Ofcom confirms definitions and end-user protection rules for the European Electronic Communications Code

Written on 10 Nov 2020

The regulator will lift financial thresholds from business customer definitions and ban mobile network providers from selling locked devices – as well as carrying out a further consultation

The UK communications regulator has published (27 October 2020) a statement that assesses telecom industry responses to recent consultations and confirms the changes it will enact in new regulations that give effect to the provisions of the Directive (EU) 2018/1972.

Ofcom's new rules establish the European Electronic Communications Code (EECC) into its General Conditions of Entitlement, which providers of electronic communications networks and services must comply with if they want to provide services in the UK.

One of the aims of the EECC was to improve fairness for end-users when buying and using broadband, mobile, pay TV and landline phone services. Ofcom's statement, which follows consultations launched in December 2019 and July 2020, confirms how many end-user protections will apply in the UK and signifies a major change in the scope of the rules.

The rules, which previously applied only to consumers, now extend to all sizes of business customer, including large enterprise customers. This will require communications service providers (CSPs) to undertake system changes to ensure compliance, which could have a significant impact on them amid the Covid-19 pandemic. Businesses will need to understand the impact of these changes on their activity, and set aside budget and time over the next 12 months to ensure compliance on time.

Ofcom has listened to feedback from respondents on the implementation period and the impact of the Covid-19 pandemic. Previously, the regulator indicated that a maximum of 12 months would be given to CSPs to implement the rules, but has confirmed that the period will now vary between 12 and 24 months from 21 December 2020 depending on the rule and the significance of the changes. Although this will be welcomed by industry, the implementation timelines could be challenging for some.

Confirmed new rules

From 27 October 2020:

  • Annual best tariff notifications. In July, Ofcom consulted on minor changes to the requirement to send annual best tariff notifications to customers on pre-pay tariffs. Ofcom has adopted its proposals with immediate effect, which means, CSPs are no longer required to send these annual notifications to any customer who did not previously have a contract with a fixed commitment period.

From 21 December 2021:

  • Mobile device locking. Mobile providers will be banned from selling devices to consumers that are locked and cannot be used on another network.
  • Extension of rules on accessible formats. New rules will be introduced to ensure disabled customers have equivalent access to all information about their communication services (except for marketing materials). CSPs will have to provide the communications in a format that meets the customer's needs, if requested. Ofcom is also working with industry to ensure that access to the emergency services is made available for free for deaf people by providing access to a free video relay service.
  • Contract duration. The rules on not offering contracts, which stipulate commitment periods of longer than 24 months, are being extended to bundles and to small business and not-for-profit customers for the first time, although they can expressly agree otherwise. Ofcom has confirmed that this does not limit CSPs from advertising contracts with a minimum duration exceeding 24 months to these customers, provided that they expressly agree to the contract duration when they sign up. Where consumers, small businesses and not-for-profit customers add a new service to their existing contract for broadband or voice services mid-term, CSPs will no longer be permitted to extend the length of the original contract unless the customer expressly agrees to the extension.
  • Publication of Information. The information that CSPs must publish on their website about their services has been extended to include the contact details of the service providers, details about quality of service levels and on restrictions on equipment that can be used, and a clear breakdown of charges included within tariff allowances. Limitations on access to the emergency services and details of services for end users with disabilities must also be published.
  • Customer usage notification requirements. Consumer, small business and not-for-profit customers must be notified when a service included in their tariff is used up and of the charges that they will incur if they continue to use the service. Ofcom have decided not to introduce any further requirements to give customers additional information on their consumption level or to set consumption limits, which had been in its original proposals.
  • Information sharing with price comparison tools. CSPs will be required to make available, free of charge, publicly available data on the prices, tariffs, download speeds for fixed broadband (and locations these are available) and minimum quality of service to qualifying comparison tools in an open data format.
  • Non-conterminous linked contracts. Although not a new rule, Ofcom recognises that linked contracts (for example, in a bundle) with different end dates could act as a disincentive for customers to switch provider until all services are out of the applicable fixed commitment period. Ofcom has issued new guidance on how it will assess if the linked contract deters switching and breaches the revised General Condition C1.8. This will be dependent on the case facts and take into account the financial, technical and contractual nature of the link between services.
  • Availability of broadband services. Ofcom is extending the requirement to ensure the ‘fullest possible availability’ of services in the event of a catastrophic network breakdown or force majeure from voice services to include internet access services (i.e. broadband) as well.

From 21 June 2022:

  • Right to exit for contract changes. Customers must be permitted to exit their contract without the payment of exit fees (other than for the cost of hardware) if the CSP makes a change to the customer's contract terms during the fixed commitment period and where the change is not exclusively to their benefit, purely administrative in nature, or required by law. This is a much lower threshold than the current rules which permit customers to exit the contract where the change is to their material detriment. Ofcom has updated its guidance on how communications service providers can comply with this rule. These new rules will apply to all contracts, from the implementation date, including existing contracts and new contracts and to all categories of customer – including large businesses. This is one of the more controversial changes given its broad nature and the high potential for customer churn for minor contract updates.
  • Pre-contract information and contract summary. A short summary followed up by a more detailed set of contract information in a prescribed format (which is provided in a durable medium or easily downloadable document) of the contract's main terms must be provided before the customer is bound by the contract. These rules will apply to all services, including pre-pay mobile. Ofcom has provided guidance on how practical compliance may be achieved where there is limited involvement of sales personnel; for example, the sale of pre-pay SIM cards in supermarkets. It has also issued guidance on how CSPs must comply with these rules in an annex to Ofcom's statement.
  • Right to exit after fixed commitment period. Customers must be permitted to exit their contract on no more than one month's notice when the contract reaches the end of the commitment period and automatically rolls on a monthly basis. This will apply to consumers and small business and not-for-profit customers. Although, the small business and not-for-profit customers can expressly agree a longer notice period.

From 21 December 2022:

  • Switching and number porting. The rules on switching are being extend from mobile providers and fixed services provided by BT and KCOM to all providers of fixed networks irrespective of whether the switch will involve a switch between different providers and different technologies. There are general rules which are less prescriptive and apply to both consumers and all business customers, as well as more specific rules on information, notice period charges, consent and the compensation regime for delayed switched which will only apply to consumers.

A summary of the key rules changes are:

  • the switch will be led by the gaining provider;
  • switching must take place as soon as possible and on the date agreed with the customer;
  • the customer can request to port its number(s) for at least one month post termination and there will be a ban on charging for number porting;
  • providers must take all reasonable steps to ensure all customers are adequately informed before and during the switching process, including informing customers of the right to compensation;
  • any loss of service as a result of the switch must not exceed one working day for consumers;
  • compensation for missed appointments or if the switch takes longer than one working day or doesn’t happen is to be paid to consumers automatically within 30 days;
  • for pre-paid mobile services, the customer can request a refund of any unused credit remaining after the switch date;
  • a ban on notice period charges beyond the switch date for consumers.

Definition changes

The EECC brings in changes to how an electronic communications service is defined, which are broader than before, and include:

  • internet access services, for instance, broadband;
  • interpersonal communications services, which in turn has two sub-sets of number-based and number-independent (NI-ICS);
  • conveyance services (such as transmission services for broadcasting and machine-to-machine communication services).

Due to the government deprioritising the implementation of end-use protections for NI-ICS, these services are not included within scope of the General Conditions. In most cases the end-user protections will not apply to machine-to-machine services, but the new end-user protections will in some cases, as described above, apply to a broader range of service than before. Each General Condition states, at its start, the type of service and the type of customer that the rules apply to, which is a helpful way to determine how the rules will apply to each service a communications service provider makes available.

Bundles

One of the more controversial requirements in the EECC is the application of end-user protections to other goods (for example, mobile handsets) and services that are sold as part of a bundle with a communications service. Ofcom has confirmed the scope of the rules that will apply to bundles and has provided more certainty over what type of goods and services would be considered as a "bundled" good or service for the purpose of the General Conditions. Many of the new and updated end-user protection rules will apply to all aspects of a bundle, such as the right to exit for contract changes, end of contract and annual best tariff notifications, and maximum contract.

Ofcom has included a definition of "bundle" which is narrower than the EECC recital and provides more clarity to communications service providers. The definition will now only capture equipment and services that are most relevant and closely related to telecoms, such as information society services, content services, and related equipment including handsets and routers.

Business customer definitions

Ofcom has confirmed it will implement its proposals from its July 2020 consultation in relation to how "microenterprise", "small enterprise" and "not-for profit customers" will be defined:

  • There will be no financial threshold in the definition of microenterprise and small enterprise customers.
  • The threshold for small enterprises will be reduced down to 10 staff members or volunteers.
  • The definitions of small enterprise and microenterprise will be consolidated into a single definition.
  • The definition of a not-for-profit organisation will include a staff headcount threshold of 10 staff members (although this does not include volunteers).

Brexit

Under the Withdrawal Agreement, the UK is obliged to implement EU directives until the end of the transition period on 31 December 2020. As the EECC must be implemented by 21 December 2020, this falls within the transition period. Ofcom will be under an obligation to implement the EECC. Most of the end-user protections are subject to "full harmonisation", which requires Members States to implement the applicable rules in full and prevents any more or less stringent rules being implemented.

There has been significant calls from industry on Ofcom to exercise a proportionate and selective approach to the implementation of the EECC and certain end-user protections in particular. However, Ofcom has confirmed that it will implement the provisions in full to ensure compliance with the terms of the Withdrawal Agreement.

Taking into account the fact that the transition period would end at the end of 2020, Ofcom was also called on to review the approach to EECC implementation immediately. However, Ofcom has said that it will not commit to a review of the General Conditions following the end of the transition period as this would create significant regulatory and legal uncertainty for both customers and providers.

The message from Ofcom is clear: the new rules must be implemented by CSPs and will only be reviewed if market developments or fresh evidence show that a particular requirement is imposing an unnecessary burden, in line with its usual practice.

Next steps

Many of the new rules will require changes to internal processes, changes to the sales process as well as internal system changes. The staggered implementation timeframe from Ofcom should help CSPs manage this, but, as businesses are planning budgets and business and IT change programmes for 2021, these changes should be factored in.

Many of the end user protections that are being introduced will also apply to small businesses and not-for-profit customers for the first time. In some situations, there is an ability for small businesses and not-for-profit customers to expressly waive their rights.

However, this will involve additional processes and record-keeping to monitor consent. A gap analysis should be undertaken by CSPs to assess which of the end-user protections will apply to each category of customer and type of service that they provide.

Ofcom is now also consulting on minor consequential changes to the General Conditions, Metering and Billing Direction and Numbering Plan until 30 November 2020.

Further implementation of the EECC is also required, in addition to the end-user protections, and Ofcom intends to publish a final notification containing all of the revisions to the General Conditions prior to the 21 December 2020 implementation deadline.

Full details of Ofcom's statement and consultation are available on Ofcom's website.