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Today Commissioner Jean Claude Junker announced the structure of the new European Commission, that will manage and execute European policies in the next 5 years term (starting from November 2014). The new structure can be found here.
As regards the Digital Agenda, the portfolio has been assigned to the German candidate Oettinger, who was holding the Energy directorate in the current Commission’s term. The choice of Oettinger is somehow a surprise, although the German press had already whispered this possibility one week ago. In the past days, rumors indicated the UK candidate to get Digital Agenda (together with the Internal Market portfolio), while other informal news indicated Cyprus, Slovenia or Estonia to get the task.
Interestingly, the task of Oettinger, named “Digital Agenda and Society” will be shared with the Estonian VP Andrus Ansip who will be responsible for “Digital Single Market”. For the time being, it is not clear how this shared competence and related coordination will work. Probably, rules of procedure will need to be revised and adapted accordingly, and one could suspect that an important negotiation will take place in the next weeks. In the past, cluster/grouping of commissioners have never been successful, since each commissioner tend to manage his/her portfolio as a own backyard. Thus, it will be up to the President Junker, and mainly to his head of cabinet Selmayr, to make sure that this coordination brings value and results rather than internal guerrillas and inertia. Whatever the result will be, it is clear that this kind of organization reinforce the role of the President in terms of coordination and influence over all European policies.
Apparently, the offices of DG Connect have escaped the dismantlement which had been suggested by many rumors in the last weeks. It is clear that the German candidate did not accept a reduction of offices and competences. By contrast, DG Connect has been reinforced by absorbing various units of DG market, the most relevant in the matter of copyright. On the other side, since the current focus of DG Connect is upon the establishment of a Digital Single Market, some adaptations may be expected in order to facilitate the coordination with the offices of Ansip, who in fact does not own a real portfolio/organization (like the other VP of the new Commission, he will be supported by the Secretariat). More details on the shift of competences between Directorates General are available here.
One could now wonder whether the appointment of Oettinger may be a good news for the market, or for some stakeholders in particular. The hashtag #OMgoettinger is already circulating in Twitter. Alternative operators may fear that this commissioner, being German, could be sensitive to the ambitions of national champions and therefore more inclined to the views of Deutsche Telekom; on the other side, incumbent operators may be suspicious about somebody coming from the energy sector, where structural separation occurred effectively.
Thus, it is difficult to anticipate evaluations about the expected views of a new commissioner simply on the basis of his/her past record. In 2006 Viviane Reding was not expected to shake the sector, but then she did it, with various striking proposals in the area of international roaming, structural separation, mobile termination, which created conflicts with dominant operators. In 2010 her successor, Neelie Kroes, was expected to crash small and alternative operators for the benefit of incumbents. By contrast, in the first 2 years mandate she did not take any relevant action in this respect. Then, when in July 2012 she launched a contested reform welcomed only by incumbents, this change appeared driven mostly by accidental and financial circumstances, rather than by a coherent industrial view.
The European Commission published a Report on the telecommunications market in the EU, providing both economic and regulatory information with regard to the each Member States as well as to the EU in its entirety.
The report show strong discrepancies within the EU, especially with regard to BB penetration and NGA roll-out. However, the overall feeling of the Commission seems positive: “… investment in the field starts to grow again, data traffic is growing quickly, together with an increase in VoIP calls“.
The Commission remarks a decline of revenues in the period 2010-2012 (from 327 to 323 billion). The report does not specifically analyze the background for such trend. However, it seems to me that the revenue’s decline is due to a combination of factors: on one side, it is the result of previous regulatory decisions (price decrease for mobile termination and international roaming, in particular), on the other it is caused by market trends as substitution of traditional cash-machine services such as voice and SMS by corresponding free Internet services (VOIP, chats, ecc). The emergence of Internet mobile access has not compensated yet the value destroyed by the OTT concurrence. One could argue whether such figures are positive or not for the telecom industry: for sure, this is the sign that the time for the easy-money is gone and telecom operators must now face a fierce competition. The new reality is particularly hard for historical incumbents and dominant mobile operators which for ages have relied on high margin services such as PSTN voice and sms. La festa è finita. The consumers seem to be the winner of this trend, because the decrease of revenue of telecom operators basically means that the price of many basic communications services has fallen (in some cases to zero).
More controversial are the data about the investments. In the last years the Commission repeatedly maintained that telecom investments in the EU were slowing down, and this failure justified a radical regulatory change announced by Commissioner Neelie Kroes in July 2012. Despite of that, the data of the current telecom report show that investments in the sector have been stably growing (in the period 2010-2012) from 38 to 42 billions. The fact that European BB market was healthier than expected had been confirmed also by the European Parliament as well as by Berec in its critics to the Connected Continent proposal of Commissioner Kroes.
If the above is not challenged, one would wonder on which basis the European Commission in 2012 changed radically its regulatory agenda, since the main problem to fix – the huge lack of investments – did not exist.
To remind the facts, in July 2012 Commissioner Kroes announced that she intended to “stabilize” the cost of the traditional telephone networks (the ones based on copper and builded over 50 years ago with money of tax payers during the monopoly era) in order to secure cash-flow to incumbents and provide them with sufficient money to invest in new fibers networks. At the same time, the higher costs of the traditional copper network had incentivized new altnets to desist accessing that network while building new ones. In other words, the stabilization (namely: increase) of the copper network price would have somehow encouraged both incumbents and altnets to invest in new fiber networks.
The strategy of the Commission was however challenged by many: first, with copper networks become even more rentable, incumbents would have stopped or slow down investments in fibers, in order to avoid cannibalization of the copper profits. Secondly, the matter is quite tricky with Altnets, since the equation “build or buy” is too simplistic. The increase of copper price would have probably helped some fiber deployers, but many Altnets would have been unable to make the with because too expensive.
In truth, Kroes’ move in 2012 had nothing to do with investments, it was rather aimed at securing cash-flow for historical incumbent operators, with the scope to protect them from the financial crisis and from extra-Europena take-over. The lack of investments claim was just an excuse to justify a dramatic regulatory overturn which, at the end, just helped big telecom operators to surf and survive the financial storm.
The data retention tsunami: how EU Member States are reacting to the annulment of the data retention directive
Following the annulment of the Data Retention Directive in April 8, 2014, by the Court of Justice of the European Union, European Member States are hardly starting to face the consequences of that.
As stated in my previous post on the matter, the European decision did not make national data retention legislations (whether or not enacted as implementation of the annulled directive) automatically invalid. However, because of the principles laid down by the European court, most of such national legislations are at risks, because they impose data retention obligations in a too general and far-reaching way. This conclusion is shared also by a study commissioned by the Greens Group at the European Parliament which can be found here.
In fact, in §59 of the sentence the European judges stated that “blanket” data retention legislations are not allowed, they must be selective and focussed:
“Moreover, whilst seeking to contribute to the fight against serious crime, Directive 2006/24 does not require any relationship between the data whose retention is provided for and a threat to public security and, in particular, it is not restricted to a retention in relation (i) to data pertaining to a particular time period and/or a particular geographical zone and/or to a circle of particular persons likely to be involved, in one way or another, in a serious crime, or (ii) to persons who could, for other reasons, contribute, by the retention of their data, to the prevention, detection or prosecution of serious offences.”
To time, Member States have hesitated in taking actions, also because of the lack of guidance from the European Commission, which is sharing its part of responsibility for this messy situation. To time, only Denmark made a legal analysis whether the European decision could somehow affect their data retention legislation, but then they concluded that there was no reason to act.
In June, at a recent closed meeting of EU Justice and Home Affairs ministers, the Council’s Legal Services is reported to have stated that paragraph 59 of the European Court of Justice’s ruling on the Data Retention Directive “suggests that general and blanket data retention is no longer possible“. Therefore, should Member states not take actions, the matter will be likely submitted by individuals to a national courts, which will take the decision instead of the government, as it did just happen in Austria. In other words, today’s judgement of the Austrian Constitutional court is a clear reminder to most European member States that postponing a decision on this matter is not a good strategy. Italy is one the country mostly at risk, because their national legislation is just a copy & paste of the annulled directive.
On June 27, 2014 the Austrian Constitutional Court has declared invalid most parts of the Austrian law on data retention. This is the first national decision taken after the important sentence of the European Court of Justice which, on April 8, 2014 annulled the European Directive on data retention (Directive 2006/24/EC).
Austrian ISPs have to stop retaining and providing information to the Austrian authorities about data retained under the data retention regime by the end of the day following the publication of the decision. ISPs will however still be allowed to retain traffic data for their own legitimate purposes (billing, fraud prevention etc.) for a certain amount of time. Such data could still be accessible by public authorities for public securities reasons.
A source of Austrian ISP industry declared “very positive” from an ISP-angle is that the system implemented for the exchange of information with law enforcement agencies (so called “Durchlaufstelle” / “DLS”) will remain in place and will be used for the exchange of information about traffic data ISPs are still allowed to retain.
On 23 April 2014, the Slovak Constitutional Court preliminary suspended effectiveness of the Slovak implementation of Data Retention Directive. Although the case is already pending for before the Court since October 2012, the Court decided to issue this preliminary measure and accept the case for the further review only now. The preliminary suspension of effectiveness means that the Slovakian retention laws are still formally valid, but have no legal effect until the Court decides on the merits of the compliant. The Court, however, suspended only provisions that are mandating data retention itself, while leaving provisions on access to those information intact for now. This means that ISPs will soon lose any legal obligation to store data about users. Any storage of personal data of users will thus need to be limited to general privacy regime.
On July 3, 2014 also the Slovenian Constitutional court annulled the national data retention legislation for reasons similar to the Austrian case. The decision is available here (only in Slovenian language, sorry): https://www.ip-rs.si/fileadmin/user_upload/Pdf/sodbe/US_RS_ZEKom-1_3julij2014.tif
In nuts, the Slovenian Court found the local data retention legislation to be disproportionate for the following reasons:
– massive and un-selective retention of data constitutes a breach of rights of a large proportion of population, while no grounded justification was provided for that;
- no justifications and grounds were provided for the selected retention periods (8 months for internet related and 14 months for telephony related data);
- the use of retained data was not limited to serious crime.
the Romanian data retention law was declared unconstitutional by the Constitutional Court on July 8, 2014. The ruling applies to all provisions of the law. The argumentation of the judgement is expected to be published at the beginning of August.
According to the court, the data retention law is suspended for 45 days and operators no longer have to retain data. If the government and parliament do not resolve the constitutional issues within 45 days, then the law will be annulled permanently.
UK, Sweden and Danemark
These countries show a different trend.
On July 17, a new data retention law came into force in UK, the Data Retention and Investigation Powers Act 2014 (DRIPA). The new legislation substantively re-enacts the mandatory data retention provisions of the UK 2009 Data Retention Regulations, which was based on the provision of the annulled European Directive. The rules will continue to empower the Secretary of State to give data retention notices to public telecommunications operators ). However, instead of the previous fixed 12 month period of retention, the current retention period may vary subject to a maximum 12 months. The notice may specify different periods for different types of data. The notice may relate to an operator or description of operators. Complaints against the new regime has been already announced.
In Danemark, the Parliament commissioned a study on the lawfulness of the local data retention legislation and reached the conclusion that it fully comply with the minimum proportionality requirements set out in the CJEU ruling.
A similar study was carried out in Sweden upon initiative of the government. On June 12, 2014 an expert group appointed by the Ministry of Justice concluded that the Swedish legislation on data retention is lawful by maintaining that, unlike the repealed directive, such provisions contain clear rules on the conditions for providing access to retained data. The assessment is still preliminary and a final report is expected by October 1st, 2014. As a consequence of this intervention, most of the Swedish operators have resumed data retention. PTS, the Swedish regulator, had initially announced that it would stop the enforcement of the data retention law – at least until the investigation by the expert group had been carried out. Several ISPs had subsequently stopped retaining data and even started to erase already stored data
Today in London, at the International lntellectual Property Enforcement Summit, prof. Angelo Cardani, the Chairman of Italian Regulator AGCOM, reported the preliminary results of the Copyright Enforcement Regulation which recently (March 28, 2014) entered into force in Italy. The regulation is quite a unique measure in Europe – since no other telecom regulator is entrusted with copyright enforcement powers in the EU – and has been highly contested by civil society, ISPs and consumers associations, while plauded by the content industry. Experts have released different views on the matter. Likewise, the Regulation encountered different feedback at international level: while an official advisor of the United Nations argued that the measure may be dangerous for freedom of speech, the US administration welcomed the regulation and apparently because of that it dropped Italy down from the black list of “pirate” countries.
Various recourses for the annulment of the regulation are pending with Italian courts and a decision may be adopted quite soon before the end of June. A legal description of the Copyright Enforcement Regulation can be found here.
Prof. Cardani defended the regulation declaring that “no Armageddon happened“. He maintained that the measure was necessary to protect the creative industry because the judiciary remedies are not sufficiently quick. He informed the audience that 41 complaints have been filed so far with regard to photos (15), movies (11), music (7), books (4) and digital newspapers (1), video games (1). The authority started 28 proceedings, two-thirds (13) of these were closed as a result the spontaneous removal of the content. In 8 cases, the Authority adopted sanctions, ordering also the blocking of pirate sites’ DNS addresses. Most serious infringements concerned the illegal downloading of music and movies.
The data released by prof. Cardani have been made public with a PR of AGCOM.
It is still premature to make a complete assessment of such results. Probably, such outcome will be analyzed by AGCOM to eventually refine the Regulation. For instance, it is clear that many claims have been filed with regard to individual, and non massive, infringements (while the Regulation was deemed to deal only or mainly with large-scale and commercial infringements). Most of the requests concern pictures, i.e. a creative works which are not highly discussed in the piracy debate. The web-blocking measures have been imposed with regard to websites hosted abroad, however is not clear whether substantial attempts have been made in order to ask foreign police to shut down such servers and avoid web-blocking (Prof. Cardani said that international cooperation is still a problem). Web-blocking was ordered at DNS level rather than at IP level, in order to avoid over-blocking.
Remarkably, in the last weeks various ISP were informed by AGCOM about pending proceedings which could result in web-blocking. AGCOM suggested ISPs to impose a block even before a final decision was adopted. Mostly ISPs rejected this approach and experts have argued that such anticipated blocking could be legally risky.
Today in Brussels we launched Digit@lians.eu, a community of Italian (and Italian-speaking) professionals engaged in the digital sector. Guest speakers were prof. Antonio Nicita, commissioner at AGCOM, and dott. Cristiano Radaelli, president of Anitec. They entertained the audience (almost 100 professionals) with a wide range of subjects, including the role of AGCOM and the need for a new digital policy for Italy. At the end there was the intervention of Gianpiero Lotito, the visionary CEO of Facility Live.
Digit@lians.eu is an idea of Maria Rosa Gibellini, Fabrizio Porrino and myself. More events to follow!
You cam follow Digit@lians.eu via:
A new decision of the Court of justice of the European Union (case C-131/12 Google Spain SL, Google Inc. v Agencia Española de Protección de Datos) raises very interesting points with regard to the application of data protection rules (namely Directive 95/46/EC) to search engines. The PR of the court is here.
The case started with a series of complaints filed with the Spanish Data Protection Agency (AEPD). A specific claim concerned some information, published on the popular newspapers La Vanguardia, reporting financial difficulties of the claimant (the sale of some estates). The claimant wished such information to disappear from the web, because the financial difficulties had been solved, and therefore he asked the newspaper to remove it and Google to disable the links when googling his name. Remarkably, the case against the newspaper was lost, because AEPD found that such information were true and lawful and therefore one could interfere with the freedom of the newspaper. By contrast, AEPD upheld the complaint against Google and its Spanish subsidiary, Google Spain, calling the dominant search engine to take the necessary measures to withdraw the data from their index and to render future access to the information impossible via their search engine. Google and Google Spain appealed against that decision before the Spanish courts and the case was then submitted to the CJEU in Luxembourg.
The application of European data protection rules to Google and, in general, to extra-EU Internet operators
According to the European judges, a search engine is subject to European data protection rules even if it is establihed outside the EU, provided that the relevant business is directed to European users. Therefore, the simple circumstance that headquarters, main establishment, servers, ecc of a search engine are located abroad, in an extra-european country, is not a reason to skip the European jurisdiction. The European Court held, in this regard, that where personal data are processed to promote and sell in a given Member State (such as Spain, in the case at stake) advertising space offered by the search engine in order to make a revenue, then European rules apply. This conclusion is not surprising, however one should note that the technical details of the case (i.e. the fact that the technogical establishment of the data processing are located in the US) had been invoked by Google to dismiss the European/Spanish jurisdiction. Google normally maintains that its search engine business is run by Google Inc., based in California, and then it is subject only to US data protection legislation. In the case at stake, it argued that Google Spain is only responsible for selling advertising on US Google and has no role in the operation of the search engine itself. However, AEPD pointed out that Google Inc. indexes Spanish websites using crawlers and robots and uses a Spanish domain name. Moreover the centre of gravity of the litigation was in Spain, concerning information published on a Spanish website, in Spanish language, about Spanish residents.
Remarkably, the issue of the European jurisdiction over Google Inc. had been already debated in a similar case fought in Italy about data protection and minors protection (the famous Vividown case). There the national courts reached similar conclusions (although the finally lost in the merits of the case): the national laws apply to Google because of the territorial target and effects of its business activity. Today’s CJEU’s decision confirms this approach.
The search engine and the right to be forgotten: an attempt to regulate Google?
The merits of the case is more intriguing and rise some legitimate questions. As stated above, the personal data as stake were lawfully published on Spanish newspapers and have not been removed from there. Therefore, one should wonder why the right to be forgotten rule should be applied only to Google, with respect to data stored in servers outside its control. Google respectfully invoked the intermediary liability set forth by the Electronic commerce Directive (directive 2000731/EC). The CJEU, by contrast, took another view:
“… the Court holds that the operator is, in certain circumstances, obliged to remove links to web pages that are published by third parties and contain information relating to a person from the list of results displayed following a search made on the basis of that person’s name. The Court makes it clear that such an obligation may also exist in a case where that name or information is not erased beforehand or simultaneously from those web pages, and even, as the case may be, when its publication in itself on those pages is lawful.”
Thus, the court refers to “certain circumstances” which must considered by the search engine, or eventually by the national judge in case of disagreement, on the basis of a balance evaluation between the data subject’s rights and those of other internet users with legitimate interests in finding information.
The decision sounds a bit political. The CJEU seems to suggest that in the current Internet ecosystem search engines counts much more than the source of the data:
“….Given the ease with which information published on a website can be replicated on other sites and the fact that the persons responsible for its publication are not always subject to European Union legislation, effective and complete protection of data users could not be achieved if the latter had to obtain first or in parallel the erasure of the information relating to them from the publishers of websites“
According to the European court, without the indexing and searching activity of Google, such data continue to exist but they are substantially not accessible, thus they are like non-existing. One should wonder whether this conclusion is driven by the fact that Google is the dominant operator in the online search sector. In a very competitive search market, i.e. with a plurality of search engines, the only workable solution would be to remove the information directly at the source. However, in the current markets structure, dominated by Google, the decision of the CJEU seems to be driven by a practical opportunism rather than by a solid legal reasoning.
The interferences with other frameworks
We will continue to talk about this sentence, because it may originates consequences which have not been fully considered by the court. The assumption that a search engine, as in the case of Google in the present case, must be seen as a data controller, opens the doors to large consequences for a wider range of operators, not only search engines. The impact on the Electronic commerce Directive (2000/31/EC) should be also analyzed as well as the regime of ISP liability: was Google acting as a caching, hosting operator, or what else? In addition, the idea that intervening upon indexing rather than removing a content at the source also appears problematic from technological point of view.
In any case, the finding of the CJEU (you may like it or not; I do not like it so much) is remarkable and may be seen as the recognition of the paramount position achieved by search engines, and in particular by Google, in the Internet. Without the search activity as developed until now, information and data disseminated in the Internet have little importance because they cannot be easily found: “I am indexed, then I exist“. The existence of individuals’ data in the Internet is the result of the capability to be reached by third parties, and search engines (Google in particular) enable, and somehow control, such capability.
As we well know and frequently heard since last year (at least since September 2013, when Commissioner Kroes launched the Connected Continent proposal), international roaming tariffs within the EU should soon disappear. While travelling, European citizens will then be able to call, use SMS or access Internet via mobile device without surcharges, anywhere in the EU. On April 3, 2014 the plenary session of the European Parliament approved the proposal tabled by the European Commission, although with drastic amendments with respect to the initial draft. The completion of the entire reform (containing a puzzle of different measures, well beyond roaming) will require the final approval of the Council, which is deemed to happen – optimistically – sometimes before the end of 2014.
The question is whether the end of international roaming should be given already for granted or not; in the latter, whether one should rather better examine the proposed rules and maybe find that the promised scenario is more complex. The mediatic campaign ran by the concerned European institutions and politicians (Kroes, Barroso, Del Castillo, ecc) have always showed the end of roaming as a simple result of the debated reform. This is comprehensible, because the end of roaming constitutes a formidable political achievement for policy-makers, therefore the temptation to be recorded in the history as the leader of this achievement is great. Viviane Reding, who was the first European commissioner to address the roaming issue in 2006, got an incredibile popularity from this action.
However, a more deep analysis of the proposed roaming reform show that the resulting scenario may be less exciting than expected. Provided that everything goes through, without obstacles and delays in the following approval process involving the Trialogue (Parliament, Commission and Council), what will actually happen with the currently proposed rules? Will really international roaming disappear in the EU? And when exactly? Will current mobile tariffs remain basically the same? Here the answers in peanuts.
As from July 1st, 2014 (thus, just in a couple of months!), European citizens should no longer be subject to roaming surcharges for incoming calls received when abroad. In other words, we will not have to pay an additional fee for the fact that somebody is calling us while we are travelling abroad, as it is the (irritating) case now. Therefore, calls received abroad will be treated like any call received when we are at home: only the calling party has to pay, not the one receiving the call.
HOWEVER: since the reform will be (optimistically) in force only at the end of 2014, this means that up to that date consumers will be continuing to pay for incoming calls, despite the fact that the reform sat the final deadline for July 1st. It is a strange, hilarious paradox.
Outgoing calls, SMS and Internet
As from 15 December 2015 roaming charges for calls, SMS and internet usage, should disappear completely. When travelling abroad, European citizens should continue to pay just the domestic rate. This will be a great achievement for the EU, something very important in times of Euro-skeptisism.
HOWEVER: despite the above, the proposed reform provides for an exception which may even become the rule: mobile operators may continue to apply roaming surcharges (although within the limits of the current regulated caps established by European Regulation 531/2012) if users consume a quantity of traffic which is considered “not fair”. In other words, the elimination of roaming may be limited to just the “usual” and “fair” traffic usage of people when traveling abroad. BEREC, the European agency for telecommunications, should adopt guidelines to precise what “fair usage” means (in quantitative terms). In any case, mobile operators will have the power, not the obligation, to apply this “fair usage” condition. Thus: despite the optimistic declaration by the European institutions, the actual elimination of roaming charges will depend, on one side on how many operators will actually use the “fair usage” faculty; on the other side, on the actual notion of “fair usage” decided by Berec.
What is the sense of the “fair usage” limitation? The problem is that incumbent mobile operators are afraid of the so-called “permanent roaming”, i.e. a market scenario where the same tariffs apply everywhere in the EU, therefore there is no difference any longer between domestic and roaming in terms of prices. In such a scenario, European citizens could get mobile offers from any mobile operators based in the EU, since the agreed tariffs will be valid everywhere within the EU. In such a scenario, the competitive landscape of the mobile industry will change dramatically, since every operator would be able to compete everywhere within the EU. The consequence of this business dynamic would be a dramatic market consolidation, with the number of operators collapsing from 100 operators to a dozen or less. This kind of consolidation was – by the way – the official aim of the Connected Continent philosophy: the fewer operators in the EU, the better. It is therefore surprising to see that the European Commission left to operators the possibility to opt out.
Will mobile operators just acknowledge the end of roaming, become more efficient and/or renouncing to make easy money, or will they try to rise domestic tariffs to compensate the loss? In a competitive scenario, rising tariffs will not be easy at all. However, the competitive landscape imagined and desired by the European Commission is not so promising. Fact is, the proposed reform does not take into account the fact that many medium-small mobile operators, including MVNO, will have difficulty in providing communications services abroad because the prices of access to foreign networks (necessary to provide roaming) may be too high, or even higher than retail prices. In other words, such small and competitive operators may be losing money when providing services abroad at domestic tariffs. The paradox is that some of such operators mobile may prefer to stop communications services abroad, others may even close the business. This involution of the market would favor just larger mobile operators (Vodafone , Telefonica, T-Mobile, etc.) which, strengthened by an increased market power, could increase domestic rates. In other words , the advantage of the disappearance of roaming could be negatively compensated by the increase of domestic rates in general.