digitaleurope views on the proposal for a telecommunications single ...

11 October 2013

DIGITALEUROPE VIEWS ON THE PROPOSAL FOR A TELECOMMUNICATIONS SINGLE MARKET REGULATION

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EXECUTIVE SUMMARY

DIGITALEUROPE supports the Commission’s desire to create a single market with a freedom to provide and consume digital services across the European Union. The Telecoms Single Market (TSM) package proposal gives Europe a unique opportunity to encourage investment in telecoms networks and infrastructure, which are crucial in supporting and boosting the economy. To support an Internet and cloud-driven economy which will create jobs and growth, we need robust and fast telecommunications networks, which permit the most extensive and efficient use of Internet and cloud resources. To encourage investment, we need a telecommunications framework that is fit for the digital age, unencumbered by unnecessary regulatory burdens, yet robust enough to foster a dynamic, competitive and innovative market. Only a genuine dynamic of competition in the telecommunications sector will provide sufficient incentives to invest. We welcome the Commission’s proposal to coordinate and where possible harmonise the use of radio spectrum within the single market. We agree that a further coordinated and harmonised approach to spectrum management in the European Union will help to create a coherent economic region where innovation with global impact is possible, investment is encouraged and administrative burden minimised. We support the Commission’s proposal to establish common timetables for spectrum assignments in Europe while allowing Member States to make spectrum available for wireless broadband before the established date. We also welcome the Commission’s consideration to create a favourable environment and administrative regime for the deployment of small cells in both rural and urban areas that can respond to the future capacity demand for wireless broadband connectivity. We consider, however, that additional amendments to the TSM proposal are required to achieve this goal. Finally, we support the consideration of spectrum sharing under a Licensed Shared Access (LSA) scheme. We take note of the Commission’s proposal on net neutrality. We understand the objective of the Commission is to safeguard an open Internet while allowing room for innovation. On one hand, the Commission proposes to safeguard the open Internet by banning blocking and throttling, recognising the need for reasonable traffic management in limited circumstances, including to avoid congestion. On the other hand, the Commission allows for specialised DIGITALEUROPE Rue de la Science, 14 >> B-1040 Brussels [Belgium] T. +32 2 609 53 10 >> F. +32 2 609 53 39 www.digitaleurope.org Transparency register member for the Commission: 64270747023-20 >> 1 of 11

services that encourage innovation and the offering of services with added value for users and differentiation potential for suppliers. DIGITALEUROPE believes it is important to keep a balanced approach and allow room for service differentiation and new business models. We support both an open Internet alongside the possibility to offer specialised services. Finally, we appreciate the Commission’s efforts to create more single market by proposing a single EU authorisation and a more coordinated approach to virtual access products in the EU. We would welcome a proper debate on assured quality connectivity products before enshrining a particular solution into law.

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INTRODUCTION

DIGITALEUROPE supports the European Commission’s desire to forge ahead with ‘more Single Market’, and the additional competition and consumer choice it would bring. Telecommunications has always been a crucial infrastructure supporting the economy. The advent of the Internet and the associated rise of Cloud Computing and Big Data applications in every aspect of the economy and society, further increase the role of the sector today. DIGITALEUROPE sees this text as a unique opportunity to encourage investment into telecoms networks and infrastructure. The success of the initiative should be measured against an actual increase in infrastructure investment and take-up of services. DIGITALEUROPE would like to comment on the sections on the single EU authorisation, the coordination of spectrum, European virtual access products, assured service quality connectivity products and net neutrality in order to ensure they create the right framework that will foster such investment.

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INVESTMENT

Europe needs significant investment in ubiquitous access (wireless and wireline1). Upgrades in the core and backhaul of the networks will also be required to cope with continued growth in data traffic we are seeing in the Internet, and in the development of new services and applications, which will continue to grow. To support an economy increasingly based on the Internet and cloud-driven economy, which will create jobs, growth and offer new societal possibilities for Europe, we need robust, fast and capacious telecommunications networks, which permit the most extensive and efficient use of Internet and cloud resources.

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The observed growth in mobile data traffic is intensifying the burden on mobile operators to carry this traffic on what is mostly a fixed network except in the access, which has a radio air interface. This means more transport capacity, more fiber in the ground, even for mobile communications.

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The EU-wide rollout of superfast broadband networks, increasing speed and ubiquitous availability of Internet access is a priority for Europe’s future. The ambitious Digital Agenda broadband targets as well as the promotion of investment in networks remain very relevant today. In the absence of public funding of networks, investment should be promoted primarily through regulatory restraint and certainty, in order to provide the private sector with the stability and incentive to invest. We need a telecommunications framework that is fit for the digital data age, unencumbered by a legacy of fragmented and unnecessary regulatory burdens, yet robust enough to foster a dynamic, competitive and innovative market. Only a genuine dynamic of competition for telecoms will provide adequate incentives to invest. A stable single market also requires regulatory certainty, and this will only happen once we move away from relying on a legacy of rules and practices, which were voice-driven and bilateral-cross-border: many are now unnecessary or unjustified in the current data growth, IP-based era. These are the priorities and the approach that which we urge EU legislators to keep in mind.

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SINGLE EU AUTHORISATION

More Single Market is a must in our Internet age, which is inherently cross-border. DIGITALEUROPE therefore welcomes the European Commission’s intent to enable the development of genuine pan-EU communications providers and Europe-wide choice for consumers, while at the same time, seeking to minimise the hindrances of legacy and other fragmented, nation-based rules. The proposed creation of a new single EU authorisation goes in the right direction, giving the end-user the right to buy electronic communications services across borders, and accordingly allowing companies to provide electronic communications services from their home Member State to the entire EU. Using this ‘Country of Origin’ principle in particular is a welcome approach for ‘better regulation’, reinforcing the single market to the benefit of consumers and the market, because as in e-commerce, pan-EU providers would only need to deal with their home country’s regulator, rather than comply with 28 different, stifling sets of national rules. The introduction of such pan-EU provision of electronic communications has the potential to bring more competition, consumer choice, and dynamism in this market, which are crucial to stimulate continued investment in high speed Internet access across Europe. Of course such evolution is not a simple affair, and we have reservations concerning the wording suggested in the text, e.g. Recital 10 such as determining a company’s place of operation on the basis of the languages of the company’s website, which does not make sense in a Europe of many countries with similar languages, and freedom of movement whereby EU citizens of all languages can inhabit any other Member State. In addition, the rules on main establishment may discourage companies from smaller Member States or the lack of clarity on the application of national rules when a company is deemed to operate and be regulated in another Member State on top of their home Member State. We stand ready

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to engage with policymakers, notably on questions regarding the place of establishment of pan-EU providers and the extent of application of the country of origin principle - for which as few exceptions as possible should be allowed.

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COORDINATION OF SPECTRUM WITHIN THE SINGLE MARKET

DIGITALEUROPE supports a further coordinated, harmonised and consistent approach to spectrum management and assignment in the European Union that encourages investment and reduces administrative burden. We understand that, through this proposal, the Commission aims to build a framework that creates certainty and confidence for investment in European wireless networks. We seek to ensure the final Regulation will create a more predictable investment environment, favour faster roll-out of the wireless networks and facilitate the adoption of the most advanced technologies that allow an optimised usage of the spectrum. General considerations Recital 20 cites several bands envisioned by the RSPG Opinion on spectrum demand for wireless broadband that may be harmonised in the near future for wireless broadband communications. The 2300-2400 MHz band is not referenced in this consideration; however it is cited in the RSPG Opinion as having potential for wireless broadband. The European framework for wireless broadband use of this band is nearing completion and DIGITALEUROPE supports its use for mobile broadband applications and would therefore recommend it to be added to the list of frequency ranges cited. Articles 2 (9) and (10) define respectively “small-area wireless access points” and “radio local access network” (RLAN) in a call for a lighter regulation and administrative framework for deploying such network elements. However, while the definition of RLAN is clear on the use of unlicensed spectrum at 2.4 GHz and 5 GHz, there is no clear indication that the definition of “small-area wireless access points” is referring to small cell equipment using licensed spectrum or a combination of licensed and license-exempt spectrum. This has a significant impact on the understanding of Article 15 on the harmonisation of deployment conditions and removal of barriers to such deployment. In relation to Article 12, a synchronised and aligned calendar for spectrum assignment is not equivalent to having a single calendar for the availability of the spectrum. The document’s text gives the opportunity for Member States to make the spectrum available for wireless broadband earlier than the common calendar which we believe is a positive approach. We support the ability for Member States to grant rights of use and allow the use of harmonised bands in advance of harmonised timetables established by the Commission. Mandating one date for spectrum auctions across the EU28 would hinder Member States wishing to release spectrum for wireless broadband before the established date. Any

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alignment of timetables should not result in the least common denominator for spectrum auctions i.e. aligning with the slowest member state rather than the quickest. Spectrum sharing DIGITALEUROPE supports the availability of spectrum for wireless broadband services in the following priority order; 1) clear spectrum for use on an exclusive licensed basis, 2) share spectrum on a LSA basis, 3) share spectrum on a license exempt basis. Article 10 (6b) requests national authorities to determine conditions under which undertakings may transfer or lease part or all of their individual rights to use radio frequencies to other undertakings, including conditions to enable the exploitation of beneficial sharing opportunities. DIGITALEUROPE supports a licensed shared access (LSA) approach to spectrum when access to spectrum on an exclusive basis is prevented by incumbent usage that cannot be re-assigned elsewhere. LSA usage when properly defined can provide a robust and scalable means of implementing secure and reliable spectrum sharing arrangements. A flexible structure of LSA allows multiple cases and variations in implementation in accordance with mobile broadband services’ needs over both the short and long term. For the licensed shared use LSA of spectrum, it is highly desired that a harmonised technology neutral framework is created for Europe. As industry needs clarity to deliver on LSA, DIGITALEUROPE considers that the multiplication of new concepts with “beneficial sharing opportunities” is not beneficial, especially in the context of the on-going RSPG, CEPT and ETSI activities on LSA. Therefore, in Article 10.6 (b), we recommend substituting “beneficial sharing opportunities” by “licensed shared access (LSA)”. Access to radio local access networks We noted that the Commission is consistent in its measures to promote the use of the radio local access networks (RLAN) without sector-specific conditions and subject only to general authorisation conditions. We welcome this approach. In this context, DIGITALEUROPE supports the extension of the 5 GHz band that would result in RLAN devices being able to operate within one large uninterrupted block of frequencies between 5150 - 5925 MHz in Europe. However, we would welcome clarification in relation to Article 14.3, whether this provision is intended to undermine the ability of hotspot providers to limit the use of their hotspots to their own customers or those of their partners. The text of Article 14 raises uncertainty regarding the scope of such a provision and the validity of the business model. Deployment and operation of small-area wireless access points DIGITALEUROPE welcomes the Commission’s initiative to consider the need of deploying denser networks that are able to respond to the future capacity demand for wireless

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broadband connectivity, focusing on the need to create a favourable environment and administrative regime for deploying small equipment that fit easily in the dense urban environment thanks to their size and unobtrusive character. As previously stated, we seek more clarity with the definition under Article 2.9 as it has a significant impact on the understanding of Article 15 on the harmonisation of deployment conditions and removal of barriers to such deployment. We also find Article 15 very generic. DIGITALEUROPE considers that both Articles 2.9 and 15 need to be revisited to remove ambiguity and misinterpretation. Without such an action, the text on the small-area wireless access points can be interpreted as referring to equipment under a general authorisation license-exempt regime. In this light, we propose the definition of small-area wireless access point under Article 2.9 should be amended to explicitly mention that small cell equipment use either licensed or a combination of licensed and license-exempt spectrum. We also propose the deletion of the reference to the implementation of the general authorisation regime under Article 15(2). With the desired changes in the text of the Articles 2.9 and 15 operated, we understand that the Commission defines as small-area wireless access points the equipment referred as small cells by the industry. We also understand the Commission acknowledges their importance for answering the increasing market demand for mobile data capacity, especially in the dense urban environments, and improved coverage, while retaining the secure and private character of the connectivity and the quality of service guaranteed by a cellular network. We thus support the proposal to simplify and streamline the deployment of small cells by cancelling any administrative requirements by Member States for individual planning or other permits. This would ensure predictability for manufacturers as well as for operators which, benefitting from harmonised rules, would spur investment in this technology across EU Member States. DIGITALEUROPE equally supports the proposal to simplify and streamline the deployment of RLANs by cancelling any administrative requirement by Member States for individual planning or other permits. Taking into account that our proposed changes to Article 2.9 would exclude RLANs, which use license-exempt spectrum, from the scope of applicability of Article 15, we propose to replicate all the relevant provisions, including the Commission’s power to specify characteristics for design, deployment, connection and operation of RLANs and include them under Article 14. DIGITALEUROPE considers that small cells within heterogeneous networks using licensed spectrum will play a key role in the future evolution of mobile broadband networks and access. Likewise, RLANs using licence-exempt spectrum will continue to expand as a key access technology. Small cells operating with larger bandwidths (e.g. 100MHz and beyond) at higher frequency bands can provide a significant contribution to the achievement of the EU Digital Agenda objectives, in terms of end user throughput and quality of services and experience.

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EUROPEAN VIRTUAL ACCESS PRODUCTS

DIGITALEUROPE supports a coordinated and harmonised approach to virtual access products in the European Union to promote a favourable investment climate for industry as a whole, in order to deliver the greatest possible benefit to consumers and businesses of an industry wide migration to Next-Generation Access Networks. While we still think that infrastructure competition should prevail, wholesale products must allow product differentiation and innovation, and give access seekers a high level of control over the connections and over the customer premises equipment in terms of transparency (for IP configuration and Ethernet transport), quality of service, and multicasting capabilities. The European virtual access product definitions and specifications should be as lightweight as possible to allow flexibility on how to implement such products and to prevent the blocking of already existing offers. By definition or specification, we mean a list of features which should be present in such product offer and not a fixed list of how to technically implement each aspect. DIGITALEUROPE recommends the establishment of a common adoption date for the technical and methodological rules for the three wholesale access products and not for one product only. All of these wholesale products are technology neutral2, meaning that they can be offered over all NGA technologies (existing and future) (Recital 8) and as such can facilitate the migration to next-generation networks. Virtual access products are beneficial to all service providers: 1. When physical unbundling is not technically feasible at an economically viable point (In UK, physical unbundling of the fiber loop at the Metropolitan Point of Presence is not technically feasible at an economically viable point, as is currently the case with GPON); 2. When there is no business case or investment identified for physical unbundling for alternative operators (unused possibility to climb the ladder of investment); 2

There’s no all-englobing virtual access product track currently in standardisation but relevant work has already been done. A quick assessment (related to the activities of BBF and MEF) from our side shows that there are enough standardised building blocks to assemble virtual access products. For the assured service quality product, the European Commission has funded a European collaborative research project, named ETICS (Economics and Technologies for Inter-Carrier Services), within the ICT theme of the 7th Framework Programme of the European Union that contributes to the objective "Network of the Future" of the Work Programme. ETICS specified pragmatic solutions and recommendations to achieve such ASQ product emergence. The priority should be in one hand the standardisation of business interfaces to negotiate ASQ connectivity product SLA's as mentioned in ETICS recommendations and the standardisation of interfaces to invoke end-user ASQ connectivity sessions.

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3. When service-based competition is the objective (some regional and local broadband plans retain an open access model where there is only one active infrastructure provider especially in white and some grey areas); 4. When physical unbundling renders Next-Generation Access technologies ineffective (loss of performance in download/upload speeds, quality of service and experience to users, unpredictable bitrates). DIGITALEUROPE recommends that provisions on virtual access products should not be limited to SMP operators. Under the four cases listed above, rules should protect the investments of the first mover (either the SMP or an alternative operator). This implies that all other operators rely on virtual access products instead.3

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ASSURED SERVICE QUALITY CONNECTIVITY PRODUCT

DIGITALEUROPE welcomes the initiative to allow the development of assured service quality products for the provision of services such as cloud independently of the existing interconnection products and as long as it does not interfere with best effort traffic. However, before enshrining a particular solution in law, we would encourage a proper debate and exchange between policymakers and relevant stakeholders, to determine exactly what the technical solutions entail, their impact, and the possible avenues to enable them if appropriate, with or without legislation.

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NET NEUTRALITY

On quality of service, open Internet access, traffic management and transparency, DIGITALEUROPE would like to point out that it fully supports an open and innovative Internet. We also believe the proposal must include the ability for network operators to innovate and offer both Internet access and other services such as IPTV or Video on Demand, or other value-added offers (‘specialised services’), e.g. guaranteed quality of delivery for gaming or video applications. DIGITALEUROPE agrees that end users should be free to agree on data volumes and speeds with providers of electronic communications including offers with defined quality of service. With regard to Article 23 (5), DIGITALEUROPE agrees that within the limits of any contracted data volumes or speeds, providers of electronic communications to the public shall not 3

Final decision of BNetzA adopted August 29, 2013 setting the rules for FTTx deployments by the SMP and alternative operators

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employ traffic management practices to block, slow down, degrade or discriminate against specific content, services or applications, or specific classes thereof. Also, when it comes to the exceptions to the general rule, DIGITALEUROPE believes this list must not be an exhaustive list and that e.g. efficiency must also be taken up as a category. Different service characteristics require different forms of traffic management. Traffic management is needed to prevent and remedy congestion, as well as for legal and network security reasons. Traffic management is also appropriate where differentiations apply to traffic tagged as having priority (e.g. specialised services and IPTV medical application equipment) to pass before best effort traffic, justified, e.g., by technical circumstances or user agreements, as long as this is without detriment to the quality of Internet access. Innovation through service differentiation, built on traffic management, is a viable way of delivering quality services to all users and promotes competition. DIGITALEUROPE also sees traffic management, which avoids discrimination among commercial rivals, as a useful tool for a satisfactory Internet experience. Transparency is a key tool in the EU electronic communications framework to protect users and to ensure competition. Transparency enables consumers to optimise their informed choices and thus to benefit fully from competition, in particular at a time when operators are developing new business models. Competition will best guarantee that consumers have an extensive choice of services and will receive the quality of service they expect. For competition to do its job, consumers must be able to understand and compare the products and services offered by different operators. Transparency is therefore vital, even in a market as competitive as Internet access. The issue is to specify the level of transparency required by striking the right balance between excessively-detailed information that would be hard for consumers to understand, and too general a level of information which would not satisfy consumer expectations.

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ANNEX-

ACRONYMS USED

ASQ

Assured Service Quality

BBF

Broadband Forum

CE

Conformité Européenne

CEPT

European Conference of Postal and Telecommunications Administrations

ETSI

European Telecommunications Standards Institute

FTTx

Fibre to the x

GPON

Gigabit-capable Passive Optical Networks

HEVC

High Efficiency Video Coding

IP

Internet Protocol at OSI network layer

IPTV

Internet Protocol Television

ISP

Internet Service Provider

Layer 2 OSI data link layer LSA

Licensed Shared Access

MEF

Metro Ethernet Forum

NGA

Next Generation Access

QoE

Quality of Experience

QoS

Quality of Service

R&TTE

Radio equipment and Telecommunications Terminal Equipment

RLAN

Radio Local Access Networks

RSPG

Radio Spectrum Policy Group

SLA

Service Level Agreement

SLG

Service Level Guarantee

SMP

Significant Market Power

VPN

Virtual Private Network

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ABOUT DIGITALEUROPE DIGITALEUROPE represents the digital technology industry in Europe. Our members include some of the world's largest IT, telecoms and consumer electronics companies and national associations from every part of Europe. DIGITALEUROPE wants European businesses and citizens to benefit fully from digital technologies and for Europe to grow, attract and sustain the world's best digital technology companies. DIGITALEUROPE ensures industry participation in the development and implementation of EU policies. DIGITALEUROPE’s members include 57 global corporations and 36 national trade associations from across Europe. In total, 10,000 companies employing two million citizens and generating €1 trillion in revenues. Our website provides further information on our recent news and activities: http://www.digitaleurope.org

THE MEMBERSHIP OF DIGITALEUROPE COMPANY MEMBERS: Acer, Alcatel-Lucent, AMD, APC by Schneider Electric, Apple, BenQ, Bose, Brother, Canon, Cassidian, Cisco, Dell, Epson, Ericsson, Fujitsu, Hitachi, HP, Huawei, IBM, Ingram Micro, Intel, Jabil, JVC Kenwood Group, Kodak, Konica Minolta, Lexmark, LG, Loewe, Microsoft, Mitsubishi Electric, Motorola Mobility, Motorola Solutions, NEC, Nokia, Nokia Siemens Networks, Océ, Oki, Oracle, Panasonic, Philips, Pioneer, Qualcomm, Research In MotionBlackberry, Ricoh International, Samsung, SAP, Sharp, Siemens, Sony, Swatch Group, Technicolor, Texas Instruments, Toshiba, TP Vision, Xerox, ZTE Corporation. NATIONAL TRADE ASSOCIATIONS: Belgium: AGORIA; Bulgaria: BAIT; Cyprus: CITEA; Denmark: DI ITEK, IT-BRANCHEN; Estonia: ITL; Finland: FFTI; France: Force Numérique, SIMAVELEC, Syntec Numérique ; Germany: BITKOM, ZVEI; Greece: SEPE; Hungary: IVSZ; Ireland: ICT IRELAND; Italy: ANITEC; Lithuania: INFOBALT; Netherlands: ICT OFFICE, FIAR; Poland: KIGEIT, PIIT; Portugal: AGEFE; Romania: APDETIC; Slovakia: ITAS; Slovenia: GZS; Spain: AMETIC, Sweden: Foreningen Teknikföretagen, IT&Telekomföretagen; United Kingdom: INTELLECT Belarus: INFOPARK; Norway: IKT NORGE; Switzerland: SWICO; Turkey: ECID, TESID, TÜBISAD; Ukraine: IT UKRAINE.

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