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The European Electronic Communications Code May Benefit You

I.  Introduction.

Since the European Electronic Communications Code (EECC) was released in December 2018, many in the industry have described its effects on providers of EU telecoms and communications related OTT services. None have analyzed the EECC’s impact on large business end-users of those services and how they can benefit from those effects. That changes now – If you are a large business-end user of EU telecoms and communications related OTT services, read on.

II.  What is the European Electronic Communications Code?

The European Electronic Communications Code is a consolidation, simplification, clarification/expansion of regulation of electronic communications services (ECS) in a technology neutral manner, and harmonization of regulation across the EU. It aims to minimize ex ante regulation of ECS providers to what is necessary to protect end-users of the services. It consolidates and simplifies existing regulation by replacing four EU directives – the Access, Authorization, Framework and Universal Services Directives – with a single comprehensive directive. It harmonizes regulation among EU countries by setting strict requirements for implementation in national laws. (As an EU directive, each EU member country must implement the EECC into its national laws by December 2020. It is not a self-implementing EU regulation like the General Data Protection Regulation.)

Under the existing EU directives, ECS generally means services that convey messages over an electronic communications network (e.g., circuit and packet-switched networks, including internet) normally for remuneration. Remuneration has been focused on the exchange of money, and the definition did not evolve with technology or the increased importance of electronically gathered data. Whether OTT services or media/cable transmission of messages were regulated was unclear. If not regulated, did that give OTT providers and media companies an unfair advantage that harmed traditional voice telephony providers? 

Under the EECC, ECS specifically includes internet access (including that provided by media companies) and interpersonal communications services (IPCS) such as voice communications services, messaging and email, whether to an individual or a select group, and other services used primarily for the exchange of messages such as machine-to-machine services; money need not be exchanged. It’s enough that the provider can get value from using personal data received when providing the services if the user permits such use. How heavily the services are regulated depends on whether national numbering plan numbers are used, with lighter regulation if not – and of course how, and how heavily, services are regulated impacts you.

III.  Why should large businesses care?

Large businesses must dig deep to mine EECC’s relevance to their operations.

Know Your Rights

Title III of the EECC is “End-User Rights”. End-users encompass consumers (natural persons), small businesses, micro-enterprises, and everything else (referred to in this article as large businesses). Many parts do not apply to large businesses – those that do support your demand for beneficial contract terms.

Contracting tip – Providers often resist contract clauses reflecting what the law requires of them, particularly if the contract has a compliance with law clause. They then impose contractual obligations on customers to which the customer is subject under applicable law. Point out the contradiction in the positions and let them know they can’t have it both ways.

Automatic renewals

If your contract for ECS (other than number independent interpersonal communications or machine-to-machine services) automatically renews, the provider must timely inform you of the end of the contract term and how to terminate the contract. And your provider must give you the best advice on rates relating to their services. If a contract does not automatically renew, providers may proactively seek a renewal with better rates when you could move to a different provider. Few providers, if any, provide their best advice at the same time as telling you how to terminate.

Contracting tip – Whether or not you want an automatic renewal (many large businesses do not), insist the provider give you notice of contract expiration in time to migrate to another provider (which may be more than the timely notification under national law) and that such notice include the provider’s “best tariff advice” for the services it provides.

Best rate available

At least annually, your provider must give you information about the best rate for services they provide you and advice on those rates.

Contracting tip – Leverage the best tariff advice/best tariff available requirement during your rate benchmarking negotiations. Although you will want market-based (not provider-specific) information, requiring the provider to advise of its best rates as required under the EECC can reap benefits and cost reductions. Unlike the US, in the EU, tariff just means rates.  It need not be a publicly filed document.

Changes to contract terms

At least one month before making a unilateral change to the contract terms, your provider must notify you of the change. The notice must be personal to you, not via a website update. (Neither US law nor US Federal Communications Commission regulations require such notice or provide this protection.)

Contracting tip – Resist clauses that allow the provider to unilaterally change the contract terms, like those that incorporate web-based documents. If they are included in the contract, insist the provider include the right to personal notices of the changes in your master contract for services in all countries, not just the EU.

Termination rights

Changes to Contract Terms – For ECS (other than number independent interpersonal communications and machine-to-machine services), if a provider changes a contract provision “which is not to the benefit of the end-user”, you may terminate the contract without compensating the provider even if other changes were beneficial.

Contracting tip – The rights granted end-users for contract changes under the EECC are much stronger than the rights providers offer for “material and adverse” changes. Use this knowledge to get a clause allowing termination if a change is not for your benefit to improve on the contract change clause offered by providers.

Early Termination Charges – When you have the right to terminate the contract as provided under the EECC (such as for changes to contract terms) or under national law, you do not owe any compensation to the provider other than for services received before termination and compensation of retained subsidized equipment costs, which costs are capped.

Contracting tip – Ensure your contract has a right to terminate without liability for failure to comply with law. Providers may assert the right is not needed because you have a right to terminate for material breach. This claim is false unless the contract has a representation and warranty or obligation for your provider to comply with law. The provider’s form contract will not include this.

Continuity of service and number portability

The EECC relies on competition instead of regulation where possible. Competition suffers if end-users do not switch providers for fear of loss of service or of their telephone numbers. The end-user rights quell these fears by requiring providers to ensure there is continuity of service/no loss of service when switching providers and to switch service on the date you request if “technically possible”. National laws implementing such right will establish times within which providers must complete ports of numbers and require that numbers be held for a limited period when switching providers. If your provider does not timely port your numbers, you will be compensated at the amount in the relevant national law.

Contracting tip – Providers resist contracting for times within which they must complete number porting, even when maximum porting times are regulated (as they are in the US). The EECC requires not just a hard deadline but also provides you compensation if your provider fails to timely port your numbers. Seek an SLA – particularly where the contract says the listed SLA credits are sole and exclusive remedies – for porting numbers that requires a credit at least equal to that available under national law.

Make provider benefits benefit you

Understanding end-user rights is a start, but you can also leverage benefits awarded ECS providers under the EECC to your advantage.

By December 31, 2020, the European Commission will establish a maximum EU-wide mobile voice termination rate and a single maximum EU-wide fixed voice termination rate from which the national laws should not deviate. It is expected these maximum voice termination rates will reduce providers’ costs to provide voice services. Providers often do not pass cost savings to their customers, and large businesses may not see these savings when comparing bids in an RFP or during an annual benchmarking exercise.

Contracting tip – You may want to seek a contract clause requiring the provider to reduce your voice rates by an amount equal to the reduction in the provider’s voice termination charges.

Provider’s costs of complying with national laws should fall as the laws are consolidated and harmonized across the EU.

Contracting tip – You may want to use this knowledge and the provider’s continuous move to automation to seek small automatic annual price reductions through the contract term or price reductions during a renewal period.

IV.  Conclusion.

End-users who understand regulation of telecoms and technology services, particularly the national laws implementing the EECC, are in the best position to benefit from protections given them under regulation and from savings providers would otherwise keep for themselves. End-users with knowledge of the providers’ obligations may also reach deals more quickly by understanding what underlies a provider’s overreaching contract provision and offering a compromise that addresses both parties’ needs. “Scientia potentia est” applies, knowledge is power during your negotiations.

Please contact LB3’s Deb Boehling if you have any questions about the European Electronic Communications Code’s impact on large business end-users.

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