Telecoms operators are moving towards a model where the customer is at the centre of everything they do. This is primarily happening as a result of the industry adopting an omnichannel approach, ensuring that customers are able to get the full value from the services they consume. It’s also a result of fostering consumer trust in areas such as privacy by giving consumers more control over how their personal data is used. These are some of the key findings of a study conducted by Assembly Research for ETNO, which was presented in Brussels on 2 October 2019. The debate that followed the presentation of the study showed that, despite understandable differences, stakeholders are not too far apart and broadly agree with the direction in which the sector is heading.
Regulators have done extensive work to facilitate consumers’ ability to switch providers, to foster competition and consumer benefit. Yet switching is still seen as a pain point in some countries. In recent months, initiatives to help customers become proactive in choosing a new contract have taken place in the UK, Japan, and Germany. In all three cases, regulators are taking steps to ensure consumers don’t get trapped once their initial contract expires – either by reducing the length of such contracts (Germany), by reminding customers of their options when they are out of contract (UK), or by forbidding practices that would discourage switching (Japan). Stronger rules to increase transparency of charges customers face are also imminent all three countries. In Japan and UK, regulators are explicitly separating airtime charges from the cost of handsets; in Germany, this will happen when the new European Electronic Communications Code comes into force. The intention is to reduce prices, and help customers better understand what they are paying. While these measures will have an impact on operators’ revenues in the short run, they could also turn out to be beneficial in the long run by fostering customer engagement. This is an aspect on which the industry has strived to improve for a long time; more fairness and transparency about the best deals customers can get is likely to result in a better perception of the sector.
The fine approved by the FTC against Facebook on 24 July 2019 amounts to almost $5bn. It is far higher than any fine issued in the EU under GDPR so far, and could have been even higher, with Mark Zuckerberg also held personally accountable for the company’s conduct. To some extent, the decision shows that US authorities are starting to take privacy regulation at least as seriously as their counterparts in the EU; on the other hand, heavy fines do not go far enough to solve the market problem. While some regulators are starting to consider antitrust remedies, these have not yet taken a clear shape, and it will be some time before authorities figure out such an approach.
In the second plenary meeting of the year, which took place on 12–14 June in Ghent, Belgium – BEREC launched four new consultations to develop guidelines across a range of topics. Other significant developments included the adoption of a document on the response to the European Commission for the review of the Recommendation on Relevant Markets, which is increasingly likely to see the deregulation of call termination markets; and the opinion on the functioning of the roaming market, which claims Roam-Like-At-Home as having been a clear success. BEREC also hosted a workshop on the review of the guidelines to apply the Regulation on net neutrality, which highlighted possible changes in light of the development of 5G and exposed potential imbalances between tech giants and small startups in accessing mobile operators’ zero-rating offers.
After nearly three months of bidding, the multi-band auction of 5G spectrum in Germany across the 2GHz and 3.6GHz bands has come to an end. The length of the auction resulted in a high price (€6.5bn), especially considering the award did not include sub-1GHz frequencies. Assembly’s 5G tracker shows that spectrum in the 3.6GHz band was particularly expensive by international comparisons. German operators are making an investment above the average prices for these bands, and understandably voiced their discontent, since the hefty price will now impact their ability to invest in the network rollout and BNetzA attached coverage obligations to the licences. The silver lining perhaps is that they paid comparatively less than their peers for the 700MHz band back in 2015.
Since the end of 2018, several governments around the world have put forward proposals for the introduction of a digital service tax in their respective countries. As digital services change the nature of business, governments see the tax as a way to overcome the challenges that these digital businesses create for the international corporate tax system. Assembly’s Platforms and Big Tech Tracker has identified nine countries where this has happened; most of them in the EU, where the failure to reach a common approach at a supranational level has led many of them to go their own way. Countries in Asia and America are also taking action, while the international initiative, within the OECD, continues to lag behind and may be preempted by the proliferation of national regulations. While international coordination would be desirable, the trend of countries taking individual action is likely to continue given the slow pace at which supranational bodies are progressing; this will result in an inconsistent patchwork of tax regimes and rates around the world, and even within the EU.
The UK Government recently published a white paper with a broad set of proposals to tackle online harm. These include a new regulatory framework, to establish a duty of care for online companies for the first time, and the set-up of a specific regulator to enforce the new rules. While the regulation of internet companies has been coming for some time, the UK is the first country to propose such a comprehensive and detailed framework; to this end, the government appears to have listened to the concerns raised by inquiries of parliamentary committees (the DCMS Committee’s inquiry on fake news, and the Lords’ Technology Committee on internet regulation, in particular). A consultation is running until 1 July 2019, before the Government goes on to develop a final legislative proposal.
On 29 March 2019, the UK regulator Ofcom set out its initial approach for the next Fixed Telecoms Market Review, which will cover the years 2021–25; for the first time, a market analysis will have a time frame longer than three-years. Ofcom’s main objective is to ensure competition continues to develop, while at the same time supporting the recent surge in fibre investment, resulting from the rise of alternative operators which are seeing a strong investment case, particularly in urban areas, and ensuring Openreach continues to deploy fibre to improve connectivity and enable 5G in rural areas. The regulator also set out measures to facilitate migration from copper to fibre, by phasing out regulation and price controls on copper products.
The European Commission is currently seeking input on the review of its Recommendation on relevant markets, which has to be completed by the end of 2020 to comply with a provision of the Electronic Communications Code. While at this stage the EC is not setting out what that will look like, it is likely that some markets will be removed from the list of those subject to ex-ante regulation, in line with the outcome of previous reviews. However, the EC is also hinting at the creation of a specific market for wholesale physical infrastructure access, which shows how the review is focused around the development of 5G and fibre networks.
The note published by Mark Zuckerberg on 6 March 2019 sets out the new approach Facebook aims to take for its communications services. It will be more focused on privacy and less on public sharing compared to the past, reflecting on new demands of the market and taking on board some of the lessons of the past. However, the plan could fall short of addressing the issues identified by regulators, which no longer see privacy in isolation from competition problems. The promise of full-encryption across platforms is also likely to face regulatory challenges.
As the issue of security in 5G networks gains momentum, policymakers around the world are taking contrasting approaches. Concerns around the use of Chinese vendors is resulting in outright bans in some countries (US, Australia, New Zealand), whereas others are yet to take a definite stance, such as the UK whose government is finalising a review of the telecoms supply chain. Operators were initially quiet on the issue, but they are now taking explicit stances to keep the market for network equipment as competitive as possible, to avoid delays and increased costs in 5G roll-out. As our Cybersecurity Tracker shows, It is likely that vendors will have to face more thorough scrutiny, whereas operators could end up having to avoid using one single vendor in core parts of their networks, as proposed in Germany.
The Committee for Digital, Culture, Media, and Sport of the UK Parliament (DCMS Committee) has now completed its inquiry into Fake News, which lasted throughout 2018. The inquiry started as an investigation on the spread of disinformation and its role in influencing elections, and soon turned to the link between tech companies’ practices and the protection of citizens’ personal data. The final report makes strong recommendations to set up new regulators and laws around social media; however, it is unlikely that government and parliament will take immediate action to address the issues raised in the inquiry.