radiobruxelleslibera
Innocenzo Genna's blog on European telecom and Internet regulation & policies – @InnoGenna
The European court stops UberPop, not Uber. A new legislation for digital start-ups is needed
According to the the court of Justice of the European Union, UberPop, i.e. the local taxi service supplied by Uber through unlicensed drivers, is not a simple digital app used by customers looking for a ride, rather an innovative transportation service subject to general transportation legislations, in particular local taxi rules. Uber therefore fails in claiming that its UberPop service could be classified as a mere Information Society service falling within the ambit of application of freedom of services and European electronic commerce directives. The key reasoning of the court is contained in §§ 37-39 of the judgement: Uber could be in theory a pure intermediation service and, as such, a pure Information Society service. However, Uber also organises the service, sets rules for drivers, checks prices and fixes cars’ quality standards. This is why Uber did not win the case.
Uber was probably expecting this judgment, since previous opinions of the European court had anticipated this position. Therefore, the Uberpop application is likely out-of-law because it will hardly resist against the lobbies of local taxi drivers, while the traditional Uber business model, based on the intermediation between professional drivers and clients will go on, although negotiations with national authorities competent for local transportation may become more complex. Therefore, Uber is expected to continue to concentrate upon value-added taxi services such as UberX, Uber Black, Uber Limo ecc (where service providers are regular taxi drivers, not private citizens) and will keep UberPop only when possible in few countries. It is however doubtful whether Uber will be able to extend its activities upon new services (such as delivery of foods and goods in general) through non licensed workers (mainly students or young people) as far as local policies and authorisation may become a barrier.
Fact is, the impact of today’s judgement may be more relevant in sharing economy sectors where the activity of non licensed workers/private citizens is prevailing (such as Airbnb, for instance, or many start-ups). The principles stated by the court may become far restrictive for innovative digital services rendered by such non professional workers, since it requires them the be subject to the general legislation of the sector (if any). In the case of Uber, as previously stated, this means the likely end of UberPop, not of other transportation services provided by licensed taxi drivers via the same platform (Uber X, Uber Limo, ecc). The situation is more complex for other popular app such as, for instance, AirBnb: one could question whether this is a nice app helping custumers to find accomodations or a true hotelling service, subject to all kind of legislation for hotels.
The same may happen for any new application intermediating innovative entrepreneurs and nonlicensed/private citizens. In the end, it is likely that the European Commission will soon intervene ad hoc with new legislation, since the ruling by the European Court does not prevent it from legislating on the matter so as to adapt the European directives applied until now. It would not be a question of liberalizing the taxi service, but of adapting existing regulations (transport, labour, etc.) to the new challenges of the sharing economy, for example by paying special attention to start-ups and SMEs. The problem is not so much Uber and the public taxi service, rather the preparation of a regulatory framework certain and adequate for new innovative companies and the digital economy.
The European court itself seems to invite the European institutions to intervene where, in §§ 46-47 of the judgement), recognizes that non-public urban transport services and services that are inherently linked to those services, such as the intermediation service provided by Uber, has not given rise to the adoption of measures based on transportation policies:
The impact of Trump’s net neutrality reform in the EU
On December 14th, the Federal Communications Commission (FCC) will vote to replace current rules enforcing net neutrality in US (i.e. the Open Internet Order introduced by FFC under the Obama’s mandate). While the consequences of this change may be more or less dramatic for the US market, the intriguing question is whether this development may have an impact into net neutrality in the European Union.
Prima facie, that political impact will be quite minimal in the EU, at least at beginning. The European framework for net neutrality, namely Regulation 2120/2015 (i.e. the same set of rules dealing with the elimination of roaming surcharges), is quite recent and it would be politically inconvenient to ask for a repeal. Its foundations are solid since it was adopted after a long debate amongst institutions which finally agreed on a fair balance. No-one, at least until the end of this EU five-year mandate, will be keen to reopen the dossier.
Even stakeholders opposing net neutrality in general, such as European incumbents like Deutsche Telekom or Orange, may be hesitant in flagging and supporting a reform which is so much Trump-branded and equally adversed by civil society. Such operators will likely wait for developments in the US market and hope, with elections in 2019, that the new European institutions will be more inclined vis-à-vis this kind of net-deregulation. However, reopen the net-neutrality basket may be a risk for everyone, because with new European institutions no-one can predict whether new rules would be more or less stringent than the current ones. The story of Regulation 2120/2015 should not be forgotten: the proposal started in 2013 with the proposal of the Commission to be very flexible and let to big telcos a kind of “laissez faire”, but when the dossier arrived to Parliament and Council things changed dramatically and the final result was much more consumer-oriented.
An impact of the Trump reform may however occur in specific European countries, where the provisions of Regulation 2120/2015 are going to be enforced by national regulators and courts dealing with practical cases.
This may happen because European net neutrality rules (in particular article 3 the Regulation) consist in general principles which may be may interpreted with some discretion. Berec, the European electronic communications agency, issued guidelines recommending to regulators and courts the criteria to be applied. The resulting approach is similar to a competition assessment, whereby the decision shall take into account, as indicated by recital 7 of the Regulation, the market positions of the providers involved as well as of the weight of concerned content, applications and services. This means that similar practices may be treated somehow differently in different countries, depending on the supposed impact on the market. Such potential divergences may be more evident with regard to zero-rating practices, as the Regulation is more generic on this point and grants more discretion to enforcing authorities. Conversely, rules on network management and specialized services are much more clear in the Regulation and therefore less divergence is expected.
The possibility that net neutrality enforcement may slightly vary between member States is inherent to the system and should not be a scandal. Is is a political choice aiming at making sure that the European framework is adapted to different market conditions, from Lisbon to Warsaw.
This is why net neutrality adversaries will probably start to flag the Trump reform more in a national context, in front of concrete cases with the regulator, rather than lobbying now in Brussels to reopen the European framework. Depending on the discretion and margin of maneuver left to national regulator, the influences coming from US may have more or less chances of success. This new scenario will be soon tested in the Netherlands and Germany, where zero-rating practices are debated in front of regulators and courts with different outcomes, as well as in Portugal, where mobile operator Meo is fragmenting Internet mobile offers into various packages dedicated to specific services and apps.
The Netherlands case is particularly meaningful, because it is about the validity of the national legislation prohibiting zero-rating practices in absolute since 2011. The national courts have to decide whether this strict obligation may pass the test of the European regulation. Whatever the result will be, zero-rating practices will continue to be scrutinized, eventually under EU rules.
The German case is about a way to construe a zero-rating business by offering to any service provider the chance to be “zero rated”, without apparent discrimination. A deep examination of the commercial conditions offered by T-Mobile to “zero-rated” candidates will be essential to verify whether the offer is fair or it is just a way to circumvent the zero-rating prohibition.
The Portuguese case is about mobile operator Meo offering, in addition to a basic Internet mobile offer, different connectivity packages dedicated to specific services (social, messaging, mail or video), kind of “specialized services“. Meo likely believes to comply with art. 3.5 allowing to offer connectivity “other than internet access services which are optimized for specific content, application or services”, but it may be wrong, because such offer should not be marketed as “Internet access”, while the diversification into different packages should be justified by the need to “meet requirements of the content, applications or services for a specific level of quality”. All such conditions appear to be absent in Meo’s offer and therefore the scrutiny by the Portuguese regulator, currently pending, may become critical.
Remarkably, all the commercial practices listed about are about new tariffs scheme and ways to access to services which are already existing. There is nothing regarding new services to be offered to consumers. This is something to keep in mind: when net neutrality rules are relaxed, tariffs and packages change, but services remain the same.
The future of the European online content market is its past
Despite hopes of many, the creation of a Single Digital Market for online content is going to remain unachieved, forever or for many years at least. European citizens have seen many borders recently disappearing (for roaming, electronic commerce, travels, studying abroad for instance), but getting access to movie or online content offered abroad will continue to be a problem. Let’s see why.
At beginning of its mandate in 2014, the European Commission planned to end geoblocking as well as other practices and mechanisms preventing European citizens to get access to any digital content offered outside their European country of residence (but still in the EU), despite the persisting practices of movies studios and content providers to distribute videos and movies on a strict territorial basis. The Commission’s aim was to sustain the creation of a truly integrated single market for digital content, the development of a paneuropean content industry, as well as the elimination of consumer frustration and grey markets which are the main causes for piracy behaviors.
Accordingly, the European Commission proposed to overcome such territorial restrictions in various areas of action within the Digital Single Market strategy, particularly in the matter of geoblocking, content portability and rights clearance for instance. While content portability ended up with a solution satisfactory for users, the most sensitive matter, that is to say geoblocking for online content, was a debacle, since the final regulation was watered down with the exclusion of content online from areas for which geoblocking is forbidden (technically: “unjustified”). A similar accident is now going to happen in the matter of rights clearance, since a proposal to facilitate the clearance of rights in the online sector (by making them cross-border), laid down with the reform of the SatCab Directive, has been dramatically weakened by the competent committee of the European Parliament. As a consequence, online copyright should continue to be cleared country by country, thus reinforcing the power of rights-holders to segment the market geographically. Soon the plenary session of the Parliament will be called to decide whether to approve or reverse such a decision.
Any time and anywhere territorial restrictions are challenged, the content industry is fiercely opposing this process basing on the argument that such territorial restrictions are inherent to the production model for movies and premium content in the EU. Fact is, European movies are financed via contracts remunerated via territorial exclusivities country by country. Therefore, changing this system would shake the production model for movies and content in the EU, triggering a spectacular process with some uncertainties. Therefore, the resistance of the concerned stakeholders is understandable.
One should consider, however, whether such concerns are overestimated and whether the defense of the status quo may be serving also interests other than welfare of the European culture and movie industry.
Firstly, it is not clear why, on the basis of the above arguments, territorial restrictions should be granted for US content that is NOT generated and produced in the EU. If territorial restrictions are aimed to protect investment in EU content, than geoblocking and other measures should not be justified for non-EU works, such as – for instance – movies from US studios. Remarkably, despite the foregoing US content production is currently distributed in the EU on a strict territorial basis, thus enjoying profits which would no be imaginable in US where geoblocking is not tolerated.
Secondly, many European movies are financed via European funds (the Media Program for instance). Such funds are aimed are supporting the European creative industry and, as a matter of principle, should be designed in a way to spread European content everywhere in the EU. By contrast, even such EU-financed works may be (and are) currently geo-blocked country by country, which is absurd. It is curious that no-one in the European Commission has never thought that EU funding should be used more coherently with the scopes of the Digital Single Market.
Third, one should investigate whether the current territorial-based system is really helping the European content industry to really grow and become stronger. European content stakeholders normally claim that the European industry is weak, needs for subsidies and any change in the territoriality principle should just open the doors to US supremacy. However, US supremacy seems already to exist despite the pro-european geographical segmentation system. This is the evidence that this model does not work and it allows the European industry just to survive, not to grow and become stronger. While the current territoriality-based system is granting formidable profits to the US industry, the EU content industry can only arrange to live some way. No one in the EU should be happy to continue like this.
Fourth, it is clear that a great effort is necessary to shake a status quo which is familiar to everyone, while fews are ready for the uncertainties of a change. However, this is a déjà vu in the EU: any time markets have been liberalized and opened to import and exports (goods, services ecc), stakeholders interested with the status quo have been always claiming that changes will destroy the market. This never happened, however: by contrast, markets have been adapting and growing, while resources have been allocated more efficiently, with consumers satisfaction. The current commitments (i.e.: overcoming territorial exclusivity) undertaken by Paramount with DG COMP, in the pay TV case, shows that changes are possible without catastrophes. If Paramount can, why others can’t?
Finally, “cui prodest” this debate? The Single Market is not a mantra per se, what really matters is the interest of the European citizens, who can be both artists and consumers. They should be at the centre of this reform.
Content stakeholders say that they protect the interest of artists, however the matter is more complex. Artists belong to a a system which is historically shaped with a top-down approach by big studios and, therefore, even if artists are part of such organizations, one could doubt whether they really have the possibility to have their say. The Weinstein case show how difficult could be the career for first mover artists. The problem is particularly serious for young, new and innovative artists, deprived of negotiating power, while the most famous do not have interest in big changes. A clear example is shown by the collective copyright management system, which is normally organized via monopolies (de facto or de iure) depriving artists of a concrete right of choice: thus, young artists are keen to escape as soon as they found a suitable alternative. One should therefore be skeptical when big studios or traditional organizations claim to represent the interests of all artists. Artists have different interests depending on the stage of their career, but collective organizations and studios only take care of the profitable ones. The undersigned is a non-professional pianist and I know something about that.
As regards consumers, content stakeholders normally say that the content liberalization would just favor few, privileged expats citizens living in Brussels and in big international cities, or wealthy travelers. This is not correct and, by the way, the same argument could be used to challenge the European reform deleting roaming surcharges. It is true that any time borders within the UE have been opened and liberalized, the initial beneficiaries where selected categories of people: in the case of cars importation, for instance, just people interested in buying a cheaper car abroad; in the case of roaming, the people traveling more or living in borderline regions; in case of diplomas, just students studying abroad for personal reasons profited of the new system; and so on. However, in the long term liberalizations have been providing beneficial effect to everyone, not just to the initial occasional beneficiaries. In other words, the short-term practical effects of a liberalization reform may be, at beginning, not so decisive for all European people, however the resources which can be liberated in the long term may be huge. This is the way the Single Market developed until now and there is no reason to believe that things should go differently for digital.
Why in Italy TIM’s network separation is convenient for everybody
There is no doubt that the history of TIM (formerly Telecom Italia) is different from other big European incumbents such as Deutsche Telekom, Orange, Telefonica, BT, Telia ecc: while after liberalization these companies have been growing and becoming international players, TIM did exactly the opposite. While being a formidabile player in the ’90, with international footprint from South America to Turkey, now TIM’s activities have been dramatically reduced to the Italian domestic market, with just few exception: Telecom Sparkle, the international carrier (still a jewel in the sector) and TIM Brazil (few years ago a star, but now suffering because of the crisis in Brazil).
The bad news, however, are not finished: while being still an high profitable company, TIM has high indebtment, legacy internal costs and all risks deriving from a business limited to a single domestic market. Like other old incumbents, TIM suffers because of declining telecom margins and for the need to reconvert its old (but still profitable) legacy copper network into fibers. And everybody agrees that such upgrade is not cheap.
The above scenario is not a problem just for TIM: the company owns the sole nationwide telecom network in Italy, an infrastructure of critical importance for the country. Therefore it is not a surprise that most recent Italian governments (starting with Renzi in 2014) have started to send distress signals, enquiring TIM about its willingness to invest and upgrade the network, as well as investigating about control and shareholders of the company. Something totally new for Italy, a country where technology and national interest debate has been, for decades, limited to broadcasting.
With the above explanations, one can better understand the current controversies between TIM and the Italian government, starting from the position of its main shareholder: Vivendi.
Vivendi, a French media and content champion, in 2015 accidentally became the main shareholder of TIM, as a consequence of a barter with Telefonica wishing to reinforce in Brazil (where Vivendi owned a carrier, GVT) and to leave Italy. At that time it was not clear the industrial scope of Vivendi’s investment in TIM (except for the fact that leaving Brazil before the economic collapse was a smart idea). In fact, it is doubtful why a media company should become a telecom operator, since the best way to sell content is to have a large number of telecom customers rather than focusing on a single carrier (instead, the opposite may be true: for a telecom company it may be interesting to acquire a media player to better feed with premium content its network). Fact is, many have seen the presence of Vivendi in TIM as a pure transitional portage, in light of a future entry by Orange, Deutsche Telecom or whoever. In light of the future telecom consolidation in Europe, the entry into Italy by other European incumbents is just a matter of time.
This scenario became even more complicated, or more clear depending from other points of view, when in 2016 Vivendi started to scalate Mediaset, the Italian media company owned by tycoon and former premier Berlusconi: an operation which, you like it or not for national interest, makes more industrial sense than controlling TIM, but which has been conducted with the same sympathy of the Italian campaign by Napoleone.
The Italian authorities have promptly reacted, contesting the double control over both TIM and Mediaset (in force of pluralism legislation) as well as lack of consistency with Italian legislation about infrastructure of national relevance. Now Vivendi is risking sanctions and its ability to concretely manage control over both TIM and Mediaset is seriously impaired. On the other hand, while the Italian government is irritated with Vivendi (and with France in general, because of obstruction to Italian investment there), its leeways are more limited than expected, because Vivendi has the EU passport and can resist better than Chinese and Mexican raiders (against golden powers measures, for instance). However, the real problem for Vivendi is not a potential legal dispute per se, rather how to make business in a big country where the government is irritated and hostile. In these circumstances, the combination with Mediaset is clearly at risk and the investment value in TIM may evaporate.
The solution of the above may come from TIM’s network separation, a scenario which just few years ago could appear a fair tale. The Italian government is clearly unsatisfied with TIM about the (too) slow upgrade from copper to fiber and, in order to shake the market, has even endorsed the entry of a new network competitor: Open Fiber, a newco equally owned by Enel S.p.A. (the electricity utility) and CDP Equity (CDPE), a company of the Gruppo Cassa Depositi e Prestiti group. Open Fiber is developing a wholesale-only FTTH network throughout Italy and it may become, in a few years, a real problem for TIM. Of course, today TIM could try to kill the baby in the cradle, but the Italian government would not like it.
This war is not in the interest of TIM which, in addition, has neither a real incentive in massively investing in a fiber network: the copper network is still profitable and still represent a major item in the books of the company, therefore expanding quickly the fiber footprint would impair its financial stability. Furthermore, the profitability of TIM must firstly destined to creditors and shareholders, and there is no much left for investments.
Given this scenario, the voices about separating the network of Tim and eventually merging it into Open Fiber should be seen (irrespective of the willingness of the latter) more as an opportunity, rather than a threat, for Vivendi, which could serve a separated TIM to the Italian government so as to get back, in exchange, a green light to operator and growth in other markets. Vivendi will be more than happy: while abandoning the risky Italian telecom business with some nice money in exchange (and considering that the most of predecessors have lost), it will probably find warmer reception with Mediaset. And also investors and other telecoms will appreciate the new scenario because the new TIM Services, separated from the network, will be there, clean and with less problems than in the past. Orange, Deutsche Telekom, Iliad but also Italian investors could step-in. Even Vivendi may also consider to better integrate its business with TIM, if this is their scope.
Italians will finally have a national telecom company leading the modernization of the country, and the Italian government could rivendicate the award (while feeling the network to be in safer hands).
The scenario is more complex for TIM. On one side, abandoning the vertically-integrated business may appear a dramatic change of paradigm, and one may wonder whether the separation between services and network may dramatically affect its retail business (thus confirming the arguments of competitors whereby TIM is leveraging its dominant position in the access).* On the other side, the new separation scenario will provide TIM with robust financial resources for its main job, that is to say developing and managing telecom networks (certainly not buying or developing entertainment and TV content). Obviously, the official declarations of TIM are against network separation, but market reality and Vivendi’s interest may play differently.
In this light, the discussion about industrial precedents (like BT in UK) or legal basis for the network separation become less useful: the European electronic communications framework already empowers national authorities to separate the network of the incumbent, subject to the consentment (veto power) of the European Commission. However, in the Italian case this disruptive procedure is not necessary. The separation of TIM’s network should simply occur because, at the end, it may be convenient for everyone.
* One should also consider the regulatory treatment of the network separation. Should a separated TIM be able to get a substantial deregulation, then the operation would worth. But the rest of the market would complain, and the European institutions would look into it.
- Transparency note: the author assists, as a regulatory consultant, one of the company mentioned in the article, namely Open Fiber. In no way the views expressed in the article may be attributed to Open Fiber.
Really, did European Parliament water down investment plans of telcos?
The days following the deliberation of the ITRE committee on the Commission proposal for the a new Electronic Communications Code, media coverage reiterates the story that the approach taken by the MEPs would have affected investments plans of telcos (all? or which ones?). Unfortunately, this is just an artificial simplification creating intriguing titles for the readers, while not genuinely reflecting the overall and actual outcome of the ITRE decision. The misunderstanding is partially due to the fact the the European Commission presented the entire telecom package as pro-investment reform, therefore any rebuttal may be interpreted now as a position against investments; in addition, stakeholders focalized their attention just on few provisions, while the new European Code is much more complex then single provisions; and then journalists followed this story telling.
The main provision of the Telecom Package inspiring this pro/against investment story is art. 74 about co-investment. In a few words, the Commission proposed that in case of joint investments in new very-high capacity networks (thus networks consisting entirely of fibers such as FTTH/FTTB), local regulators would be prevented from looking into the business and therefore coinvestors would escape regulation. Obviously, the provision would be relevant for incumbents which are normally regulated, while it would not matter others. This is the first firm point of this story: only potential incumbents’ plans may be potentially affected by the regulatory intervention, while for other operators life goes ahead as normal.
Are incumbents’ plans really affected by potential regulation on co-investment? This question brings us back to the circular story about regulation vs investment and vice-versa. In the reality, the impact of regulation upon investments’ decisions of incumbents is normally overestimated. People refer of US deregulation in 2004 which would have boosted telcos to invest in fibers, but they forgot that at that time Verizon and AT&T had no other choice but investing in fibers, since broadband connection offered by competing cable operators was replacing the copper network business. The drama for US telcos was investing in fiber or die, while the regulatory regime has limited impact on their investment decisions. Fiber footprint in Europe confirms this business dynamic: in geographic areas where cable operators have been starting to provide broadband connectivity, incumbents had to react quickly with fiber investment. Conversely, in areas where cable operators were not present (mainly outside metropolitan areas), incumbents fibers’ investment have been much more prudent. Thus, competition drives investment decisions, rather than regulation.
The co-investment text approved by the Parliament, and reforming the Commission’s draft, does not prevent incumbents from gaining a regulatory dividend through co-investments, however it preserves the competences of regulators to look into the matter and to address potential anticompetitive issues. Remarkably, the original proposal of the Commission prevented regulators from doing so, then the Parliament has reinstated the latter’ powers. This happened because European MPs understood that there might be serious risks that incumbents may play with this model and arrange investments vehicles which are not genuinely opened to other coinvestors, with the sole scope to gain deregulation. Such scenarios are difficult to foresee and regulate ex-ante, therefore keeping competences of national regulators has been a sensitive decision, while incentives for investing in new fiber networks, in the form of regulatory divided, still remain. This is why the story telling whereby the Parliament would have affected future investment decisions is fundamentally wrong.
Interestingly, the European Parliament kept untouched another “pro-investment” model proposed by the European Commission, that is to say the wholesale-only operators caught by art. 77 and subject to a light regulatory regime. This is the case of operators concentrating their investments and resources into network business and then just providing high-speed connectivity to other telecom operators for their clients. Wholesale-only operators have no residential business indeed, such as Stokab in Sweden, Open Fiber in Italy, Siro in Ireland and various small operators in UK, France and Austria. Currently, no one of them is dominant in Europe.
The wholesale-only model has been frequently confused with coinvestment, however it is something really different. While the coinvestment model makes sense, in terms of actual regulatory dividend, only for incumbents which are dominant, currently regulated and therefore seeking deregulation, wholesale-only operators are in Europe still at infancy of their development and therefore possible light regulation is just a bet on the future. Such light regulatory regime is not an actual regulatory holiday (as it could have been for incumbents with the Commission’s text of the co-investment), it is rather a signal addressed to long-term investors to put their resources in new infrastructures starting from scratch, wait patiently and trust their development like for any public utility sector, with no room for playing in order to get a regulatory dividend today.
Interestingly, Berec has been conspiring against such operators, despite the fact there no jurisprudence in Europe about anticompetitive behaviors by wholesale-only operators (unlike incumbents) which should alarm national regulators. Authorities have basically complained about losing part of their competencies, although the solution proposed by the Commission (and approved by the Parliament) allow them to recover the entire set of regulatory remedies if a dominant wholesale- only operator start to behave badly. At the end, it seems that this negative approach of Berec was mainly driven by its French constituency, that is to say French regulator Arcep, which is worried about small municipalities which invested in fibers and could escape their oversight. Just a French problem indeed.
To sum up, the approach taken by the European Parliament appears balanced and reflecting the business reality, that is to say lifting regulation only in case anticompetitive behaviors should not reasonably occur, and keeping the powers of national regulators for the rest.
Roaming is ending for users, not for operators: the potential consequences
The roaming reform finally entering into force on June 15, 2017 is right and due, because European citizens deserve, although within the limits of simple traveling, the end of roaming surcharges which, beyond the economic burden, have been an unbearable discontinuity in the European integration process.
However, the reform is also incomplete because it eliminates roaming surcharges for users (Roaming Like At Home: RLAH) while keeping such surcharges amongst operators under the form of high wholesale roaming caps (the cost that a mobile operator must pay to a foreign network to use it and provide roaming service sto its customers). Such wholesale caps have been fixed by way of regulation at a level which is totally inconsistent with the market practice. To make an example, the starting wholesale cap for data will be 7.7 Euro for Gigabyte (6.0 euro from January 2018 up to 2.5 euro in 2022) awhile current retail tariffs are already much below and cheaper (between 1 and 2 Euro per Giga).
As a result, many mobile operators, especially small innovative and MVNOs, will have to provide RLAH services below costs. In order to recover such costs, various options may be available (which may come as unexpected surprises for consumers):
– limiting the RLAH data with the so-called fair usage clauses (for unlimited or low cost data bundles)
– asking national regulators for a derogation and continue to apply roaming surcharges;
– increasing domestic tariffs, in order to be able to replicate them abroad as RLAH;
– issuing “domestic” SIM cards without roaming ;
– quitting the market.
The above will not happen tomorrow, it will depend on market conditions and on the evolution of usage patterns. Until now European citizens were not consuming data abroad because were scared about high or uncertain roaming tariffs. This situation will change, also due to new features available in the market, like the portability of content abroad.
However, some signals are already in the market. Finnish operators Elisa and DNA are already asking for derogation, as well as all the operators in Lithuania and Estonia, O2 Slovakia and Voo in Belgium. Up to now, it seem that almost 40 derogation requests have been filed in the EU and 24 of these have been granted by national regulators. In addition, domestic tariffs increases are happening in Denmark and Sweden. Moreover, operators are increasing a variety of other charges to try and offset the end to roaming surcharges: in Italy, for instance, mobile network operators have been rescheduling the monthly subscription from 30 days to 4 weeks.
The next months will tell us whether this is just a normal market adjustment or the beginning of a general trend that may frustrate the consumers’ expectation for the end of roaming.
Of course, the above problems may be mitigated should the European institutions decide to lower roaming wholesale caps to level more aligned with the market practice.
The European Court puts start-ups and European sharing economy in danger
The redde rationem between taxi drivers and Uber is getting closer and closer, with the Uberpop application likely to be definitively out-of-law. This may not be a serious prejudice for Uber, which is more concentrated on other value-added modalities such as UberX, Uber Limo ecc where service providers are regular taxi drivers, not private citizens. However, the impact of today’s opinion of the Attorney General of the European Court, Maciej Szpunar, may be more relevant in other sharing economy sectors where the activity of private citizens is prevailing (such as Airbnb, for instance).
The legal opinion rendered in the case C-434/15 Asociación Profesional Elite Taxi vs Uber is not binding for the Court, which will adopt the final, binding decision in 8/10 months. However, statistics say that in 80% of the cases the court substantially confirms the legal solution suggested by the Attorney General.
As we all know, Uber is a US-based company which has developed a successful computer program that can be used on smartphones. The program has created an online platform connecting users and car owners for urban journeys, competing de facto with traditional taxi transportation. The success of Uber and the replication of the same model in other services sectors (doctors, baby-sitting, take-away ecc) has even created the term “uberization”, meaning the process whereby traditional economic activities are replaced by an online platform connecting directly users and providers.
In this preliminary reference, the Court of Justice was asked to determine the type of service provided by Uber, whether transport services, information society services or a combination of both. The question was fundamental to determine whether Uber, and its drivers, may be required to have authorizations and licenses, normally required by national transport legislation. In Barcelona, like in many European cities, the operations by Uber has been challenged by local taxi organizations claiming that Uber and its drivers should hold a normal taxi licenses and be subject to the taxi legislation. This would be, however, the end of the UberPop application as we have learned it sofar. In the specific Spanish case, an absence of such authorizations and licenses amounts to a breach of the provisions governing competition in Spain.
Obviously, Uber always denied to provide transport services, instead claiming that its computer program should be seen as an information society service falling within the scope EU Directive 98/34/EC. This Directive prohibits restrictions on the freedom of establishments and would mean that national taxi legislations could not make such services subject to administrative authorizations. In addition, in the specific case Uber claimed that an authorization scheme applicable to its program and services should be justified by general interest and not be discriminatory, in line with art. 9 Directive 2006/123 which governs authorization schemes and the freedom of establishment.
The opinion of the Attorney General is restrictive vis-à-vis services rendered by private citizens, since it requires them the be subject to the general legislation of the sector. In the case of Uber, this means the end of UberPop, not of other transportation services provided by licensed taxi drivers via the same platform (Uber X, Uber Limo, ecc).
However, the worst impact of this principle will be upon other sharing economy platforms which are based on private citizens rather than on licensed workers. This is the case, for instance, of AirBnb, which is constantly under attack by the hoteling industry. In that case, imposing the full application of hotelling rules upon Airbnb’s clients would be the end of the business model. The same may happen for innovative applications intermediating private citizens. Thus, the final decision to be rendered by the European court would be more fundamental for future European start-ups rather than for Uber.
