It also requires controls of imported products. Market surveillance should hence become more effective and more visible and deter those operators who have been encouraged by a perceived absence of market surveillance activities to take advantage of the system. However, even under the best functioning market surveillance system, authorities can only control a relatively limited amount of products on the market. Certain operators will still try their luck, in particular as long as the consequences of “being caught” (fines, withdrawal, effect on reputation, etc) are relatively minor in relation to the economic savings they can achieve.

While the NLF Regulation might lead to a certain improvement of the current situation, at the same time certain trends suggest a worsening of the problem. Whereas when the Directive entered into force in 1999 a significant part of the products covered were manufactured in Europe, most products today (80%, see Annex III) are imported from trading blocks where awareness of EU legal requirements is limited, and this trend seems to be sustained. Increased delocalisation of production will also make the tasks of market surveillance authorities more complex and difficult. In many instances they will not be able to identify or directly contact the manufacturer. Consequently they will need to rely increasingly on the information provided by importers and distributors. The lack of traceability in the supply and distribution chain will then become an even bigger problem. With no action, compliance with the Directive should remain low.

The presence of wireless communication devices has been significantly increasing in the last ten years. An increasing amount of other products such as machinery, vehicles and toys incorporate radio modules. In all probability this trend will not change. No action would increasingly allow for situations of risk to good operation of devices and prevent a more efficient use of radio spectrum.

Technological progress and market developments continously present new challenges to the application of the Directive. The ‘Guide for the implementation of the Directive’ agreed by Member States and the Commission is a common reference for consistent application of the Directive, and maybe regularly updated. However, as it is not legally binding, Member States follow it to different degrees. In particular increasing amounts of equipment modified by software are expected to be placed on the EU market, lack of adequate provisions would render the application of the Directive difficult or impossible in this case.

Further harmonisation of spectrum under the Radio Spectrum Decision and the impulse of the Radio Spectrum Policy Programme should simplify regulatory conditions for market access of radio equipment in general, enhance the flexibility and technology neutrality of spectrum allocation, and provide more opportunities for license-free access to spectrum by innovative products in particular. The Commission plans to issue a Communication on collective and shared use of spectrum.

Continuous efforts by the European Standards Organisations and the Commission to reduce delays in development and publication of harmonised standards, and to develop technology-neutral harmonised standards are expected to facilitate their timely correspondence with the state of the art and thus enable market access for innovative products.

4.9. EU right to act

The Single Market is an area of ‘shared competence’ according to article 4 of the Treaty on the Functioning of the European Union (TFEU). The current R&TTE Directive, as one of the ‘New Approach’ directives setting EU-wide harmonised requirements, has been instrumental in the completion of the internal market for radio and telecommunication terminal equipment. The objective of creating an open competitive single market for telecommunications and radio equipment could not sufficiently be achieved by the Member States acting individually, as different national requirements for the placing on the market of equipment fragment the EU market.

The revised Directive shall be based on TFEU articles 26 (Internal Market) and 114 (Approximation of Laws). Action at EU level is necessary on order to adapt, clarify or simplify provisions which are the keystone of the Single Market in this area. This cannot be achieved by Member States acting individually. A possible new obligation to register at EU level manufacturer and/or equipment as part of options addressing objective A would enable access to the EU market, and its advantages with respect to multiple similar measures at national level are clear. The changes of scope considered within options addressing objective B are limited, and affect other EU legislation rather than national competences. Some of the options considered for a revision of the regulatory environment of radio equipment (Objective C) affect spectrum regulation, an area largely within the competence of Member States, and this is addressed in section 7.4. The other options considered propose simplification or limited adaptation of the current Directive to some technologies, and therefore the EU right to act and the value-added of action at EU level can be considered uncontroversial for them.

5. Objectives

5.1. General objectives

As a general objective, the review of the R&TTE Directive aims to ensure better implementation of the essential requirements in the Directive, i.e. to ensure a high level of protection of health and safety for users and any other person, to ensure the electromagnetic compatibility of equipment, and to ensure an effective use of spectrum so as to avoid harmful interference. This must be achieved in a way that preserves free circulation of these products in the EU, does not create unnecessary costs and burden, in particular for SMEs, and supports innovation.

5.2. Specific and operational objectives

Specific and operational objectives in line with the problems identified in section 4 are the following:

A To achieve improved enforcement and compliance with the Directive:

· To reinforce the obligations of economic operators, and to improve the legal tools available to MSAs in order to improve their efficiency and effectiveness, in particular regarding traceability of products

· To simplify and clarify the requirements in the Directive in order to facilitate compliance by economic operators. This is also part of objective B

B To make available a sound legal basis for the implementation of the essential requirements:

· To clarify and simplify a number of provisions for economic operators, notified bodies and market surveillance authorities. To improve the coherence of definitions and requirements with other Internal Market legislation and with other related legislation such as the Radio Spectrum Decision and the regulatory framework for electronic communications. To modify or suppress a number of administrative obligations which create burden but bring in only limited value-added

· To facilitate the application of the Directive to equipment within the scope of the Directive which because of its nature, technology or patterns of use creates difficulties in the operation of the Directive, i.e. software defined radio, complex installations, equipment prone to generate cumulative effects; to enable harmonisation of interfaces between equipment and accessories

· To rationalise the scope of the Directive so that it includes all equipment for which avoidance of harmful interference (the essential requirement in article 3.2) is relevant

C To remove regulatory barriers for the access to the market of innovative radio equipment:

· To simplify regulatory decision-making processes and to reduce associated delays conditioning market access of new technologies

5.3. Consistency with other policies and objectives

The initiative will be consistent with the principles of the ‘Smart Regulation’ policy of the Commission[41], with the policy for Europe 2020, in particular with the regulatory review foreseen within the policy for an Innovation Union[42], as well as with the proposed Radio Spectrum Policy Programme[43].

The initiative will also be consistent with the New Legislative Framework package, approved in 2008. This consists of two complementary instruments, Regulation 765/2008 on accreditation and market surveillance and Decision 768/2008 establishing a common framework for the marketing of products. The Decision complements the Regulation. While the latter basically contains the obligations on Member States and their authorities to ensure that products on their market are safe and comply with the legal requirements, the Decision contains the relevant obligations imposed on economic operators such as manufacturers, importers and distributors, as well as the bodies testing and certifying products. Hence, the two instruments are inextricably linked and their elements mutually support and complement each other. Unlike the Regulation, the Decision does not have immediate legal effects on economic operators, individuals or Member States, and provides (article 2) that its provisions are to be used when legislation is drafted or revised.

6. Policy options

6.1. Options addressing objective A

-Option A0 is the status quo.

-Option A1 is an alignment with the New Legislative Framework (NLF) for the marketing of goods. Alignment of Single Market harmonising legislation with the NLF is a commitment of the EU Council, Parliament and the Commission. One of the main objectives of the NLF is to improve compliance with legal requirements in the Internal Market, and in particular to strengthen market surveillance. Alignment with the NLF would include the following elements from NLF Decision 768/2008/EC[44]:

– obligations for manufacturers, importers and distributors to check at the different steps in the supply chain that compliance of equipment has been assessed

– traceability obligations for manufacturers, importers and distributors: to mark their identity on the equipment, to keep a register of from whom they buy, to whom they sell (with the exception of consumers) at the different steps in the supply chain

– easier to use and more effective safeguard clauses

– penalties for administrative non-compliance

This option also includes the improvement of cooperation with MSAs in countries exporting to the EU so that they contribute to raise awareness of EU regulatory requirements among those manufacturers within their jurisdiction. This cooperation will be sought within regulatory dialogues between the Commission and third countries, as it has been the case in the area of toys.

-Option A2 includes Option A1 plus the obligation for manufacturers to register. The manufacturer shall register in an ad hoc EU central registration system his contact data, and keep them updated. The system returns a unique company registration number, which the manufacturer shall affix on all products placed on the EU market.

-Option A3 includes Option A1 plus the obligation to register individual product types. The manufacturer shall register in an ad hoc central EU registration system each new product type, and upload part of the technical file. The system returns a number specific to each product type, which the manufacturer shall affix on each corresponding product. Product registration intends a quick identification of products and online retrieval of the technical file by MSAs. This obligation could be applied as follows:

– The manufacturer registers, and is allocated a unique manufacturer identifier (mID)

– The manufacturer assigns a unique product identifier (pID) to each product type. This may be performed well in advance of placing a product on the market, so that details of both mID and pID are available when product design takes place

– The manufacturer assesses the conformity of the product, and affixes the product identifier (mID+pID) to his product

– The manufacturer uploads in a central registration system a subset of the technical file of the product which has to be put together as part of conformity assessment

-Option A4 includes Option A1 plus the possibility for the Commission, through the use of delegated powers conferred on the basis of article 290 TFEU, to introduce product registration for some specific categories of equipment, where following the entry into force of the revised Directive a high level of compliance has not been achieved in those categories.

– The Commission, following consultation with Member States and interested parties, would decide on a regular basis whether and for which product categories registration would become mandatory or would cease to become mandatory. Categories of products to be considered for product registration would be identified on the basis of evidence provided by MSAs, and taking into account other circumstances such as particular market/technology situations and availability of alternative enforcement measures. Depending on the situation of the categories of equipment covered by the delegated act, this may be accompanied by a specific impact assessment

– All manufacturers producing equipment within those categories would be required to register relevant products as long as the measure is in force. Exceptions could be considered for those manufacturers implementing the most comprehensive conformity assessment module, i.e. Full Quality Assurance module according to Annex V of the Directive

– The Commission would be in charge of implementing and operating the central EU registration system

A clear majority of industry representatives have favoured option A1, and strongly opposed options including product registration (options A3 or A4), alledging that it would bring significant additional burden upon law-abiding manufacturers but could still be circumvented by other manufacturers . Consumer representatives support option A3. Market surveillance authorities are equally split among those who value the increased efficiency and effectiveness of enforcement under option A3, and those who consider it unnecessary burden (see section 7.2 for more detail, as well as Annex VI and refs. [9] and [12])

6.2. Options addressing objective B

-Option B0 is the status quo including the regular update of the ‘Guide for the implementation of the Directive’

-Option B1 includes:

– alignment of definitions, obligations and conformity assessment procedures with the NLF for the Internal Market for goods[45]

– the clarification of currently problematic provisions on the basis of the current ‘Guide for the implementation of the Directive’; inclusion of obligations of internet-based economic operators

– simplification of administrative obligations including the ‘Alert Sign’ informing users of restrictions to use, and the suppression of a number of administrative obligations (see section 4.2) including notifications as per article 6.4

– the improvement of consistency with the Regulatory Framework for Electronic Communications and the Radio Spectrum Decision. This includes the alignment of definitions in the area of electronic communications and the introduction of explicit references in the Directive to other EU requirements for use of radio equipment

Suppression of notification to Member States of the placing on the market of equipment using non-harmonised bands, as currently provided for by article 6.4, is compensated with an enhancement of existing non-legislative measures providing information to stakeholders on regulation on the use of spectrum at EU and national level, namely the R&TTE sub-classes[46] under article 4.1 and the EFIS database[47].

-Option B2 includes option B1, plus the introduction of additional provisions to deal with some specific technologies and to address interoperability with accessories, and an extension of scope so that it includes all radio transmitters, radio receivers, and fixed terminals:

– introduce specific provisions for complex installations, for software defined radio equipment, and for equipment likely to create cumulative effects; a new general essential requirement for interoperability with accessories

– clarify that the essential requirement in article 3.2 applies to reception performance of radio equipment, and include within the scope of the Directive all equipment which intentionally emits or receives radio waves; this would add to the current scope receive-only TV and sound broadcast equipment and intentional radiators non-capable of communication

-Option B3 includes option B1, plus the introduction of additional provisions to deal with some specific technologies, an empowerment to the Commission to facilitate the application of the Directive and to address interoperability with accessories, and a scope restricted to radio transmitters:

– introduce specific provisions for software defined radio equipment and for equipment likely to create cumulative effects (but not for installations)

– confer delegated powers to the Commission on the basis of article 290 TFEU in two areas to introduce additional requirements in two areas: conformity assessment of software defined radio equipment, and interoperability between specific categories of equipment and accessories

– confer implementing powers to the Commission on the basis of article 291 TFEU to take binding decisions on consistent application of the Directive to future products and technologies in matters such as definitions, scope and requirements

– clarify that the essential requirement in article 3.2 applies to transmitters but does not apply to reception performance of radio equipment; include within the scope of the Directive intentional radiators non-capable of communication, and exclude all receive-only equipment.

Improvement in the performance of receivers, left outside the essential requirement in article 3.2, is to be pursued through voluntary standards reflecting the state of the art. When necessary the Commission may issue standardisation mandates requesting the development of such standards

– remove fixed terminals from the scope of the Directive, which would become a Directive for radio equipment; leave competition issues affecting terminals to general competition law and to Directive 2008/63/EC[48]

Both industry and MSAs generally support simplification measures in Option B1, as well as adaptations to specific cases in options B2 and B3. Opinions are more divided with regard to the inclusion of broadcast receivers within the scope of the Directive: manufacturers are clearly opposed, network operators and frequency managers are clearly supportive (see also section 7.3, as well as AnnexVI and ref. [12]).

6.3. Options addressing objective C

-Option C0 is no new EU action.

-Option C1 includes several non-legislative measures:

– to put in place a single point of contact for the request of EU-wide experimental licences for use of radio equipment

– an action plan led by the Commission to achieve a stronger relationship between responsible entities within the regulatory framework for radio equipment, in particular CEPT, notified bodies and standardisation bodies. This would include measures such as the systematic exchange of information on planning and operational processes, exchange of personnel, co-located meetings, etc

– an information campaign improving awareness by companies and SMEs on the regulatory framework for the use of radio equipment

-Option C2 includes option C1 and two legal changes: the creation of a special category of notified bodies, who would give opinions on the more innovative radio equipment, and who would be required to engage with CEPT and with ETSI in order to have access to an appropriate level of information; second, the setting up of a central EU body which would be empowered to allow the placing in the market and the use of a limited amount of radio equipment within well defined geographical areas and periods of time, so as to provide the conditions for a quick commercial start and uptake. The body would be supported by an EU level competence centre which might be attached to an existing body (e.g. BEREC[49]),. Temporary authorisations could be extended, made permanent or be reversed, including a possible withdrawal of previously authorised equipment.

Industry and public authorities generally support the measures included in Option C1. Measures in Option C2 have been proposed by individual companies and authorities, but are not clearly supported by a category of stakeholders (see also section 7.4 and ref. [11]).

7. Analysis of impacts

The Impact Assessment report uses data collected during 2 public consultations, numerous formal and informal exchanges with stakeholders and the external study carried out by Technopolis on the impacts of a possible registration system for R&TTE equipment. While every effort has been undertaken to base the proposed analysis on evidence, it must be recognized that some data are not available or have not been sufficiently agreed by stakeholders, in particular with regard to the administrative costs and benefits of a possible registration system.

The impacts of the three respective baseline options have been described in detail in chapter 4, in particular section 4.8, and will not be repeated here. They are consistently used as the benchmark for comparison of the options involving new EU action and are therefore also included in the summary tables.

7.1. Identifying impacts

All options will be assessed in terms of effectiveness in achieving the objectives.

Further, the main impacts to be assessed are social impacts, driven by the improvement of compliance with requirements protecting the the good operation of communications equipment used by consumers, business and public service and the health and safety of users and other citizens. Reduction of regulatory barriers for innovation facilitates access to the market of new products, enhances consumer choice and increases value-added for consumers. According to present knowledge, no significant impact on employment of the options considered can be foreseen.

Economic impacts consist of an improvement in the functioning of the internal market, an efficient use of spectrum and the administrative costs induced by the Directive, as well as some competition and innovation aspects. Many of these impacts are indirect, driven by intended improvements in simplicity in the operation of the Directive and in legal certainty. Specific impacts on SMEs are described as appropriate[50].

Due to the overall limited impact on the costs resulting from the options considered, it is not expected that it creates price increases that may negatively affect consumers. If on specific products moderate price increases were nevertheless to materialise, in particular under options B2 and B3, it is expected that the latter would be largely offset by the benefit of greater reliance on the product quality.

With regard to environmental impacts, disposal of R&TTE equipment is already regulated by a number of existing pieces of legislation (see section 3). Options considered in this report do not present significant environmental impacts.

7.2. Options addressing objective A: To achieve improved enforcement and compliance with the Directive

Four impacts are relevant here: impact on compliance – and through compliance on the social benefit of improved and safe operation of equipment-, administrative costs for companies and administrations, direct cost of a registration system, and impact on trade with third-countries.

7.2.1. Effectiveness:

In spite of significant efforts undertaken by the Commission together with Member States and economic operators in order to assess the impact on compliance of the different options[51], views on this matter of different stakeholders have remained very divergent. Furthermore, though product registration applies to different subsets of radio equipment in countries such as US, Canada and Singapore, they do not provide information on resulting levels of compliance. It is therefore important to explain which and to what extent elements in each option contribute to improved compliance.

Option A1 – alignment of the Directive to the NLF

The improved legal tools (obligations of importers and distributors, traceability, safeguards, penalties) intend to increase the effectiveness of enforcement by MSAs. Stakeholders have provided the following estimation of the impact of the NLF alignment on compliance:

– Some 50% of Member States and most economic operators expect a high impact of the alignment to the NLF on compliance in the R&TTE area (see ref. [9]). In the course of the 2010 public consultation a majority of respondents expected from the NLF alignment a medium (43%) to strong (28%) impact on compliance. SMEs were equally positive with 60% indicating a medium impact and 12% a strong impact (see ref. [12])

– A similar fraction of Member States (ca 50%) considers that, taking into account current difficulties to allocate more resources to market surveillance, in the absence of other instruments allowing to improve efficiency of MSAs only a limited positive improvement with regard to the current situation can be expected (see ref. [9])

With regard to the growing share of imports in the R&TTE area, the obligations of importers and distributors to check that appropriate conformity assessment has been carried out, and their role in providing feedback on enforcement measures (e.g. market withdrawals) are expected to have a positive impact on compliance by manufacturers based outside the EU. In addition to this, improving cooperation between EU authorities and those in the main exporting countries, i.e. China, US, Japan and Korea (see Annex III) is also necessary in order to educate extra-EU manufacturers and importers and to dissuade them from placing non-compliant products on the EU market. Considering the divergence of economic interests among trading partners, a significant additional contribution to compliance as a result of such cooperation is however uncertain.

Taking into account the elements above, the conclusion is that this option should provide an improvement of compliance ranging between moderate and significant.

Option A2 – NLF alignment +manufacturer registration - includes two additional elements for MSA efficiency on top of option A1: the online availability of up-to-date manufacturer’s contact data in a central database facilitates a reduction of delay in contacting manufacturers responsible for R&TTE products; as the contact data are not product specific, the reduction would in some cases be more effective than in others. Also, MSAs can easily withdraw from the market products without manufacturer registration number.

The additional effect on the efficiency of MSAs and therefore on compliance should be positive but limited, as seen by most MSAs (see ref. [9]).

Option A3 - NLF alignment + product registration - provides improved efficiency in market surveillance and has an educational impact on manufacturers:

First, product registration provides quick access to the technical file of registered products; this should allow in most cases to check whether conformity assessment has been performed or not. When necessary, online availability of product-specific manufacturer’s contact data in a central database facilitates a reduction of delay in obtaining further details about the process. Though no common picture of the potential improvement could be obtained, one MSA provided the following estimation (see ref. [9]):

– Difficulties for contacting the responsible entity arise in 50% of the cases, entailing a time effort ranging between 0.25 and 0.75 manXdays. Taking into account time spent analysing the technical documentation and planning lab tests (average 1.5 days), the MSA estimates an overall gain of up to 10-15% in time/resources allocated to market surveillance. Product registration also allows to eliminate the current delay for obtaining the technical documentation for the product, which is currently estimated to be of 4 weeks on average, and therefore reaction time of MSAs would be improved by several weeks.

Second, product registration allows MSAs to easily detect and withdraw from the market non-registered products, and products identified as non-compliant.

Third, on the basis of the aggregate set of registered products, MSAs obtain an overview of the market to be surveyed. This allows devise programmes for market surveillance accordingly, and to request appropriate means from budgetary authorities

Fourth, a user-friendly online product registration tool obliges manufacturers to go step by step through all necessary regulatory steps specific to each product. This is expected to improve awareness by manufacturers of their obligations under the Directive, and is particularly relevant for the majority of manufacturers located outside the EU.

Respondents to the 2010 stakeholder assessed the impact of product registration on compliance as medium 31% (48% for SMEs) or significant 34% (18% for SMEs). The incentive matrix with which manufacturers are confronted evolves with option 3:

Table 3. Evolved incentive matrix for compliance under R&TTE Directive under option 3

Barrier/Incentive for compliance || Probability of effective sanction in case of non compliance

High || Low

Perceived cognitive barrier to compliance || High || ||

Low || ||

The new matrix is characterised by a lower perceived cognitive cost of compliance, and a higher risk of sanctions in case of non-compliance. The change in the incentive matrix should drive compliance further up from the levels attained with options A1 and A2. Some allowance for inefficiency and forgery in the product registration system itself should however moderate the increase in compliance resulting from this option.

Option A4 should have similar impact as Option A3 on effectiveness addressing compliance in those equipment categories which become subject to product registration. For other equipment categories, impact of effectiveness is similar as for Option A1. As Option A4 only brings in the obligation to register products for those categories where a high level of compliance has not been attained, a better cost/benefit ratio is expected.

7.2.2. Impact on administrative costs

Option A1 entails some additional administrative costs, resulting for example from the obligation of economic operators to keep a register of suppliers and buyers of equipment, which are perceived as non-problematic by manufacturers (see ref. [9], [12][52]).

With regard to Option A2, manufacturers consider that effort associated to a one-time registration of the manufacturer itself would be negligible. Adding an additional manufacturer ID to all products would create design problems since there are already many global labelling requirements and limited space on product labels (see ref. [9]).

The impact of Option A3 on administrative burden is perceived as much more significant than for the other options. 32% respondents to the 2010 consultation (but only 12% of SMEs[53]) assess the impact as significant against only 10% for the NLF alignment. Main burdens generated by this option are the following (see ref. [9]):

– Training staff to become acquainted with the system: this is a one-time investment, also common to option A2 above, and not considered significant by industry

– Upload manufacturer information, obtain manufacturer Id and a range of product Ids. This is again considered not significant by industry

– Upload product specific information: this implies selecting appropriate information, formatting, performing confidentiality checks and actually uploading the information. This is considered to be significant by industry, actual effort would depend on the precise subset of technical documentation required

– Manage correspondence between product Id, technical file and product labelling: this is again considered significant. In the case of supply chains involving subcontractors, this may imply revision of legal agreements in order to allocate responsibilities under the product registration scheme

– Design equipment to accommodate a new label, and organise production to ensure correspondence between products and product Ids. This is considered problematic, mainly because of already existing labelling requirements in the EU and other economic areas, and the limited space on products

Manufacturers have not been able to provide a systematic estimation of resources required to cope with these tasks. Both written and oral requests on behalf of the Commission to provide such estimation were declined by companies and industry associations[54]. Some elements gathered were the following:

– For a large manufacturer with many products, industry representatives indicated that the additional workload could mean several additional full-time staff. (see ref. [9]).

– A large manufacturer indicated the need to recruit 2 additional employees, an additional cost of ca. 1500000 €/year to cope with obligations under Option A3.

– Additional burden is expected to be lesser for SMEs with fewer products on the market and for whom the operation of the system presents less challenges of complexity (see ref. [8])

– Additional burden arising from collecting, formatting and uploading product specific information seems to derive from the way in which companies comply in practice with their obligations under the Directive:

“It seems that while firms (especially large companies) collect all necessary data as expected by the regulation when a new product is introduced onto the market, they do not edit a fully comprehensive report every time. Rather, and although manufacturers have all information on their databases, such fully comprehensive reports are only edited ‘on demand’, i.e. when an MSA asks for the required information. That way, the companies in question save the work to actually produce reports in most cases (i.e., the work needed to copy and paste the information, create table of contents etc.) and are able to implement higher ‘internal’ (information) security standards (e.g., by implementing separate access barriers for certain employees to certain types of information). The additional time needed is seen in this context in the need to hire extra persons only tasked to handle the creation of the reports, and the extra time needed to assemble the information in a readable way. Additional costs would be negligible if the companies were to create the Documentation in such a way every time, i.e. also when no MSA is requiring the information (which is what many MSAs seem to expect from the companies). However, in practice cost increases would occur (although they would likely also be present if the current system could be enforced more stringently). (see ref [8])

Should the current obligation to establish a technical file prior to the placing of a product on the market be systematically fulfilled, additional costs would be limited.

There is no impact on time to market: provision of a pool of product Ids to a company can be done in advance, allowing companies to plan for their use. Product registration can be designed to integrate existing notifications as per article 6.4 (see section 4.2.4 above), so that registration facilitates market access without additional procedures.

An obligation to register products as in option A3 is already in place in countries such as US, Canada and Singapore. In view of their experience, no relevant impact on product diversity and consumer choice in the EU market is foreseen.

For Option A4, additional administrative burden linked to product registration (i.e. training, formatting and upload of information, labelling, etc) would only apply for those product categories required to apply registration, i.e. those showing persistently low compliance levels. The total administrative costs would therefore be much more limited than for Option A3. As Option A4 targets problematic product categories and implies less burden for industry as a whole, its overall efficiency is expected to be higher than for Option A3.

7.2.3. Direct costs of the options

Options A2, A3 and A4 entail direct costs for the implementation and maintenance of a registration system. A conservative estimate of these costs for option 3, implying the most complex system yields estimated investment costs of 300000 € and estimated annual maintenance costs of: 30000 € (see Annex X for the assumptions considered). A system limited in scope to some categories of products, as in Option A4, would of course imply lower costs; the reduction need not be proportional. As for the system in option A2, costs would be very limited.

7.2.4. Impact on third countries:

Some 80% of equipment placed on the EU market is manufactured abroad, and manufacturers outside the EU would have to comply with an obligation to register in case the relevant options are adopted. In the case of option A4, observed low compliance shows that some categories of low-cost products manufactured in East Asia might become subject to registration. Associated administrative burden and cost would particularly apply to them.

A Commission proposal to introduce registration in the R&TTE area would have an impact on the role of the EU as an effective model of liberal regime in the area of technical barriers to trade. Introducing registration in the R&TTE area may be perceived as questioning the effectiveness of the New Approach regime in protecting public interests, and could make less attractive the adoption of the EU regulatory approach by our trading partners.

7.2.5. Comparing the options addressing objective A. Preferred option

The table below summarises the impacts assessed[55].

As a summary, the alignment to the NLF and the improved cooperation among MSAs (Option A1) should increase compliance with limited increases in administrative cost. The simplification measures considered below under objective B should further contribute to the improvement of compliance. Manufacturer registration as per Option A2 provides only limited value-added to market surveillance tasks. Full product registration as per Option A3 may provide significant improvement of effectiveness and efficiency of market surveillance, but is perceived by industry as a significant additional burden. Option A4 allows to adopt a flexible and proportional approach: to perform the alignment of the R&TTE Directive to the NLF, and to introduce registration in some specific product categories where a high level of compliance has not been attained as shown by careful examination. Option A4 provides the best balance between the social benefit of improved compliance and the economic imperative to avoid unnecessary burden, and is therefore the preferred option.

Table 4. Summary table comparing options addressing objective A

|| Effectiveness in achieving objective A || Cost and efficiency || Coherence

Option A0 || 0 || 0 || 0

Option A1 || +/++ Moderate to significant || - Increase of administrative requirements, in particular for importers and distributors || +++ NLF alignment improves coherence with other New Approach legislation

Option A2 || +/++ Limited impact on top of A1 || -/+ Perceived as a small increase of burden by manufacturers Limited improvement in the efficiency of MSAs || +++/- Idem NLF / Slight depart from New Approach legislation

Option A3 || +++ Additional instrument for effective enforcement of obligations and education of companies || --/++ Perceived as a significant increase of burden by manufacturers Improves efficiency of MSAs Estimated 300000€ investment || +++/-- Idem NLF / Departs from New Approach legislation

Option A4 || ++ Additional measures only for problematic categories || -/+++ Smaller increase in burden for industry than Option A3 Higher overall efficiency than Option A3 || +++/- Idem NLF / Departs from New Approach legislation in justified cases

7.3. Options addressing objective B: To make available a sound legal basis for the implementation of the essential requirements

7.3.1. Effectiveness.

Option B1: the NLF intends, among other objectives, to clarify and to bring consistency to many definitions and obligations common to New Approach legislation such as the R&TTE Directive. This is an aspect which benefits from an important consensus among the R&TTE constituency (see ref. [10]). Avoiding current confusion between the obligation to affix the alert sign and the obligation to notify equipment using non-harmonised bands (article 6.4) is important for manufacturers, as shown by numerous discussions within TCAM. We may therefore speak of a significant clarification and improvement of coherence from Option B1.

Many Member States use notifications in article 6.4 to communicate with manufacturers on applicable spectrum regulation, and to identify needs for further spectrum harmonisation. Suppression of this communication channel is to be compensated by currently ongoing improvements in information provided to manufacturers by the list of R&TTE equipment sub-classes, which provide information on available restrictions to use, in the EFIS database, which provides some information on spectrum allocation and designation at European and national level but which is yet incomplete and not up-to-date, and by other non-legislative measures considered under objective C in section 6.3.

Option B2, with the introduction in the Directive of provisions specific to the cases of software defined radio, installations and cumulative effects, provides in general companies and authorities with a clearer, more fit-for-purpose legal basis. Specific issues and possible drawbacks to take into account are the following:

· In the area of software defined radio, there are yet important unknowns about the actual risks created by software uploads, about the future extent of competition in the provision of third-party software, and in general about future technology and its market uptake. New provisions may not be future-proof

· Installations are not placed on the EU market. There is less value-added in harmonising legislation applicable to them than it is the case for products. Co-existence with national legislation for installations may still be necessary in many cases, making the case for harmonisation weaker

· A general requirement for interoperability with accessories may be inapplicable due to disagreements within industry on technology. Systematic intervention by the Commission would mean a counterproductive interference with technology choices in the market

Option B2 brings the benefit of unifying interpretation of the essential requirement 3.2, which would include performance of reception. This facilitates the task of ETSI in developing harmonised standards, and also allows to plan a more efficient use of spectrum. This is important in view of the increased demand for this scarce resource, and in particular for the coexistence in the same bands of broadcast services and other electronic communication services. It ensures that consumers only have access to receivers with sufficient performance to work properly in situations of intense use of spectrum, and therefore brings the social benefit of protecting user experience. This approach is strongly supported by mobile network operators and by spectrum authorities (see ref. [12]). Including within the scope of the Directive intentional radiators non-capable of communication and broadcast receivers brings under the same legislation all equipment concerned by the essential requirement, which allows to unify requirements on equipment using spectrum for different purposes and simplifies market surveillance.

Option B3 brings in the benefits of option B2 with regard to application of the Directive to challenging technologies, but tries to avoid its drawbacks through the use of Commission implementing and delegated powers, allowing to timely react to future developments in technology or in the market. This is particularly valuable in the case of software defined radio, where the technology and the forms of cooperation between manufacturers of hardware and software are yet to be developed. With regard to interoperability with accessories, the possibility in option B3 to introduce requirements in the future provides an incentive to market actors to solve the issue by themselves, thus making EU intervention exceptional, which is desirable in order to avoid hampering innovation.

Option B3 also brings the benefit of unifying interpretation of the essential requirement 3.2 with regard to reception, though in a different direction than in option B2: the requirement would not be applicable to receive-only equipment, which would be excluded from the Directive. Performance of receivers would be left to voluntary standards and to the market, as it is currently taking place for co-existence of services in the 800 Mhz band. This option is clearly preferred by manufacturers (see ref. [12]). In the context of a more intense use of radio spectrum, some consumers having purchased underperforming receivers may suffer a degradation of their experience.

Again, bringing within the scope of the Directive intentional radiators non-capable of communication brings under the same legislation all equipment intentionally using spectrum and therefore concerned by avoidance of interference, which unifies requirements and simplifies market surveillance.

In addition, Option B3 unifies and simplifies the legal framework for fixed terminals (see 4.2.2), which would be the EMCD[56] and the LVD[57] (or GPSD[58] in some cases). The R&TTE Directive would become a simpler Directive on Radio Equipment with a clearer scope. A side effect of this simplification is to remove the possibility of introducing additional interoperability or accessibility requirements for fixed terminals and for pure receivers (e.g. Galileo/GPS receivers) on the basis of currently applicable article 3.3.

7.3.2. Impact on administrative and compliance cost

Alignment with the NLF (Option B1) involves some reduction of administrative cost for manufacturers (see table below).

Other elements in Option B1 further provide reduction of administrative cost for manufacturers. Suppressing article 6.4 has been referred in the context of the 2010 public consultation (see ref. [12]) as a significant reduction of burden. Less important was considered the suppression of the Alert Sign. SME participating in the consultation did not present any specificity in their valuation of this impact.

Table 5. Administrative obligations under Current R&TTE Directive and NLF

Administrative obligations for manufacturers || Option B0 - Current R&TTE D || Option B1 (NLF)

-CE marking -Notified Body number -Alert Sign -Manufacturer's name, product id, unique id -Indication of the countries where the equipment is to be used -Indication of restrictions of use -Indication of relevant interfaces for use -Provision of a DoC with the product -Prior notification of equipment using non-harmonised bands || 3x:(equipment, package, user instructions) 3x:(equipment, package, user instructions) 3x:(equipment, package, user instructions) 1x (equipment) 2x (package, user instructions) 1x 1x 1x -required || 1x : (equipment) 1x : (equipment) 1x (equipment) not required

Option B2 creates some additional compliance cost for manufacturers of software defined radio, i.e. an obligation to introduce mechanisms which ensure that only compliant software is uploaded, and for installers of fixed installations if explicitly covered by the Directive. Systematic requirements on interoperability with accessories may bring in important transitional costs for manufacturers obliged to adapt to new technical specifications.

Under option B2, a number of R&TTE D obligations would become applicable to intentional radiators and to broadcast receivers, what entails some compliance costs (see table below).

– complying with the essential requirement in article 3.2 may entail some additional testing and costs, ranging between quasi-nil for those products already subject to comprehensive testing, and a range of 2000-4000 EUR[59] per product type where the manufacturer opts for the introduction of external testing in order to assess compliance with the requirement. In the short term, in the absence of specific harmonised standards for these products, the opinion of a notified body would be required, with additional costs ranging between 500 and 1500 EUR[60] per product type. An appropriate mitigation measure to avoid such worst-case situations would be an additional delay for implementation allowing for the development of harmonised standards which would make consultation of a notified body optional

– the R&TTE Directive removes the voltage limitation (50 AC, 75 DC) of the LVD, therefore the LVD safety requirements are of application. Manufacturers have indicated that this entails additional testing and costs. However, under the GPSD safety of products also has to be tested and therefore the change of applicable legislation should only bring some limited additional administrative cost

The impact of these additional compliance costs on individual products may be estimated as ranging between practically nil for products which already are comprehensively tested by manufacturers and up to 50 € in the extreme case of products sold in small quantities when full testing and the opinion of a notified body is newly required. (see Annex XI for the assumptions considered). Leaving aside exceptional situations, those products for which lower quantities are sold are also products incorporating higher value added and more expensive products, therefore the possible increase in prices is not substantial in relative terms, even in the absence of mitigation measures. Sufficient delays for the entry into force of the new scope should in practice eliminate the need for manufacturers to contract external testing and to consult with notified bodies, leaving them the option to declare conformity on the basis of harmonised standards and in-house tests.

As for additional administrative burden:

– article 6.3 obliges to provide the DoC with the product; this obligation can currently be fulfilled in the form of a standard simplified DoC

– article 6.3 obliges to provide information to the user on available interfaces, on the geographical area for intended use of radio terminals (and on possible restrictions to use, not applicable to broadcast receivers)

– one-time costs for referring to the R&TTED in the DoC of product types already present on the market under EMCD and LVD/GPSD; an additional delay for implementation limits the need for this adaptation to product types not phased out by manufacturers within the given delay

Table 6. Additional requirements under R&TTE Directives compared to EMCD + LVD/GPSD

|| R&TTE D requirements additional to EMCD + LVD/GPSD

Substantive requirements || -essential requirement 3.2 (avoidance of harmful interference) -safety requirements of LVD apply also for equipment outside the 50V-1000V AC / 75V-1500V DC voltage range, in particular for battery-powered equipment

Administrative obligations || -provide the DoC with the product -inform the user about available interfaces and geographical areas for use -alert on restrictions to use (not applicable to pure receivers)

Negative impacts on cost and burden with regard to broadcast receivers were highlighted by a majority of manufacturers during the 2010 public consultation, where no specific SME issues where apparent.

The use of delegated powers in option B3 allows to limit additional cost generated by requirements on SDR equipment and on interoperability with accessories to those cases where the benefits are clearly justified. Option B3, like option B2, would create some additional cost for intentional radiators non capable of communication, which would fall under the scope of the R&TTE Directive (see above the discussion of additional cost for broadcast receivers under option B2) . This option would reduce some administrative cost for receive-only radio equipment and for fixed terminals which would become excluded from the scope of Directive.

7.3.3. Comparing the options addressing objective B. Preferred option

The table below summarises the impacts assessed above:

In summary, Option B1 achieves clarification, simplification, reduction of burden and improvement of coherence. Option B2 further clarifies and improves the legal basis in dealing with SDR, intentional radiators and receivers. Requirements on performance of reception may be used to increase efficiency in the use of spectrum and improving user experience, but entailing additional compliance and administrative costs. Option B3 allows to clarify the application of the D