Consumer aspects in telecoms regulation

1. Consumer aspects in telecoms regulation Peter Lundy MSc DIC BSc(Eng) Information and Communications Technology consultant November 2008

2. Overview • End user rights in the telecoms legislation • Contract law • Data protection • European legislation on distance contracts,e-commerce and unfair commercial practices • Roles of the telecom regulators

3. Before liberalisation • Before liberalisation, providing telecommunications services was a task of the state • Providing good quality for low price under fair conditions was therefore also a task of the state • but it did not work very well

4. First steps of liberalisation • In a licensing regime, end user rights are often ensured by the licences • Providing good quality for low price is sometimes a criterion for licencing, for example in beauty contests • Fair conditions are often ensured by licence conditions

5. Fully liberalised market • Instead of detailed requirements on quality and price, the state only requires transparency: providers must publish information that consumers can compare • Unfair business methods remain forbidden and the institutional framework against them is strengthened

6. Discussion • Which types of consumer complaints are reported to; • Operators? • Regulators? • Consumer and business associations? • Other bodies?

7. Examples of consumer problems • Prices, how to find cheap services • Unsolicited calls • Mis-selling, changing the operator without consent • Premium rate services, surprisingly high bills, unsubscrubing from premium rate services text messages

8. Terminology • Legal definitions (art. 2 Framework Directive) • User: who uses or requests a service (including providers) • End-user: not including providers • Subscriber: who has the contract • Consumer: who does not use the service for his trade, business or profession

9. Discussion • Telephones used in a family: who is user, who is subscriber? • Internet access by a company: who is user, who is subscriber? • Is a prepaid customer a subscriber? • Is a small („one man“) enterprise a consumer?

10. Affordability of tariffs • Art. 9 Universal Service Directive • No precise definition of „affordable“, reference to „national consumer prices and income“ • Member states may; • require special tariffs for users with low income or special social needs • require geographical averaging

11. Control of expenditure (1) • Art. 10 and Annex I Part A Universal Service Directive; • Itemised billing • Selective call barring • Pre-payment systems • Phased payment of connection fees • Non-payment of bills

12. Control of expenditure (2) • These are obligations for designated universal service providers • But in many Member States some of these obligations apply to a larger group of operators, e.g. all providers of publicly accessible telephone services (PATS)

13. Itemised billing • NRAs must be able to specify a basic level of detail that allows consumers to verify and control the charges and exercise a reasonable degree of control; • in practice: one line per call • Basic level of detail must be free of charge • Free calls, including calls to helplines, not to be identified in the itemised bill

14. Selective call barring • Must be provided free of charge • Subscriber must be able to bar outgoing calls of defined types or to defined types of numbers • Directive does not specify details • Typical options: calls to value added service numbers, in mobile networks also; roaming related call barring

15. Pre-payment systems, phased payment • NRA must be able to require designated universal service providers to offer pre-payment systems • NRA must be able to require designated universal service providers to allow consumers to pay the connection fee phased over time

16. Non-payment of bills • Proportionate, non-discriminatory and published measures • Due warning must be given before interruption or disconnection • Service interruption only for the service concerned (exceptions: fraud, persistent late payment or non-payment)

17. Contracts • Art. 20 Universal Service Directive • Minimum content of contracts; • Applies to consumers, but member states may extend the scope to all subscribers • Subscribers can withdraw from contracts, if the provider changes the conditions

18. Transparency • Art. 21 and Annex II Universal Service Directive • Minimum information that must be published by providers, including contractual conditions, tariffs, compensation policy, maintenance, dispute settlement mechanisms

19. Operator assistance, directories • Subscribers have a right to have an entry in the comprehensive directory • Subscribers must be able to call operator assistance services and directory enquiry services

20. Numbering issues • European emergency call number 112 • Standard international access code 00 • Non-geographic numbers accessible from other member states • Tone-dialling, calling line identification (CLI) • Number portability

21. Out-of-court dispute resolution • Member states must ensure transparent, simple and inexpensive out-of-court procedures • Details left to the member state to decide, but many member states assign such tasks to the NRA

22. Contracts

23. Introduction • In the times of the monopoly, the legal relation between phone users and the operator was the relation between a citizen and a public authority • In an liberalised environment, this changed to a contractual relation between a subscriber and a service provider

24. Discussion • You go to a shop and buy a pre-paid SIM-Card. • With whom do you conclude a contract? • What is the content of this contract?

25. In practice • Almost every kind of commercial activity is based on contracts • Most of these contracts are not concluded written form • It most cases it would not be possible to determine all details of the contract • In most cases it would be difficult to enforce the contract in case of a dispute

26. Discussion • How can a company change its existing long-term contracts, for example the monthly price?

27. Data protection / Privacy

28. EU legislation • Directive 95/46/EC: General data protection directive • scope: all personal data, all „controllers“ who process personal data • Directive 2002/58/EC: Privacy in electronic communications • scope: subscribers, users, providers of electronic communications networks and services

29. Directive 95/46/EC • Art. 6 Principles relating to data quality • Personal data must be collected for a certain, legitimate purpose, and most not be processed contrary to that purpose • Personal data must be kept up to date, and must be deleted when no longer needed for the purpose

30. Directive 95/46/EC • Art. 7 Criteria for making processing legitimate • consent by the data subject • processing necessary to fulfil a contract • processing necessary to fulfil a legal obligation • task carried out in the public interest • ...

31. Directive 95/46/EC • Rights of data subjects • Right to be informed about processing personal data • Right to object • Right to access own personal data • Right of rectification or deletion

32. Directive 2002/58/EC • Confidentiality of communications • Strict rules on processing traffic data: delete as soon as possible • Itemised bill shall protect interests of other calling users (who are not the subscriber) or called users • Rules how users can restrict CLI

33. Directive 2002/58/EC • Rules on processing location data: consent needed • Directories: subscribers must have the possibility to decide whether they want be included • but no clear opt-in or opt-out principle • Rules against unsolicited messages (automated calling systems, spam)

34. Data retention • Directive 2006/24/EC • Turns the principle that personal data shall be deleted as soon as possible upside down • Providers shall store telephony data and Internet data (but not the transmitted content) for 6 months to 2 years, for law enforcement purposes

35. Distance contracts, electronic commerce, ...

36. EU legislation • Distance Contracts Directive 97/7/EC • Distance marketing of consumer financial services, Directive 2002/65/EC • E-Commerce Directive 2000/31/EC • Unfair Commercial Practices Directive 2005/29/EC

37. Directive 97/7/EC • Distance contract: wide definition, includes selling per telephone, mail-order catalogues, websites, ... • Detailed information requirements, in particular identity of the supplier, price, delivery costs, ...

38. Directive 97/7/EC • Right of withdrawal • consumer can withdraw without stating any reason • without penalty or charge (only delivery costs for returning) • within 7 working days (financial services: 14 or 30 days) • some exceptions

39. Discussion • What does this mean in practice? • for selling telephone services via call centres or websites? • for provision of value added services?

40. E-Commerce Directive • Information obligations • Rules how to conclude a contract via websites and email • technical steps must be explained, a possibility to correct errors must be given, possibility to store the contract • Rules on advertising

41. Unfair Commercial Practices Directive • Forbids misleading and aggressive commercial practices • abstract definition in articles 5 to 9 • many concrete examples in annex 1 (same list applies in all member states) • Applies to business-to-consumer relationship

42. Discussion • Do you know examples of misleading or aggressive commercial practices in the telecoms sector?

43. The role of Telecom regulators in consumer protection

44. Transparency • Publication of general business conditions • Publication of tariffs • Tariff calculator on the website • requires lot of timely updates and programming in order to take new tariff options into account

45. Public relations • Reacting to consumer issues in individual press releases • Annual report • Information on consumers‘ issues on the regulator‘s website • on most regulators‘ websites, this is one of the first items in the navigation

46. Quality of service • Possibility to regulate it, if necessary • Trend, not to require certain level of QoS, but only to require transparency

47. General business conditions • A regulator can enforce the rules • from the telecoms acquis, for example minimum content • from other parts of legislation, e.g. unfair clauses

48. General business conditions • Methods of enforcement • Misdemeanour provisions • only in serious cases • Obliging operators to change business conditions • in cases of complaint • evaluation of all general business conditions as a regular activity

49. Consumer complaints • Out-of-court dispute settlement on case-by-case basis • task of many EU regulators and/or • dealing with consumer issues on a more general level • for example the Ofcom Consumer Panel explicitly states that it does not deal with individual complaints

50. Expertise • Provision of expertise to consumer protection institutions, in individual cases • Regular exchange of information with such institutions • Staff of the regulator acts as court experts