A small plug for our contribution to the 3rd edition of the International Comparative Guide to Telecommunication Laws 2010. We drafted the chapter on Bahrain, which will shortly be available on the ICLG website.
Until it is published, contact us at critique@charlesrussell.co.uk and we will send you a .pdf of the chapter.
Article 20(1) of the Framework Directive 2002/21/EC requires national regulatory authorities (“NRAs”) of member states to issue binding decisions to resolve certain regulatory disputes between communications providers. However, Article 20(2) permits member states to make provisions for NRAs to decline to make such decisions where the NRAs consider that another mechanism, including mediation, exists and “would better contribute to resolution of the dispute in a timely manner in accordance with the provisions of Article 8.”
Article 8 sets out the policy objectives and regulatory principles that must be followed by NRAs in carrying out their tasks under the Framework Directive and its associated directives.
In the UK, Art. 20(2) has been implemented by s.186 of the Communications Act 2003. In particular, s.186(3) states that unless there are alternative means of dispute resolution that are consistent with the Article 8 policy objectives and regulatory principles (the Community requirements set out in section 4 of the Communications Act 2003) (the “Community Requirements”) and provide prompt and satisfactory resolution, any dispute must be resolved by Ofcom.
Standard ADR clauses in electronic communications agreements do not, in our experience, routinely include the Community Requirements in any terms of reference for mediators, arbitrators or other dispute resolution third parties (e.g. third party evaluators for early neutral evaluation procedures). If communications providers wish to avoid the possibility of a dispute being subject to Ofcom’s jurisdiction by the effect of s.186(3), arguably they should ensure that their ADR clauses provide for the inclusion of the Community Requirements in any ADR terms of reference.
We’ve been alerted via Twitter (HT @clarinette02) to another problem with HADOPI 2. This is described in a recent French online journal article (Hadopi : condamné à ne pas changer d’opérateur télécom). In essence, it seems that if a customer of a communications provider who provided internet access as part of a bundled package seeks to change that communications provider during a period of internet suspension, even if the customer wishes to change for valid reasons (e.g. poor telephone or cable TV service for other parts of the bundled package), then under HADOPI 2 that customer will be liable for a fine of up to €3,750.
Ouch.
Another approach to the dispute would have been to be technologically neutral. Under the current market review in fixed geographic call termination markets, all operators have SMP in the market for termination on their own networks. Consequently, all operators are subject to SMP Condition BC1 (or in the case of BT, SMP Condition BA1), which requires them to provide network access on terms, conditions and charges that are fair and reasonable. BT is subject to further conditions, including SMP Condition BA3, which requires BT to base its charges for fixed geographic call termination on forward looking long run incremental costs (“LRIC”).
In deciding what is fair and reasonable for other operators, Oftel and Ofcom have consistently held that termination rates that are suitably reciprocal with BT’s are de facto fair and reasonable and compliant with SMP Condition BC1. The “suitable” reciprocity refers to the weighted average of relevant BT termination rates, dependent upon the mix of geographical call termination traffic sent from the other operator to BT on the basis of a sample. Currently the industry standard reciprocity agreement applies two weighting factors, depending upon whether the other operator is a single or multi-switch operator. The single switch weighting is based upon a traffic sample in May of each year, to determine the proportion of calls sent to BT which are single tandem or local exchange terminated to be applied to the charges from October for the following year. The multiple switch weighting uses the single switch weighting factor, together with a second factor to determine the percentage of those calls which are terminated by the operator as multi-switched calls. This factor is recalculated twice a year, based upon samples of traffic in May and November.
Opal Telecom claimed it was a single switch operator. This was not a factor in dispute. Instead, Opal Telecom claimed that terminating traffic on its NGN network was the equivalent of terminating traffic on a single tandem switch. Ofcom’s draft determination therefore had to analyse and take a view on the technology being deployed by Opal Telecom in its NGN network to come to a view on this claim.
We suggest that instead of considering the technology at issue, an alternative and possibly simpler approach would have been to ignore Opal Telecom’s technology (NGN, traditional TDM switched or otherwise). An argument can then be made to state that the fair and reasonable termination rate is the higher of:
There is a question as to whether this formula fully complies with all the six principles of pricing and cost recovery used by Ofcom, particularly the principle of reciprocity (where services are provided reciprocally, charges should also be reciprocal), as the other operator’s termination rates under the second limb may be higher than BT’s termination rates. However, provided the charges are at LRIC, then this may be the price to enable the new market entrant to deploy a new technology fairly (i.e. without an effective susbisdy from all operators sending traffic to be terminated on the new network). There is also the praticability principle (the mechanism for cost recovery needs to be practicable and relatively easy to implement). Without speaking to a network engineer, we cannot say whether it would be practical for a hypothetical TDM network to be agreed for the purposes of determining whether a TDM network equivalent to the other operator’s network would be a multi-switch network with any given number of switches. As for the practicability of the other operator determining its LRIC rates, the burden of proof would be on the other operator to determine its costs to justify the higher termination rate.
We consider you could even propose that such a technology neutral approach could be used no matter what the nature of the other operator (i.e. fixed, mobile, nomadic (WiMAX) etc.), but maybe that it taking matters too far.
It is not often that we resurrect our GCSE/O Level French (or bug our bi- or tri-lingual colleagues – thank you Elora and Emanuela) to read a French language statute, but HADOPI II is an exception. This is the French “three strikes” copyright protection law, nicknamed HADOPI II after the acronym for the Haute Autorité pour la Diffusion des Œuvres et la Protection des droits sur Internet, the new regulatory body created by the law. The “three strikes” relates to suspending internet access to subscribers who are deemed to have breached copyright, e.g. filesharers, after two previous warnings. HADOPI I was killed off by the Constitutional Court in June for the lack of any judicial intervention in the procedure to cut off internet access. HADOPI II was passed by a narrow majority (285 v 225) in the French National Assembly yesterday. Suspension can be for up to one year, and the subscriber can also be fined up to €5,000.
The only material difference in the new law is the introduction of a judicial step before the final “strike”, but this uses the l’ordannance pénale procedure. Whilst this is obviously not our specialist area, we understand that this is a light touch criminal procedure. It means that HADOPI will be able to draft a judicial order, including any penalties, for issue by a magistrate. The order becomes final after a certain period, unless the defendant appeals the order, in which case there is a trial.
Why is this important in the UK? Two reasons: the Government has announced that it is looking at similar legislation, and the possible inclusion of a three strikes provision is one of the outstanding matters holding up the passing of the reform of the Framework Directive and the other six-pack electronic communications directives.
[We would welcome any informed comment on the l’ordannance pénale procedure – is our summary above accurate?]
TiMeriTy 