ANACOM sends proposal to Assembly of the Republic and Portuguese Government to amend Electronic Communications Law, Postal Law and the legal regime governing sector offences

HIGHLIGHTS

ANACOM has sent a proposal to Assembleia da República (Assembly of the Republic) and to the Portuguese Government to amend a range of legislation on the sector or with impact on the sectors which it regulates. This proposal includes:

a) changes which ANACOM considers relevant in the context of the protection of consumers and other end-users, in particular related to: (1) protection of micro and small businesses and non-profit organisations; (2) billing for services, unsolicited activation of services or additional services, suspension of services to consumers due to non-payment of bills and access to call recordings and other records related to the conclusion, amendment or termination of contracts; (3) protection of subscribers in the event of interruption of services contracted where this interruption is for reasons beyond their control; (4) enhancement of subscriber mobility in the market, reviewing and clarifying the limits to be applied to charges payable by subscribers in the event of early termination of contracts with lock-in periods; (5) promotion of greater transparency and easier access to information on charges arising from early termination of contracts during lock-in periods; (6) clarification of the regime applicable to contractual amendments made unilaterally upon the initiative of service providers; (7) the impossibility of extending lock-in periods through association of other contracts; (8) enshrining the obligation that providers obtain express authorisation from subscribers before charging for services that do not constitute electronic communications services, such as “WAP Billing” services; (9) clarification of the obligations of service providers and of ANACOM as regards the handling of complaints; (10) better information for end-users of electronic communications services on the performance of providers; (11) dissemination of information derived from the measurement of Internet access speeds; (12) oversight of compliance with the rules governing contracts concluded at a distance and off-premises.

b) amendments indicating that designation of providers for the various services which make up the universal service of electronic communications should be conducted only where it is considered that there are needs of citizens which these services are intended to satisfy but which are not ensured by the normal functioning of the market;

c) amendments related to the obligations imposed on undertakings as regards the guarantee of access to emergency services and the establishment and transmission of caller location information, resulting from the development of the 112.PT application and 112 geo-referencing;

d) amendments aimed at clarifying the information obligations and the regime governing the processing and dissemination of information made available to ANACOM by regulated service providers;

e) changes to the sanctioning regime, including: (1) inclusion of the sanctioning regime applicable to infractions resulting from non-compliance with the Net Neutrality Regulation and the Roaming Regulation; (2) definition of the sanctioning regime whose application, in respect of Taxa Municipal de Direitos de Passagem (Municipal Fee for Rights of Way), should be the responsibility of ANACOM, clarifying ANACOM's sanctioning powers only with regard to audits in relation to this fee; (3) a toughening of the sanctioning regime as regards certain offences, particularly as regards failure to comply with information obligations and in cases of repeated or habitual behaviour, or the issuance of guidelines, recommendations or instructions, the application of which may lead to unlawful breach of rules or ANACOM determinations, with proposals for: (i) classification of the breach of the obligation to provide information as a very serious offence; (ii) the possibility of assigning liability to directors, members of management bodies and senior personnel, as well as to those responsible for directing or supervising areas of activity of legal persons where the offence is committed, when legal conditions are met; (iii) the introduction of a new auxiliary sanction barring perpetrators, for up to a maximum of two years, from the exercise of managerial, administrative and supervisory duties in collective persons with engagement in the activity of communications.

ANACOM considers that there are issues which the legislator urgently needs to address, in particular:

i. The sanctioning regime applicable to breaches of European regulations in the context of open internet access (Net Neutrality Regulation) and roaming on the public mobile communications networks of the European Union (Roaming Regulation), considering that under the terms of these regulations, it is the responsibility of member states to establish the sanctions applicable to breaches of the obligations established.

ii. The regime governing designation of one (or more) provider(s) for the universal service of electronic communications, considering the recommendations made by ANACOM to the Government on the matter and the end of the various contracts concluded by the Portuguese State for provision of the universal service; and

iii. The regime governing access to emergency services, considering ongoing developments in the context of the SIMPLEX+ programmes, in particular with regard to the development of the 112.PT application and 112 georeferencing.

In the legislative proposal presented, ANACOM also includes a range of proposals to amend Lei das Comunicações Eletrónicas (Electronic Communications Law) that have been submitted by ANACOM to the Government since October 2016, so that they can also be taken into account in the reflections of Assembleia da República (Assembly of the Republic) and of the Government.

Since it was considered relevant to put ANACOM's contribution to the analysis which is being undertaken at CEIOP - Comissão de Economia, Inovação e Obras Públicas (Committee on Economics, Innovation and Public Works) of Assembleia da República (Assembly of the Republic) on rules governing the contract lock-in periods, ANACOM has also presented a proposal for legislative amendment that seeks to respond properly to the concerns underlying the drafts being discussed by the parliamentary groups. These amendments allow an approach that is both balanced and which ponders the opinions expressed by companies and other interested parties of the sector.

Finally, ANACOM has presented a set of specific amendments to be incorporated into Lei das Comunicações Eletrónicas (Electronic Communications Law,) which aim to ensure proper exercise of the functions of sector oversight and supervision. Since some of these proposals imply or require specific amendments to other legislation, the need for coherence in the legal system applicable to the communications sector justifies the submission of surgical amendments as follows: to the Law on the processing of personal data and the protection of privacy in the Electronic Communications Sector, to Lei Postal (Postal Law) to Regime Quadro das Contraordenações do Sector das Comunicações (Framework Regime of Communications Sector Offences) and to other legislation with an impact on the sectors regulated by ANACOM.

The main legislative changes proposed by ANACOM are summarised below.

Protection of consumers and other end-users

1. Changing the scope of application of certain consumer protection rules, in particular as regards maximum duration of contract lock-in periods, extending them to other subscribers of electronic communications services (micro and small enterprises and non-profit organisations), to the extent that identical protection is warranted.

2. Introduction of clarifications in the text of the law and correction of identified shortcomings - based on the analysis of the various practices adopted by communications service providers: billing for services, unsolicited activation of services or additional services, suspension of services to consumers due to non-payment of bills and access to call recordings and other records related to the conclusion, amendment or termination of contracts.

3. Strengthening protection for subscribers in case of interruption of contracted services for reasons that are not attributable to them or in cases of non-compliance with specified levels of quality of service by providers. In this context, when services suffer interruptions of more than 24 hours for reasons not attributable to the subscriber, providers will be required to issue the customer a credit with a value that corresponds to the period for which the service was unavailable, even if this credit is not requested by the customer.

4. Establishment of the right of subscribers to compensation where providers fail to comply with contractually established time limits for the activation of services or for the repair of faults, or when providers do not attend on the dates agreed for this purpose.

5. Defence of the mobility of subscribers in the market, in particular by reviewing and clarifying the limits to be applied to costs incurred by subscribers (consumers, micro and small enterprises or non-profit associations) in the event of early termination of contracts with lock-in periods (see box 1). It is proposed that penalty charges should no longer be based on the value of the benefits which they are designed to compensate, as has justified lock-in periods to date, but be made subject to a maximum limit according to a percentage of the value of outstanding monthly payments, depending on the length of time for which the contract has already been in force, in cases where it is not possible to apply legal provisions which place limits on the amounts that may be charged for the provision of services to unblock equipment used to access electronic communications services.

In fact, instead of reducing the maximum duration of contract lock-in periods, ANACOM considers that focusing on the values that can be charged by service providers in case of early termination of contracts by consumers (and equivalent entities) provides for a more balanced intervention. In this way, it is also possible for the parties to freely negotiate the conditions which they consider to be most advantageous, while at the same time seeking to avoid high charges in the event of early termination of contracts by subscribers as has been the cause of a significant number of complaints in the sector.

6. Promotion of greater transparency and easier access to information on charges arising from early termination of contracts during lock-in periods, by including this information in monthly bills.

7. Clarification of the regime applicable to unilateral contractual amendments made on the initiative of service providers, bringing these rules into line with the rules which result from the recently adopted European Electronic Communications Code.

8. Impossibility of extending lock-in periods through the association of other contracts with the contract governing the provision of electronic communications services, specifically as related to the sale of equipment with payment in instalments over a period of time which exceeds the maximum established for the duration of the lock-in period.

9. Enshrining the requirement that providers obtain express authorisation from subscribers before charging for services that do not constitute electronic communications services (such as “WAP Billing” services), often subscribed to by users inadvertently when accessing Internet pages,

10. Clarification of the obligations of service providers and of ANACOM as regards the handling of complaints, limiting ANACOM's direct intervention to cases where complaints have previously been put to service providers by end-users with no satisfactory response.

11. Amendment of the regime governing the dissemination of information on complaints received by ANACOM, in line with its Statutes and the objective of ensuring better information for end-users of electronic communications services on the performance of service providers, as well as on the characteristics of the services they provide.

12. Disclosure by ANACOM of information obtained through the computer platform that was created to measure Internet access speeds.

13. Assignment of legal powers and responsibilities of oversight to ANACOM to pursue breach proceeding and apply fines, as under rules governing contracts concluded at a distance and off-premises, as regards the contracting of electronic communications services and the services they support or of postal services, considering that, given the specific knowledge ANACOM has about the provision of these services, it is particularly well placed to provide oversight of compliance with this regime.

Universal service of electronic communications

In line with the recommendations presented by ANACOM to the Government on 09 May 2018, it is considered that developments, in terms of technology and in terms of altered dynamics in the market of electronic communications services, now justify modification of the regime governing provision of this service, as enshrined in Lei das Comunicações Eletrónicas (Electronic Communications Law), insofar as designation of providers for the various services which make up the scope of the universal service should be promoted only where it is considered that there are needs of citizens which these services are intended to satisfy but which are not ensured by the normal functioning of the market.

As such, and in accordance with these recommendations, ANACOM considers that, in the future, it is not reasonable to designate providers of the universal service for electronic communications as are currently paid to provide services that are available in the market or that citizens do not use.

Over the 5-year period of current provisions, the universal service has cost 23.8 million euros, which is indirectly but ultimately supported by all consumers and users with no significant benefit in return. That amount, in a context where there is no designation of universal service providers, could be given a different application, specifically to satisfy essential needs in an effective manner and at a lower cost, to invest in the development of telecommunications, for example in the provision of internet broadband to the entire population, and to reduce the prices of communications.

ANACOM's proposal on the non-designation of universal service providers is based on the very low level of use of each of its components (fixed telephone service, public pay-telephones and comprehensive telephone directory and 118 directory enquiries service) and that, therefore, the cost of financing new designations, both for the market as a whole and indirectly for end-consumers, is disproportionate and entirely unwarranted give the lack of relevant benefit.

In fact, the needs of consumers as regards all these services are met by the set of operators active in the market: available fixed networks cover the majority of the population and several operators provide this service, even offering fixed telephone services at lower prices than the universal service; in the case of public pay-telephones, the universal service makes up the minority of total stock of public pay-telephones available on the market (42%), while the majority (58%) of public pay-telephones are operated by different operators and are outside the universal service. Although the continuity of public pay-telephones is not in question, as operated by operators and as already occurs in most cases, ANACOM recommends monitoring the market to assess the need for the adoption of alternative solutions. As regards telephone directories and the directory enquiries service, information can also be accessed through electronic directories, search engines and social networks, as well as by using the services provided in the '18XY' numbering range. Telephone directories and 118 include only 5% of telephone numbers, while representing a cost of 1.9 million euros.

Emergency services

As regards access to emergency services and taking into account ongoing developments under the SIMPLEX+ programs, in particular in terms of the development of the 112.PT application and 112 geo-referencing, it is proposed, following a request from the Government (Ministry of Internal Affairs), to adapt the obligations imposed on undertakings, both as regards the guarantee of access to emergency services and as regards ascertaining and transmitting caller-location information. Likewise, it was proposed to update current legal provisions on the processing of personal data and protection of privacy in the electronic communications sector, on terms which should be the subject of consultation with emergency services and undertakings providing electronic communications services.

Information obligations

ANACOM proposes the introduction of clarifications regarding the legal regime which governs the processing and dissemination of information made available to ANACOM by providers of services which it regulates.

Accordingly, on the one hand (notwithstanding the right of service providers to maintain the confidentiality of information where clearly identified as such on a reasoned basis, specifically, information which contains business secrets or concerns their internal operations), the classification of information as confidential is without prejudice to the evaluation which ANACOM itself, as Regulatory Authority, performs with regard to the confidentiality of the information in question. This evaluation will take into account the various interests involved, and in particular the public interest, in accordance with applicable cross-sector legal regimes.

On the other hand, it is proposed that the information obligations imposed on providers of electronic communications services should be strengthened; this will ensure that the information sent to ANACOM is properly detailed, from a quantitative (completeness) and qualitative (veracity and objectivity) point of view. For systematic consistency, the same should apply to postal service providers.

Sanctioning regime

It is considered that application of the sanctioning regime in relation to Taxa Municipal de Direitos de Passagem (Municipal Fee for Rights of Way) should also be ANACOM's responsibility to apply, making clear that ANACOM's sanctioning powers should be limited only to matter of auditing in respect of this fee. This is in addition to the proposed inclusion of the sanctioning regime applicable to infractions which result from non-compliance with the Net Neutrality Regulation and Roaming Regulation (referenced above).

Furthermore, a strengthened sanctioning regime is proposed in respect of certain infractions, in particular as regards failure to comply with information obligations and in cases of repeated or habitual behaviour, or the issuance of guidelines, recommendations or instructions, the application of which may lead to unlawful breach of rules or ANACOM determinations (see box 2). In this respect, it is proposed that any breach of the obligation to provide information should be classified as a very serious offence, and that it should be possible to assign liability to directors, members of management bodies and senior personnel, as well as to those responsible for directing or supervising areas of activity of legal persons where the offence is committed, when the legal conditions are met. It is further proposed that a new ancillary sanction be introduced which entails barring (up to a maximum of two years) perpetrators from the exercise of managerial, administrative and supervisory duties in collective persons with engagement in the activity of communications subject to the legal provisions which it is proposed to amend.

Box 1 - Rules governing contract lock-in periods

ANACOM's proposals as regards rules on contract lock-in periods are centred on the need to achieve a compromise and a fair balance between enabling a competitive environment, consumer protection, the freedom of economic agents to make contracts, and the stability of investments in infrastructure and equipment by companies and their capacity for a return on such investments.

The duration and possibilities of contracting remain unchanged (i.e. the requirement that undertakings offer all users the possibility of concluding contracts without any type of lock-in periods, as well as contracts with lock-in periods of 6 and 12 months but not exceeding 24 months is maintained); nevertheless, it is proposed that the rules governing lock-in periods should apply not only to consumers, but also to other users who, like individual consumers, have reduced negotiating power (micro and small enterprises and non-profit organisations).

ANACOM proposes that any lock-in period should depend only on the allocation of offsetting benefits to the subscriber (which must be identified and quantified) and be associated with a total or partial subsidy of equipment or of the installation and activation of the service. It should be noted that ANACOM proposes elimination of the reference to other promotional conditions as may justify the establishment of a contract lock-in period, since assessment of the scope and value of the promotional conditions invoked as justification for lock-in periods is subjective. This subjectivity has been identified under the current legal framework as one of the major difficulties when it comes to overseeing the proportionality of the duration of lock-in periods established in consideration of these promotional conditions, while the impact on consumers in case of early contract termination, in terms of the level of charges applied, is currently very significant. Nevertheless, these promotional conditions may exist whenever providers wish to consider them in the design of their offers.

Recognising that it is important for subscribers to retain the ability to switch providers whenever switching is in their interest, ANACOM proposes a rule which limits the charges payable in case of contract termination upon initiative of the subscriber (that is, termination not based on a failure on the part of the provider). Taking into account the current legal regime, the proposed solution will ensure a reduction in the charges payable by subscribers.

ANACOM considers the current regime to be excessively complex, entailing multiple limits and using indeterminate concepts which are difficult to calculate (such as the costs incurred by the provider due to installation of the operation). This makes effective and uniform application of the regime difficult and undermines understanding of applicable contractual arrangements. It also undermines ANACOM’s supervision and intervention in seeking to put an end to practices considered detrimental to consumers' interests.

ANACOM therefore proposes that the value of termination charges should no longer be associated with the value of benefits which they are meant to offset and which justify the lock-in period, as established in 2016, and should be instead be capped according to a percentage of the sum of monthly payments outstanding up to the end of the contract:

→ In the case of initial lock-in period:

i) Up to 20% of the sum of outstanding monthly payments, where the contract is terminated in the first half of the lock-in period;

ii ) Up to 10% of the sum of outstanding monthly payments, where the contract is terminated in the second half of the lock-in period.

→ In the case of a lock-in period established in consideration of the subsidy of the value of a new installation, up to 10% of the value of the sum of outstanding monthly payments;

The solution now proposed for calculating the costs payable by consumers, micro and small enterprises and non-profit organizations, in the event of early termination of contracts subject to lock-in periods, will be reasonable and proportionate. It will allow providing companies a balanced recovery of benefits granted, while also ensuring that users are able to terminate their contracts early if they so wish, subject to a reasonable cost in consideration of the benefits received.

Finally, simplifying the regime, by removing the link to the value of benefits (as tend to be defined according to provider propensity) and setting a single limit to be considered for this purpose, will also allow greater predictability and legal certainty in the sector.

Box 2 - Amendments to the sanctioning regime

ANACOM proposes a strengthened sanctioning regime in respect of certain infractions, in particular in the event of failure to comply with information obligations and as regards the adoption of repeated or habitual behaviour, or the issuance of guidelines, recommendations or instructions, the application of which may lead to unlawful breach of rules or ANACOM determinations.

It is proposed that, where these infractions are committed, in addition to the perpetrating company, the directors and management bodies and senior personnel should also be held liable, as well as those responsible for directing or supervising areas of activity of legal persons. These agents should be held liable, through manifest and material breach of their inherent duties, where it is found that they had knowledge or should have had knowledge of the commission of the infraction, and failed to take the appropriate measures to prevent or immediately bring an end to the conduct in question. By establishing these requirements, the proportionality and balanced application of the rules governing liability, as now established, will be ensured and the deterrent function of the sanctioning regime will be strengthened.

Provision is made to hold these agents liable given the particular relevance of the legal interests which the violated rules seek to safeguard - to ensure accurate knowledge of market situations, allowing effective and efficient regulatory action and to prevent actions which, as a result of guidelines or instructions given by the management of companies, cause mass violation of rights and obligations. This provision is made noting that guaranteeing the protection of these legal interests is directly dependant on conduct which is in compliance with the obligations inherent to the functions and responsibilities of the agents in question.

This type of liability is already enshrined in the offence regimes applicable to other regulated sectors, such as: Código dos Valores Mobiliário (Securities Code), Regime Geral das Instituições de Crédito e Sociedades Financeiras (Legal Framework of Credit Institutions and Financial Companies), Regime Jurídico da Concorrência (Legal Regime Governing Competition), Regime Sancionatório do Setor Energético (Sanctions Regime Applicable to the Energy Sector), Regime Jurídico da Distribuição de Seguros e de Resseguro (Legal Regime Governing Insurance Distribution and Reinsurance), Regime Jurídico de Acesso e Exercício da Atividade Seguradora e Resseguradora (Legal Regime Governing Access to and Exercise of Insurance Business), Regime Aplicável às Contraordenações Aeronáuticas Civis (Regime Applicable to Civil Aviation Offences).

Consult:

Public consultation on the process of designating the provider(s) of the electronic communications universal service and conditions governing provision https://www.anacom.pt/render.jsp?contentId=1468020

Public consultation on the designation of the universal service provider(s) for electronic communications and on the conditions and specifications of universal service provision https://www.anacom.pt/render.jsp?contentId=1468022

Proposta Legislativa
(PDF 3146 KB)

Consult:

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