Telecommunications Regulation. AUSTRIA CHSH Cerha Hempel Spiegelfeld Hlawati

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1 Telecommunications Regulation AUSTRIA CHSH Cerha Hempel Spiegelfeld Hlawati CONTACT INFORMATION Benedikt Spiegelfeld CHSH Cerha Hempel Spiegelfeld Hlawati Parkring Vienna Austria What is the name and nature of the regulatory body(ies) in your jurisdiction? To which bodies (if any) are decisions appealed? The Federal Minister of Transport, Innovation and Technology is the highest telecommunications authority. The Federal Minister is also responsible for the subordinate Telecommunications Offices and the Licensing Office. Regulatory bodies include (i) the Telecom Control Commission (Telekom-Kontrol- Kommission, the "TCC") which is a judicial body whose members are not bound by any directives and can act independently as provided for by the Austrian constitution; (ii) the Austrian Regulatory Authority for Broadcasting and Telecommunications (Rundfunk und Telekom Regulierungsbehörde, the "RTR"); (iii) the Austrian Communications Authority, also known as KommAustria ("KommAustria"), as the regulatory authority for the Austrian broadcasting industry and (iv) the Federal Communications Board (Bundeskommunikationssenat - BKS) which acts as independent appellate body for decisions made by the KommAustria and as the legal supervisory authority of first instance for the Austrian Broadcasting Corporation. The Federal Minister is a member of the Austrian Government, the BKS and the TCC are judicial bodies (which are independent tribunals) and the RTR is a limited liability

2 company under Austrian company law, however, it carries out government duties as a legal entity owned and controlled by the Austrian federal government. Depending on the case at hand, almost all decisions can be appealed against to the Austrian Constitutional Court (Verfassungsgerichtshof) in cases where the violation of constitutional rights is alleged, or the Austrian Administrative Court (Verwaltungsgerichtshof) in all other cases of alleged violations of provisions of simple federal law. Both the Constitutional Court and the Administrative Court are independent courts under the Austrian constitution. Depending on the case at hand, an applicants may appeal to the aforementioned Courts either directly or as a legal remedy of last resort. 2. Has your jurisdiction adopted the WTO Basic Telecommunications Agreement? If yes, with what exceptions, if any? The WTO Basic Telecommunications Agreement is in force in Austria as a part of the WTO and the General Agreement on Trade in Services (the "GATS", published in the Austrian Federal Law Gazette no 1/1995 as amended). Within the framework of the GATS, Austria submitted a schedule of specific commitments dated 15 April 1994 (GATS/SC/7). By Decision of 28 November 1997 (97/838/EC) the Council of the European Union issued a schedule of specific commitments and a list of exemptions from Article II of the GATS concerning basic telecommunications which supplemented or modified the schedule of specific commitments and the list of Article II of the GATS exemptions of the respective WTO member (this schedule supersedes Austria's original full exemption relating to basic telecommunications services due to the now abolished public monopoly). In such schedule Austria has not included any additional commitments or any further exemptions which deviate from those applying equally to all European Member States (such schedule was published in the Austrian Federal Law Gazette Part III no 44/1998). In this respect, in all sub-sectors of telecommunications services limitations on market access and on national treatment with respect to the presence of natural persons are to be regarded as unbound except as indicated in the "Horizontal Commitments" section of Austria's original schedule. The same is valid for the subsector domestic and international services provided using any network technology, on a facilities based or resale basis, for public and non-public use, in the market segments (i) leased circuit services and (ii) mobile and personal communications services and systems. No limitations apply to voice telephone services, packet switched data transmission services, circuit-switched data transmissions services, telex services, telegraph services, facsimile services. 3. Are operators in your jurisdiction privately or publicly/state owned?

3 Operators in Austria are in general companies of private law, however in some of them the State of Austria owns a major stake or shareholding. Currently, the State of Austria holds a 27,37% share in Telekom Austria, the former monopoly operator of telecommunication services in Austria. In the field of radio and television broadcasting, the Federal Act on the Austrian Broadcasting Corporation established a foundation under public law with the name of ''Oesterreichischer Rundfunk'' (Austrian Broadcasting Corporation, the "ORF") which is a legal entity. The ORF'S statutory duties include the duty to broadcast three nation-wide and nine region-wide radio programmes and two nation-wide television programmes. Anyone is entitled to receive the radio and/or television programmes of the ORF against continued payment of fees. The ORF does not have a monopoly and other radio and television broadcasters are admitted to broadcast in Austria subject to a pertinent license. 4. What are the primary differences between the regulation of wire line, wireless, satellite, cable and VoIP providers? Any person shall be entitled to provide communications networks and services in compliance with the statutory provisions. Furthermore within the meaning of that act provision of a communications network means the establishment, operation, control or making available of such a network. In this case operator means an undertaking providing or authorised to provide a public communications network or an associated facility, whereas a provider does not coercively have to run a telecommunication network. Furthermore operators must have the legal control regarding the telecommunication service. Therefore wireline provider, cable network carriers as well as Internet or VoIP providers can be defined as operators. Since the EU Directive 96/2 concerning mobile communication and personal communication wireless service provider are not limited any more. On the other hand the EU Directive 91/263 concerning satellite communication services constituted a complete liberalization of the market and free trade regulations for those services later. 5. Are broadcasters regulated separately from telecoms? Broadcasters are regulated separately from telecoms and are subject to different laws, most notably on radio and television broadcasting, e.g., the Austrian Private Television Act or the Austrian Private Radio Broadcasting Act. However, the regulations in the field of broadcasting and communications share the same authorities and regulatory bodies which are vested with respective powers and assigned different duties to the circumstances at hand.

4 6. How are satellite earth stations and submarine cable landings regulated? In case of satellite broadcasting information, as to satellite and earth satellite transmitting stations, it will be used to disseminate the program, information about the area covered as well as information about arrangements that the applicant has already reached with the satellite operator. Therefore it is necessary to apply for a license. The holder of a license for providing satellite broadcasting services shall report in advance to the regulatory authority if major changes occur in the type of program, the duration of the program, the number and time scope in case of window programs, as well as in the dissemination of programs via other satellites. The regulatory authority shall approve the changes. Submarine cable landings are not specifically regulated in Austria. 7. How is the radio spectrum generally regulated? Radio broadcasting based on analog terrestrial transmission technologies (specifically FM radio in the 87.5 to MHz range) requires a license, especially as it is necessary to allocate scarce frequency resources (transmission capacities) among multiple applicants. Radio licenses are generally put out to public tender once the tenyear validity period of existing licenses has passed or when a license becomes available for other reasons (e.g., relinquishment or revocation). In cases where interested parties identify additional frequencies, they are first subjected to a technical review by KommAustria. If this review shows that it is technically feasible to use the frequencies, they are generally put out to public tender. A license for new frequencies is issued by way of a selection procedure which mainly serves to identify the radio station most likely to ensure a greater diversity of opinions aired in the medium. New or released frequencies can also be allocated to existing radio broadcasters in order to improve or expand their coverage areas. The administration of Austria's frequency spectrum is divided among various authorities according to certain criteria basically following a distinction of in three levels: general frequency administration, the allocation of frequencies to specific users, and the licensing of specific radio systems. The Federal Minister of Transport, Innovation and Technology enacts the frequency usage plan and the frequency allocation plan defining specifications with regard to the use of the frequency spectrum. General frequency administration which also includes the coordination of frequency usage with neighbouring countries is handled by the KommAustria for the spectrum designated for broadcasting in the frequency usage plan and frequency allocation plan. The remainder of the spectrum is administered by the Federal Ministry of Transport, Innovation and Technology itself. 8. Are any operators granted exclusivity?

5 In general, all operators are treated equally and are not vested with special rights, preferential treatment or rights of exclusivity. Any procedures for the allocation and use of scarce resources, including frequencies, numbers and rights of way, will be carried out in an objective, timely, transparent and non-discriminatory manner. The current state of allocated frequency bands is made publicly available, but detailed identification of frequencies allocated for specific government uses is not required. 9. Are anti-competitive practices subject to regulation or general competition (e.g., antitrust) laws? The Austrian regulations aims to ensure fair and functioning competition on the telecommunications market. In this context, the main priority is to ensure high-quality and innovative telecommunications services. In order to enable competition between alternative service providers and companies with significant market power on the relevant markets, the regulatory authority can subject companies with significant market power to an obligation to provide access to their telecommunications networks and to unbundled parts thereof. At the same time, every operator of a public communications network is obliged to provide other operators of such networks with an interconnection offer upon request. Penal sanctions are imposed in case of breach of statutory duties or instructions of regulatory bodies. General competition and antitrust laws do apply to companies operating in the telecommunications market and are not superseded by the aforementioned laws. 10. What services have been liberalized or designated as competitive services? Since January 1998 all services with respect to telecommunication are - also in accordance with the EU law - liberalized. Before that date Telekom Austria had a monopoly position on the setting up and the operation of telecommunication networks as well as the provision of voice telephone, telegraph and telex services. 11. Are there regulated tariffs or price lists? If so, for what types of services? Communications network operators and service providers are required to report their general terms and conditions of business as well as their conditions regarding rates and charges to the regulatory authority, whereby the operators of broadcasting networks are exempt from this obligation. Please note that general terms and conditions are only published in cases where the Telekom-Control Commission has not decided to raise an objection to the terms and conditions under Section 25 subsection 6 in conjunction with Section 117 number 3 TKG In addition Section 42 subsection 1 determines that the regulatory authority identifies that an undertaking with significant market power might sustain prices at an excessively high level, or apply a price squeeze, to the detriment of end-users, the regulatory authority may impose obligations relating to cost recovery and price controls.

6 12. Are there restrictions on foreign investment in any types of communications companies? If so, what are the restrictions? Any (natural or legal) person is entitled to provide communication networks and services as long as the relevant provisions relating to the respective business activity are observed. Austrian laws no longer require a license or concession for the provision of communications networks. However, the Austrian Telecommunications Act 2003 stipulates that any intended provision of a public communications network or service as well as its modifications and its termination shall be notified to the regulatory authority prior to the start of operation, modification or termination. As to radio and television broadcasting services, limitations apply insofar as operators or their members must be Austrian citizens or legal entities or sole proprietorships or partnerships under commercial law domiciled in Austria. A maximum of 49 percent of a company's shares may be held by a person of foreign nationality or a legal entity or sole proprietorship or partnership under the general control of such foreign person. 13. What are the approval processes for mergers and acquisitions? Do these vary by type of operator? As far as communications services are concerned, Austrian law does not prevent mergers and acquisitions or foresee any special provisions on the transfer of telecommunications businesses or business units other than general merger approval provisions. Since any person is entitled to operate and to provide communications networks and services as long as such networks and services are operated and provided within the requirements of the law, mergers and acquisitions of companies, businesses and undertakings is not restricted. However, such transaction should in any case be notified to the regulatory authority prior to the transaction's closing. As to radio and television broadcasting services, mergers and acquisitions and in general the transfer of shareholdings in companies having a license to broadcast radio or television programs are to be notified to the regulatory authority. In case of a change of control in such operator, a transaction may require prior approval of the regulatory authority. In particular, whenever more than 50 percent of an operator's shares as existing at the time of granting of the license are being transferred or such threshold is exceeded in the course of restructuring measures or subsequent transfers of shares to third parties, the operator shall disclose such transfer to the regulatory authority in advance. The regulatory authority shall determine whether the legal requirements for awarding the license are being complied with under the changed circumstances. The licence will be revoked if the operator has transferred any shares or has set restructuring measures having similar effect in case of a violation of this obligation. 14. Is interconnection between carriers mandatory?

7 Every operator of a public communications network is obliged to provide an interconnection offer to other providers upon their request. Should the providers fail in achieving an agreement on the requested interconnection, either party may resort to the regulatory authority. In such case the regulatory authority is authorised to issue an order in which it defines the terms and conditions of the requested interconnection as a substitute for the required interconnection agreement. 15. Are interconnection fees/rates regulated? Interconnection fees are also regulated in Austria. A provider can initiate a proceedings with the regulatory authority to set interconnection fees to be charged by a provider that exceed the traffic mode fees of another provider. 16. Must carriers make available network components to competitors? If so, what are fees/prices based on cost, or market rates? The regulatory authority may impose obligations of non-discrimination related to access on undertakings with significant market power. The obligations of nondiscrimination shall ensure, in particular, that an undertaking with significant market power applies equivalent conditions in equivalent circumstances to other undertakings providing equivalent services, and provides services and information to others under the same conditions and of the same quality as it provides for its own services, or those of affiliated undertakings. Prices are determined on a case by case basis by the regulatory authority. In this, the regulatory authority will take into account the investment made by the operator and allow him a reasonable rate of return on capital employed, taking into account the risks involved. In addition, obligations concerning cost accounting systems may be imposed on undertakings with significant market power. 17. Is there an obligation to serve all customers? If yes, is there a fund to subsidize eligible carriers? Which carriers contribute to the fund? Which carriers are eligible to receive these funds? Are broadband services subsidized or otherwise promoted through tax or other incentives? Regarding wireline service providers only there is an obligation to offer universal services under certain circumstances (wireless service providers in any event are not subject to these provisions). At the moment only Telekom Austria, the former monopolist in Austria, is legally appointed by the regulation authority to offer those services because this company commands all infrastructural elements of the telecommunication network on a nationwide basis. In that context universal service is the provision of a minimum set of public services, as outlined below, to all national users at an affordable price regardless of their place of residence or work. In any event, universal service shall comprise the following services:

8 The access to the publicly available telephone service at a fixed location, where also facsimile equipment and a modem can be operated, the provision of an inter-operator directory inquiry service, the preparation of an inter-operator subscriber directory of subscribers of publicly available telephone services as well as the access to this directory, the coverage with public pay telephones on a nationwide basis at general and readily accessible locations, the possibility of emergency calls and landlines. If public financial resources are not sufficient to substitute the cost of universal services, the regulatory authority shall set up and administer a Universal Service Fund for the financing of those services. The Fund shall publish an annual report on its activities and achievements, in which the net costs are presented taking into account market benefits and the shares attributable to the individual undertakings assessed as liable to contribute. Operators of telecommunications services with an annual turnover greater than EUR 5,000,000 from these activities shall contribute to the financing of the Universal Service Fund and to the financing of the fund administration in proportion of their market shares (universal service charge). 18. Are there mandatory requirements to customer agreements (subscriptions, etc.)? The provisions of the Austrian consumer protection regulations are mandatory and will apply also with respect to communication services. Therefore, certain provisions of a contract with a customer will not become effective and may be null and void as provided for by general civil law. Furthermore, the interests of the customer have to be protected by the mandatory transparent setting of rates, terms and conditions and the possibility of out of court settlements before a regulatory authority serving as the mediation body. 19. Are there any general or telecommunication specific requirements as to data retention? The content data, traffic data and location data shall be subject to confidentiality of the communications. Confidentiality of the communications shall also refer to the data of unsuccessful connection attempts. The obligation to issue data security, related to the provision of a public communication service, shall be imposed upon every operator for each service which is provided by him. Master data, traffic data, location data and content data may be collected and processed only for the purposes of providing communications services. The data may be used for the purpose of marketing of communications services or the provision of value added services as well as for other transmissions, only with consent of the data subjects which may be withdrawn at any time. Such use shall be restricted to the

9 necessary extent and the period necessary for marketing. The providers must not make the provision of their services dependent on such consent. 20. Is number portability mandatory? If so, for which types of carriers (e.g., wireline, wireless, voice over internet protocol)? Number porting represents a key element of competition on the communications markets. The Federal Minister of Transport, Innovation and Technology shall, by way of ordinance, specifies detailed provisions relating to the porting of numbers between mobilecommunications networks. Referring to the operator portability it is possible to maintain the same dial number although the costumer has changed the wireline operator. Regarding to mobile number porting both contract and prepaid subscribers are entitled to have their mobile numbers ported, provided the number in question is in service. Concerning VoIP there are no specific regulations determined relating transfering a phone number to another service provider. It is not possible to switch the same call number from a wireline provider to a wireless provider and vice versa. Furthermore the operators shall fix the amount of the charge due for the porting of a number in a cost-oriented way. 21. Is equal access dialing selection mandatory? If yes, for which types of carriers? Yes because the regulatory authority shall require undertakings with significant market power for the provision of connection to and use of the public telephone network at a fixed location to enable their subscribers to access the services of any interconnected provider of publicly available telephone services (i) on a call-by-call basis by dialling a carrier selection code or ( carrier selection approach ) or (ii) by means of pre-selection, with a facility to override any pre-selected choice on a callby-call basis by dialling a carrier selection code ( carrier preselction approach ). Furthermore pricing for access as well as activation fees in connection with carrier selection or carrier pre-selection shall be cost-oriented. Regarding to the provision of interconnection network services other carriers are not compelled to command an own interconnection network because those carriers only have to establish a connection between different user-network interfaces. 22. Is access or other contributions ( ADCs ) required of new entrants? Access means the making available of facilities and/or services to another provider under defined conditions or on either an exclusive or non-exclusive basis. Therefore new entrants have the right to use existing telecommunication networks, if they fulfill

10 all legal requirements. In this context it covers the access to network elements (including ADCs ) and associated facilities or to physical infrastructure, to relevant software systems and to fixed and mobile networks. 23. Is VoIP regulated? If yes, to what extent? According to the working paper of the DG Information Society at the European commission of 14 June 2006 ( The Treatment of Voice over Internet-Protocol (VoIP) under the EU Regulatory Framework ) a VoIP offering that comprises provision of a product (for instance a software program to be run on a personal computer), with no ongoing provision of a service, is not within the scope of the EU regulatory framework, if it does not entail provision of an Electronic Communications Service. Therefore VoIP providers who are running their own address-servers, can be seen as providers of a public communication service. To sum up under Austrian law, the operation/provision of telecommunications networks/services does not require any licences or pre-authorization, but is subject to a notification duty if the services are rendered on a commercial basis (assumed if for consideration) and offered in the public market. Hence, the notification duty does not extend to corporate networks and closed user groups. 24. Are any major changes to telecommunications laws expected in the near future? On 15 July 2009 the Austrian Telecommunication Act was amended. Key changes include the improvement of the broadband, the improvement of the investment in infrastructure, the extension of conduction and sharing rights, faster proceedings and regulations relating to competition. As of today, no specific amendments to existing regulations or the enactment of new legislation is intended so far as can be anticipated. 25. Is resale of telecom services permitted? If yes, is this activity regulated? What is the process to become a reseller? Are foreign companies permitted to be resellers? The resale of telecom services is not considered a communications service, provided that (i) it is only an ancillary service to an otherwise entirely different activity (e.g., accommodation, provision of office space, etc) and (ii) the resold telecom service is not altered technically or commercially by the reseller. In all other cases resale is subject to the general framework of the Austrian regulations and requires, in particular, prior notification to the competent authorities prior to the operation's commencement. There are no (additional or special) restrictions for foreign companies as resellers of communications service, including radio and video broadcasting services.

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