Slovakia Coping with EU Telco Regulation

In the modern world information form one of the most important factors, which are affecting the quality of peoples’ lives. Relationships between people, mutually exchanging information, shall be, however, regulated and legally governed. Transmission of information in the form of signals from the transmitter to the receiver of the signal via wires as well as facilitating of such transmission is designated as telecommunications (according to the new EU terminology – electronic communications).

The electronic communications regulation focuses primarily on issues such as establishment, operation and provision of the electronic communications networks and services. These shall secure exchange and transmission of information between users via electronic communications networks.

Current Slovak legal regulation of electronic communications is based on the EU regulation of the electronic communications networks and services which was implemented by means of a so-called regulatory framework of directives and regulations adopted mainly in year 2002 (so called Regulatory Framework 2002). This package of rules governs all forms of fixed and wireless telecommunications, data transmission and broadcasting. The aim of this package was to promptly react on the quickly and dynamically developing telecoms market and mainly to improve consumer protection and create the best conditions for the development of the internal market. The main expected result of such development of the internal market was establishment of healthy and competitive environment, which would then naturally lead to the increase of the quality of the services provided or eventually to the decrease of prices for the provided services.

Consumers’ Rights

The Regulatory Framework 2002 was aimed to improve the consumer protection also through the institute of the universal service and increased protection of privacy of users.

The universal service consists of the minimum set of services (as specified within the Framework) of specified quality which is available to all users regardless of their geographical location and, in the light of specific national conditions, at an affordable price (including inter alia the provision of the access or connection to the public telephone network on the basis of reasonable request, the provision of at least one comprehensive directory available to end-users, whether printed or electronic, or both, and updated on a regular basis (at least once a year) and at least one telephone information service or the ability of all end-users of publicly available telephone services, including users of public pay telephones, to call the emergency services free of charge, by using the single European emergency call number 112 and other national emergency numbers, etc.).

Such universal service shall be provided by the enterprise designated by the national regulatory authority throughout the whole respective territory.

As the provision of the universal service requires also expenditure of certain costs on the side of its provider, EU regulation requires, where necessary, also individual implementation of the procedure for compensation of costs of the designated enterprises incurred in relation to provision of the universal service.

As regards the protection of privacy, the Regulatory Framework 2002 imposed on the Member States an obligation to secure protection of the rights to privacy of the users (referring solely to the physical persons). Under the provisions of the respective directive, the provider of the publicly accessible electronic communications service is obliged to secure appropriate technical and organisational measures in order to ensure the safety of the provided service and protection of operational (e.g. traffic data) and location data. Further there was imposed also the obligation to ensure the confidentiality of the communications (i.e. exchanged or transmitted information) by imposing the ban on listening, interception and other means of violation or surveillance of the communications.

Internal Market

In Slovakia, as well as in majority of the EU Member States, the dominant players on the market (with significant market power) are still the incumbents (ex-monopolies). One of the aims of the Regulatory Framework 2002 was to protect other players against any abuse of the dominant position.

The Regulatory Framework 2002 significantly liberalised the internal market by the abrogation of the system of licensing of the individual providers of telecommunications services by the Member States. Such licensing required fulfillment of vast number of complicated conditions, which made the licensing process very lengthy and extremely administratively demanding and in some cases even effectively prevented new enterprises in entering the market.

The Framework introduced a general permission for electronic communications network systems and services. The right to provide electronic communications network systems or services is not anymore subject to prior consent of the state regulatory authority. The Member State may only require notification of the intent to commence activities in the respective area, which is also the situation in Slovakia. The provider may generally commence its telecoms activities should it fulfill general conditions provided.

Slovak Law vs 2002 Regulatory Framework 

The majority of the Regulatory Framework 2002 was transposed into the Slovak law by means of the Act on electronic communications and its subsequent amendments. In general, this act and its amendments complied with the requirements of the package.

The universal service is defined basically in the same way as the communications act sets out similar extent of the universal service as the respective directive, with only subtle differences.

The universal service shall be provided by one or more enterprises designated by the Slovak Telecommunications Office in order to ensure access to public electronic communications services for the whole territory of the Slovak Republic. The designated enterprise shall be entitled for compensation of assessed net costs of the universal service, provided these exceed earnings from provision of the universal service.

The compensation of such cost shall be covered by contributions of other enterprises providing public networks, public services or public networks and services, market share of which is or exceeds 0,2% of the market. Such contributions are kept on a special account maintained by the Slovak Telecommunications Office, which publishes annual report on the management of this account.

Net costs of provision of the universal service shall be calculated by the Slovak Telecommunications Office as the difference between costs of this service on one side and the earnings and market advantages of the provider of the universal service on the other side. The market advantages comprise mainly of the strengthening of the enterprise’s reputation or promotion of the enterprise by for example public telephones or directories.

In the Slovak Republic, there has only been one sole provider designated to provide the universal service for several years. The other providers of public networks and services tend to object to such status quo. The main argument here is that they have to contribute to the designated enterprise in order to facilitate provision of the universal service which then effectively strengthens the market position of their main competitor and weakens the position of them as competing enterprises. In addition, they also have to contribute to the compensation of losses incurred by the provider in relation to provision of the universal service. The argumentation here is based upon the fact that the concept of universal services belongs among the topics which shall always be covered by the state, as it has been implemented to fulfill a so-called public interest. The framework itself allows for different solutions here, when Slovakia adopted one of the possible approaches.

The protection of privacy shall be enforced under the Slovak laws by the institute of the telecommunications secret, which shall concern:

1. contents of the transmitted information;
2. data on communicating parties (including names and addresses); and
3. operational and localisation data.

The telecommunications secret shall be maintained confidential by anyone having access to it, even accidentally. Additional, however, very important role in relation to the telecommunications secret plays the traffic and location data protection and also the personal data protection, which is however governed by separate special laws.

The electronic communications act also imposed the obligation to adopt adequate technical and organisational measures in order to protect the security of the networks and services on the providers.

Transposition of the regulation related to the internal market resulted under the Slovak law into the environment where, from the legal viewpoint, any enterprise may provide networks and services on the basis of the general permission, provided it meets conditions imposed therein. Slovak Telecommunications Office may impose within the general permission only such conditions which are provided for by respective laws. In line with the EU regulation, such conditions shall be nondiscriminatory, adequate and transparent, whereby the obstacles on entering the telecommunications market are eliminated and the transparency is increased.

Regulatory Framework Reform

Due to the rapid development of the telecoms sector, recently (i.e. December 2009) new rules reforming the Regulatory Framework 2002 entered into force (“telecoms reform package”). The reform was proposed by the European Commission already in 2007 and the final wording was approved by the European Parliament and the Council of Ministers in November 2009 after an uneasy procedure of conciliation, as the standpoints of the both institutions were not uniform for a long time. This reform package directly amends the original Regulatory Framework 2002 and reacts on the issues and weaknesses within the competition on the telecommunications market and aims at strengthening of the consumers’ rights. Further, it also contains more rigorous and consistent regulation, however with the originally declared priorities.

The telecoms reform package may be divided into three main areas being governed by (i) the Better Regulation Directive – covering and improving specific telecoms regulatory matters; (ii) the Citizens’ Rights Directive – strengthening consumers’ rights and protection of privacy; and finally (iii) the Regulation establishing the new European Telecoms Authority called "Body of European Regulators for Electronic Communications (BEREC)".

The Commission identified 12 most prominent reforms of the telecoms reform package, however, upon their transposition by the individual Member States only some of these will have fairly quick impact which will be also recognisable by the consumers. The reminder of the reforms is aimed at improvement of the telecoms market environment and competition.

The main of the new changes affecting consumers are inter alia the following: 

1. The extension of rights of consumers with regard to protection of citizens' rights relating to the internet access by a new “internet freedom provision”, which was subjected to extensive discussions between European Parliament and the Council, providing that any measures taken by Member States regarding end-users access’ to, or use of, services and applications through electronic communications networks shall respect the fundamental rights and freedoms of natural persons and shall be limited or excluded only upon prior fair and impartial trial.
2. Porting of phone numbers and their subsequent activation shall be carried out within the shortest possible time; in any case, users who have concluded an agreement to port a number to a new undertaking shall have that number activated within one working day (it currently takes in the EU it on average from approximately 8 days up to few weeks).
3. Obligation of the providers of services to offer the possibility to subscribe to a contract with a maximum duration of 12 months (recently the contract period is usually 24 months).
4. Improved information of consumers regarding the subscribed communications services by setting the minimum requirements for contract with operators (including for example the minimum service quality offered, compensation and the refund arrangements which apply if contracted service quality levels are not met etc.).
5. 5. Improved consumer protection against personal data breaches and spam by means of imposing additional obligation on the providers including for example mandatory notifications for personal data breaches.

As the majority of the rules of the reform package are contained within the newly adopted directives, these will have to be transposed into the national laws of individual Member States by June 2011. Therefore we can expect amendments of the relevant Slovak legislation in the foreseeable future, which should react on the reform package.

(Published in The Slovak Spectator)

Branislav Ujvári

ROWAN LEGAL