The Regulation of Voice over IP (VoIP) in Europe

Transcription

1 WIK-Consult Final Report Ref. Ares(2013) /09/2013 Study for the European Commission The Regulation of Voice over IP () in Europe Authors: Dieter Elixmann J. Scott Marcus Dr. Christian Wernick WIK-Consult GmbH Rhöndorfer Str Bad Honnef Germany Bad Honnef, March 19, 2008

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3 Study on the Regulation of in Europe I Contents Tables Figures Executive Summary To what degree are the Member States harmonized? What are the impacts on service providers? What are the impacts on the broader economy? What should be done? III III V VI VII VII VIII 1 Introduction 1 2 Previous analyses of regulation in Europe Empirical evidence History of policy recommendations at the European level The European Commission s Public Consultation on (2004) The ERG Common Statement on (2005) The ERG s Common Position on (2007) The European Commission s Review Proposals (2007) 16 3 Status of regulatory requirements regarding in the European Union Authorisation and notification requirement for services Classification of services Calls to emergency services Numbering and number portability Interconnection 37 4 Impacts of regulation on service providers and markets General conditions relevant to market entry Access to Emergency Calls Emergency call numbers Public Safety Answering Points (PSAPs) Routing of emergency calls to the correct PSAP: the traditional PSTN world Routing of emergency calls to the correct PSAP: Approaches regarding Standards groups and access to emergency services 50

4 II Study on the Regulation of in Europe The division of responsibilities among participants in emergency access Implications of the differing emergency call systems in Europe for a operator Numbering and Number Portability Ability to get numbers Geographic numbers vs. non-geographic numbers Number portability Wrap-up Interconnection Lawful Intercept, data retention 60 5 Impacts of regulatory barriers to the Internal Market Policy Objectives and the Commission s Role Costs caused by the differences in regulating Costs on the level of companies providing services Costs on a macroeconomic level The role of third-party intermediaries in the provision of 66 6 Conclusions and recommendations Conclusions Recommendations 70 Bibliography 73 Annex I List of acronyms 75 Annex II Member State Regulation Comparison Matrices 77

5 Study on the Regulation of in Europe III Tables Table 2-1: Table 2-2: Regulatory treatment of numbering and emergency calls in European Member States (as of 2005) 8 Differences in regulatory obligations on in European Member States (as of 2006) 10 Table 3-1: Rights and obligations for ECS providers 23 Table 3-2: Rights and obligations for PATS providers 25 Table 3-3: Classifications of offerings in different Member States 30 Table 3-4: Comparison of regulations on emergency calls in different Member States 34 Table 3-5: Access to numbers in different Member States 37 Table A- 1: Notification requirements for services 79 Table A- 2: Classification of services 82 Table A- 3: Calls to emergency services 87 Table A- 4: Numbering and number portability 96 Table A- 5: Interconnection 105 Table A- 6: Codes of practice and future legislation 117 Figures Figure 3-1: The implications of ECS, PATS and Universal Service for regulation (stylized view) 22 Figure 4-1: Emergency call system in the UK (stylized facts) 47

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7 Study on the Regulation of in Europe V Executive Summary This is the Final Report of a study of the regulation of Voice over IP () conducted on behalf of the European Commission by WIK-Consult GmbH. Cullen International contributed to the project by conducting detailed surveys of the state of regulation of in selected Member States. Specifically, we were asked (1) to evaluate the degree of harmonisation (or lack of it) as regards regulation in the Member States, (2) to consider the degree to which lack of harmonisation might be impairing competitive entry of service providers and thus causing harm to the broader economy, and (3) to make recommendations as to how the Commission could alleviate any problems that we might identify. Not so many years ago, was something of an avant garde plaything for hobbyists. There were few service providers in Europe. No more! Today, large and small operators, incumbents and competitors, are converting their networks to Next Generation Networks (NGNs) and are thus betting their businesses on a successful migration to. At the same time, third party service providers who may not even have a network have developed a firm foothold. IP has become the heart of the telecommunications network. With that evolution, has become mainstream. These changes in the milieu parallel the evolving nature of the regulatory environment. In 2004 and 2005, when the European Commission and the European Regulators Group (ERG) held their first public consultations on, was much less prominent in the marketplace, and the associated regulatory challenges were not yet fully understood by all of the regulatory levels involved; today, however, as a regulatory topic is taking centre stage. The earlier examinations of regulation tended to take an extremely light touch, arguing rightly, in our view that regulation would have been premature, that the technology and the marketplace were still evolving too rapidly. The earlier assessments identified a number of regulatory challenges generally the very same regulatory challenges that regulators continue to struggle with today but chose not to impose regulatory solutions at the time, in order to allow market players to come forward with solutions.. This light touch approach provided a window of opportunity for market players to attempt to resolve the identified challenges. Today, many of these regulatory challenges still remain. It is now appropriate and timely in our view to take further steps to enhance harmonisation of the regulation of.

8 VI Study on the Regulation of in Europe To what degree are the Member States harmonized? From the first, the Commission and the ERG concluded that, even though most aspects of the regulatory framework were well equipped to deal with the migration to, there would nonetheless likely be problems in a number of specific areas, including: Numbering and number portability; Access to emergency services; Interconnection; and Lawful intercept. We attempted to assess harmonisation among the Member States in each of these areas, and others as well, through (1) a detailed survey of regulation and law in ten selected Member States, conducted on behalf of the project by Cullen International, an independent firm that specializes in regulatory surveys; (2) stakeholder interviews; and (3) desk research. What we found was that, in each of the areas noted above, there were significant differences from one Member State to the next. Rules regarding the ability of service providers to obtain geographic versus nongeographic numbers were highly diverse, and confusing. 1 Our interviews suggest that NRAs do not consistently provide timely response to requests for numbers, even though they are required to by the Authorisation Directive. Rules regarding number portability are also diverse. Implementing access to emergency services is a challenge in view of the very different emergency systems 2 across Europe. In particular, access to emergency services can be extremely difficult for -based service providers to the extent that their customers can move (i.e. are nomadic). If the customer s location cannot be reliably determined through automated means, it is impossible to complete an emergency call to the proper emergency response unit, and it is also impossible to reliably report the user s whereabouts. Technical solutions are improving over time, but gaps are likely to remain for a long time to come. 1 Our interview results suggest that it is even more difficult for a -based service provider to obtain mobile numbers. 2 The emergency systems in Europe differ e.g. with respect to the actual number of emergency numbers, the regional organisation of PSAPs (Public Safety Answering Points), and the way routing to the correct PSAP is organized.

9 Study on the Regulation of in Europe VII Many experts anticipated that network interconnection would evolve over time to IP-to- IP interconnection, but for a variety of economic reasons this has not yet happened. 3 Meanwhile, even in Member States where regulations are reasonably technologically neutral, outdated and inefficient restrictions are often embodied in Reference Interconnection Orders (RIO) that were written for the old fixed network (the PSTN), and that did not consider IP-based interconnection. These restrictions often imply the need to maintain voice switches or physical points of interconnection in-country that the service provider would not otherwise require. Finally, while lawful intercept was not formally a focus of our study, it came up in interview after interview. In terms of the technology used, Member States seem to be reasonably well harmonised, but in terms of the many procedures used (for initiating an intercept, for example, and for conveying data to authorities) there seem to be substantial differences. What are the impacts on service providers? Impacts on service providers whom we interviewed were substantial in many cases, but varied greatly as a function of the nature of the service provider s business plan. Most providers were heavily dependent on the availability of geographic numbers. Uncertainty, delay, or outright unavailability of geographic numbers could lead to a decision not to enter the market in the Member State in question. Lack of harmonisation of requirements for emergency services and lawful intercept came up in most interviews as a source of cost and uncertainty. Some interviewees spoke of obligations to maintain a voice switch or an unreasonable number of points of interconnect in order to obtain interconnect as a barrier. Regulatory obligations seem to be reasonably transparent, but several interviewees spoke of the difficulty in obtaining a clear view of more subtle requirements, including (1) interconnection obligations implied in RIOs, and (2) lawful intercept obligations. What are the impacts on the broader economy? There are a wide range of potential impacts. In our assessment, we have attempted to identify those that affect service providers differently from traditional voice service providers, and to those that are directly traceable to lack of regulatory harmonisation. 3 See Marcus et. al. (2008).

10 VIII Study on the Regulation of in Europe For service providers, lack of harmonisation often leads to a decision to enter the market in fewer Member States than would otherwise be the case. The service provider thus foregoes the revenues it otherwise would have achieved in the avoided Member States. The service provider also misses out on potential economies of scale. The impacts to society at large are harder to directly measure, but potentially much larger. To the extent that there is less competitive entry, this will tend (other things being equal) to imply that consumers have less choice, and that price/performance and quality of offerings available to them are inferior to those that would be available in a market where competition was more fully effective. What should be done? Our recommendations are as follows: Access to numbers: In order to achieve the pro-competitive goals of the Authorisation Directive, bureaucratic hurdles to obtaining numbers need to be reduced if not eliminated. The duration for a response to a request for numbers should not exceed the levels specified in Articles 4 and 5 of the Authorisation Directive, and effective recourse must be available to the ECS provider. 4 Geographic versus non-geographic numbers: Numbering plans should be technologically neutral. Geographical numbers for traditional telephony services and geographical numbers for services (including nomadic services) should share the same number range. In light of the substantial and longstanding inconsistencies in this area, and the significant impact that these inconsistencies already have on service providers, the Commission should consider reinforcing these aspects of ERG (2007) with suitable technical implementing measures using its existing authority under Articles 10(4), 19(2) and 22(3) of the Framework Directive. Emergency services: The Commission should require Member States to ensure that any providers of a service available to the public for originating national calls through a number or numbers in a national telephone numbering plan provide access to emergency services. 5 Such providers should also be required to make caller location information available to authorities handling emergencies, to the extent technically feasible. Reasonable transition periods should be al- 4 The Authorisation Directive permits a service provider to proceed as if authorized in the event that national authorities fail to promptly respond to a Notification. Since the service provider cannot do the same for numbers, an alternative mechanism is needed. 5 The phrasing intentionally follows that of the Commission s proposed amendments to the Universal Service Directive, which are generally appropriate in our view; however, we see no need to impose the obligation on services that are used solely for international calls.

11 Study on the Regulation of in Europe IX lowed. Such providers should be obliged to clearly inform subscribers about any limitations in the access to emergency services they offer, as compared to that offered by the traditional telephony service. To the extent that location determination depends on the subscriber s own actions, it is crucial that the subscriber be educated and informed as to the obligations that he or she must undertake to keep this location information current. The Commission (with the ongoing support of the European Regulators Group (ERG) and the Expert Group on Emergency Access (EGEA)) should continue to monitor developments as regards technical standards and actual deployment in regard to access to emergency services. In particular, at such time as a deployment of enhanced Public Safety Access Points (PSAPs) is ripe (especially a migration of the PSAPs to IP), some level of European coordination will be necessary and appropriate. Scant attention has been paid to date to nomadic use from a Member State other than the one for which the service was intended, either with or without the permission of the service provider. Today, access to emergency services will not work in such an environment; however, in a future world operating under ECRIT standards, access to emergency services could in principle be supported. We view this as an area for future study. Interconnection and call termination: This is a large and complex topic in its own right. Our assessment and our detailed recommendations appear in Marcus et. al. (2008), another report for the European Commission. Lawful intercept: Our interviews suggest problems in the area of lawful intercept (at a procedural level, not necessarily in terms of technical standards). Lawful intercept was not an explicit part of our remit. We think that further study is warranted under the auspices of some organisation with an appropriate charter, possibly ENISA.

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13 Study on the Regulation of in Europe 1 1 Introduction The replacement of the traditional PSTN (public switched telephone network) by packetoriented TCP/IP (Transmission Control Protocol/ Internet Protocol) network infrastructure causes technical challenges and affects general market development, business strategies, and sector specific regulation. Due to its potential in stimulating competition, reducing operators costs, and furthering new and innovative services for citizens, voice over Internet Protocol () takes centre stage of recent debates on the future of telecommunications as it is expected to be able to shape the nature of the whole ICT sector. In this report, we define as the delivery of voice services over networks based wholly or partly on Internet Protocol. 6 This definition allows a variety of business models by means of which these voice services are actually provided. One key distinction between business models is to differentiate between Voice over Broadband (access lines) and Voice over Internet. Roughly speaking, Voice over Broadband (VoB) combines the offering of a broadband access line (e.g. via DSL technology or cable modem) with the provision of voice services by a single company. Voice over Internet (VoI), however, physically requires that the end user has broadband access. From an institutional perspective, the provider of the access line and the provider of the VoI voice services are not necessarily the same. Rather, the provider of VoI voice services offers its services on top of the infrastructure of some other network operator. A slightly different characterization of VoB and VoI is the following: VoB comprises non-nomadic services (sold as bundles with high speed Internet connectivity), while VoI can support nomadic use. Another distinguishing characteristic is whether there is outgoing or incoming access to/from the PSTN. To this end ERG (2006) identifies the following types of : 1. services in corporate private networks limited to internal communications within large companies; 2. services which are used within public operator s core networks that do not impinge on retail offers to customers nor their quality; 3. Services or software from which there is no access to or from the PSTN and where E.164 numbers are not provided; 4. Services where there is outgoing access to the PSTN only and E.164 numbers are not provided; 6 See ERG (2006).

14 2 Study on the Regulation of in Europe 5. Services where there is incoming access from the PSTN only and E.164 numbers are provided; 6. Services where there is incoming and outgoing access to the PSTN and E.164 numbers are provided. 7 All of these models are visible in the marketplace today. services in corporate private networks (type no. 1) are widely used by multi-national corporations. These services actually might be provided in-house or by a third party (e.g. a carrier) which operates the company network. Many telecommunications carriers are in the process of migrating their core networks to IP (or have already finished). Thus, services which are used within public operator s core networks (type no. 2) are more and more prevalent in the telecommunications market. An example for type no. 3, i.e. services or software from which there is no access to or from the PSTN, is the original Skype (peer-to-peer) service. Examples for types 4 and 5 are SkypeOut and SkypeIn, respectively. Type no. 6 is pursued by many facilities-based carriers in the telecommunications market. These various business models intersect with the European framework for electronic communications in different ways. 8 Corporate private networks (type 1) fall within the scope of electronic communications networks as defined in the Framework Directive, and thus are generally within the scope of the regulatory framework; however, they are not publicly available, and consequently are subject to few if any regulatory obligations. Services in the operators core networks (type 2) are fully covered by the framework under the principle of technological neutrality, they would tend in general to be regulated the same as the PSTN. products like peer-to-peer Skype that do not access the PSTN (type 3), and for which there is not a true service provider in the normal sense, are largely outside the scope of telecommunications regulation except to the extent that the equipment and software used to implement them might be subject to regulation. Publicly available Voice over IP services, with access to and/or from E.164 telephone numbers (types 4, 5, and 6) tend to fall squarely within the European framework for electronic communications and thus take centre stage in this report s examination of the effects of possibly inconsistent regulation on the diffusion of in the European Member States. Regarding type 6, it is useful to distinguish between VoB and VoI (as characterized above). A number of recent market definitions and proceedings distinguish between VoI and VoB. This distinction is very relevant in Chapter 3 of this report, where we review the consequences of regulatory obligations on different types of operators. 7 See ERG (2006). 8 See EU-Commission (2004).

15 Study on the Regulation of in Europe 3 As demonstrates the potential to substitute for traditional telecommunications services, which are subject to a common European regulatory framework, much attention has to be paid on the types and extent of regulations imposed on those operators. This is a challenging task, as regulators face complex trade-offs. On the one hand, they have to ensure a level playing field between existing operators and new entrants against the backdrop of technological neutrality. On the other hand they should strive to avoid overshooting the mark with heavy-handed, disproportionate regulatory intervention that might stifle innovation. As a further complication for the regulator, some obligations that are already well addressed within the fixed network (PSTN) and the mobile network (PLMN) are difficult to implement with to the extent that the costs are different, an obligation that was proportionate for PSTN operators cannot automatically be assumed to be proportionate for -based service providers. Conspicuous examples include (1) provision of access to emergency services, and (2) lawful intercept, both of which can be notably more difficult under. In both cases, solutions have evolved over time, and they continue to improve; however, had NRAs mandated an immediate obligation to implement support exactly identical to that of the PSTN in 2004, the likely result would have been to impair or perhaps to totally preclude competitive entry on the part of service providers (this "light regulatory touch" approach was introduced back in 2004 when the Commission first examined regulation in its public consultation and information document). The need to strike the right balance among these divergent goals has led to intense and recurring discussion between the Commission, the national regulatory authorities (NRAs), and the ERG. This challenge is reflected in a number of consultant reports 9 and official documents by the Commission and the NRAs. 10 In the discussions to date, the following issues should be viewed as the most controversial and critical regarding the regulatory environment for service provision: Authorisation and notification requirements; Classification of services; Access to emergency services; Numbering and number portability; Interconnection. These issues are therefore central to the present report. 9 See, e.g., Analysis (2004), Stratix (2003). 10 See for example EU-Commission (2005), ERG (2007), ERG (2006), ERG (2005).

16 4 Study on the Regulation of in Europe Several factors suggest that a deeper analysis of differences in regulation of on the national level and their consequences on the diffusion of services is appropriate and timely: Increasing broadband penetration, which is a core driver of usage; Large quality improvements enabling operators to offer calls at a quality comparable or potentially even superior to that of PSTN based telephony, furthering its market potential; Ongoing technical improvements in the ability of to conform to regulatory needs such as access to emergency services; Incumbents and facility-based entrants investing large sums in the roll-out of IPbased next generation networks; New -based applications enabling innovative business models and sources for growth and revenue as well as potential for cost savings; An increasing availability of stand-alone ( naked ) DSL in the EU Member States 11 enabling new entrants to offer services; The recent review of the European Framework for Electronic Communications scrutinizing existing regulatory obligations in view of changing market conditions and seeking to provide an appropriate framework for the coming years; The political aim to establish a single European market characterised by consistent conditions of competition; Actual experiences gained since NRAs started dealing with in 2004 allowing interim conclusions on the effectiveness of certain regulatory obligations. It is fair to state that there is a wide agreement on the potential merits of in the context of a common regulatory framework. The present report therefore focuses on the current characteristics of regulation in the Member States. We compare the approaches (classifications and obligations) pursued by NRAs. To the extent that different regimes prevail across the Member States, these inconsistencies could act both as a barrier to market entry and a hindrance on the road to a single market. It is therefore vital to analyse the consequences of different regulatory measures on market diffusion of services and to identify best practices which can serve as a guideline for policy recommendations. To this end, the present report identifies and assesses challenges 11 As of 2007 naked DSL is available in practice in about half the Western European Member States (usually over bitstream access but not (yet) over shared LLU). Naked DSL is not available in practice in most CEE Member States.

17 Study on the Regulation of in Europe 5 and opportunities for operators with regard to the regulation within a Member State and with regard to differing regulatory approaches across Member States. Do these differences constitute barriers to the deployment of services? Do these differences limit or prevent the proliferation of multi-national operators offering their services throughout the EU, thus hampering competition with its welfare enhancing consequences? What are the costs associated with these regulatory barriers from a macroeconomic point of view? From a methodological perspective the present study is based on three pillars: Desk research of relevant documents published so far; Investigation of the current regulatory conditions regarding in Member States; Interviews with market participants (mirroring different business models). The desk research focuses on the examination of official documents from various institutions, such as ERG s 2005 Common Position on 12, ERG s 2006 report on and Consumer Issues 13, the OECD s 2006 report : Developments in the Market 14, ERG s 2007 common position on 15 and relevant material published by the Commission 16 and national regulators 17. Furthermore, we have evaluated academic journals, company websites and relevant online databases. As a key part of this study, we engaged Cullen International to provide detailed empirical evidence about the current status of regulation in the Member States. In cooperation with the Commission, we chose ten Member States for a thorough bottom-up analysis: Austria, Denmark, Estonia, France, Germany, Italy, the Netherlands, Poland, Spain and UK. Cullen International has collected and compiled detailed information for each of these countries and has compiled the data into a series of data collection matrices. This basic information serves as a cornerstone of our assessment of the difficulties in establishing and maintaining a service in a given Member State. The matrices appear in full detail in an annex to this report. The country data collected by Cullen International and presented in the six tables in the Annex was reviewed and commented on by the NRAs in all of the countries surveyed. The Polish regulator, UKE, was the only NRA not to respond. 12 See ERG (2005). 13 See ERG (2006). 14 See OECD (2006). 15 See ERG (2007). 16 See EU-Commission (2004), EU-Commission (2005a). 17 See e.g. Ofcom (2006), Bundesnetzagentur (2005).

18 6 Study on the Regulation of in Europe Cullen International s role in this study was limited to the collection of country data. It has not been involved in detailed assessment of the data, nor in developing the recommendations presented in this report. In selecting interviewees, we have tried to capture a broad range of market participants whose activities are based on different business models. Interviews have been conducted with Arcor (a national carrier in Germany which is a subsidiary of Vodafone), British Telecom (Germany), Deutsche Telekom AG, Easynet (provider of managed networks, managed hosting, managed Internet and wholesale throughout Europe), Global Crossing (provider of a fully integrated and interoperable suite of IP and legacy services throughout Europe), SipGate (non-facilities based service provider with activities in Austria, Germany, and the UK), Skype (worldwide), Telefonica (Germany), Truphone (mobile WiFi/GSM operator located in the UK), VATM (the German Association of Telecommunications and Value-Added Service Providers), Verizon (European branch of the American carrier focusing in Europe on business customers and carrier s carrier services), and Vonage (non-facilities based service provider with activities in the UK and the U.S.). We carried out the survey, the interviews and the assessment of the different national regulatory regimes and market entry challenges in different Member States during the period November 2007 January Thus, all of the empirical information provided in this report provides a consistent picture reflecting the state of regulation in the selected Member States as of the end of Our desk research, however, includes some statistics reflecting earlier periods, when deployment and regulation was less mature. The report is organized as follows: Chapter 2 gives an overview of previous analyses of regulation in Europe. We present both empirical evidence regarding differences in regulation and a history of policy recommendations at the European level. Chapter 3 analyses the current regulatory environment regarding the provision of services in Europe. This chapter in particular provides the results of our in-depth examination of regulation in the ten Member States. Chapter 4 combines this empirical evidence with the results of interviews with market participants conducted in the frame of the present study. This chapter in particular analyses which specific challenges for the implementation and launch of a multi-national or pan-european service are brought about by the differences in the regulation of. Moreover, this chapter addresses the extent to which the differences might act as entry barriers. Based on this analysis Chapter 5 aims at estimating (in a qualitative way) the costs associated with those differences representing barriers for entry and further development. Finally, Chapter 6 contains our conclusions and policy recommendations. Note that the opinions expressed in this study are those of the authors and do not necessarily reflect the views of the European Commission.

19 Study on the Regulation of in Europe 7 2 Previous analyses of regulation in Europe 2.1 Empirical evidence This Chapter focuses on specific international comparisons addressing economic and regulatory aspects of which have been provided in the past by the OECD and the ERG. OECD (2006) OECD (2006) analysed the development of services in OECD countries and identifies the classification of the application/service, interconnection, possible market entry barriers, numbering, universal service issues, customer protection, privacy protection, emergency call capabilities, law enforcement issues, and technical safeguards as the relevant issues that need to be addressed. 18 However, apart from useful case studies on the development of in OECD countries, the report makes no recommendations on specific policies or regulations. ERG (2005) In its 2005 common statement, the ERG highlighted differences in the regulatory treatment of services as regards numbering and number portability as well as access to emergency services across 25 Member States. 19 Table 2-1 comprises the relevant information regarding the regulatory treatment of numbering and emergency calls derived in ERG (2005). In 2005, geographic number ranges were available to operators in eighteen European countries. Seven of them asked operators to fulfil miscellaneous requirements. Five EU Member States did not allocate geographic numbers to services. Different regulations applied at the time to the nomadic use of services. Six European countries allowed services with geographic numbers from locations differing from their fixed home location. Another group of six countries did not allocate any geographic numbers to nomadic use. In three countries, geographic numbers for nomadic use were partially allowed, while seven NRAs were reviewing the subject. Similar differences could be observed looking at national regulations as regards access to emergency services. 14 out of a total of 17 countries under observation mandated emergency calls to be routed to an appropriate emergency response centre. Furthermore, the provision of the caller location (at least if technically feasible) was mandated in most of them. 18 See OECD (2006), p See ERG (2005).

20 8 Study on the Regulation of in Europe Table 2-1: Regulatory treatment of numbering and emergency calls in European Member States (as of 2005) Country Are geographic numbers allocated to services? Is it allowed to use a geographic number for nomadic voice services? Are there legal requirements to route emergency calls to appropriate emergency response centres? Are there legal requirement to provide the location information of the caller? Austria Yes, in connection with certain requirements Not Allowed Yes (technical and commercial possibilities has to be taken into account) Yes those information data, which are processed in a communications network Belgium Yes Allowed Bulgaria Cyprus Yes, in connection with certain requirements No (under review) Not Allowed Under Review Czech Republic No Not Allowed Yes Yes Denmark Yes (Service Providers must terminate calls immediately in the network of the USP, USP delivers calls to the nearest emergency centre) Yes can be based on agreement between USP and emergency authorities Estonia No No Yes, if technically possible Finland Yes Allowed Yes Yes, if technically possible, with the best accuracy the communications provider provides for business purposes France Yes Partially Allowed Yes Yes, if technically possible Germany Yes Under Review Yes N/A, ordinance and technical directive in preparation Greece Yes No Interest so far Hungary Yes Not Allowed No Yes Iceland Under review Under Review Yes No Ireland Yes Allowed Call is delivered to the nearest appropriate emergency service centre Yes, if technically feasible Malta Yes, in connection with certain requirements (under review) Allowed

21 Study on the Regulation of in Europe 9 Country Are geographic numbers allocated to services? Is it allowed to use a geographic number for nomadic voice services? Are there legal requirements to route emergency calls to appropriate emergency response centres? Are there legal requirement to provide the location information of the caller? The Netherlands Yes, in connection with certain requirements Partially Allowed Norway Yes Partially Allowed Yes Yes, however, on application, providers of public telephone services may be given time-limited exceptions to the duty to offer origination marking Poland No Under Review Yes Yes Portugal Romania Yes, in connection with certain requirements Open, in connection with certain requirements Not Allowed Yes No Under Review Yes The Operator could be obliged to provide the CLI in case of 112 calls, at the request of the authorities, under conditions set out by the Romanian Ombudsman Slovenia No Under Review Spain Yes, in connection with certain requirements Not Allowed Sweden Yes Under Review Yes Yes, if technically feasible Switzerland Yes Allowed Yes Yes UK Yes Allowed No Yes, if technically feasible Source: ERG (2005) ERG (2005) underlines the principle of technological neutrality. With regard to numbering, the ERG claims that the same number ranges should in principle be available for both traditional voice and services. Moreover, it is recommended that the conditions concerning number portability should be equal for similar types of voice services. 20 Furthermore, the ERG highlights the importance of access to emergency services for the public. Overall, however, it is fair to state that ERG (2005) remains reluctant with regard to concrete policy recommendations, see section for more details. 20 See ERG (2005), p. 8.

22 10 Study on the Regulation of in Europe ERG (2006) In its 2006 report, the ERG 21 examined access to emergency services, numbering and number portability, tariffs, Quality of Service, and cross-border issues for 25 European Member States. Again, large differences on the national level are visible. Some of them are highlighted in Table 2-2. The table shows that a majority of Member States obliged operators to inform their customers of any limitations with regard to emergency services in In some countries, these obligations were under discussion. Several countries allowed providers to offer both geographic and non-geographic numbers to end-users regardless of whether the service is PATS/non PATS or fixed/nomadic. Other countries limited the availability of geographic numbers to certain types of and offered only non-geographic numbers to those operators not fulfilling the given criteria. Finally, different rules and restrictions pertained to number portability. Table 2-2: Differences in regulatory obligations on in European Member States (as of 2006) Country Obligations on operators to inform their customers on limitations of their service? Allocation of geographic numbers to operators? Restriction of Number Portability? Austria Limited to fixed location Only PATS Belgium Yes For nomadic services Only PATS Cyprus Under review Under review Czech Republic Yes Limited to PATS Only PATS Denmark Regulation prepared Non-geographic numbering plan Estonia Recommended Non-geographic numbering plan Only PATS Finland Yes No limitation Only PATS Germany Under scrutiny No limitation No restriction Greece Regulation prepared No limitation Not imposed yet Hungary Yes Limited to fixed location Only PATS Ireland Yes No limitation Italy Yes Limited to fixed location No restriction Hungary Yes Lithuania No limitation No restriction Malta Recommended Non-geographic number- Only PATS 21 See ERG (2006).

23 Study on the Regulation of in Europe 11 Country Obligations on operators to inform their customers on limitations of their service? Allocation of geographic numbers to operators? Restriction of Number Portability? ing plan The Netherlands Limited to fixed location Norway Yes Limited to fixed location Limited to geographic numbers at fixed locations Portugal Yes Limited to fixed location Slovenia Yes No limitation Spain Yes No limitation Not imposed yet Sweden Regulation prepared No limitation Only PATS Switzerland Yes Limited to fixed location No restriction UK Consultation ongoing No limitation Only PATS Source: ERG (2006) As regards emergency services and numbering and number portability, the ERG concludes: Despite certain degrees of variance regarding the means - stemming from different legal cultures and nuances in the transposition of the NRF - there seems to be common ground for further integration in the near future in the Principles of Implementation and Best Practice which seems worth exploring. 22 Furthermore, it is clear that Member States have had little experience with cross-border consumer complaints. 23 However, apart from the useful overview on the status quo in the Member States, the actual policy recommendations of ERG (2006) are rather vague and limited, too. Wrap up These brief snapshots highlight that there were important differences in the regulatory treatment of services in 2005 and in This is not surprising given the various changes and challenges associated with the switch-over from a PSTN to an IP-based communications world and the wide scope of regulatory discretion given to the NRAs in the 2002 Framework. The differences in the past underscore in particular the value of an in-depth examination of the current conditions surrounding in order to be able to reach sound and pertinent conclusions regarding potential policy actions going forward. 22 ERG (2006), p See Ibid.

24 12 Study on the Regulation of in Europe 2.2 History of policy recommendations at the European level The regulation of has been studied extensively by the European Commission (in 2004), the European Regulators Group (ERG) (in 2005, 2006 and 2007), and by various National Regulatory Authorities (NRAs). The thinking has visibly evolved over time, along with the market and the technology. Nonetheless, there are common threads. Indeed, it is striking that many common themes (including numbering, emergency services, interconnection, and lawful intercept) are visible in the earliest assessments, carry through the intermediate analyses, and continue to be relevant in this report The European Commission s Public Consultation on (2004) The European Commission s 2004 public consultation on 24 was the first major regulatory exploration of the applicability to the then-new European regulatory framework for electronic communications to Voice over IP. 25 The new framework had been crafted with convergence in mind, so represented an important initial test case for the new framework. The consultation document recognised (as have most or all assessments since) that there are many forms of, and that it would not be appropriate to impose the same obligations on all of them. It also recognised that some services would fall within the definition of Publicly Available Telephone Service (PATS), that others would be properly viewed as publicly available Electronic Communications Services (ECS), and still others (for example, those implemented through software running on a personal computer, with no ability to access E.164 telephone numbers) were neither PATS nor ECS. The consultation document explored a number of regulatory issues, including authorisation, universal service, and means to deal with market power. In each of these areas, a straightforward application of the regulatory framework seemed to be reasonably straightforward. For interconnection, the consultation document recognised that arrangements would likely migrate over time to pure IP-to-IP interconnection, but did not identify particular problems. 24 EU-Commission (2004). 25 The Commission had, however, issued brief guidance in 1998 and again in 2000 as to the applicability of the former regulatory arrangements.

25 Study on the Regulation of in Europe 13 The areas that required more intense analysis were: Access to emergency services; The ability to use geographic or non-geographic numbers (and to exercise number portability); Integrity and availability of the network; Privacy, security and lawful intercept. For emergency services, the consultation document identified the issues that regulators continue to grapple with to this day most notably, that the user s location (particularly in the case of nomadic users, whose location may change over time) is not reliably and unambiguously known. The document called for obligations in the case of PATS providers, and to the extent feasible in the case of ECS providers, but in all cases with a clear recognition that regulators should not impose undue or disproportionate burdens. For integrity at fixed locations, the consultation document noted that the Universal Service Directive had not fully considered the possibility that a voice service provider might not control the underlying network, and might therefore have little or no ability to ensure network integrity. It also noted that power outages could effectively impact network access. In the case of access to emergency services, and also in the case of network integrity in the face of power outages, the consultation document sees a role for service providers in informing customers of the degree to which their respective services differ from the traditional networks with which the customer is likely familiar. For numbers, the document encouraged regulators to make geographic and nongeographic numbers available to service providers who requested them. It noted that the availability of geographic numbers could well be critical to the viability of service providers. It observed that, under the regulatory framework, only users of PATS had the right to port their numbers. The consultation document noted that security and privacy obligations apply to services, much as they do to conventional voice services. The document touched only lightly on lawful intercept, inasmuch as this is a matter of national rather than European competence; however, it did note the potential value of common standards.

26 14 Study on the Regulation of in Europe The ERG Common Statement on (2005) The 2005 Common Statement on 26 emphasized the need to seek a balance among different policy objectives (promotion of competition, development of an internal market and promotion of interests of citizens) against the background of a regulatory practice which had historically been focused on a different technology. Consequently, the Common Statement highlights the need to focus on the regulatory principles of objectivity, technological neutrality, transparency, non-discrimination and proportionality. 27 Although was in its early days at the time the statement was published, ERG (2005) already provides some important and wide-ranging recommendations. For its day, the ERG Common Statement of 2005 should be viewed as setting important and forward-looking principles. At the same time, it can also be viewed as a consensus document that stops short of reaching firm conclusions on the more contentious issues. In order to foster competition by stimulating the emergence of new services as well as promoting number portability, ERG (2005) calls for technologically neutral numbering plans based on service descriptions. Consequently, the same number ranges should in principle be available for both traditional voice and services. Moreover, conditions concerning number portability should be equal for similar types of voice services in order to facilitate consumer choice and promote effective competition. 28 The Common Statement arrived at a number of important conclusions with regard to access to emergency calls. The ERG emphasized the importance of access to emergency calls, and therefore recommended that NRAs require operators to inform end-users about any restrictions in routing emergency calls and in providing caller location information. emergency calls from fixed locations should be routed to the nearest emergency centre, and caller location information should be provided to the extent technically feasible. Finally, the statement suggested that requirements for nomadic services related to routing and caller location information should be discussed further after technology and standards have matured. 29 Given the relatively immature state of the technology and the marketplace at the time, this restraint was appropriate in our view. As will be shown in Chapter 3 of the present report, the issues addressed in ERG (2005) regarding the regulation of numbering and of emergency calls in Europe are still relevant today. 26 See ERG (2005). 27 See Ibid, p See Ibid, p See Ibid, p. 10.

27 Study on the Regulation of in Europe The ERG s Common Position on (2007) In comparison to the earlier reports on published by the ERG, the 2007 report is more concrete in emphasizing the differences between the Member States and in noting areas where there is room for improvement. It notes that, as becomes an increasingly central aspect of new networks, the need for harmonisation takes on progressively greater significance. The Common Position specifically advocates pan- European harmonisation in regard to: Numbering; Number portability; Access to emergency services. Numbering First, regarding numbering the ERG Common Position presents a clear understanding of the current problem: In this area the result of current regulation is a disharmonised allocation and use of geographic numbers, against the increasing demand amongst consumers to use geographic numbers out of area (nomadic use). In fact, some member states permit out of area use and allocation of geographic numbers while others do not. In addition the use of non-geographic numbers specifically allocated to services is an option but could not be the primary choice for the market. The Common Position argues that numbering plans should be technologically neutral, based on the service descriptions, and that the same number ranges should be available within those service descriptions. This means that geographic numbers for traditional telephony services and geographic numbers for services should share the same number range, that is, they should come from a common number pool. 30 Number portability As to number portability the ERG Common Position suggests introducing an obligation to port numbers to any service provider which satisfies the conditions of use of the appropriate number ranges. 31 Access to emergency services With regard to access to emergency calls, the ERG recommends that all telephony service providers should be obliged to provide access to emergency services; to provide location information to the extent technically feasible; to support the emergency calls with priority, quality and availability to the extent technically feasible; and to provide the 30 See Ibid., p See Ibid., p. 23.